Foody v Horewood & Ors [2007] VSCA 130

1 The appellant, Andrew Emmett Foody, appeals against the decisions made in the proceeding by a judge of the Trial Division on 22 September 2003[1] ("the liability decision") and 1 July 2004[2] ("the valuation decision") and consequent declarations and orders made on 23 July 2004. The appellant's claims against the respondents can be conveniently divided into two categories, namely, derivative claims[3] that were brought on behalf of the third respondent, Musashi Pty Ltd ("Musashi" or "the company"), and claims brought in his own right as shareholder in Musashi in which he alleged that the conduct of the affairs of Musashi by its directors and shareholders, the first and second respondents, Timothy Frederick Horewood ("Horewood") and his father, Edward Frederick Hore ("Hore"), has been oppressive, and prejudicial to and unfairly discriminatory against him as a minority shareholder of the company. Following two lengthy hearings, his Honour effectively ordered, amongst other matters, that the respondents purchase the appellant's 10 per cent shares in Musashi, to which he attributed the value of $685,156.46 as at 30 June 2002[4]. I will refer to his Honour's other orders later.

2 The appellant's primary contentions on appeal were that his Honour erred in his conclusion that the proper date of valuation of his shares was 30 June 2002 - it was claimed that it was 22 September, or 30 June, 2003 - and that, given the emergence of new evidence, the value placed by the court on the appellant's shareholding in Musashi was materially understated. In the result, the appellant seeks orders that his Honour's decision be set aside and that the valuation of the appellant's shares be referred back to the trial judge to be determined as of 30 June 2003, in light of the new evidence. Briefly, the new evidence related to the sale by Musashi in 2005 of its business and other assets to Nestlé (Aust) Ltd[5] for approximately $27 million. It seems that approximately $12.7 million of the purchase price was attributed to the company's intellectual property. The appellant sought to rely on the purchase price to demonstrate manifest error in his Honour's valuation of his shares. It was his case that the significant discrepancy between the 2005 sale price of the assets of the company and the value attributed to them by his Honour as at 30 June 2002, or even 30 June 2003, shows that there must have been error in the court's valuation. Moreover, said the appellant, the transaction demonstrates that the company owned a valuable asset - intellectual property - that was never disclosed by the respondents by way of discovery or otherwise and, therefore, was not taken into account for the purposes of the impugned valuation. Hence, it was claimed, the valuations were made on a false premise and, in the circumstances, the matter should be remitted to the court below for reassessment.

Circumstances giving rise to proceeding

3 Before dealing with the issues that are relevant to the appeal, it is necessary to explain the context in which they arose. The circumstances are fully set out in his Honour's comprehensive liability reasons and it is sufficient for present purposes merely to summarise them. At all relevant times, Musashi manufactured and distributed a range of food and drink products that were fortified by the addition of various elements; they were predominantly sold in health food stores, gymnasiums and sports clubs as health products. The company's principal shareholder, and the driving force behind it, was Horewood. In 1989 Musashi had not yet broken into the mass market serviced by the supermarket chains. The products were then sold principally in Australia, although penetration of Asian and European markets had begun. His Honour observed that the evidence before him disclosed that Musashi had struggled financially until about 1994 (when its business improved significantly), the economy being in recession in the early 1990s and Musashi having to contend with several effective competitors. As the judge noted, at that time Musashi's financial position was parlous. In the 1991/1992 period, for example, the company's financial resources were strained such that there were daily meetings of its officers to decide which creditors to pay. His Honour said that these were early, formative, years when Horewood and the business lacked capital but, as the learned judge noted, by the time of the trial, and well previously, Musashi's business was established and profitable.

Shareholding in Musashi

4 The founding shareholders and directors of Musashi were Horewood, Sean Goss ("Goss") and G Probert, whose shares were held by PGR Enterprises Pty Ltd ("PGR"). There were then 18 issued $1 shares held by the shareholders as to six shares each. The shares held by Horewood and Goss were fully paid; those held by PGR were only partly paid. In mid 1988 Horewood and Goss took over the PGR shares and PGR's liability to Musashi. To facilitate the purchase it was resolved at an extraordinary general meeting of the members of the company, held on 15 July 1988, that Musashi lend $100,000 to each of Horewood and Goss and that interest be payable on the loan annually in arrears at a rate to be determined by the directors from time to time. As a result, Horewood and Goss became owners of nine shares each, six fully paid and three being partly paid.

5 In 1989 difficulties arose between Horewood and Goss. In the result, Horewood agreed to buy Goss's 50 per cent shareholding in the company for $450,000, payable as to $200,000 by the end of February 1990 and the balance of $250,000 by the end of September 1990. Having agreed on the terms of sale, Goss ceased to act as a director and officer of Musashi and, by an instrument of transfer dated 7 February 1990, he transferred his nine shares to Horewood.

Appellant's participation in Musashi

6 Horewood, however, lacked the funds to pay the initial $200,000 to Goss and Musashi did not have the money to assist. Thus, he sought to introduce a new shareholder. Some time in 1989 Horewood met the appellant, a US citizen who had come to Australia for a holiday in February 1989, when Musashi was a sponsor of a sporting team of which the appellant was a member. As his Honour said, "one thing led to another", culminating in Horewood offering the appellant employment and, later, shares in the company and a directorship. The appellant commenced work with Musashi on 31 July 1989. On 16 February 1990, while they were in Japan on company business, Horewood gave the appellant a written option to purchase 10 per cent of the shares in Musashi for $90,000, the option expiring on 19 March 1990. The appellant borrowed $90,000 from a relative and paid that sum to Horewood on 19 March 1990. This money was applied by Horewood towards payment of the first instalment to Goss. Much later, in July 1991, following a restructure of the company, after the parties had fallen out and Horewood was threatened by the appellant with litigation, the appellant succeeded in obtaining from Horewood a certificate for 10 per cent of the issued shares in Musashi, namely, 18 fully paid shares.[6] It took the appellant over 15 months to obtain the relevant share certificate from Horewood and in order to achieve this he had to retain solicitors at a cost of approximately $9,000.

7 It was in the above circumstances that Horewood managed to obtain $90,000 towards the payment of the debt he owed to Goss; the balance of $110,000 for the February payment came from his father. His Honour noted that the provision of $90,000 by the appellant was fortuitous for Horewood because it enabled him to continue on the path of acquiring Goss's 50 per cent shareholding in Musashi and thus to cement his position as controlling owner of the company. His Honour considered that the significance of this should not be overestimated. The learned judge also said that, in borrowing the $90,000 and paying it to Horewood, the appellant demonstrated a significant element of trust in Horewood and his confidence in the future of the company. The provision of $90,000 by the appellant was made in the context, his Honour found, of Horewood having offered the appellant full time employment and a position on the company's board.

Deterioration in relationship with Horewood

8 There were a number of events that occurred in the course of 1990 that combined to produce an irretrievable breakdown in the relationship between the appellant and Horewood, culminating in the appellant's dismissal from Musashi in late 1990. As his Honour explains in his reasons, both men had strong personalities and, at times, the appellant did what he thought appropriate in his work with the company, often without due regard to Horewood's wishes and instructions. It may be fairly said that, in a number of respects he behaved as if he was a principal owner of the company. Moreover, Horewood became progressively dissatisfied with the appellant's work at Musashi and had concerns about his commercial morality given his conduct that included the following.

9 In early 1990 the appellant effectively deceived Horewood as to the real reason for his being detained by Customs when he returned from the United States in early 1990. A search of his luggage at Melbourne Airport revealed that he carried a quantity of cannabis leaf which he had failed to declare in his customs declaration. The appellant made full admissions on being interviewed and later pleaded guilty in the Magistrates' Court to one count of importing a prohibited import. He was convicted and released on a $500 bond to be of good behaviour for 18 months. When the appellant returned to work, however, he falsely told Horewood that he had been delayed at the airport for carrying a prohibited import which he said was salami. Some time later, Horewood discovered that he had been misled by the appellant in that regard when the police attended the Musashi premises. In about April 1990, the appellant produced to Musashi invoices for his consultancy fees in the name of a fictitious US company and in August 1990, in the absence of Horewood and without his approval, procured Hore's signature on Musashi's letter of support that he had written for his visa renewal. His Honour noted that this occurred when the relations between the appellant and Horewood were rapidly deteriorating.

10 At the hearing before his Honour the appellant and Horewood accused each other of improper conduct towards the company and generally. Horewood claimed that the appellant's employment was terminated principally because of his failure "to perform as befits a consultant to this company" and because of certain alleged acts on his part that were said to be prejudicial to the interests of Musashi. The appellant, on the other hand, contended that his employment was terminated because he would not cooperate with a number of devious or dishonest business practices that were instituted by Horewood and because he refused to go to the United States to develop the market there as directed by Horewood in September 1990. He said that he was concerned that, if he returned to the United States, Horewood would procure the Immigration Department to cancel his visa and thus preclude his re-entry into Australia. His Honour was not satisfied that Horewood engaged in the unlawful conduct that was attributed to him by the appellant and, as will be explained later, considered that there was an objective basis for the termination of his employment at Musashi in late 1990.

11 At the time when the appellant left the company Horewood was prepared to repay to him the $90,000 that he had paid for the shares in the company together with interest, but the appellant insisted on receiving the shares. And as has been noted, after pressure from the appellant and his lawyers, Horewood eventually procured the issue to him of scrip for his shareholding in Musashi.

Visa card dispute

12 It is convenient to mention now a dispute between the parties that arose after the appellant left Musashi, in the course of which Horewood effectively hounded the appellant for payment of an amount that he said was due by him to the company. The circumstances of the dispute were these. Before the appellant departed for overseas in the latter part of 1989 on company business Horewood gave him a company credit card to use for company expenses which the appellant used both here and overseas. After the appellant left the company, Musashi claimed that he had impermissibly used the card for personal expenses and demanded repayment. Thus, in November 1990, its solicitors claimed an amount that was in excess of $80,000. By the letter of demand dated 7 December 1990, however, the claim was reduced to $14,404.46. In the result, in September 1991, the company brought a proceeding against him in the Magistrates' Court in respect of that claim. During the interlocutory stages of the proceeding the claim was reduced further to $11,304.82. Eventually, the case was set down for a pre-hearing conference on a date that did not suit the appellant because he was leaving to attend his brother's wedding in the US. An adjournment was requested by him, but Musashi would only consent on terms that the appellant agreed to a default judgment being entered against him by consent if he failed to turn up for the hearing. On the advice of his then solicitors, he agreed to this seemingly unusual condition of the adjournment and the case was adjourned to 1 September 1992 on the agreed basis. His Honour accepted the appellant's evidence that the underlying premise of his agreement to a default judgment was his belief that he would be able to re-enter Australia without difficulty. I note also that his Honour concluded that the appellant did not owe money to the company as claimed, and that Musashi's actions were initiated by Horewood "with the object of forcing [the appellant] to give up his shares with little or no recompense".

13 In July 1992, while in the United States, the appellant applied to the Australian Consulate for a visa but this was refused. The appellant said that an officer of the Consulate informed him that he was no longer a suitable person because he had stolen money from a company for which he had worked. His Honour found that it was Horewood who had given adverse information to Immigration officials for the purpose of preventing the appellant obtaining a visa.

14 In the result, the appellant telephoned his solicitors and sought an adjournment of the Magistrates' Court case until he could obtain a visa but they advised that nothing could be done, given the agreement as to consent judgment. Thus, on 1 September 1992 consent judgment for the sum claimed plus interest and costs was obtained by Musashi against the appellant. Eventually, in November 1993, the appellant was granted a permanent residency visa and returned to Australia; in due course, he became an Australian citizen. On his return, he asked his solicitors to have the order in the Magistrates' Court set aside but was advised that because the order was made by consent it could not be set aside.

15 Bankruptcy proceedings against the appellant were instituted by the company in November 1994 upon his failure to meet the judgment but the bankruptcy proceedings failed and, in late 1998, he applied to set aside the order under s 110 of the Magistrates' Court Act 1989. Following a contested hearing, the Magistrate ordered that the impugned order be set aside and that a defence be filed within 21 days. Horewood, however, caused Musashi to appeal against this decision to the Supreme Court which, on 26 February 1999 allowed the appeal on the ground that s 110 did not apply in the circumstances of the case to permit the setting aside of the order. Thus, the order of 1 September 1992 was effectively reinstated.

16 The matter did not end there. In 1997, the appellant's former solicitors sued him to recover unpaid costs of approximately $17,000 relating to the Magistrates' Court litigation. The appellant filed a cross-claim for damages for negligence and breach of contract and, eventually, the cases were settled on 4 May 1999. Relevantly, the terms required the solicitors to pay the appellant $30,000 by 30 May 1999 in full settlement of his claim. On 10 May 1999, however, Horewood procured Musashi to apply for a garnishee order in respect of this amount in satisfaction of the amount due to it under the order of the Magistrates' Court made on 1 September 1992. In the result, on 30 May 1999, notwithstanding that this proceeding had been instituted, as will be explained, the court ordered the appellant's former solicitors to pay Musashi all but a few hundred dollars of the amount that they were going to pay the appellant under the settlement.

Oppressive conduct and commencement of proceeding

17 After the appellant left Musashi, Horewood continued his belligerent conduct towards him. Thus, the appellant was effectively "locked out" of the company and its affairs. I have already mentioned that Horewood continued to refuse to provide to the appellant the scrip relating to his shares until litigation was threatened. The appellant was not given any notice of meetings of shareholders or any information concerning the company's affairs, nor was he paid dividends. Furthermore, as has been explained, he was relentlessly pursued by Horewood in relation to the credit card and other matters that need not be detailed here. In the circumstances, it is unsurprising that his Honour later found that such conduct amounted to oppression. In the result, on 9 May 1997, the appellant caused a proceeding to be issued in the Federal Court in which he sought leave to pursue derivative claims on behalf of the company against Horewood and Hore. The claims were later enlarged to include claims by him as a shareholder in Musashi based on oppression of him as a minority shareholder at the instance of Horewood and Hore. The case was transferred from the Federal Court to the Supreme Court following the High Court decision In re Wakim; ex parte McNally.[7]

The Supreme Court proceeding

18 I mention by way of an overview of the proceeding that it was conducted in two stages. First, during 13 sitting days in March 2002, his Honour considered the appellant's derivative claims and those based on alleged oppression. As has been mentioned, in the liability decision of 22 September 2003, his Honour concluded that the appellant had been oppressed by the respondents and that he was entitled to have his shares purchased at fair value. His Honour also determined that, for the purpose of valuation, Musashi's accounts be adjusted to the extent specified by him so as to reflect the appellant's successful derivative claims and that Musashi should repay to the appellant the amount of the garnisheed sum, together with interest and costs. There were other matters with which his Honour dealt in his liability decision to which reference will be made later.

19 The second stage of the proceeding concerned the valuation of the appellant's shares in Musashi. His Honour heard that matter in April 2004 and delivered his findings on 1 July 2004. In that regard, as I have said, the judge concluded that the appellant's shares should be valued as at 30 June 2002 and made necessary findings to enable relevant calculations of the value of Musashi to be made as at that date (as well as at 30 June 2003). His Honour's decision was given effect by declarations and orders made on 23 July 2004.

Appellant's unmeritorious claims at liability trial

20 As will become apparent, the appellant's uncompromising pursuit of numerous claims at his trial, most of which were regarded by his Honour as plainly unmeritorious, assumed significance in the judge's decision on the question of what was the appropriate date of valuation of his shares in Musashi. These claims, and the course adopted by him at trial in relation to them, are dealt with fully in his Honour's comprehensive liability decision of 23 September 2003. There is no need to detail them here, but in order better to understand the magnitude of the time consuming task that faced his Honour in dealing with the first aspect of the proceeding, and the decisions which are now under attack in the appeal, it is necessary to make a brief reference to them. The appellant's amended points of claim ran to 49 pages (with a further 50 pages being particulars produced pursuant to the respondents' request). The points of defence were 33 pages in length. As his Honour noted, the appellant alleged numerous wrongful acts by Horewood and Hore in the conduct of the company's affairs, most of which involved, on their part, alleged mismanagement, breaches of duty, contraventions of the law, conspiracy and oppression of the appellant. For example, it was asserted that Horewood and Hore inflated Musashi's eligible export expenditure, falsified or forged documents and correspondence relating to Musashi's participation in export grants and disguised company funds as eligible export grant expenditure and transferred this offshore to companies associated with them from where the money was credited back to personal bank accounts in Australia. It was also said that they improperly used company funds for personal use and diverted funds and business opportunities from Musashi to overseas entities in which they held an interest. One of the orders that was claimed by the appellant was that he have control of Musashi and that Horewood and Hore make good to the company financial losses that were said to have been caused by them. Thus, for example, it was part of the relief claimed that Horewood and Hore be restrained from acting as directors of Musashi and have no further involvement in its affairs. Under cover of such allegations, said his Honour, "the trial was conducted by [the appellant] as something like a roving commission of inquiry to see what could be established by way of loss to Musashi caused by the impugned acts of Horewood and Hore. The exercise was treated as being relevant to the oppression case because, to the extent to which it succeeded, it showed a respect in which [the appellant] had been oppressed." Later, his Honour said:

"In large part, [the appellant's] case was conducted on the basis of raising a number of matters, in great part by reference to discovered documents, and alleging that they showed, or provided a sufficient basis to infer, wrongdoing. Much of what [the appellant] pointed to occurred after he left Musashi and therefore he had no personal knowledge of the matter. Accounting evidence was not called to establish his allegations or aid in their establishment. The approach taken by [the appellant] and his counsel during the trial was to trawl through documents, to raise a raft of matters and allege or suggest wrongdoing concerning them, and on those materials, and in light of all of the evidence, to contend that an order should be made, among other orders, referring the case to an independent accountant to investigate and value the company."

Rejection of numerous derivative claims

21 After thoroughly analysing in the liability decision the relevant evidence and competing contentions, his Honour rejected the following claims of the appellant as being wholly without merit, or he found that they were effectively abandoned by the appellant at the end of the trial:

(a) That Horewood and Hore had profited or gained a personal advantage to the detriment of Musashi in breach of the relevant legislation and "fiduciary duties and equity". In that context, his Honour noted that the appellant failed to call any accounting evidence on that issue but "wanted to have another hearing before a referee to ascertain facts. One could only wonder at the point at which, and when, the litigation would end."

(b) That documents and correspondence relating to Musashi's participation in the export subsidy scheme were altered, falsified or forged by Horewood and Hore so that greater export claims could be obtained. It was significant, his Honour said, that in final addresses the appellant's counsel did not make a submission to support that claim.

(c) That covert cash sales were conducted without proper invoicing or accounting and involving the avoidance of tax and that he, the appellant, was offered a $200 per week cash inducement by Horewood to participate in the scheme.

(d) That Horewood and Hore wrongfully and maliciously conspired to defraud and injure the appellant by depriving Musashi of its business, in favour of associated companies, thus rendering his shares in Musashi worthless or of minimal value and depriving him of his livelihood and his just entitlements as a shareholder.

(e) That there was impropriety in Horewood's acquisition of shares in Musashi from Probert and Goss and that, therefore, those shares were held on trust for Musashi.

(f) That a property in Moama, purchased by Harrisons Clocks Pty Ltd[8] with $65,000 as a loan from Musashi, was held on trust for Musashi.

(g) That consultancy fees paid by Musashi to Harrisons Clocks and the salary paid to Horewood were excessive such as to amount to a breach of duty by Horewood to the company.

(h) That interest should have been paid by Musashi on the unsecured loan of approximately $340,000 to 4T's Pty Ltd - a company owned by Horewood and Hore - and, therefore, interest should be "written back into the accounts [of the company] for the purpose of valuing [the appellant's] shares.

(i) That there was impropriety in Musashi paying Hore a consultancy fee instead of a salary by way of payment to his company, Campaspe Consulting Pty Ltd.

(j) That the payment of consultancy fees by Musashi to a business called Athletes Advisory - owned by Horewood and Hore - involved impropriety. His Honour explained that Athletes Advisory provided market research services that could not have been undertaken by Musashi and, in that context, accepted Horewood's evidence as to why it was appropriate to conduct such an activity through a separate business. Essentially, it was both to avoid conflict with Musashi's retailers and to research the market and learn about the selling practices of retailers. Moreover, said his Honour, the appellant led no evidence to establish that the amounts paid as consultancy fees were beyond that which was reasonable or appropriate in the circumstances. There was no evidence, the judge said, that Athletes Advisory made any profit when it was owned by Horewood and Hore or that there was impropriety in handing the business over at the end of its commercial usefulness to Musashi to Ozimer Trading, to which I will refer later, such that there should be an accounting in favour of Musashi.

(k) That Horewood caused Musashi to write off debts due to it by its Japanese distributor so as to enable Horewood to reclaim the gift of US$45,000 made to him by the proprietor of the distributor.

(l) That there was misappropriation by Horewood in respect of Musashi Asia Pte Ltd.

(m) That a forensic accountant make further enquiries (by telephone and obtaining that company's bank accounts) to determine what use was made by Horewood of 32 Q Pte Ltd.

(n) That the loans that were made from time to time by Musashi to Horewood and Hore were uncommercial and should be accounted for. His Honour recognised that, given that Horewood was essential to the operation of Musashi and was, unlike the appellant, risking his assets, the arrangement may properly be regarded as one that was for the benefit of the company.

(o) That Horewood was improperly using vehicles of Musashi and other assets.

22 His Honour also had to consider and rule on the large number of orders and declarations, many of them put in the alternative, that were sought by the appellant and explain why nearly all of them were misconceived.

Some derivative claims upheld

23 There were, however, a few of the appellant's derivative claims that were upheld by his Honour.

(a) Thus, although the judge rejected the appellant's claim that there was relevant impropriety in Bruce Hore borrowing $50,000 from Musashi in the financial year ended 30 June 1994, he considered that, for the purpose of valuing the appellant's shares and the loan - the benefit of which, said his Honour, went to Bruce Hore - the interest in relation to it should be treated as written back into the company's accounts.

(b) Similarly, his Honour concluded that, for the purpose of valuing the appellant's shares, the loan by Musashi of $95,000 to Ozimer Trading and interest on it must be written back into the accounts and that Musashi's accounts should include, as an asset, a business called the Growling Dog Bar & Bistro that had been acquired by Musashi.

(c) His Honour also noted that the respondents conceded that the loan of $89,000 by Musashi to International Cadence should be written back into Musashi's accounts for the purpose of valuing the appellant's shares and that there should be an allowance for interest.

24 Importantly, for reasons which will appear later, his Honour noted that the respondents were astute as to the strength of the appellant's oppression claim. Thus, in their points of defence, the judge said, they admitted that the appellant was not given notice of the meetings of members of Musashi between 1991 and 1995. It was also admitted that the appellant was excluded from management and the financial affairs of the company. Those admissions, said his Honour, provided the basis for the statement in the last paragraph of the points of defence that the respondents agreed to an order that they purchase the appellant's shares at fair market value (although denying that the appellant was entitled to any other relief). In the circumstances, his Honour concluded that oppression, unfairness or discriminatory conduct by the respondents as against the appellant within the meaning of s 232(e) of the Act were established by him and that there should be an order for the purchase of his shares at fair value. As I have noted, his Honour left over for determination, at the subsequent trial, the date at which the shares should be valued and their value. He also concluded that the amounts established by the appellant by way of the successful derivative claims should be added "back" into the company's accounts for the purpose of establishing the value of his shares.

25 So far as the business of Musashi was concerned, his Honour found that it was almost totally dependent in its success on Horewood who, his Honour said, was its principal and guiding hand.

26 As has been noted, his Honour also considered that the appellant was entitled to be repaid the garnisheed amount in relation to the credit card, together with interest, and he later ordered that the appellant be paid compensation for loss arising out of the oppressive conduct towards him by way of interest at 6 per cent per annum on the value of his shares from the date of valuation to the date of trial. But his Honour declined to award the appellant damages for Musashi's failure to pay him dividends or compensation for his alleged loss of earnings by reason of his termination of employment with Musashi in late 1990.

Valuation trial

27 Because the parties could not agree on the fair value of the appellant's shares in Musashi, the matter returned to his Honour for determination. Initially, the parties agreed that the valuation should be as at 5 March 2002 or 30 June 2002. It was only at or near the commencement of the valuation trial that the appellant contended that the valuation should be as at the date of judgment, namely, 30 September 2003 or, alternatively, 30 June 2003. In the event, the parties filed reports from the respective experts containing their opinions as to the value of the shares in question. More particularly, the appellant filed the following reports prepared by Thomas Peter Borsky and Gary Charles Graco, chartered accountants:

(a) report dated 18 February 2004 which valued Musashi as at 5 March 2002 and 30 June 2002 ("the first Borsky report");

(b) report dated 14 April 2004 which valued the company as at 22 September 2003 and which commented on the McCann report to which I will refer in a moment ("the second Borsky report").

(a) a report by Michael McCann ("McCann"), chartered accountant, dated 29 March 2004;

(b) a report by Christopher Phillips ("Phillips"), chartered accountant, dated 7 April 2004.

The reports filed on behalf of the respondents considered the value of the company as at 5 March and 30 June 2002. In addition, when he gave evidence Phillips provided a number of schedules of further calculations that included a projected valuation as at 30 June 2003.

28 All the experts gave evidence of the value of the company as at the relevant dates and were cross-examined.[9] In accordance with his Honour's order, a joint report of the experts was filed on 15 April 2004 . The principal matter on which they agreed was that the appropriate method of valuing the company was by reference to its future maintainable earnings. But they disagreed on a number of matters, including the date on which the valuation should take place, the appropriate multiplier and the items that should be taken into account in determining the net surplus assets. In summary, as his Honour noted, the experts respectively valued the company as follows:

Valuation decision 1 July 2004

29 As I have mentioned, in his valuation decision his Honour concluded, first, that it was fair and just that the appellant's shares be valued as at 30 June 2002. As I will explain later, it seems that a primary reason for this conclusion was that, notwithstanding that at the outset of the liability trial the respondents admitted oppression and the appellant's entitlement to have his shares purchased at fair value, the appellant proceeded to press claims that were obviously unmeritorious that delayed materially the conclusion of the trial and the determination of arguable issues. But for such conduct, said his Honour, the appellant's claims that were arguable would have been resolved in 2002.

30 Be that as it may, his Honour then determined, as requested by the parties, a series of issues that enabled them to calculate, arithmetically, the value of the company - and the appellant's 10 per cent shareholding in it - at the relevant dates, 30 June 2002 and 30 June 2003. In the result, his Honour concluded that the value of the appellant's shares as at 30 June 2002 was $685,165.46.

31 On 23 July 2004, the judge ordered the respondents to pay to the appellant:

(a) the above amount;

(b) interest on that sum at the rate of 6 per cent per annum from 30 June 2002 to the date of judgment;

(c) the garnisheed monies together with interest at the penalty rate;

(d) 70 per cent of the appellant's costs of the proceeding, including the costs of the Federal Court proceeding, except in relation to his costs of the liability trial post 19 February 2002.

Subpoenaing fresh evidence

32 As I have mentioned, in July 2005, the business and assets of Musashi were sold to Nestlé for a little under $28 million. In the light of that and related events, in early 2007 the appellant sought orders from the Court that he have leave to issue subpoenas directed to the respondents and Nestlé for the production of documents relating to the sale with the view to establishing, through them, that the impugned valuation is plainly wrong. In the result, on 1 February 2007 this Court gave the appellant leave to serve such subpoenas on the respondents and gave him leave to inspect, on a confidential basis, such documents as may be produced. In consequence, the appellant produced to the Court, prior to the hearing of the appeal, three volumes of confidential documents (that were provided by the respondents pursuant to the subpoenas) that confirmed the abovementioned sale and that the purchase price was divided between the company's intellectual property (as to approximately $12.7 million) and the remaining assets (as to approximately $14 million). As I explain later, it was part of the appellant's case on appeal that the material disclosed error in the court's valuation. Hence, it was said, the matter should be remitted to the court below to re-assess the value of the company at the relevant date which, it was said, was 30 June 2003.[10]

Appeal

33 The appellant's first Notice of Appeal was drawn by him. It was filed on 6 August 2004 and contained in excess of 100 grounds. Not surprisingly, it was struck out as not complying with the Rules. The amended notice, filed on 26 August 2005, also drawn by the appellant, contained 69 grounds. The appeal was eventually set down for hearing on 13 October 2006 but was vacated because the Court considered that, as then framed, the Notice of Appeal failed to articulate properly the grounds of appeal. At that stage, the appellant was still unrepresented. Towards the end of 2006, however, he retained counsel who, pursuant to leave granted on 1 February 2007, reduced the grounds that essentially fell under the following heads.

(a) His Honour erred in determining that the proper date at which the appellant's shares in Musashi were to be valued was 30 June 2002.

(b) His Honour erred in not awarding the appellant compensation in respect of loss of dividends and earnings and interest at the penalty rate.

(c) His Honour failed to provide sufficient reasons for his decisions.

(d) In any event, in light of the fresh evidence the question of valuation should be reassessed by the court below.

Date of Valuation error

34 As has been mentioned, the appellant's principal case on appeal was that the date of the valuation should have been the date of the liability decision - 30 September 2003 - or the closest preceding accounting date, 30 June 2003. It was said that, in determining that the date of valuation was to be 30 June 2002, his Honour erred in two principal respects. First, his Honour's discretion miscarried because he took into account as a material consideration an irrelevant matter, namely, the appellant's pursuit at trial of claims that his Honour considered to be plainly unmeritorious. It was pointed out that the judge also took that matter into account in reducing the appellant's entitlement to costs so that he effectively "double punished" him for running those claims at trial. Secondly, it was argued that his Honour failed to explain why he chose 30 June 2002 as the date of valuation rather than the "prima facie applicable date of judgment".

His Honour applied correct criteria

35 As I explain below, the court's discretion in determining the date of valuation in respect of shares to be purchased from an oppressed minority shareholder is wide and absolute, subject to the requirement that it be exercised judicially, and is to be informed by the justice and fairness of the particular situation. In his reasons, his Honour recognised, correctly, I think, that there is no firm rule by which the relevant date of valuation is to be selected, and that the observation of Nourse J in In re London School of Electronics Ltd[11] that "prima facie an interest in a going concern ought to be valued at the date on which it is ordered to be purchased" was only a starting point for the enquiry. After considering a number of authorities his Honour said that his task was to fix a price for the shares that represents "a fair value in all the circumstances of the case".

36 In my view it is plain, on the authorities, that his Honour applied the correct criteria in determining the date of valuation. Thus, for example, in In re London School of Electronics Ltd, Nourse J said:

"If there were to be such a thing as a general rule, I myself would think that the date of the order or the actual valuation would be more appropriate than the date of the presentation of the petition or the unfair prejudice. Prima facie an interest in a going concern ought to be valued at the date on which it is ordered to be purchased. But whatever the general rule might be it seems very probable that the overriding requirement that the valuation should be fair on the facts of the particular case would, by exceptions, reduce it to no rule at all. That that is so is already suggested by such authorities as there are on this question." [12]

In that case the court was required to determine the date of valuation of the shares of an oppressed minority shareholder that were ordered to be purchased pursuant to a provision in the English Companies Act that is relatively similar to s 232 of the Act. Nourse J concluded that, in the circumstances before him, fairness required that the petitioner's shares be valued at the date of the presentation of the petition. His Lordship came to that conclusion primarily because the development of the company since the appellant left it, and the increase in its share price, occurred essentially due to the respondents' efforts so that it would have been unfair if the appellant were to gain the benefit of those efforts by having the shares valued at the later date.[13]

37 The relevant valuation date selected in the several authorities to which Nourse J referred in his reasons confirms his view that there is "no [general] rule at all" as to the selection of the valuation date and that the overriding requirement is one of fairness and justice to both parties in all the relevant circumstances of the case. Thus, in Scottish Co-operative Wholesale Society Ltd v Meyer[14] the shares were ordered to be purchased at the value they would have had at the date of the petition if there had been no oppression. Similarly, in In re Jermyn Street Turkish Baths Ltd[15] Pennycuick J ordered that the assets of the company be valued as at the date of the petition. And in In re A Company (No. 002567 of 1982)[16] Vinelott J considered that, because the petitioner had unreasonably rejected previous fair offers for the purchase of the shares, they should be valued as at the date of submission to arbitration or for expert valuation, rather than retrospectively from the date of his exclusion from participation in the affairs of the company. However, his Lordship said that he could conceive of many cases where fairness would require that the valuation should relate back to such an earlier date.

Sufficiency of reasons

38 It is convenient to deal first with the claim that his Honour failed to provide sufficient reasons for this and a number of other decisions in the case. It was said for the appellant that, in light of the delay in handing down the liability decision, his Honour failed to make plain in his reasons that the delay had not affected his decision. Counsel argued that in view of the delay his Honour should have taken "extraordinary efforts to provide an articulation of a clear and logical process of reasoning of the key findings in his judgment". More particularly, it was said that his Honour failed "to articulate reasoning for preferring 30 June 2002 [and] for finding that the acts of oppression ... did not give rise to a separate ground of compensation in addition to the fair value [of the shares]". It was further contended that his Honour failed "to articulate any reasoning whatsoever" in relation to the decision that 6 per cent rather than the penalty interest rate was the appropriate interest to award the appellant.

39 The appellant did not, however, explain the basis of the claim that the judge's obligation to provide clear reasons went beyond the requirement that applies in every case but imposed on him the duty to make "extraordinary efforts" in that regard. Every judicial officer is under an obligation to provide such explanation for the decision as would enable the appellate court and the parties to understand the path of reasoning by which the decision was reached so that they would be in a position to determine if it contains an appellable error.[17] Although the degree of detailed reasoning required to be provided in support of a decision depends upon the nature of the case and the issues thrown up by it,[18] it seems to me that whether a long, or a short, period elapses between the completion of argument and the decision does not alter the essentials of this requirement. In any event, as I explain later, his Honour provided sufficient reasons for the impugned decisions.

40 It was also not apparent from the submissions whether it was asserted that the claimed delay affected his Honour's decision on the valuation question such as to vitiate it. Again, whether the delay was short or long cannot directly affect the correctness of the decision. As I understand it, counsel said, albeit without apparent enthusiasm and without any reference to authorities or principle, absent a "confirmation" in the judge's reasons that the delay did not affect his decision on the valuation date, it might be thought that his Honour chose 30 June 2002 as the relevant date in order not to penalise the respondents for the delay. If 30 June 2003 had been chosen, it was pointed out, it would have required the respondents to pay a higher price for the appellant's shares. In my view, there is nothing in this point. As I have said, for the reasons I give later, I consider that, although it might be said that his Honour's reasons should have been more extensive, they constitute a sufficient explanation why he chose 30 June 2002 as the relevant date and there is nothing in those reasons that suggests that it was because otherwise the respondents would be penalised by having to pay a higher amount for the appellant's shares. In any event, the valuation decision was handed down on 1 July 2004 and I think that it is fanciful to suggest that a reasonable person might consider that the delay in the delivery of the liability decision might have influenced his Honour in choosing the date of valuation. If anything, such considerations would have pointed to the choice of the later date.

41 I now turn to consider briefly the specific claim of the appellant that his Honour's decision as to the date of valuation is vitiated because he failed to provide sufficient reasons for his conclusion on the matter. I think that there is no merit in that claim. His Honour's reasons make it sufficiently apparent why he chose 30 June 2002 as the relevant date. The date was determined, as I have said, on the basis of fairness; and in coming to the impugned conclusion his Honour made it apparent in his reasons that he took into account a range of matters. More particularly, his Honour had regard to the long period of time that had elapsed between the appellant leaving Musashi and the date of the liability trial, in March 2002 (during which the value of Musashi increased substantially by reason of Horewood's efforts, including his investment in the company).[19] The learned judge also took into account that the respondents confirmed their "conceded oppression" at the outset of the trial and that, notwithstanding this, the appellant pursued at trial a considerable number of claims that were plainly unmeritorious and that this conduct was productive of the matter not being disposed of in 2002. That his Honour treated the respondents' admissions as being important to the issue can be deduced from his observation that he considered that, arguably, the date of valuation should be the date on which the admission was confirmed, namely, 5 March 2002. It is true that the price at which the respondents offered to purchase the appellant's shares on 5 March 2002 was, as was later determined, inadequate but that does not detract from the fact that the two critical planks of the appellant's claim, namely, oppression and entitlement to have the shares purchased at fair value, were plainly admitted by the respondents at that time. In the circumstances, it is not surprising that, as I have said, his Honour considered that 5 March 2002 might have been an appropriate date of valuation but in the end, he decided to select 30 June 2002 because that was the more "sensible and convenient" date.

42 It seems to me that if the liability decision had been given in 2002 it would have been understandable, at least on the face of things, if 30 June 2002 was then chosen as the date of valuation, that being the accounting date closest to the date of such determination. Be that as it may, I consider that the trial judge sufficiently explained the path of the reasoning that led him to the impugned conclusion. Moreover, I think that the above matters were properly taken into account by him in exercising his discretion on the question of the date of valuation. Hence, the claim that the decision is vitiated due to lack of reasons should fail.

Appellant's conduct of trial not irrelevant

43 I now turn to consider the appellant's claim that his Honour's decision as to the appropriate date of valuation is vitiated because he took into account, as a material factor, an irrelevant consideration, namely, the appellant's pursuit of a large number of claims that the judge considered to be plainly unmeritorious and, consequently, it was said, the decision must be set aside. In my view, however, his Honour did not err as claimed. The appellant's argument is flawed because it disregards the context, which I have already described, in which the judge took that matter into consideration in arriving at the impugned decision. It was not so much the fact that the appellant pursued unmeritorious claims at trial that was, of itself, of significance so far as his Honour was concerned. More relevantly, it was that the conduct was pursued notwithstanding the respondents' admissions and that it had the effect of materially delaying the resolution of the liability claim. These factors, I would have thought, taken in conjunction with the fact that Musashi's significant development occurred after 1995 and that the appellant played no role in that, having left the company in late 1990, were all relevant to the determination of the date of valuation. I mention for completeness that, as a matter of practicality and fairness, the discretionary choice of possible valuation dates in this case was relatively limited. One date might have been the date of the issue of the proceeding. Another might have been the date of his Honour's decision on the liability issue. Yet another might have been March 2002 when the respondents confirmed their admission of oppression. The choice of the ultimate date, as I have said, was to be determined by reference to the fairness and justice of the situation. In my view his Honour's choice of 30 June 2002 is sufficiently understandable as not to constitute error in the exercise of his Honour's discretion in that regard.

44 I also think that there is no merit in the appellant's claim that he was "doubly punished" for the manner in which he conducted his case at trial. As a matter of proper characterisation, I think, the judge's discretion on the question of costs was exercised by him by reference to the extent to which the parties succeeded, or failed, in their respective claims and not just because of the appellant's pursuit of plainly unmeritorious claims in the face of admission of wrongful behaviour by the respondents.

Alleged interest error

45 The appellant next claimed that his Honour erred in not ordering that he be paid interest on his holding in Musashi at the penalty interest rate to which, he said, he was entitled, given his success in his claims. But in ordering that the appellant be paid interest on the value of his shareholding at the rate of 6 per cent per annum his Honour made it plain that the interest was awarded by way of compensation for the respondents' use of his shares. The learned judge also made it clear that in selecting the interest rate he sought to ensure that the compensation was "fair and equitable in the circumstances". His Honour said that he was satisfied on the material before him that the rate of interest was one that represented a good commercial return on investment in the market, and this aspect of his decision is not challenged. His Honour explained that he did not apply the penalty rate because that contains elements that were inapplicable here, namely, a penalty component aimed at inducing defendants to settle cases and providing compensation for loss of use of money.[20] In my view, his Honour made no error of principle in determining to award the interest at the above rate. Plainly, s 101 of the Supreme Court Act 1958 had no application to the claim, and even if s 58(1) of the Supreme Court Act applied, which I doubt, as their Honours in Clarke v Foodland Stores Pty Ltd[21] pointed out the provision purports to prescribe only a maximum rate and the rate to be applied is at the discretion of the court. Importantly, as I have said, the judge in this case did not award the appellant interest qua interest; rather, he used interest as a proxy to measure the compensation to which the appellant was entitled by reason of the first and second respondents having use of his shareholding between the relevant dates.[22] Beyond the date of judgment, s 101 of the Supreme Court Act would give the appellant entitlement to relevant interest.

46 I mention for completeness that, in light of his Honour's explanation for ordering that the appellant be paid interest at 6 per cent per annum, I would reject counsel's claim that his Honour failed to provide sufficient reasons for the decision to order the above interest rather than interest at the penalty rate.

Loss of dividends, earnings

47 The appellant also contended that his Honour erred in rejecting his claim that he was entitled to compensation under s 233(1) of the Act arising from the oppressive conduct by the respondents, more particularly, in respect of the monetary loss that he claimed to have suffered in the form of non-receipt of dividends and loss of earnings as an employee and/or director of Musashi. It was argued that the appellant was entitled to such a compensation order so as to overcome the effects of the oppressive conduct as a matter of justice and equity. More specifically, it was claimed, the compensation should have been based on the benefits the appellant would have received by way of earnings and dividends if "the parties had continued to cooperate".

48 In my view, however, this complaint is without foundation. First, his Honour did not find that no dividends were paid to the appellant because the first and second respondents wished to disadvantage him; it was part of their business policy not to pay dividends. The oppression, in that regard, said his Honour, was constituted by their failure to consider whether that payment should be made. Secondly, and in any event, as the respondents pointed out, the amounts that would have been paid as dividends were retained by the company and were ultimately reflected in its rise in value, so that the appellant is not entitled to claim it again, so to speak, as compensation. Hence, as I have said, there was no error in principle in the judge not awarding compensation in respect of the non-payment of dividends.

49 As to loss of earnings, the appellant claimed below, as I have noted, that he was entitled to compensation for the earnings he would have gained at Musashi but for his dismissal which, he said, was part of the oppressive conduct of the respondents. His Honour, however, said that this claim was essentially one for damages for wrongful dismissal that was not brought within the limitation period. As the judge noted, such a claim should have been brought by the appellant in his capacity as an employee of Musashi and could not be properly made in the context of relief sought as a member of the company. In the end, his Honour did not regard it as appropriate or just to award compensation, as the appellant claimed, to cover his earnings for some indefinite time after his employment was terminated.

50 The appellant argued before us that his Honour erred in a number of respects in rejecting the claim that was based on loss of earnings. First, it was said, his Honour mischaracterised the claim for compensation as one for wrongful dismissal. Such a wrongful characterisation, it was said, led his Honour into error in refusing to order the compensation sought. Secondly, the appellant contended, his Honour's rejection of the claim was inconsistent with the evidence that the judge had himself accepted, namely, that Horewood had offered the appellant employment, unlimited as to time, promised him that he would be appointed a director of Musashi, which he did on 7 September 1990, and spoke in July 1990 in terms of the appellant being an excellent employee and instrumental in the company's sales doubling whilst he was there. Counsel argued that, notwithstanding this, the respondents wrongfully pursued, in the latter part of 1990, a policy of getting rid of the appellant from Musashi in order to avoid having to pay all or some of the money to which he would have been otherwise entitled. In so doing, it was said, they pursued oppressive conduct against him which entitled him to compensation for lost wages. Yet, it was claimed, his Honour made no reference to these matters when dealing with the appellant's claim for loss of earnings.

51 But it is plain enough that merely because his Honour did not refer to those matters in his reasons does not mean that he did not have due regard to such of them as were relevant to the consideration of the claim now under discussion.[23] Moreover, I consider that his Honour made no error of principle in characterising the appellant's claim as described. In any event, it was open to his Honour, in the exercise of his discretion under s 233(1) of the Act, not to award the appellant compensation in relation to the termination of his employment at Musashi, particularly given that there were circumstances, as accepted by his Honour, that would have justified his dismissal on an objective basis. I have earlier referred to some of these circumstances, such as the appellant's lie to Horewood about the true reason why he was detained at the airport in early 1990, the making of a fraudulent customs declaration, his falsification of documentation as to his appointment as director, his procurement of Hore's signature on Musashi's letter of support for the renewal of his visa, his dealings with the company's agents in a manner which Horewood regarded as contrary to the company's interests and his personality clashes with Horewood.

52 In the circumstances, I consider that there is no merit in the appellant's claim that his Honour erred in not awarding him compensation in respect of the non-payment of dividends to him and for the termination of his employment at Musashi.

53 I mention for completeness two matters. The first is that I think that there is no merit in the appellant's contention that his Honour failed to give sufficient reasons for his decision on these matters. The second is that the appellant's ground alleging failure by the judge to award exemplary damages was abandoned on the appeal.

Fresh evidence

54 I now turn to consider the appellant's claim that the documents that were obtained by him from the respondents pursuant to the above subpoenas should be admitted on the appeal pursuant to r 64.22(3) of the Rules of Court. It was said that the material, on its face, demonstrates that there was manifest error in the court's valuation of Musashi or, at the very least, that the valuation was carried out on a false premise. In either case, it was said, the impugned valuation should be set aside and referred back to the trial judge for reconsideration in the context of the new evidence. Before analysing this claim it should be mentioned that, notwithstanding the Court's order as to the confidentiality in respect of these documents, it will be necessary to refer briefly to some of them in order to explain the decision as to their relevance and admissibility. I doubt, however, that such documents are now commercially sensitive so that I think that their limited disclosure here is unlikely to cause justified concern to the respondents or to Nestlé.

55 I turn first to describe briefly the relevant documents and their content. They confirm the appellant's claim that negotiations for the purchase by Nestlé of the Musashi assets began in about late 2004 and that the discussions reached fruition in or about mid 2005, as is apparent from a letter of 28 July 2005 from Nestlé to Musashi offering to acquire its assets for an aggregate price of $28 million on terms of the attached Purchase Documentation Outline ("PDO"). The formal documentation that contains the terms and conditions of sale appears to have been executed by the parties on or about 27 October 2005. Although the matter is far from clear, it seems that, relevantly for present purposes, there were two sets of documents that related to the sale. Chronologically, the first was an agreement pursuant to which Musashi acquired at least some of the intellectual property that it sold to Nestlé from one Jonathon Lambie Davie ("Davie") who, it would seem, assigned to the company, by deed dated 25 October 2005, all his intellectual property rights in a number of (protein based) recipes as well as specified confidential information.[24] The other set of agreements was constituted by the Business Purchase Agreement and the Intellectual Property Purchase Agreement that appear to have been executed on 27 October 2005.[25]

56 I will describe the relevant parts of these agreements shortly, but it is convenient to mention at this point that it was not until the 2004 financial year that there was any reference in the company's financial statements that it was using intellectual property in relation to the conduct of its business (although I would have thought that it would have been obvious to anyone who knew the Musashi business that at least some intellectual property was used in the conduct of it). The 2004 accounts, that were finalised after negotiations with Nestlé commenced, show for the first time, as an item of expense, "royalties [paid] to shareholders". The reference to "shareholders" seems to be a reference to Horewood and Hore so that, curiously, on the face of those documents, no royalties were paid to Davie in that year. And in a Musashi document headed "Special Purpose Financial Statements for the year ended 30 June 2005" that formed part of the confidential material, the Profit and Loss Statement discloses that the amount spent by the company in that year on royalties amounted to $260,000 (although there is no disclosure to whom the money was paid). Returning to the two agreements, their terms make it apparent that they are to be read together. It was pursuant to those agreements that Nestlé acquired the tangible business of Musashi (for approximately $13 million) and its intellectual property (for approximately $12.7 million).[26]

57 The appellant's counsel also referred to a file note, made by the solicitors for the vendors, that dealt with the question whether the anticipated appeal might inhibit the proposed sale. The note contained the entry: "IP in case". It was put for the appellant that this notation indicated that the respondents were positioning themselves so that, if the valuation were to be attacked on the basis of the 2005 purchase price, the seemingly high price could be explained by reference to the sale of the intellectual property to Nestlé. In other words, it was said, the transaction was devised so as to split the purchase price between the intellectual property and the tangible assets of Musashi in order to give the appearance that the tangible assets had a value that was closer to that attributed to them by the court. The subpoenaed documents also disclose that, although the net profit of Musashi in the 2004 year was $800,000, it rose to almost $2.5 million in the 2005 year and that the operating profit before tax rose to $3.4 million in 2005 compares with the figure of $1.1 million in 2004. The material also confirms that Nestlé was a very keen purchaser.

58 The appellant submitted that the Court should exercise its power to admit the further material because it demonstrates that the valuation of the company by his Honour (and the valuers) was plainly wrong and/or proceeded on a false basis. The sale price of $28 million, it was said, is more than twice the highest value that was attributed to it by any of the valuers so that, on its face, there is manifest error in the court's valuation of the appellant's shares. Furthermore, it was put, the fresh evidence shows that, at the time of the valuation, the company had assets which the valuers and the court did not realise existed, namely, the intellectual property, and, therefore, the valuation proceeded on a false premise. The reason the existence of intellectual property was not known, so it was alleged, was that the respondents failed to comply with the discovery process with the result that material information was effectively hidden from the court. It was said that the circumstances here were similar to those in Commonwealth Bank of Australia v Quade ("Quade")[27] where the evidence in question was not made available at the hearing because of the failure by the successful party to disclose it by way of discovery. In the circumstances, it was said, the justice of the situation requires the admission of these documents into evidence.

59 Thus, the documents that are said to constitute the "new evidence" can be conveniently divided into two groups: those that relate to circumstances that existed prior to trial - such as those relating to intellectual property - and those that pertain to matters that plainly occurred after judgment. Rule 64.22(3), which recognises this Court's power to receive further evidence, provides:

"The Court of Appeal shall have power to receive further evidence upon questions of fact, either by oral examination in court, by affidavit, or by deposition taken before an examiner."[28]

It is plain enough that the rule imparts to the Court a general and wide discretion to receive further evidence notwithstanding that the appeal is in the nature of a rehearing.[29] I note for completeness that members of the court in CDJ v VAJ[30] considered that the power to receive "further evidence" cannot be exhaustively defined by common law rules as to the admission of fresh evidence, but nothing turns on this distinction for present purposes**.**

60 Although it may be said that, ordinarily, leave to admit such evidence will be refused in accordance with the principle that the appellant is bound by the way it conducted the proceedings below,[31] in dealing with the matter the court seeks to reconcile the demands of justice with the policy that it is in the public interest that there be finality of litigation.[32] More specifically, usually different considerations arise depending on whether the evidence that is sought to be adduced is of matters that were in existence before (or at the time of) the trial, or whether it relates to matters that arose after the trial. This is of relevance here given, as has been noted, that the evidence which the appellant seeks to introduce falls into the two categories just mentioned.

Evidence of matters before trial

61 Where the evidence in question relates to matters which occurred before trial the court will ordinarily refuse to admit such evidence unless it is satisfied that it is sufficiently credible, that it could not have been obtained with reasonable diligence for use at the trial and that there is a high probability that the result would have been different had it been received at trial.[33] Such requirements, it was said, represent the reconciliation of the interests of justice and the public interest in finality of litigation. Thus, in Greater Wollongong City Council v Cowan, Dixon CJ said:

"It must be reasonably clear that if the evidence had been available at the first trial and had been adduced, an opposite result would have been produced or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary. Again, reasonable diligence must have been exercised to procure the evidence which the defeated party failed to adduce at the trial." [34]

The stringency of the "test" was also emphasised by his Honour in the following passage in his earlier reasons in Orr v Holmes:

"... [the] fresh evidence [must place] such a different complexion upon the case that a reversal of the former result ought certainly ensure. The fact which the new evidence tends to prove, if it does not itself form part of the issue, must be well nigh decisive of the state of facts upon which the issue depends. The evidence must be so persuasive of the existence of the fact it tends to prove that a finding to the contrary, if it has been given, would, upon the materials before the court, appear to have been improbable if not unreasonable." [35]

These principles were affirmed more recently in Quade, where their Honours relevantly said:

"... the reconciliation of 'the demands of justice' and the 'policy' that there be finality to litigation at least prima facie (or 'generally') dictate that the successful party should be deprived of the verdict in his favour only if the unsuccessful party persuades the appellate court that there was no lack of reasonable diligence on his part and that it is reasonably clear that the evidence would have produced an opposite verdict." [36]

Their Honours noted that the stringency of the test is supported by considerations of justice and of public interest and in particular that there should be finality of litigation "in other than the truly exceptional case".[37] In the circumstances of that case, the latter consideration gave way to the demands of justice given that the unavailability of the evidence was the result of the successful party's failure to comply with an order for discovery. The further evidence consisted of various documents that had been wrongly omitted during the discovery process and was made available to the respondents only after the original trial had ended. In those circumstances, said the court, the appellate court was correct in giving the respondent leave to adduce the further evidence on the appeal.

Evidence of matters after trial

62 Where the proposed evidence is of matters that have arisen after trial, the applicable principles governing the exercise of the court's discretion have been stated most notably in Mulholland v Mitchell ("Mulholland").[38] More specifically, Lord Wilberforce's speech in that case is commonly cited as laying down the relevant principles, although it should be noted that his Lordship did not purport to lay down an exhaustive test[39] but emphasised that the question was largely one of discretion and degree[40] having regard to the public interest in finality of litigation balanced against the requirements of justice of the case. Lord Wilberforce relevantly said:

"I do not think that, in the end, much more can usefully be said than, in the words of my noble and learned friend, Lord Pearson, that the matter is one of discretion and degree. Negatively, fresh evidence ought not to be admitted when it bears upon matters falling within the field or area of uncertainty, in which the trial judge's estimate has previously been made. Positively, it may be admitted if some basic assumptions, common to both sides, have clearly been falsified by subsequent events, particularly if this has happened by the act of the defendant. Positively, too it may be expected that the Courts will allow fresh evidence where to refuse it would affront common sense, or a sense of justice. All these are only non-exhaustive indications; the application of them, and their like, must be left to the Court of Appeal. The exceptional character of cases in which fresh evidence is allowed, is fully recognised by that court."[41]

63 His Lordship confirmed[42] that the determination of the issue must proceed from an examination of the process involved in the decision below - in that case, it was the process by which damages were fixed by the trial judge. It was from that award that the plaintiff appealed generally. More specifically, his Lordship noted that an assessment of damages was a "once for all" award that took into account any number of inherent uncertainties and exigencies, so that the cases where fresh evidence would be admitted in those circumstances are exceptional. Nevertheless, his Lordship considered (and the other members of the House of Lords agreed) that the discretion to admit the new evidence in that case could not be said to have been erroneously exercised because the common assumptions at the trial, on which the award of damages was based, had been found, by the subsequent events, to be false. The case concerned an award of damages for personal injury that included an amount for the plaintiff's future medical and nursing costs. That amount was arrived at on the basis of a calculation of the cost of caring for the plaintiff in a particular nursing home. At the trial it was assumed that the cost of home care would have been significantly greater than the alternative cost of a nursing home, based on figures applicable to a particular nursing home. Shortly after the trial, however, it became apparent that the plaintiff could not be adequately cared for at his home and had to be placed into a nursing home. The application to adduce fresh evidence arose when the nursing home which had formed the basis of the initial comparative assessment had closed down and that to which the plaintiff was sent charged a rate that was significantly higher than the cost of home care. The Court of Appeal granted leave to adduce the new evidence for the purpose of determining if a new assessment of damages should be ordered.

64 The above principle recognised in Mulholland was considered in Doherty v Liverpool District Hospital.[43] The case concerned an appeal by the plaintiff, who had been awarded damages for personal injuries, against a finding of contributory negligence. Before the hearing of the appeal, the appellant died from unrelated causes and his wife was substituted as the relevant party. The respondent council filed a notice of cross-appeal, the basis of which was that the damages were excessive such that they must have been based on an erroneous estimate of the plaintiff's future life expectancy. It sought leave to file fresh evidence to prove the death of the plaintiff. Gleeson CJ (with whom Meagher and Handley JJA agreed) recognised that the principles set out by Lord Wilberforce in Mullholland did not seek to lay down a precise formula,[44] and affirmed that the question of the admissibility is one of discretion and degree. More particularly, the Chief Justice said that what Mulholland emphasised was that "the exercise of the discretion is to be undertaken with regard to the context in which it arises and also to the general public interest in the finality of litigation".[45] In the circumstances of the case before him, Gleeson CJ considered that the principle of finality of litigation was not as weighty as it might otherwise be. What was of more importance, he said, was the nature of the action - being for damages that involved the awarding "once and for all" of a lump sum based upon the circumstances existing at the date of the trial - and that the event in respect of which new evidence was sought to be admitted was the realisation of a specific contingency, namely, the plaintiff's death, for which due allowance had been made in the assessment of damages. In the circumstances, the court refused to receive the evidence in question.

65 Mulholland was also followed in Mobilio v Balliotis ("Mobilio"),[46] where the Court accepted that, ordinarily, the discretion to admit further evidence on appeal under r 64.22(3) should only be exercised in exceptional cases. Unlike the position in Mulholland, but as in Doherty, the Court in Mobilio concluded that, in the circumstances of that case, the further evidence should not be received given that it was of matters that were reasonably in contemplation at the trial, and that there was nothing exceptional about the changed circumstances so that it could not be said that the basis on which the case was decided had been materially falsified by a relevant change of circumstances. The appeal was against the refusal of leave to bring common law proceedings for damages sustained in a transport accident. The judge below found that, although the appellant was suffering from a consequential mental disorder or disturbance, it was not "severe long-term" within the meaning of the Act. On appeal, the new evidence that was sought to be adduced consisted of medical and other evidence of circumstances that arose after the trial that showed that the appellant was suffering from a major depressive illness and was unemployable. In refusing leave, Brooking JA said:

"The further evidence sought to be led was concerned with such matters as the mood of the plaintiff, her ability to work, her suicidal tendencies, her dependency on medication and her need for electro-convulsive therapy. These matters had all been gone into at the hearing. It is true that the evidence, if permitted to be led, would have shown that in some respects things had changed, but none of the changes went beyond what was reasonably in contemplation at the time of the hearing. It is a matter of degree, but I am not prepared to say, using the words of Viscount Dilhorne and Lord Pearson in Mulholland, that the circumstances of this case are exceptional or (using the words of Viscount Dilhorne) that the question was determined at the hearing on a basis which events after it have falsified. Nor, using the words of Lord Hodson, would I say that the basis upon which the case was decided at the hearing was suddenly and materially falsified by a dramatic change of circumstances. In picking up these expressions I do not of course suggest that there is any 'precise formula which gives a ready answer', reminding myself of the caution expressed by Lord Hodson."[47]

66 Thus, the cases make it apparent that, ordinarily, the discretion to receive evidence of events after trial is exercised only rarely, and generally only if it bears upon matters falling within the field or area of uncertainty, in respect of which the trial court had made an estimate on an assumption that was then common to both parties and that that assumption has clearly been falsified by subsequent events, such that the refusal to admit the further evidence would affront common sense**.**

New evidence should not be admitted

67 I consider that the proposed new evidence arising from the Nestlé sale should not be admitted, essentially for the following reasons.

Evidence of sale price

68 Contrary to the appellant's submission, I consider that the mere size of the purchase price does not necessarily demonstrate falsification of any basic assumption that was made at trial in relation to the value of the company. Nor does it demonstrate that the value attributed to the company by his Honour and the valuers is manifestly wrong. There are a number of reasons that could explain the difference between the two values other than plain error by his Honour (and the valuers) or the acceptance by them of a false assumption on which the valuation was based. Some of these factors are now known and their existence points against the error contended for. Thus, for example, one explanation for the increase in the value of Musashi could be that its sales had increased substantially during the 2005 financial year over the previous 12 months and this would have been due, as the respondents pointed out, at least in material part, to the substantial rise in advertising costs incurred by the company during that year and probably more favourable market conditions. At the same time, the overall expenses were held steady. Next, although in the present circumstances it is not possible to know now precisely how the purchase price was fixed, it may properly be assumed that Nestlé was keen to acquire the Musashi business, and pay a correspondingly high price for it, on the basis that it would fit within its contemplated expansion into a market which Musashi had already entered, and in which it was an important player. Thus, it is unsurprising that it would be prepared to pay a premium to acquire the Musashi business.

69 Moreover, the evidence does not establish that his Honour's valuation was made on the basis of a common assumption about a matter of relevance that is proved to be false by the new evidence. This case is not like one where, say, damages for personal injuries were awarded on the basis of a common assumption that is subsequently proved to be false. Here, on the other hand, the best that the appellant can do is hypothesise that because the purchase price was considerably higher than the 2002 or the 2003 valuation of the company, the impugned valuation must have been made on the wrong basis. But, as mentioned earlier, there are many reasons why the price may have been fixed at the seemingly high level that are unrelated to its value being materially different in 2002 or 2003 so that the appellant's possible explanations for it do not rise above speculation. In essence, I agree with the submission of counsel for the respondents that the case falls within the first category of the guidelines mentioned by Lord Wilberforce. What the appellant effectively seeks, it seems to me, is the opportunity to have a fresh valuation of the Musashi shares. I consider that, in the circumstances, a refusal to admit in this appeal evidence about the sale to Nestlé would not affront common sense, or a sense of justice.

Evidence of intellectual property

70 As to the new evidence that goes to circumstances that existed at or prior to the time of the trial on valuation, namely, ownership by Musashi of intellectual property, even if such evidence were credible, I am not persuaded that there is such a high degree of probability that it would have produced a different result at trial as to warrant it being admitted as a matter of fairness and common sense. I am also not persuaded that ownership of intellectual property by Musashi could not have been established by the appellant at or before the valuation trial by use of reasonable diligence. It is true that the high hurdle as to the admissibility of such new evidence may be lowered if the successful party has withheld material from the court, particularly if that were so in contravention of the duty to discover relevant documents. The later discovery of the material in such circumstances may justify a reassessment of the case, as occurred, for example, in Quade where the court considered that the Commonwealth failed to comply with discovery in respect of a number of relevant documents. But that was not the case here, as the respondents submitted. The existence or otherwise of intellectual property as a separate asset of Musashi was never an issue on the pleadings or at trial. Importantly, as was pointed out, discovery in this case was not left to the parties in circumstances where they were obliged to discover every conceivably relevant document. The ambit of the discovery was limited to that ordered by the court. In the event, the court had ordered that discovery be provided by categories so that only the documents that fell within them were to be discovered by the parties. The mere fact that none related to intellectual property does not mean that there was failure to provide proper discovery.

71 Moreover, it seems to me that the court's failure to take into consideration, when assessing the value of the company, the separate value of its intellectual property did not relevantly affect the validity of the valuation process given that the valuers had agreed that the proper basis for the valuation was the company's future maintainable earnings and it is plain enough that the assets used to generate those earnings included its intellectual property. Thus, that asset of the company was taken into account, albeit indirectly, in the valuation process. It seems to me that even if the valuers knew of the existence of Musashi's intellectual property, and its market value, this would not have caused them to use a different basis for the valuation of the company, such as the present value of its assets. There are at least two reasons for this conclusion. First, a valuation on that basis would have involved a re-valuation of all the company's assets because they were in its "books" at a written down value. This would have been a very time consuming and prohibitively expensive exercise. Secondly, the valuers agreed, as I have said, that in principle a valuation based on future maintainable earnings was the most appropriate way of establishing the true value of the company's shares

72 I mention for completeness that it was boldly suggested for the appellant that there was non-compliance by the respondents with the subpoenas. In my view, however, this claim should be firmly rejected. There is not the slightest evidence to justify that claim. It is apparent that the respondents made a considerable effort to comply with the subpoenas, producing in a very short period over 30 documents. As I understand the appellant's case on this point, it was claimed that there was a notable absence of Musashi documents that one would have expected it to have produced in answer to the subpoena, such as those that related to the due diligence that was undertaken before the sale or its responses to the purchaser's requisitions on matters such as intellectual property. This shows, so it was asserted, that there has been failure to answer fully the subpoenas. But as counsel pointed out, a substantial number of Musashi documents, understandably, were taken over by Nestlé so that the company no longer has control of them. In the circumstances, as I have said, I do not accept the appellant's assertion that there has been a disobedience of the subpoenas. I also reject the claim that any impropriety springs from the solicitors' notation "IP in case" to which reference has been made earlier. There is no evidence at all that points to the notation having been made for the purpose of positioning Musashi into a favourable position in case his Honour's valuation was called into question, as was claimed by the appellant.

73 On a more general note, it seems to me that in considering the appellant's claim that a new valuation should be ordered in the context of the new documents, the principle that it is in the public interest that there should be finality to litigation is of considerable importance. Here, the principal events occurred essentially in 1990 and the proceedings at first instance dragged on between 1997 and 2004. The appeal was instituted in 2004. What the appellant effectively seeks now is a roving enquiry that would require an analysis of the company's trading operations in the 2004 and 2005 financial years, as well as the circumstances surrounding the Nestlé purchase.

In my view, given the circumstances of this case, such a course would be inimicable to the proper administration of justice.

74 For these reasons, I would dismiss the appeal.

75 I agree with Chernov JA. But I wish to add something to what his Honour has said.

76 From my perspective, the most difficult question raised by the appeal concerned the learned judge's choice of the date for valuation of Musashi. Two questions arose in that connection: First, was there a fault in the exercise of the judicial discretion? Second, were the judge's reasons adequate? There is an interrelationship between the questions, because, so the appellant contended, the judge did not disclose the path of reasoning whereby he arrived at the ultimate conclusion; and in consequence, the presence of error - at least in part - was undetectable.

77 As to the first question, I agree with Chernov JA, for the reasons which his Honour gives, that the judge did not misdirect himself as to the legal framework within which the discretion was to be exercised. That leaves open the other circumstances mentioned in House v The King.[48] Then it is necessary to see what the judge said about the exercise of the discretion, which brings in the second question - that is, sufficiency of reasons.

78 Before turning to what his Honour said about the date for valuation, I should

refer to some aspects of the chronology.

79 The trial of liability issues began on 4 March 2002 and concluded on 27 March. The learned judge handed down his reasons for judgment on 22 September 2003. Then it became necessary to have a trial on the issue of quantum. That was held between 16 and 23 April 2004, and his Honour handed down reasons for judgment on 1 July. It was those second reasons which fixed the date for valuation as 30 June 2002.

80 The liability trial was complex, notwithstanding that by their points of defence the respondents made admissions of oppressive conduct and stated that they agreed to an order that they purchase the appellant's shares at fair market value. It was complex in part because the appellant pursued a large number of derivative claims, most of which required a mini-trial within the trial. As Chernov JA has pointed out, the appellant failed in the majority of those claims. The trial was also complex because, in the context of the oppression claim, it called in issue the long-running, vindictive and unmeritorious conduct of the respondents[49] towards the appellant with respect to what Chernov JA has called the Visa card dispute. That matter was resolved by the learned judge in the appellant's favour. The complexity of the trial was also reflected by his Honour's reasons for judgment, which ran to 109 pages and 303 paragraphs.

81 Complexity notwithstanding, it is the fact that there was a delay of 18 months in the publication of the reasons for judgment; and, when a date for valuation was fixed, the date turned out to be three months after the liability trial ended, and 15 months before the pertinent reasons for judgment were delivered. Moreover, because there had to be a trial of the quantum issue, the valuation date turned out to be two years before the making of the order for a valuation. The circumstances were such, in a hard fought case conducted against a background of long-running bitter dispute between the parties, that selection of a date for valuation which, on a permissible view of things, appeared to advantage the respondents was bound to excite the appellant's suspicion and concern.

82 I agree with Chernov JA that a judge's obligation to provide reasons sufficient to enable the parties and an appellate court to understand the path of reasoning to the ultimate conclusion is an obligation which exists whether there is or is not delay in delivering reasons. That said, the question of sufficiency is sometimes finely balanced. I should think that the balance might shift against sufficiency in a case where the delivery of reasons was long delayed. Particularly that could be so where, for instance, the credibility of witnesses fell for consideration. As a corollary, I think that it would be wise for a judge to err on the side of caution, and to provide unarguably ample reasons for reaching conclusions about heavily-disputed issues, if - which is in any event generally undesirable - reasons are to be delivered long after trial.

83 I turn to the learned judge's reasons concerning choice of date. They can be summarized this way.

84 First, his Honour noted the submissions which each party made as to the legal framework for exercise of the discretion. His conclusion in that connection - that is, that the overriding requirement is that the valuation be fair on the facts of the particular case - was, as Chernov JA has shown, correct.

85 Second, his Honour noted in detail the competing submissions of the parties as to where the fairness test led in the particular case.[50]

86 Third, whilst in his reasons first delivered his Honour had been critical of the appellant's conduct in the course of the liability trial, plainly he took into account, in resolving the fairness issue, the objectionable conduct of the respondents towards the appellant over a long period concerning the Visa card dispute. He concluded that such conduct was one matter which produced in the appellant "an unreasonable persistence in a variety of points upon which he ultimately failed."

87 Fourth, the judge explicitly recognized the force in the submissions made for the appellant as to factors favouring a 22 September 2003 valuation date. But he was unable to make findings in the appellant's favour concerning two matters upon which the appellant had relied - failure by the respondents at any time to make him an offer reflecting the fair value of his shares; and the delay - the appellant said it was not attributable to him - in getting the claim to court.

88 Fifth, it is also to be noted that amongst the matters relied upon by the appellant was the respondents' failure to pay him any dividend.

89 It is the fact that no dividends had been paid. Initially the appellant had alleged, as part of his oppression claim, that dividends had been paid to other shareholders, but not to him. But that allegation proved to be factually incorrect. So at the end of the liability trial it was submitted on his behalf that the unfairness consisted of Musashi's directors not considering paying a dividend in respect of capital profits, or formulating a policy as to dividends.[51] His Honour found[52] that there was unfair and discriminatory treatment in the failure of the directors to consider the payment of a dividend on proper grounds when Musashi's financial position had improved "in more recent years."

90 In the event, as it seems to me, the appellant sought to rely, as a circumstance tending in favour of selection of 22 September 2003 as the date for valuation, upon a matter which had ultimately not been pressed at trial, rather than upon a different matter which had been pressed, and which had been accepted in the main by the judge.

91 Sixth, his Honour noted - not that it could have bound him - that the parties had agreed at the outset that expert valuations be made as at 5 March 2002 (the day on which the liability trial began) and 30 June 2002. At that stage, the appellant was pressing for a valuation as at 30 June 2002, the respondents for a valuation as at 5 March 2002. That made a choice of date of valuation a matter of no great moment. Emphasising the point, the appellant did not then contend for valuation as at 22 September 2003, whilst the respondents did not press for valuation as at May 1997, at which time the appellant had filed a notice of motion in the Federal Court of Australia - this being the first salvo in the barrage which culminated in the proceeding heard in the Trial Division; or as at 8 May 1998, the date on which the appellant had delivered points of claim in the Federal Court proceeding.

92 Seventh, against the background thus described, his Honour said this:

"The question for me to determine is what is the fair date in the circumstances. Regarding the matter overall, in light of the matters discussed in this and the earlier judgment, I conclude that it is fair and just that the valuation be as at 30 June 2002.

Even allowing for the need to resolve some issues, such as the garnishee matter and in the derivative proceeding, that is a fair date as between the parties. It is true that the oppression continued, and that in that respect since the earlier trial there was the spending of over $800,000 on a property in Queensland not related to Musashi's business, while at the same time paying Foody no amount at all in respect of his shareholding. Yet, even allowing Foody the benefit of the time until May 1997 when he filed his application in the Federal Court, and to delay occasioned by Re Wakim, a long time had passed until March 2002. Then, in the face of conceded oppression Foody ran both the oppression and derivative claim with the result determined in my judgment. With a due sense of proportion and reality, which Foody had lost by the time of the trial, the relatively few properly arguable issues could have had an expeditious and economic trial, with judgment, and a reference for valuation with an answer in 2002. It is sufficient to say, without repeating the matters in [116] of my earlier judgment or other matters concerning the case and its conduct, that by the time of the trial Foody's disposition precluded that occurring.

In the circumstances, and regarding the matter overall, I consider that the fair and just date of valuation is 30 June 2002. That, rather than 5 March 2002, is a sensible and convenient date. It allows a little time in favour of Foody as time in which he could have considered his position, and is a time at which there are adjusted audited accounts."

93 The matters which motivated his Honour's choice of date were there set out in part explicitly, and in part by non-specific adoption. It might be said that it would have been better if his Honour had recapitulated the matters to which he referred by adoption. As against that, it may be said with some force that there was also reason for his Honour not to recapitulate matters, for he had already published most detailed reasons resolving the liability issues - reasons which evidently impacted upon the choice of valuation date.

94 In all, I think that the matters which the learned judge brought to account are clearly enough exposed. As I perceive it, they importantly included the following:

• The fact of continuing oppression.

• The fact that some of the derivative claims had been made out.

• The fact that the appellant had contributed funds at a critical time in the history of Musashi, a time when it badly needed cash.

• The conduct of the respondents in hounding the appellant in connection with the Visa card dispute, a circumstance apt to confine the appellant to seeking to defend the proceedings brought against him, and to embitter him when it came to objectively assessing the merits of his own claim.

• The fact that, by trial, many years had passed since the appellant's employment had been terminated. Musashi had experienced a period of financial difficulty until about 1994.[53] As time passed, it had become a considerable success.[54] Its survival and eventual transformation reflected Horewood's work over the years. Any oppression claim which the appellant might have mounted and successfully prosecuted in the years shortly after his termination must have yielded a small outcome in dollar terms.

• The fact that the scale and profitability of Musashi's operations had been much built up over a long period. The appellant had played no part in that development, but sought recompense which in amount reflected the capacity and hard work of others.

• The fact that, at least shortly before the trial of liability issues began, the respondents had conceded by their points of defence[55] that there should be an order that they purchase the appellant's shares at fair market value. I say "at least shortly before the trial" because, so far as I can see, his Honour referred only to points of defence dated 1 March 2002 in that connection. Points of defence were delivered in the Federal Court proceeding;[56] and there may have been earlier points of defence in the Supreme Court proceeding. But I do not understand his Honour to have said that a like admission was made by any document other than the document of 1 March 2002.

• The fact that, in the face of the conceded entitlement to an order for purchase of his shares, the embittered and thus non-objective appellant had forced a trial in which he raised many unmeritorious allegations; this expanding the length of the trial, and the time taken in preparing reasons for judgment which addressed those allegations. Each of those circumstances contributed to the lengthy delay in publication of reasons, and thus delayed the date upon which an order could be made for the purchase of the appellant's shares.

• The circumstance, as his Honour concluded, that the appellant had made no genuine attempt to compromise the proceeding.[57]

95 In my opinion, none of the matters which I have identified was irrelevant to the choice of date of valuation.[58] Equally, no circumstance was identified which must have been considered by the judge, but was not. Again, in my opinion it cannot be said that the date which his Honour in fact selected was so unreasonable or plainly unjust as to bespeak error. In my respectful opinion, indeed, the contrary is the situation.

96 What I have said does not mean that others might not have weighed the balance differently. So, for instance, another judge might have looked at the open offer of $90,000 plus compound interest[59] made by the respondents early in the liability trial, and have considered that it reflected a position of no great compromise notwithstanding the admission made by the points of defence. But so to say simply reflects the fact that different minds might legitimately perceive a different

significance in particular circumstances.

97 What I have said about the matters which moved the learned judge in the exercise of his discretion carries this implication: that his Honour's reasons for judgment sufficiently exposed - even allowing a need for unarguably ample reasons in the particular circumstance of delay - his path of reasoning to his ultimate conclusion. That is my opinion.

98 For the reasons given by Chernov and Ashley JJA, I agree that the appeal should be dismissed.

[1] [2003] VSC 347.

[2] [2004] VSC 222.

[3] The appellant was granted leave pursuant to s 237 of the Corporations Act 2001 ("the Act") to bring such claims on behalf of the third respondent.

[4] As will be explained, his Honour also effectively determined the value of the shares in the company as at 30 June 2003 in case it was later decided that this was the proper date of valuation.

[5] The contracts of sale of the Musashi assets show that the purchasers were various companies that were related to Nestlé (Aust) Ltd, but nothing turns on this distinction for the purposes of the appeal so that, for convenience, the several purchaser companies will be referred to as "Nestlé".

[6] At the same time, Horewood held 92 fully paid shares and 60 partly paid shares and his brother, Bruce Hore, held 10 fully paid shares.

[7] [1999] HCA 27; (1999) 198 CLR 511.

[8] That company was owned by Horewood.

[9] The only other person to give evidence before his Honour was Horewood.

[10] The appellant agreed that if the Court rejected the new evidence but concluded that the proper date of valuation was not 30 June 2002, but 30 June 2003, the matters determined by the learned trial judge on the valuation question would be sufficient to enable the parties to recalculate the value of the appellant's shares in Musashi as at the latter date.

[11] [1986] Ch 211, 224.

[12] Ibid.

[13] For other examples where the court recognised that, in determining the appropriate date of valuation, the overriding consideration is fairness, see Dynasty Pty Ltd v Coombs [1995] FCA 1447; (1995) 59 FCR 122; Ford's Principles of Company Law (10th ed), [11.493]; Smith Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd [2004] FCAFC 153; (2004) 207 ALR 136, 146; Sanford v Sanford Courier Service Pty Ltd (1986) 10 ACLR 549, 562 (Waddell CJ in Eq).

[14] [1959] AC 324.

[15] [1970] 1 WLR 1194. The finding of oppression was overturned on appeal: see In re Jermyn Street Turkish Baths Ltd [1971] 1 WLR 1042.

[16] [1983] 1 WLR 927.

[17] See, eg, Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, 441 (Meagher JA); Sun Alliance Insurance Ltd v Massoud [1989] VicRp 2; [1989] VR 8, 18 (Gray J); Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No. 2) [2002] VSCA 189; (2002) 6 VR 1, 31 (Charles, Buchanan & Chernov JJA); Major Engineering Pty Ltd v Helios Electroheat Pty Ltd [2006] VSCA 107, [18] (Chernov JA); Spence v Gomez [2006] VSCA 48, [64]-[66] (Nettle JA); Hunter v Transport Accident Commission [2005] VSCA 1, [21]-[22] (Nettle JA); Franklin v Ubaldi Foods Pty Ltd [2005] VSCA 317, [38] (Ashley JA).

[18] See, eg, Shire of Wakool v Walters [2005] VSCA 216.

[19] His Honour considered that this period was "a long time" even if an allowance were made for the period up to May 1997 when the appellant filed the proceeding in the Federal Court.

[20] See Hartley Poynton Ltd v Ali [2005] VSCA 53; (2005) 11 VR 568, 618 (Ormiston JA).

[21] [1993] 2 VR 328, 389 (Fullagar, Marks and Phillips JJ).

[22] See Dynasty Pty Ltd v Coombs [1995] FCA 1447; (1995) 59 FCR 122, 145.

[23] See, eg, State of Victoria v Bacon [1998] 4 VR 269, 282 (Winneke P with whom Ormiston and Phillips JJA agreed).

[24] Apart from this document, there is no indication in the evidence what his relationship was with the company.

[25] The material shows that there were other agreements entered into between the parties at or about that time that relate to the sale of the Musashi assets to Nestlé such as the Novation Agreement of 27 October 2005 and the Transfer Agreement of November 2005, but they are not relevant for present purposes.

[26] See:

(a) Business Purchase Agreement: clauses 1.3; 1.6; 2.1; 6.1; 31.1 definition of "assets", "recipes" (Annexure C), "Intellectual Property Purchase Agreement", Schedule 2 (similar to Schedules 1, 3 of the Intellectual Property Purchase Agreement); Schedule 10 - 8.1 and Schedule 15.

(b) Intellectual Purchase Property Agreement: clauses 1.3; 2, 2.1 definition of "Australian Intellectual Property", "Australian Remaining Intellectual Property", "Business Intellectual Property"; "Business Purchase Agreement", "Horewood Intellectual Property" and "Recipes" (Annexure A); Schedule 1 and Schedule 3**.**

[27] (1991) 178 CLR 134, 141-2 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ).

[28] Unlike the position in other jurisdictions, the Rule does not draw a distinction between the new evidence going to matters that existed before trial and matters arising thereafter. See, eg, s 75A of the Supreme Court Act 1970 (NSW) and Rules of the Supreme Court, O 59 r 10(2).

[29] See Doherty v Liverpool District Hospital (1991) 22 NSWLR 284, 293 ("Doherty") (Gleeson CJ); Williams' Civil Procedure , [I 64.22.20].

[30] (1998) 197 CLR 172, 185 (Gaudron J), 199 (McHugh J), 201 (Gummow and Callinan JJ). Their Honours were considering a like rule under the Family Law Act 1975 (Cth).

[31] Williams' Civil Procedure, [I 64.22.25].

[32] McCann v Parsons [1954] HCA 70; (1954) 93 CLR 418, 430-1 (Dixon CJ, Fullagar, Kitto and Taylor JJ); Greater Wollongong City Council v Cowan, [1955] HCA 16; (1955) 93 CLR 435, 444 (Dixon CJ); Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 141 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ).

[33] See, eg, Orr v Holmes [1948] HCA 16; (1948) 76 CLR 632, 642 (Dixon J); Greater Wollongong City Council v Cowan [1955] HCA 16; (1955) 93 CLR 435, 444 (Dixon CJ); Atkins v National Australia Bank Ltd (1994) 34 NSWLR 155, 160 (Clarke JA).

[34] Greater Wollongong City Council v Cowan [1955] HCA 16; (1955) 93 CLR 435, 444.

[35] [1948] HCA 16; (1948) 76 CLR 632, 642.

[36] (1991) 178 CLR 134, 141 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ) (citations omitted).

[37] Ibid, 142.

[38] [1971] AC 666.

[39] Ibid, 680.

[40] Ibid, 679 (citing Murphy v Stone-Wallwork (Charlton) Ltd [1969] 1 WLR 1023, 1036 (Lord Pearson)).

[41] Ibid, 679-680 (citations omitted).

[42] Ibid, 678.

[43] (1991) 22 NSWLR 284 ("Doherty").

[44] Ibid 296.

[45] Ibid.

[46] [1998] 3 VR 833 (Brooking JA delivered the leading judgment. Winneke P, Ormiston, Phillips and Charles JJA agreed on this point).

[47] Ibid, 853.

[48] [1936] HCA 40; (1936) 55 CLR 499 at 505.

[49] Horewood being the leading protagonist. I will not repeat this observation when later referring to the issue.

[50] Reasons, 1 July 2004, [67] and [71] [72].

[51] Reasons, 22 September 2003, [287]-[288].

[52] Ibid, [289].

[53] Reasons 22 September, [20].

[54] By 1997 it was apparently prospering. Ibid, [21] [22]. That was the situation at trial. Ibid, [23] [24].

[55] Dated 1 March 2002, compare reasons 22 September 2003, [91].

[56] Reasons 22 September 2003, [84].

[57] Reasons 22 September 2003, [116].

[58] I specifically agree with what Chernov JA has said with respect to the relevance of the appellant's conduct of the trial at [43 ]-[44].

[59] In all, the offer amounted to $481,523. It may have been an "all in" offer. See Reasons 22 September 2003, [105], which admit of two interpretations. If the offer was "all in" - perhaps the particular amount suggests to the contrary - it would have the less represented a real attempt to compromise the appellant's claim.