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Category: Principal judgment

Parties: Brooke Kennedy (Plaintiff)
Sarah Elizabeth Franks (First Defendant)
Yamari Ochre Pty Ltd (Second Defendant)

Representation: Counsel:
AB Emmerson / M Bui (Plaintiff)
A Di Francesco (First Defendant)
Solicitors:
Ten4Law (Plaintiff)
Kreisson Legal (First Defendant)

File Number(s): 2024/107935

Judgment

Nature of the application

1. By Originating Process filed on 21 March 2024, the Plaintiff, Ms Brooke Kennedy, applied for a range of relief in respect of a company which she is a shareholder, Yamari Ochre Pty Ltd (“Yamari”), the Second Defendant in the proceedings. Ms Sarah Franks, the other shareholder in Yamari, is the First Defendant in the proceedings. Ms Kennedy initially sought relief concerning her removal as a director of Yamari in January 2023. That relief is no longer pressed where Yamari is now in liquidation. As events have developed, the relief sought by Ms Kennedy is now, primarily, an order that Ms Franks buy her shares in Yamari (although it is now in liquidation) for their fair value at an earlier date, by reason of oppression for the purposes of s 233 of the Corporations Act 2001 (Cth) (“Act”). For completeness, Ms Kennedy also seeks an order under s 468A(4) of the Act to facilitate the transfer of her shares in Yamari to Ms Franks on payment of fair value for those shares, although the applicable provision is likely s 493A of the Act where Yamari is in voluntary rather than Court-ordered winding up. Ms Kennedy initially also sought a winding up order in the Originating Process but that application is not pressed where Yamari is now in liquidation.

Affidavit evidence

2. I now turn to the affidavit evidence and cross-examination, although I will deal with the affidavit evidence as to events of particular significance in setting out the chronology of events below. In addressing this evidence, I have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318–319; Varma v Varma [2010] NSWSC 786 at [424]–[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10]. I also bear in mind the observations of Bell P (as the Chief Justice then was, with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]–[28]:

“Whilst the quality and accuracy of oral recollection of actual conversations should be treated with care and caution given the fallibility of human memory (of which there has been a growing appreciation within the judiciary in recent decades), oral testimony may still be of value and importance, as was recognised in the nuanced observations of Leggatt J (as his Lordship then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22] (Gestmin):

“the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.” [emphasis added]

Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents.”

3. I have here drawn on my summary of the applicable principles in K*&A Laird (N.S.W.) Pty Ltd (in liq) v Aidzan Pty Ltd (in liq)* [2023] NSWSC 603 at [40]ff, Re Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547 at [49]ff, Re 1derful Pty Ltd [2024] NSWSC 1414 at [7]ff and Re Mobius Distilling Pty Ltd (in liq) [2025] NSWSC 539 (“Mobius Distilling”). I have also borne in mind the cautionary observations of Basten JA (Handley JA agreeing) in Sangha v Baxter [2009] NSWCA 78 at [155], applied by Nixon J in Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd [2024] NSWSC 1293 at [42], that:

“Because a witness has not told the truth with respect to a particular matter does not mean that other parts of his or her evidence are untruthful. Where possible, an assessment should be made of the reasons for the untruthfulness in order to see if other aspects of the evidence are likely to be infected by the same concern. Further, evidence may be rejected because it is apparently unreliable, possibly mistaken or deliberately untruthful or capable of being categorised in a variety of ways which are unlikely to be capable of clear delineation in some cases.

Further, findings of credibility are not usually findings with respect to factual issues in the case, but are rather subsidiary findings on the way to determination of issues. Like many aspects of the evidence in a trial, the evidence of a witness who is believed to have lied in a particular respect, will nevertheless be able to bear some weight and should be placed into a balance, with other material evidence, before a conclusion is reached in relation to a critical fact. The rejection of a witness in total, absent corroboration is likely to mean that, even where corroborated, little attention will be paid to the evidence of the witness and less to the possible consequences which might flow from the fact that particular evidence is shown to be truthful: see generally, R v Collins [2007] NSWCA 122 at [44].”

4. Ms Kennedy reads her affidavit dated 20 March 2024. She refers to her professional qualifications which include an undergraduate degree in design and experience in shopfitting and project management. She refers to her employment by Yamari between 2018 and 2022 and the circumstances surrounding the termination of her employment. She notes (Kennedy 20.3.24 [11]) that, prior to her employment with Yamari, she worked for a third party and initially took a pay cut to take employment with Yamari from 2018. Ms Kennedy’s evidence (Kennedy 20.3.24 [14]) is that Yamari was established to be majority owned by Aboriginal and/or Torres Strait Islander peoples so as to meet conditions required to receive a Supply Nation certification, which would be an advantage in tenders, particularly for projects receiving Commonwealth funding. Her evidence is that Yamari’s primary business related to producing and installing signage and supplying promotional products (Kennedy 20.3.24 [15], [17]) which Yamari primarily sold to large corporate, construction and government organisations. There appears to be no dispute as to those matters. She also explained the process by which sales were generated and made while she worked for Yamari and she pointed (Kennedy 20.3.24 [21]) to an increase in revenue and profit earned by Yamari in the financial years from 2016 until she was, in effect, excluded from Yamari by Ms Franks in the circumstances which I address below.

5. Ms Kennedy also outlined the investment made by her husband, Mr Ben Browning, in Yamari at the time it was established (Kennedy 20.3.24 [22]ff). Her evidence was that Mr Browning, throughout his time as a shareholder and after she acquired his shares, allowed Yamari to occupy a small area in the business premises of a company in which he had an interest, Corporate Branding Solutions Pty Ltd t/as 1800 For Promo (“1800 For Promo”), at no charge (until early 2022) and permitted the use of internet and 1800 For Promo’s factory equipment and staff for some matters. There was a degree of dispute as to the extent of the support provided by 1800 For Promo and, in particular, whether products were to be supplied at cost or at trade or wholesale value. Mr Browning, in cross-examination, initially expressed the view that 1800 For Promo’s support for Yamari was somewhat less than outlined by Mrs Kennedy in her affidavit. Ultimately, that evidence has little significance for the question whether oppression is established, although it will have some significance to the valuation of Ms Kennedy’s shares in Yamari.

6. Ms Kennedy in turn outlined the circumstances in which she began employment with Yamari in January 2018 (Kennedy 20.3.24 [32]ff) and the work which she undertook with Yamari. She refers to the transfer of Mr Browning’s shares in Yamari to her in March 2018 and to her appointment as a director of Yamari at that point, to which Ms Franks consented (Kennedy 20.3.24 [40]ff). Her evidence (Kennedy 20.3.24 [43]) is that, when she acquired Mr Browning’s shares:

“I did so on the understanding and expectation that I would continue to:

(a) Be employed by the Company and draw a salary;

(b) Participate in the management of the Company as a director; and

(c) I would continue to receive a profit split as a shareholder, as paid through director fees rather than dividends.”

7. Her evidence is also (Kennedy 20.3.24 [44]) that, and it appears to be common ground that:

“I remain the current owner [of] 49% of the issued share capital in the Company. I own those shares legally and beneficially. Since I was removed as a director, I have not received any payments out of the profit of the Company nor have I been provided any information, financial or otherwise, regarding the Company’s operations.”

8. Ms Kennedy also refers to earlier occasions on which Mr Franks or Ms Franks had withdrawn funds from Yamari’s bank account without consent and plainly without any resolution of the directors of Yamari authorising that withdrawal. Ultimately, little turns on that historical conduct, given the findings that I reach below as to oppression from December 2022.

9. Ms Kennedy also referred to the further assistance provided by Mr Browning and 1800 For Promo to Yamari after Mr Browning had resigned as a director and transferred his shares to her; the matters that arose in the period prior to her dismissal as an employee of Yamari; and her subsequent removal as a director of Yamari (Kennedy 20.3.24 [56]ff). In particular, Ms Kennedy gave evidence of the circumstances in which Yamari advertised for another employee in late 2022, where Ms Kennedy was pregnant and likely to go on maternity leave in early 2023 and to a disagreement that then arose. Ms Kennedy also gave evidence of a highly contentious meeting on 9 December 2022 and as to subsequent developments which I address in dealing with the chronology of events below.

10. Ms Kennedy was cross-examined at considerable length. It was plain that she had significant industry experience, although she was, understandably, less sophisticated in dealing with legal concepts. She was generally prepared to make appropriate concessions, including concessions against interest in her cross-examination. The differences in her and Mr Browning’s evidence as to, for example, the extent of the assistance provided by 1800 For Promo to Yamari support the integrity of their respective evidence. Mr Emmerson, with whom Mr Bui appears for Ms Kennedy, submits that Ms Kennedy was a truthful witness and I largely accept that proposition with a possible qualification in respect of the circumstances that she deleted, or sought to delete, files which she contends were duplicate files from Yamari’s computer system after the 9 December meeting and the breakdown in the parties’ relationships. I return to that matter below.

11. Ms Franks reads her affidavit dated 31 January 2025. She there contends that Mr Franks is the Chief Executive Officer of Yamari, although there is no evidence he was either appointed to that position or performed the duties that would ordinarily be performed by a chief executive officer of a company. Ms Franks also acknowledges Ms Kennedy’s employment with Yamari which was terminated in December 2022. Ms Franks also outlines her (Ms Franks’) role within Yamari, at least as it has existed before Ms Kennedy’s employment was terminated and she was removed as a director of Yamari. Ms Franks also refers to the designation of Yamari as a Supply Nation certified supplier and to the resulting competitive advantage when Yamari competes for contracts and tenders for work (Ms Franks 31.1.25 [16]–[17]), although that advantage has plainly now ceased with Yamari’s liquidation.

12. Ms Franks refers to the circumstances in which Yamari was incorporated and refers to a conversation with her husband, Mr Franks, which recognised that the minority shareholder would need to have industry experience, which Mr and Ms Franks did not then have, and that:

“The idea is that within five or so years, we’ll be completely independent and won’t need to rely on the minority’s resources.”

13. Ms Franks also refers to the basis on which Mr Franks then expected that the minority would charge for their input into the business and to the discussions which took place between Mr Franks and Mr Browning in respect of establishing Yamari. Ms Franks there denies (Ms Franks 31.1.25 [33]) that Yamari adopted a constitution, although that matter was admitted in her Defence. Little turns upon that question as matters have developed in these proceedings.

14. Ms Franks refers to what she had been told by Mr Franks as to an “arrangement” by which 1800 For Promo would provide workspace for Yamari at no cost to Yamari in 1800 For Promo’s business premises. She also refers to a conversation with Mr Franks in which he referred to an arrangement by which 1800 For Promo would assist Yamari with fulfilling projects and only charge the cost price of doing so, which was not reduced to writing. There is no suggestion that either Yamari or 1800 For Promo were party to that arrangement; there is no suggestion that Yamari or Mr Franks gave any consideration for it; and, if it existed, it was at best an informal understanding as between Mr Franks and Mr Browning. Ms Franks also refers (Franks 31.1.25 [49]ff) to documents which she suggests indicate a “breach” of the “At Cost Services Arrangement”, on the implicit assumption that that arrangement was binding between relevant parties.

15. Ms Franks also refers to the records and communications platforms maintained by Yamari (Ms Franks 31.1.25 [51]ff) and to the circumstances in which Ms Kennedy acquired shares in Yamari and was appointed as a director of Yamari. She also refers to Ms Kennedy’s employment by Yamari and there appears to be no significant dispute as to the range of tasks which Ms Kennedy undertook for Yamari (see, for example, Ms Franks 31.1.25 [78]ff). Ms Franks’ evidence is that she would assist Ms Kennedy in her role from time to time, although that assistance was plainly limited by the fact that it is common ground that Ms Franks had a range of other commitments, and spent no more than one day a fortnight in Yamari’s business until after Ms Kennedy’s employment was terminated and Mrs Kennedy was removed as a director of Yamari. Ms Franks also refers (Ms Franks 31.1.25 [88]ff) to a subsequent breakdown of the relationship with Mr Browning and Ms Kennedy, and particularly to the meeting on 9 December 2022 to which I will refer in dealing with the chronology below, and to subsequent events. Ms Franks acknowledged in cross-examination (T212) that she had recognised that she did not need to buy out Ms Kennedy’s shares in Yamari to have control of Yamari and all that was needed to gain that control was to remove Ms Kennedy as an employee and director, as she did in the circumstances noted below.

16. Ms Franks also gave evidence of what she described as Ms Kennedy’s “misconduct” although parts of that evidence were not read; parts of it were admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) only as submission; and parts of it were rejected where the allegations raised had not been pleaded and could not be fairly determined without a pleading of the material facts of those allegations. Ms Franks then addressed the termination of Ms Kennedy’s employment; a suggestion of “unauthorised retention” of Yamari’s property and information by Ms Kennedy; and Ms Kennedy’s removal as a director of Yamari. Ms Franks also addressed (Ms Franks 31.1.2025 [108]–[111]) a “hold” placed by Yamari’s bank on its bank account at Ms Kennedy’s request. She did not there disclose that she and Mr Franks had been able to pay wages to employees from Yamari’s account, despite the hold on that account, although they had chosen to pay only one employee’s wages. Little turns on that matter for present purposes.

17. Ms Franks also responded to allegations of unauthorised expenses, payments and loans on her part. It appears that those expenses, payments and loans were not authorised by any formal corporate process but little turns on that where, by that time, Ms Kennedy had already been excluded from any role As an employee or director in Yamari. Ms Franks also referred to loan agreements subsequently entered into by Yamari which she says were entered into with a company associated with her husband, although the relevant documents (Ex J1, 1686) record loans made by Mr Franks personally to Yamari.

18. I recognise that Ms Franks likely gave truthful evidence as to issues which were less obviously controversial. There were occasions on which Ms Franks was evasive or non-responsive in her answers, for example, when she was questioned as to why she had not responded to Ms Kennedy’s attempt to negotiate a sale of her shares in Yamari to Ms Franks, and when she was questioned as to leasing arrangements between her company, SEF Leasing Pty Ltd, and Yamari, after she had excluded Ms Kennedy from involvement with Yamari. Other aspects of Ms Franks’ evidence as to important matters raise concerns as to her credit and the reliability of her evidence. In particular, I do not accept her attempt to reinterpret Mr Franks’ statement at the 9 December 2020 meeting as to his and her financial capacity to buy out Ms Kennedy’s shares and I reject her evidence that she had any fear of Ms Kennedy that prevented her meeting with Ms Kennedy at Yamari’s bank to remove the hold on Yamari’s bank account after 9 December 2022. It is not necessary to reach a wider finding as to Ms Franks’ credit in order to determine the proceedings; had it been necessary to do so, I would have approached her evidence as to controversial matters with caution.

19. Ms Franks also read an affidavit dated 10 February 2025 of her husband, Mr Franks. He also described himself as the Chief Executive Officer of Yamari although, as I had noted above, there is no evidence that he was appointed to that position, at least prior to Ms Kennedy’s exclusion from the company. Mr Franks referred to the Commonwealth Government’s having established minimum requirements of Aboriginal and/or Torres Strait Islander peoples’ participation in larger contracts and to his approach to Mr Browning to join with him in establishing a signage contractor which would satisfy those guidelines, with an Aboriginal and/or Torres Strait Islander peoples majority shareholder, and to his having told Mr Browning that that shareholder would need to have control of the day-to-day finances and day-to-day management of Yamari (Mr Franks 10.2.25 [14]). Mr Franks refers to a subsequent conversation in which he told Mr Browning that Ms Franks:

“has to have the majority control and decision-making and she would manage the books and records, finances, contracts, bank accounts, staffing and employment and those kind of things.”

20. Mr Franks in turn referred to the development of Yamari’s business (Mr Franks 10.2.25 [22]) and says that he engaged in work as Yamari’s business development manager and chief executive officer, although I have noted above that there is no evidence that he was appointed to that position. Mr Franks claims to have introduced several clients to Yamari (Franks 10.2.25 [24]); there is dispute as to which clients he introduced but nothing turns on that for present purposes. Mr Franks also refers (Mr Franks10.2.25 [28]) to the fact of Mr Browning’s transfer of his shares to Ms Kennedy and to her becoming a director of Yamari on 23 March 2018. He also refers (Mr Franks 10.2.25 [30]) to his being unhappy that Mr Browning seemed to be making unilateral decisions about how Yamari was being run and to his having spoken to Ms Franks about his concerns.

21. Mr Franks’ evidence is that, in July 2022, during a meeting with Ms Kennedy, Mr Browning and Ms Franks, Ms Kennedy said “I’m not enjoying this. I’m over it. I’m tired. I want to do something different.” Mr Franks’ evidence is also that there was then a discussion about replacing Ms Kennedy. There is a dispute as to these matters which it also not necessary to address, since it is plain enough that Ms Kennedy did not consent either to the termination of her employment for alleged misconduct in December 2022 or her subsequent removal as a director of Yamari or to her exclusion from any practical participation in Yamari without any compensation for the value of her shares. Mr Franks also refers to inquiries he made with a view to Yamari obtaining its own premises but nothing turns on that matter for present purposes. Mr Franks also refers to an email dated 18 November 2022 from Ms Franks to an accountant requesting and obtaining a report of how much Yamari had paid to 1800 For Promo in the prior 12 months period, which I address in the chronology below, and to subsequent communications concerning that matter.

22. Mr Frank’s evidence (Mr Franks 10.2.25 [53]) is that:

“In November 2022 I became aware that Supply Nation was conducting audits of indigenous joint ventures to ensure that they complied with the conditions of their Supply Nation Certification. I started to take steps to ensure that Yamari was compliant. I had been through a Supply Nation audit before with another joint venture company, Glad Indigenous and I knew that the process was rigorous. I also knew that Supply Nation would only deal with the indigenous owner and that the indigenous owner had to demonstrate the control and management of the company and that they knew what the Company was doing – for example, knowledge of the accounts, the suppliers, and the projects.”

I note, in passing, that it would have been open to Yamari taken steps to comply with the conditions of its Supply Nation certification before Mr Franks formed a concern as to an imminent audit.

23. Mr Franks also refers to having been told, in early November 2022, that Ms Kennedy was pregnant and to his having formed the view that:

“Yamari needed to employ an additional person to replace [Ms Kennedy] and to assist [another employee]”.

I have noted above that there is a dispute as to whether Ms Kennedy had consented to her replacement, as distinct from wishing to take maternity leave.

24. Mr Franks also refers to an interview of a potential employee (“potential employee”); a disagreement between him and Ms Franks on the one hand and Mr Browning and Ms Kennedy on the other as to the suitability of the potential employee and the amount she should be paid; and the subsequent meeting on 9 December 2022 which I address below. Mr Franks also refers to a number of documents which he contends were deleted from Yamari’s computer system after that meeting; again, little turns upon that where it is common ground that the parties’ relationship had then broken down and that conduct could not materially affect the assessment of steps which Ms Franks then took in respect of the control of Yamari. Mr Franks also addresses (Mr Franks 10.2.25 [86]) other matters of which he complains, including several purchase orders to 1800 Four Promo.

25. Mr Emmerson invited the Court to draw an inference that the evidence of several witnesses not called by Ms Franks, including Mr Martin (as to whom an affidavit was served by Ms Franks), Ms Booth, Mr Jones and an accountant, Mr Rahman, would not have assisted her: Jones v Dunkel (1959) 101 CLR 298. I accept that inference may be available but it is not necessary to draw it in order to determine the proceedings.

26. Ms Kennedy reads her affidavit dated 28 March 2025 in reply, which responds to Ms Franks’ evidence, and again addresses her role at Yamari, the manner of operations of Yamari, the breakdown of her relationship with Mr and Ms Franks and the allegations of misconduct against her. Parts of the evidence to which Ms Kennedy responded were not admitted because they did not relate to any matters that had been pleaded in Ms Frank’s Defence and there are disputes between the parties as to other aspects of that evidence. It is largely not necessary to address those disputes in order to determine the proceedings.

27. Ms Kennedy also read the affidavit dated 28 March 2025 of her husband, Mr Browning, in reply. He there addresses his initial meeting with Mr Franks in 2014 (Browning 28.3.25 [10]ff) and describes, at length, the manner in which Yamari operated (Browning 28.3.25 [22]ff). He denied any agreement that 1800 For Promo would provide services for products “at cost” to Yamari, although it appears to be common ground that 1800 For Promo would and did provide goods without a mark-up, at a wholesale or “trade” price, and that position is reflected in documentation that is in evidence. Mr Browning in turn identifies his concerns about Mr Franks’ behaviour (Browning 28.3.25 [57]ff), but it is not necessary to address those matters further where it is common ground that the relationship between the parties has broken down. He responds to Mr Franks and Ms Franks’ account for the meeting of 9 December 2022 and other aspects of their evidence. It seemed to me that Mr Browning, although plainly supportive of his wife’s claim, was also generally an honest witness doing his best to assist the Court.

28. Ms Kennedy also read the affidavit dated 27 March 2025 of Mr Ross in reply. He there set out his observations of part of the 9 December meeting where he had, to his credit, sought to intervene when he observed that matters had become heated between the parties. Mr Ross was cross-examined and presented as an honest witness doing his best to assist the Court. It is not necessary to address his evidence further where it is not necessary to reach findings as to what occurred at that meeting.

29. Ms Kennedy also read the affidavit dated 26 March 2025 of Ms Metters in reply. She is a bookkeeper who previously worked with Yamari and now works with 1800 For Promo. Her evidence is that she was asked by Ms Kennedy to estimate the cost (including, for example, superannuation) of paying a higher salary to the potential employee to whom I referred above and, in order to do so, changed Ms Kennedy’s salary recorded in Yamari’s Xero account to that higher amount, which would cause Xero to calculate that costs on a higher salary base, and then forgot to reverse that change in Xero. Ms Metters’ evidence, which I accept, is that she was not asked by Ms Kennedy to pay her a higher salary and that the change she had made in the information held on Xero did not affect the amount that was in fact paid to Ms Kennedy, which was determined by a funds transfer direction given to Yamari’s bank which had never been altered. Ms Metters was cross-examined at some length and was plainly an honest witness. She there explained the circumstances in which she made an error which has in turn been seized on by Mr and Ms Franks to make an allegation of misconduct against Ms Kennedy. I accept Ms Metters’ evidence in that respect.

The matters in issue and chronology

30. The matters in issue and the extent of the factual dispute emerge from Ms Kennedy’s Amended Statement of Claim filed on 4 December 2025 (“ASC”) and Ms Frank’s Further Amended Defence to the ASC filed on 1 September 2025 (“Defence”). It is common ground (ASC [1], Defence [1]) that Ms Kennedy is a former director of Yamari; is married to Mr Browning, who was previously a director and shareholder of Yamari; owns 49% of the fully paid ordinary shares issued in Yamari; and is a member and shareholder of Yamari within the meaning of s 231 of the Act. It is also common ground (ASC [2], Defence [2]) that Ms Franks is the current sole director of Yamari and owns 51% of the ordinary issued shares in Yamari. It is common ground (ASC [3], Defence [3]) that, at least prior to its liquidation, Yamari’s business included work in the production and installation of signage, as well as other promotion products, although Ms Franks contends that it also included other matters. Yamari was established to obtain a Supply Nation certification (ASC [6], Defence [6]), or at least that was its founders’ intention and that required that Yamari be majority owned by Aboriginal and/or Torres Strait Islander persons, relevantly Ms Franks.

31. It is also broadly common ground (ASC [7], Defence [7]) that Yamari was required to be managed by or under the direction of the directors, whether by force of s 198A of the Act or under cl 23.1 of its constitution, if it had adopted that constitution. Clause 12.1 of Yamari’s constitution (if adopted) sets out the circumstances in which one member of Yamari could transfer its shares, requiring the directors’ approval to that transfer. Clause 16 of that constitution requires a selling shareholder to offer its shares for sale to other members, after giving notice that identified a buyer of the shares and the price per share offered by the buyer. In practical terms, that further constrained Ms Kennedy’s ability to sell her shares, since a potential buyer would recognise that its efforts to negotiate a purchase would be wasted if Ms Franks then elected to acquire those shares on the same terms. There is a dispute as to whether the constitution took effect and a dispute as whether the Defence should be construed as conveying Ms Frank’s approval for a transfer of Ms Kennedy’s shares to a third party. Nothing turns on that dispute where I will find below that there was no realistic possibility that a third party purchaser would wish to acquire Ms Kennedy’s shares in Yamari once she had been terminated as an employee of Yamari and removed as a director of Yamari; and any rational purchaser of her shares would recognise (as Ms Franks herself recognised, as she conceded in cross-examination) that Ms Franks could (and, I interpolate, did) take control of Yamari to the exclusion of Ms Kennedy or any purchaser of her shares by taking those steps.

32. It is also common ground (ASC [8], Defence [8]) that Yamari’s original directors and shareholders were Mr Browning and Ms Franks. There is a dispute (ASC [9], Defence [9]) as to whether profits would be distributed on a 50:50 basis or in accordance with the parties’ shareholdings but little turns on that for present purposes. It is common ground (ASC [10], Defence [10]) that Mr Browning contributed to Yamari approximately $10,000 by way of capital contribution at the time of acquiring his shares in Yamari. There is a dispute as to the basis on which 1800 For Promo provided other services to Yamari. There is evidence suggesting that the parties understood their relationship to be a form of “joint venture”, as indicated by an email dated 4 September 2014 from Mr Franks to Mr Browning under the heading “JV” (Ex J1, 588).

33. As early as 2018, difficulties had arisen between the parties, apparently by reason of unauthorised withdrawal of monies by Mr Franks or Ms Franks. By email dated 12 March 2018 (Ex J1, 756), Mr Browning wrote to Mr Franks:

“Obviously, I have discussed with you on numerous occasions the missing funds from the Yamari account and I wanted to know where this is at. It’s really dragging on now and its not healthy for the partnership.

Are there any problems I need to be aware of?

Is there any information you are missing preventing the return of the money?

Recently I have noticed some new smaller amounts being spent from the account, and we need to set some clear rules for the account spending including purchase orders for all expenses so they can be allocated and reconciled.”

Mr Browning also suggested weekly meetings for Yamari, where key decisions would be made and strategies formed for future growth of the business. That approach would have allowed both directors and shareholders to be involved in Yamari’s management but it does not seem to have been implemented.

34. It is common ground (ASC [11], Defence [11]) that, on or about 23 March 2018, with Ms Frank’s consent, Mr Browning transferred all his shares to Ms Kennedy and Ms Kennedy was appointed a director of Yamari. Ms Kennedy contends and Ms Franks does not admit (ASC [12], Defence [12]) that she acquired her 49% holding in Yamari with the understanding and reasonable and legitimate expectation that as a shareholder she would continue to be employed by Yamari and draw a salary; participate in the management of Yamari as a director; and receive a profit split as a shareholder, to be paid as director fees rather than dividends. That was at least the parties’ practice until their relationship broke down, Ms Kennedy’s employment was terminated and she was removed as a director of Yamari.

35. It is also common ground (ASC [13], Defence [13]) that, shortly after her appointment as a director of Yamari, Ms Kennedy took over responsibility for paying supplier invoices and engaged a bookkeeper to process the wages, reconcile and complete business activity statements; and (ASC [17], Defence [17]) that, from about 8 January 2018 until 22 December 2022, Ms Kennedy was employed on a full-time basis by Yamari. There is a dispute as to whether her position changed and she became General Manager or Managing Director of Yamari in that period. It is also common ground (ASC [18], Defence [18]) that Ms Kennedy did not have a formal contract of employment with Yamari; and she undertook a range of tasks and was at least sometimes involved in the payment of invoices, although there is a dispute as to whether she undertook accounting and bookkeeping duties. There is also a dispute (ASC [19], Defence [19]) as to the extent to which Ms Kennedy worked autonomously and was not subject to direct supervision and as to the extent of Ms Franks’ input into Yamari’s business and its day-to-day operations. Little turns on these matters for the question whether oppression is established here. Ms Kennedy contends and Ms Franks denies (ASC [20], Defence [20]) that, in September 2018, Ms Franks informed Ms Kennedy that she lacked the necessary industry experience to assist Yamari in providing the services to its customers. From 2019, Yamari paid directors’ fees to Ms Kennedy and Ms Franks, initially of $10,000 per quarter, increased from April 2022 to $15,000 per quarter. Ms Kennedy’s evidence was that those fees were paid instead of dividends being paid by Yamari (T52–53).

36. It is plain that the Supply Nation certification and Yamari’s indigenous links were used in promoting its products. By an email dated 21 August 2020 to ANZ Bank, Ms Kennedy, who there incorrectly described herself as “managing director” of Yamari, described the scope of Yamari’s product offerings and observed that:

“As [Mr Browning] has mentioned, Yamari Ochre Signs is a proud majority Aboriginal owned and operated signs company. We are a Supply Nation Certified and Veteran Owned and Founded business specialising in construction and development signage, uniforms and branded promotional products.”

In some other correspondence, Ms Kennedy seems to have described herself as “Operations Manager” for Yamari, the position that she originally occupied with Yamari (for example, Ex J1, 1016).

37. By email dated 9 November 2020 to Mr Franks (Ex J1, 973), Mr Browning raised the question of Ms Kennedy’s wage and also sought payment for work that he was undertaking for Yamari as follows:

“As our projects grow in scale our supplier list does including installers. Up until recently I have in addition to the administration, meetings and general duties I do for Yamari. I have been required to be onsite to run the project. The hours are getting too long and regular, I can’t keep giving my time away for this. There is money to pay the installers and myself in the budget so I’ll need to charge for my time onsite moving forward.”

38. It appears that Ms Kennedy, trading under the name BLK Designs, subsequently billed Yamari for installation work undertaken by Mr Kennedy (for example, Ex J1, 1023, 1058). I accept Ms Kennedy and Mr Browning’s evidence that that course was taken for convenience, where Ms Kennedy had an Australian business number and Mr Browning did not; and where those services would not be billed by 1800 For Promo where they were undertaken in Mr Browning’s personal time and another shareholder had an interest with Mr Browning in 1800m for Promo. It is not necessary to reach a final determination as to this matter, where no claim for breach arising from charges for Mr Browning’s time was pleaded in Ms Franks’ Defence, and that matter would not have been material to the outcome of the proceedings. However, I would readily infer that Mr Franks and Ms Franks had acquiesced in Mr Browning charging for his time, where the alternative would have been to run the risk that his installation work would not have been available to Yamari.

39. Ms Franks contends (Defence [22]) that, in July 2022, Ms Kennedy informed Ms Franks that she wished to cease her employment with Yamari. There is also a dispute (ASC [21], Defence [21]) as to the content of a conversation in November 2022 and as to subsequent events. In November 2022, Yamari put an advertisement for a signage account manager on a third party site (Ex J1, 1176).

40. By email dated 18 November 2022, Ms Franks asked an accountant, Mr Jones, for a report for the last 12 months to see how much Yamari had paid to 1800 For Promo (Ex J1, 1181). Mr Jones’ response on the same day (Ex J1, 1182), provided a detailed record of payments by Yamari to 1800 For Promo for two overlapping periods, for the 12 months to 31 October 2022 and for the 12 months to 30 June 2022.

41. By an email dated 30 November 2022 to Ms Kennedy, Mr Browning and Ms Franks (Ex J1, 1199), Mr Franks identified issues which he suggested were likely to arise in a Supply Nation audit of Yamari and noted that the interview would only be with the Aboriginal and/or Torres Strait Islander partners, implicitly Ms Franks, who would need to cover off:

“● Day-to-day operations

Banking requires dural control over bank account. [Ms Franks] and/or I will need to be able to demonstrate that we understand and are in a position to send, rec[ei]ve and pay invoices to Man[a]ge the day-to-day. We will need to implement a two approval on all banking payments. I understand this is now how things currently operate so we will need to arrange this.

● Demonstrate the management and decision-making in the company, these means regular board meetings, voting at meetings etc.

● Some of the discussion I had today was the age of the company w[h]ere it is at, at present and what the plans are for the future. This is where we may need to demonstrate a disconnection from both our personal companies.”

Mr Franks also outlined several areas where “[w]e really need to start to look at how we are doing b[usi]ness and how decisions are being made …”.

42. By a further email dated 8 December 2022, (Ex J1, 1211), Mr Franks suggested that the potential employee was the best candidate for the position advertised by Yamari and that she should be offered a salary of at least $95,000 to $110,000 plus superannuation and a performance bonus structure. Mr Browning and Ms Kennedy did not share that view. By email dated 8 December 2022, Ms Kennedy responded to Mr Franks, with copies to Ms Franks and Mr Browning (Ex J1, 1214) as follows:

“We believe it would be wise to catch up in person to discuss a proposal for [the potential employee] rather than a rush decision over email. Can you meet tomorrow morning?

Whilst I believe she is a good candidate, she has absolutely no experience in this industry and offering her a starting wage of $95 - $110K is extremely high. I’d like to highlight a few concerns and something that should be considered before we rush to a decision – she is a flight risk. Based on her work experience, she has not been at a company for more than 12 months which is very concerning.

̶ If we offer her a higher wage, she does not have room to grow and will have an unachievable sales target to reach within the first 3 – 6 months. This time will be spent learning the role so it would be an unfair expectation to assume she can achieve the following figures which she needs to sustain in order for it to be profitable for the business and provide stable employment.

Wage of 95K – she would need to produce at least 80K monthly turnover.

Wage of 100K – she would need to produce at least 90K monthly turnover.

Wage of 110K – she would need to produce at least 105 monthly turnover.

̶ [The candidate] does not have the capabilities to fulfill the multiple roles I am currently covering so when I go on leave, we will need to either hire or sub-contract other staff members to fulfil those areas. At a minimum this would include a graphic designer and a hands-on person to site measure, onsite project management etc.

̶ In addition to this, the current office space cannot sustain anymore people so we will need to look at renting a space with more desk area and a receiving/dispatch area for products. This includes new desks, phones, computers and so on.

These points need to be considered when offering a wage, can the company sustain 95-110K plus rent, graphic designer, [existing employee], site supervisor and so on.

Further to this, as you know my current wage is 95K so offering her more than this upfront is disappointing to me. Over the past five years I have managed this company covering all roles to sustain the business and have sat on a wage of 70 – 95K over this time. Whilst I am not seeking an increase at this point, I want to make it known that this offer is disappointing to me.”

43. There is a significant dispute (ASC [23], Defence [23]) as to what occurred at a subsequent meeting on 9 December 2022 between Ms Kennedy, Mr Browning, Ms Franks and Mr Franks. However, it is common ground between the parties and both Counsel accepted in closing submissions that that meeting and subsequent events caused an irretrievable and complete breakdown in the relationship between the parties.

44. Ms Kennedy’s evidence (Kennedy 20.3.24 [58]) in her first affidavit is that, at the meeting on 9 December 2022:

“Ms Franks and [Mr Franks] told me that the did not want to continue to pay my director’s payment in order to off-set the costs of employing a new staff member. At that meeting, [Mr Franks] requested that I initiate a financial review of the Company together with a proposal to sell my shares to Ms Franks. Ms Franks was present in the room at the time of this suggestion by [Mr Franks]. I recall Ms Franks saying words to the following effect to me:

“As I hold the majority shareholding, I have the final say in the business.”

45. Ms Kennedy also addressed the circumstances in which (as is common ground) a physical confrontation occurred between Mr Browning and Mr Franks at that meeting (Kennedy 20.3.25 [58]ff). There is a collateral dispute as to whether Mr Franks or Mr Browning took the initial step that led to that confrontation, but it is unnecessary to decide that question to determine these proceedings. That confrontation caused real concern to other members of 1800 For Promo’s staff, and likely also to one or more of Mrs Kennedy’s children who were in an adjoining room at the time of the meeting and were upset by the confrontation (Kennedy 20.3.25 [63]).

46. Mr Browning also gave an account of that meeting, inn terms broadly consistent with Ms Kennedy’s evidence, and was cross-examined as to that meeting.

47. Ms Franks also gives an account of that meeting in her affidavit. She refers to a disagreement as to whether the potential employee should be employed by Yamari and then to a conversation as to which Mr Browning said that Ms Kennedy would sell her shares in Yamari to Mr Franks and Ms Franks. Her evidence is that Mr Franks then said “[g]ive us a number” and also that:

“If you are going to sell your shares in the business, we will have to get an independent valuation about what they are worth. But we can afford it.”

Ms Franks’ evidence in cross-examination, which seemed to me to be plainly false, was that she did not understand Mr Franks there to be referring to his and her capacity to buy out Ms Kennedy’s shares in Yamari.

48. Ms Franks also refers to the confrontation between Mr Browning and Mr Franks at that meeting. As I noted above, there is a dispute as to who started that confrontation and her account of the meeting does not explain what led to that confrontation. Although she set out her account of that meeting at some length, and in direct speech, she corrected that account at the commencement of her oral evidence to indicate that part of it referred to a subsequent conversation with a third party. It is not necessary to address the debate between the parties that subsequently occurred at that meeting or after Mr and Ms Franks exited to the carpark.

49. Mr Franks’ evidence as to that meeting, given in an abbreviated form (Mr Franks 10.2.25 [61]) is that:

“At that meeting, [Mr Browning] stood up and tried to physically assault me by grabbing my arm and pushing his face up against my glasses and then pushing me out of the room and down the stairs while shouting.”

50. Mr Franks in turn refers to a somewhat self-serving file note as to that matter (Ex J1, 1238) and to an email (Ex J1, 1234) that he sent to Mr Browning and Ms Kennedy on that day. Mr Franks was not cross-examined as to these matters, by reason of an agreement reached between the parties (Ex J3) as to that meeting, as follows:

“THE PARTIES AGREE:

1 In respect of the 9 December 2022 meeting, that both shareholders and directors or Yamari were passive at the meeting.

2 Irrespective of who started the altercation, that was not the actions of any director or shareholder of Yamari.

3 Based on those two agreed facts in paragraphs 1 and 2 above, the first defendant consented to not advancing a Browne v Dunne point in relation to the plaintiff’s decision to not cross-examine Mr Scott Franks.”

51. By email dated 9 December 2022 (Ex J1, 1232), sent shortly after the meeting on that day concluded, Ms Franks advised Ms Kennedy that:

“As you would agree, today’s meeting was unproductive in resolving the issues that we were there to discuss.

As the majority shareholder and director, I am requesting your time and shareholder to meet on Monday 12th December at 9.15am to discuss the operations of [Yamari] and the direction to move [forward].

I would like to make it clear that Scott Franks and Ben Browning are not to attend this meeting. Given the outcome from today, we need to meet offsite. Happy to discuss a suitable location.

Further to this, all payments excluding salaries should be on hold pending the outcome of the meeting on Monday.

I will send you an agenda over the weekend for the meeting.”

52. Three things should be noted about this email. First, it is inconsistent with Ms Franks’ evidence in cross-examination that, after the meeting on 9 December, she was fearful of attending a meeting with Ms Kennedy and that was why she was not prepared to attend Yamari’s bank so as to remove a hold that had been placed on Yamari’s bank account. Second, there is a dispute as to the circumstances in which a “batch” payment was made to Yamari’s trade creditors, including 1800 For Promo, that afternoon, and as to whether Ms Kennedy had or had not seen this email before she made that payment. Third, nothing turns on this matter because, even if Ms Kennedy made that payment over Ms Franks’ objection, there is no evidence that the amount was not payable to those creditors; there is no obligation for a company to pay its suppliers later rather than sooner; and that course could not warrant the exclusion of Ms Kennedy from an ongoing role in Yamari without Ms Franks taking any steps to acquire her shares at value.

53. Subsequently, also on 9 December 2022, Ms Kennedy responded to that email (Ex J1, 1233) that:

“The batch [payment] has been processed today as per normal to ensure we maintain good credit rating with our suppliers.

Based on your email, I have put a hold on any further outgoing payments from now until we arrange a time to meet.”

54. By a further email dated 10 December 2022 (Ex J1, 1241), Ms Kennedy “reaffirm[ed]” Mr Browning’s statement at the meeting in December “which declared out intent to exit the current relationship at an agreed financial figure” but also advised that:

“… this is a discussion I’m willing to put on hold in the best interests of [Yamari] and its customers. It’s imperative we focus on the more immediate issues at hand.

Our willingness to prioritise moving through the current phase indicates our motivation to ensure we exit [Yamari] with its integrity in-tact [sic].”

Mr Di Francesco, who appears for Mas Franks, sought to give a sinister construction to the reference to “integrity” in that email. It seems to me to refer to no more than Mr Browning’s and Ms Kennedy’s wish to maintain the value of the business in the period prior to a negotiated sale of their shares in it to Ms Franks.

55. By email dated 12 December 2022, (Ex J1, 1072), Ms Kennedy then wrote to Ms Franks:

“I do not want to discredit the Company on a social platform. It would appear that indirectly [Mr Franks] is trying to accuse me as the ‘non-aboriginal partner’ of wrong doing on LinkedIn. 1800 For Promo has provided a professional service offering signage products at a wholesale rate to Yamari Ochre. It’s rare that we use 1800 For Promo for work in comparison to our supply chain. All our dealings have been above board and to be accused of this is disappointing. 1800 For Promo is one of many companies providing a service to Yamari.

I have held a senior role managing the company and have made day-to-day and final decisions since the beginning which you were happy for me to do. It’s sad to me that since Friday I am being labelled as ‘just an employee’ when I have clearly been more.

All this aside, I’d like to focus on the projects at hand for the moment and continue in my role so the business can continue to operate. Please confirm. I have made it clear in my email on Saturday that I need to know this but you have not answered.

I have begun including you in correspondence relating to job agreements, please respond in order for the work to continue otherwise we will miss deadlines.”

56. Mr Browning also responded to Mr Franks’ earlier email on 12 December 2022, taking issue with Mr Franks’ comments (Ex J1, 1252). It is not necessary to address the debate between the parties in that respect.

57. There is also dispute (ASC [24], Defence [24]) as to other events after the 9 December meeting. In her first affidavit, Ms Kennedy refers to several steps which occurred following that meeting, including an attempt to redirect a mobile telephone number that she had with Yamari to another phone; removal of her access to Yamari’s business accounting platform and her access to Yamari’s bank account; and a further withdrawal by Ms Franks from Yamari’s bank account. Ms Kennedy’s evidence (Kennedy 20.3.24 [75]ff) is that she then requested, without success, that her access be reinstated so that she could continue to operate the business; her weekly wage ceased to be paid from 12 December 2022; and suppliers to Yamari were also not then being paid. Her correspondence with Ms Franks relating to those matters is in evidence (Ex J1, 1421ff).

58. Ms Franks also relies on several matters in response to Ms Kennedy’s oppression claim. In her first affidavit, Ms Kennedy refers to the circumstances in which, after the meeting on 9 December 2022, 1800 For Promo took steps to terminate Yamari’s occupancy of the premises previously made available to it. By email dated 13 December 2022 (Ex J1, 1267), Mr Browning set out the terms on which he understood Yamari occupied an area at 1800 For Promo’s premises; identified services which were not included in the rent and were made available “at the discretion of 1800 For Promo management” including services such as freight receipt and dispatch, pallet storage, use of a forklift driven by 1800 For Promo staff, pallet wrapping supplies and printer and equipment use and stated that:

“Following recent events and continuing growth at 1800 For Promo it’s been decided by management that the rental agreement will need to come to an end. [Yamari] will need to exit the building and relocate to a new location. 1800 For Promo will allow the space used to continue until 23 December 2022 so there is time to complete 2022 projects and wind up the year.”

It is not necessary to decide whether 1800 For Promo reasonably took this position, although I recognise that the matters that had occurred at the 9 December meeting could plainly raise a concern for 1800 For Promo’s staff as to the risk of further confrontation between Mr Franks and Mr Browning. In any event, the view taken by 1800 For Promo cannot be attributed to Ms Kennedy.

59. Ms Franks also complains that Ms Kennedy had caused Yamari’s bank to place a “hold” on Yamari’s bank accounts. However, from 9 December 2022, Ms Kennedy sought to bring about a removal of that hold, although that required Ms Frank’s cooperation. By email dated 14 December 2022 (Ex J1, 1271), Ms Kennedy advised Ms Franks:

“Can you please let me know when you are available to meet me at the bank to release the hold on the bank account? While we are there, we can set up that dual authorisation on the account as required.

We have wages and bills to pay at the end of this week so want to try [to] get this sorted so we can continue business as normal.

Fiona [Metters] can put together a list of any invoices due this week so we know what to expect.”

60. Ms Franks responded on 15 December 2022 (Ex J1, 1276) that “[t]omorrow is not convenient” without suggesting any alternative date. By a further email dated 20 December 2022 to Ms Franks (Ex J1, 1308) Ms Kennedy followed up on steps to remove the hold on Yamari’s bank account:

“What is happening with putting the Yamari bank account in order so that we can pay bills/subscriptions that are owing? Fiona [Metters] has received a few other bills and subscriptions.

Last Thursday (15/12) I attempted to arrange a time with you to meet the following day, Friday (16/12), but you said it was not convenient for you. I then suggested Monday (19/12) however you did not respond. It’s now Tuesday (20/12) and you have not come back to [missing words] available today between 11.00am – 2.30pm.

I am aware that you (Mr Franks) went to the bank on Thursday (15/12) and took out $893. I believe the transaction was for [an employee’s pay], is this correct as it does not match her normal weekly rate? What were the funds for this as there is no clear description in the [missing word].

Also my wage did not get paid as I have advised previously. You told me that it would be getting paid on Friday (16/12) as normal? Will my wage for last week be paid today and will my wage continue to be paid moving forward?

As I have been the entire time, I am continuing to manage the business and ensure customers are happy and getting what they are ordering. In order to do this, we need to be able to communicate and pay our suppliers who are providing products/services to us.”

61. By email dated 20 December 2022 (Ex J1, 1309), Yamari’s bank confirmed that the amount drawn from Yamari’s account had been paid to an employee of Yamari.

62. On 20 December 2022, Ms Kennedy signed, purportedly for Yamari, a form (Ex J1, 1331) authorising the transfer to her of the telephone number for the mobile phone that she had previously used with Yamari. Ms Franks complains of that conduct. A dispute also subsequently arose in respect of Ms Franks’ attempt to transfer the domain name used by Yamari, which was then registered to Mr Browning, to Ms Franks, and Ms Kennedy advised the domain registry (Ex J1, 1358) that she was a director of Yamari and that:

“I urge you to hold on transferring the domain as there is currently a legal dispute between co-directors & shareholders [Ms] Kennedy & [Ms] Franks.”

63. It is common ground (ASC [33], Defence [33]; Ex J1, 1352; Ex P1, 3) that, by letter dated 21 December 2022, the solicitors acting for Ms Kennedy outlined the relevant background and put three alternative offers to Ms Franks. The first was for a sale of Ms Kennedy’s shares to Ms Franks, for a purchase price of $267,500 plus 50% of funds in Yamari’s bank accounts, subject to those funds not being used or removed incorrectly, plus 50% of payments outstanding to Yamari. The second was a sale of the shares in Yamari or of the business to a third party, with the proceeds to be shared equally between Ms Kennedy and Ms Franks, and the third was that Yamari be wound up with its assets to be shared equally after payment of all outstanding debts. Ms Franks did not pursue any of those options.

64. It is also common ground (ASC [34], Defence [34]) that Ms Franks has not made an offer to acquire Ms Kennedy’s shares in Yamari for fair value, although Ms Franks contends she cannot assess that fair value without establishing the extent of damage and loss caused by Ms Kennedy’s alleged misconduct. In her first affidavit, Ms Franks acknowledges that she received the letter sent by the solicitors for Ms Kennedy, containing the offer to sell Ms Kennedy’s shares in Yamari and explains why she rejected that offer as follows (Franks 31.1.25 [174]):

“I rejected the offer as I did not esteem [sic] the offer to represent fair market value of Yamari. It did not take into account the damage caused by [Ms Kennedy’s] misconduct as set out in this affidavit. Yamari as at the date of the offer had no significant assets.”

65. It is common ground (ASC [25], Defence [25]) that Yamari issued a letter of termination of Ms Kennedy’s employment, signed by Ms Frank, on 22 December 2022. By that letter (Ex J1, 1365), Yamari advised Ms Kennedy that:

“[Yamari] now notifies you that as a result of your serious misconduct and breach of fiduciary duty to the Company, your employment is terminated effective immediately.”

That letter did not elaborate on what conduct was alleged to amount to serious misconduct or breach of fiduciary duty. That letter also demanded the return of a mobile phone, desktop computer, laptop and all passwords to accounts held by Ms Kennedy. That letter did not otherwise respond to Ms Kennedy’s proposal that she buy out Ms Kennedy’s shares.

66. It is common ground (ASC [29]–[30], Defence [29]–[30]) that, on 23 December 2022, Ms Franks issued a notice of general meeting of shareholders (Ex J1, 1369) which included motions that Ms Kennedy be removed as a director of Yamari forthwith (item 3); Ms Franks be given sole control of Yamari's bank accounts (Item 4); Yamari ratify the termination of Ms Kennedy’s employment (item 5); Yamari reimburse Ms Franks for the cost of engaging a law firm to investigate alleged wrongdoing by Ms Kennedy (items 6 and 7); and Ms Franks be authorised to bring proceedings in Yamari's name against Ms Kennedy, Mr Browning and three companies related to Mr Browning. It appears those resolutions were passed, over Ms Kennedy’s opposition, at a shareholders meeting on 24 January 2023. Notice of Ms Kennedy’s removal as a director of Yamari was given to the Australian Securities and Investments Commission on 24 January 2023 (Ex J1, 1416–1417).

67. Mr Browning exhibited at least a degree of cooperation with Yamari into February 2023, when he emailed Yamari, Ms Franks and Mr Franks (Ex J1, 1644) to advise that he had unsuccessfully sought to arrange for Yamari to collect mail which had been delivered to 1800 For Promo and that telephone calls were still being made to the phone line previously used by Yamari in the 1800 For Promo office. Ms Kennedy subsequently brought an unfair dismissal complaint in the Fair Work Commission which was settled (Ex J1, 1692) on a basis that reserved the parties’ rights to bring these proceedings.

68. On 16 March 2023, Yamari, then under Ms Franks’ control, entered into a lease for new premises at Mascot. The rental costs incurred by Yamari, together with increased costs of additional employees, appear to have contributed to Yamari’s subsequent insolvency.

69. By a further letter dated 21 December 2023 (Ex P1, 6) the solicitors acting for Ms Kennedy again outlined the factual circumstances, as Ms Kennedy understood them, at some length; referred to Ms Kennedy’s earlier offer of three alternative basis for her exit from Yamari in the letter dated 21 December 2022; identified the basis of Ms Kennedy’s claim for oppression; and observed that:

“We invite Ms Franks to seriously consider making a real and genuine offer to acquire [Ms Kennedy’s] shares in Yamari for fair value. Plainly that is the most commercially sensible way to resolve the dispute. …

Our client hopes that the current difficulties can be resolved on an amicable basis. If not, it may be necessary for our client to apply to the Court for appropriate relief including, if appropriate, an order that Yamari be wound up.”

Again, Ms Franks did not respond to that letter.

70. In early July 2025, Ms Franks filed and served Mr Gwynne’s expert report dated 3 July 2025 (Ex J1, 380) in these proceedings. Shortly afterwards, she caused Yamari to be placed in voluntary administration on 7 July 2025, without Ms Kennedy’s involvement. The voluntary administrators’ report dated 1 August 2025 (Ex J1, 2091) recorded that Yamari then had assets of $69,996 and liabilities substantially exceeding those assets; that the voluntary administrators’ preliminary investigations indicated that Yamari may have been insolvent from November 2023 to the date of their appointment, giving rise to a potential claim for insolvent trading, implicitly against Ms Franks, of up to $444,000 representing the value of unsecured and unrelated creditor claims; and that the voluntary administrators had identified some preference claims against the Australian Taxation Office and trade creditors. The voluntary administrators recorded (Ex J1, 2104–2105) Ms Franks’ explanation that Yamari’s financial difficulties as arose from:

“● Ongoing trading losses; and

● A dispute with a shareholder and former director, which prompted [Ms Franks] to obtain a business valuation. Based on the outcome of that valuation, [Ms Franks] formed the view that the business was effectively worthless, and that continuing to trade could amount to insolvent trading. This concern ultimately led to our appointment as Administrators.

The voluntary administrators went on to observe:

“We have not identified any evidence that contradicts [Ms Franks’] advice. However, we note that inadequate cashflow appears to be an additional contributing factor to [Yamari’s] financial difficulties.”

71. Yamari transitioned to liquidation on 12 August 2025. The voluntary administrators were appointed as liquidators to Yamari and provided substantially the same explanation of the reasons for Yamari’s failure in their liquidator’s report (Ex J1, 2154–2155).

72. By a letter dated 6 November 2025 from her solicitors (Ex P1, 1), Ms Kennedy made an open offer to resolve the proceedings, on the basis that Ms Franks pay $35,000 to acquire Ms Kennedy’s shares in Yamari, reflecting Mr Gwynne’s expert valuation as at 22 December 2022 on a basis that reflected Ms Kennedy’s minority holding, and an amount of $40,000 by reference to legal costs, including the costs of the cross-claim that is no longer pressed by Ms Franks. That was, on any view, a very favourable offer for Ms Franks, where it would have avoided a four day hearing and the result which I reach below. Ms Franks did not respond to that offer.

73. I recognise that there were suggestions, in the course of the hearing, that other offers to acquire shares may have been made by the parties on a without prejudice basis, including at a mediation; but nothing turns upon those offers, where they are properly protected by without prejudice privilege. If Ms Franks had wished to rely on an offer made to purchase Ms Kennedy’s shares in order to meet the oppression case, then it was of course open to her to make that offer on an open basis. Such an offer could have been made, but was not, even in the course of the four day hearing of this matter.

The oppression claim

74. I now turn to the Plaintiffs’ oppression claim, before turning to the several discrete matters which are said to constitute oppression. The applicable principles in respect of oppression are well-established and I have drawn my summary of them from my judgments in Re Gunyahweh Pty Ltd [2023] NSWSC 1133 at [130]ff (“Gunyahweh”) and Re Gerringong Storage Pty Ltd [2025] NSWSC 302 at [175]ff (“Gerringong Storage”). Section 232 of the Act provides that the Court may make an order under s 233 if:

“(a) the conduct of a company’s affairs; or

(b) an actual or proposed act or omission by or on behalf of a company; or

(c) a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d) contrary to the interests of the members as a whole; or

(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.”

75. Section 53 of the Act in turn identifies the “affairs of a body corporate” for several provisions of the Act, including s 232, as including the “promotion, formation, membership, control, business, trading, transactions and … dealings of the body” (s 53(a)) and “the internal management and proceedings of the body” (s 53(c)). The orders which may be made include, relevantly, an order for the purchase of any shares by any member (s 233(1)(d).

76. Section 232 of the Act and its predecessors extend to conduct involving “commercial unfairness” or where the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play, or a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing, is unfair: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68. Conduct may be oppressive even when a defendant believes that he or she is acting for proper purposes: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [176] (“Backoffice”).

77. The principles applicable to a claim for oppression were summarised by Austin J in Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [39] (“Tomanovic v Argyle”) and the Court of Appeal noted the parties did not challenge that summary of the applicable principles in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 288 ALR 310; (2011) 84 ACSR 121; [2011] NSWCA 104 at [140] (“Tomanovic CA”). Austin J there observed that:

“(a) consistent with the principle that the purpose of relief is to terminate the effects of oppression, relief will generally be inappropriate as a matter of discretion if there is no continuing oppression: [Backoffice] at [182];

(b) unfairness is assessed by reference to whether “objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair”: eg, Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359, per Basten JA at [181]; [2008] NSWCA 95;

(c) while it is recognised that conduct may be oppressive if inconsistent with the “legitimate expectations” of shareholders, expectations are not immutable. The non-fulfilment of expectations will not establish oppression, if there has been some good reason for the extinguishment of the expectation: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, at [85], [86], [175]; [2001] NSWCA 97; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343, at [96]; [2009] NSWSC 342 per Barrett J;

(d) “it is important when assessing corporate activities to see if there has been oppression that judges do not remain in their ivory tower”: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688, Young J at 739; [1998] NSWSC 413;

(e) a particular matter which will be taken in account in assessing the gravity of any allegation of oppression, is the extent to which the minority shareholder has “baited” the majority shareholder to act in an oppressive manner: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688, at 741; [1998] NSWSC 413 …”

78. In the ordinary course, a refusal by a majority shareholder to assist a minority shareholder to extracting his or her capital out of a company by purchasing his or her shares does not, without more, amount to conduct which is prejudicial or discriminatory against that shareholder or to oppressive conduct: Re A Company [1983] Ch 178; Re G Jeffery (Mens Store) Pty Ltd (1984) 9 ACLR 193 at 199; Byrne v AJ Byrne Pty Limited [2012] NSWSC 667 at [46]ff (“Byrne”). The emergence of irreconcilable differences between shareholders also does not on its own necessarily establish oppression: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 at [89]; Tomanovic CA at [199]. However, exclusion from participation in a company’s management may be oppressive when combined with a failure to make a reasonable offer to buy the plaintiff’s shares: O’Neill v Phillips [1999] 1 WLR 1092 at 1104 (“O’Neill v Phillips”); Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343 at [109]–[110]; [2009] NSWSC 342; Tomanovic v Argyle at [42]. For example, in Tomanovic CA, the Court of Appeal held that oppression was established where the parties had agreed but failed to implement an arrangement for separation of their respective interests so that the value of one party’s equity was locked in the companies, the income attributable to that equity had ceased, there was no ready prospect that that party could sell that equity to anyone else for fair value and the resumption of cooperation between the parties was not possible.

79. Turning now to the parties’ submissions, Mr Emmerson submits that:

“… as at 24 January 2023, when Ms Kennedy was removed as a director of Yamari, she was formally excluded from the management of Yamari. Ms Kennedy did not have any practical alternative than to sell her shares to M[s] Franks, as Yamari was under the complete control of M[s] Franks as the sole director and majority shareholder. First, any sale of Ms Kennedy’s shares to an individual or entity which is not M[s] Franks required M[s] Franks’ approval: Constitution at cll 12 and 16 ([Ex J1,] 646). Second, even if M[s] Franks’ consent was given (which it was not), Ms Kennedy was disadvantaged by the fact that she would be attempting to sell a minority holding in a company that is under the complete control of the majority shareholder. That possibility was highly unlikely or impossible (even if possible, it would far away from fair value). The Court was plainly alive to this problem: T218.6-219.44.

Ms Kennedy submits that because the oppression commenced at this point in time – early December 2022, her exclusion without a fair value buyout subsequently, and then the demise of Yamari singularly at the hands of Mrs Franks, it is only fair (and in the interests of justice) that any valuation of her interest be done in the December 2022 period, and certainly no later than 24 January 2023.

Ms Kennedy contends that her termination and removal as a director of Yamari, without a fair value buyout, was oppressive within the meaning of s 232 of the Corporations Act. She contends that the dictates of justice means that the fair value of her 49% shareholding be valued at that time. That being so, only the oppressor, Mrs Franks (and Mr Franks as CEO) were responsible for running and managing Yamari, ultimately to its demise.”

80. Mr Emmerson also refers to the applicable principles in respect of oppression, and to my summary of those principles in Gunyahweh [130]ff and Mobius Distilling at [170]ff. He submits, importantly, that:

Where the company was formed on the understanding that each venturer would participate in management, exclusion of a member without a fair exit opportunity is usually oppressive … In such cases a timely, unconditional offer by the majority to purchase the minority’s shares at fair value may negate oppression… [citation omitted]

81. He also submits that:

“A well-known form of commercial unfairness giving rise to oppression is where there has been exclusion from the management of the venture without compensation. In the present case, M[s] Franks was able to use her majority shareholding in Yamari to gain complete control of the company and remove Ms Kennedy as a manager and director.

Upon her termination and removal as a director of Yamari, M[s] Franks assumed complete control of the company without oversight or consent of the only other shareholder, Ms Kennedy. In those circumstances, M[s] Franks caused payments to be made to her benefit and to the benefit of entities related to her and Mr Franks. Each drew substantial sums as wages and director’s fees. Their excessive drawings brought about the demise of Yamari, and the current value of Ms Kennedy’s holding. It is a manifestation of the oppressive conduct of excluding Ms Kennedy without compensation and is relevant to determining the appropriate date to assess fair value ...”

82. Ms Kennedy contends that several matters were oppressive or unfairly prejudicial to, or unfairly discriminatory against, her as a shareholder, director and employee of Yamari, or contrary to the interests of the members of Yamari. The first (ASC [27]–[28], denied Defence [27]–[28]) is the termination of her employment for cause without a prior meeting or ability to challenge the allegations. The second (ASC [31]–[32], denied Defence [31]-[32]) relates to Ms Frank’s exercise of the power to issue the Notice and vote her shares to remove Ms Kennedy as a director of Yamari. The third (ASC [35], Defence [35]) relates to Ms Franks not making an offer to acquire Ms Kennedy’s shares in Yamari for fair value in these circumstances.

83. Ms Kennedy also relies on additional matters, after her exclusion from any real role in Yamari, as constituting oppression. The fourth relates to wages of $115, 582.21 paid to Ms Franks from 1 July 2023 to 30 April 2024 (ASC [40]ff). The fifth relates to an advance allegedly made by a company Associated with Mr Franks, Yarrawalk Pty Ltd (“Yarrawalk”) and subsequent payments by Yamari to Yarrawalk (ASC [50]) and loans allegedly made by Yamari to companies partly owned by Mr Franks. The sixth (ASC [70A]ff) relates to an alleged continuation of oppression by the appointment of administrators to and liquidation of Yamari and pleads the establishment of an allegedly competing business, Adina Solutions Pty Ltd. It is not necessary to address these matters given the conclusions that I have reached on other grounds.

84. Mr Di Francesco responds that the Court should find that the termination of Ms Kennedy’s employment and her removal as a director of Yamari, by shareholder resolution passed on 24 January 2023, was warranted and did not amount to oppressive conduct in the circumstances, or alternatively, that Ms Kennedy had “baited” Ms Franks in respect of the conduct of which Ms Kennedy complains. It is not necessary to decide whether the termination of Ms Kennedy’s employment was justified and it is plain that a majority shareholder has the power to remove a director of a company by resolution passed in general meeting. The question here is ultimately not whether that conduct, without more, was justified, but whether Ms Kennedy could be excluded from any real role in Yamari (other than as a minority shareholder) without Ms Franks taking steps to acquire her shares at fair value. For the reasons noted below, it seems to me that Ms Kennedy’s exclusion from a role in Yamari, combined with a failure to acquire her shares at fair value, where she had no realistic option of selling those shares to a third party, amounted to oppression; and, even if any conduct in the nature of “baiting” was established on Ms Kennedy’s part, which is doubtful, that conduct had no real connection with and cannot justify the exclusion of Ms Kennedy from any role in Yamari without compensation for the value of her shares.

85. Mr Di Francseco also points to the suggestion that Ms Kennedy had lost interest in employment with Yamari from July 2022. There is a dispute as to that matter but nothing turns upon it. Mr Di Franceso also points to Mr Browning’s indication, at the meeting on 9 December, and Ms Kennedy’s confirmation on 10 December that she wished to exit the current relationship with Yamari, at least in the light of developments at that meeting. The question here is not whether Ms Kennedy could have required Ms Franks to buy out her shares had Ms Kennedy chosen to resign as an employee of Yamari or whether Ms Franks could have been required to buy out Ms Kennedy’s shares, had Ms Franks not excluded Ms Kennedy from any role in Yamari other than as minority shareholder, but whether Ms Kennedy’s forced exclusion as an employee and director, without compensation for the value of her shares, amounted to oppression.

86. Mr Di Franceso fairly accepted in submissions that:

“It is generally oppressive to exclude a minority shareholder from management of the company without the majority shareholder giving him or her the opportunity to remove his or her capital upon reasonable terms. However, every case has to be looked at on its own facts and circumstances and the cumulative conduct may produce a different result. For example, the position is different where a minority shareholder seeks to exit the company, rather than being unilaterally excluded from it…” [citations omitted].

87. However, Mr Di Francesco submits that:

“there is no continuing oppression in the circumstances that Ms Kennedy has not tried to sell her shares in Yamari to a third party buyer since December 2022. The complaint about needing consent to sell shares from Ms Franks distracts from the fact that Ms Kennedy never sought such consent, never tried to find another buyer and was never refused such consent. Further, Yamari is now in liquidation and the business has come to an end.”

88. As I noted above, there is also some dispute (ASC [24], Defence [24]) as to what occurred after the 9 December meeting. Ms Kennedy relies on several of these matters in support of the oppression claim and Ms Franks relies on several of these matters in opposition to the oppression claim. I should address these matters here, although many of them are ultimately peripheral to the oppression that arises from Ms Franks’ excluding Ms Kennedy from involvement in Yamari without making any attempt to acquire her shares at fair value.

89. Ms Kennedy contends (ASC [24]) and Ms Franks denies (Defence [24]) that, after the 9 December meeting, Ms Franks attempted to redirected Ms Kennedy’s mobile telephone and sought to remove her business mobile telephone. It is not necessary to reach a finding as to that matter, although I recognise it provides context to Ms Kennedy’s steps to acquire the relevant telephone number for herself. Second, Ms Franks admits that she removed Ms Kennedy’s access to the Xero accounting platform for Yamari, including her access as an employee; she removed Ms Kennedy’s access to Yamari’s bank account, implicitly after the hold on that account was lifted; she removed Ms Kennedy’s access to Yamari’s web domain; and she diverted Ms Kennedy’s emails, implicitly in respect of her Yamari email account. Ms Kennedy alleges, and Ms Franks denies, that Ms Franks ceased payment of Ms Kennedy’s weekly wage and Ms Franks contends that wage was not paid because Ms Kennedy had placed a hold on Yamari’s bank account. Ms Franks’ position is unsustainable because the evidence established that Mr Franks and Ms Franks were able to pay wages notwithstanding that bank hold but then chose to pay the wages of another employee but not Ms Kennedy.

90. Ms Franks contends that she only took the steps that she admits taking after she became concerned about “irregularities” in Ms Kennedy’s management of business projects for Yamari’s business. The first asserted irregularity is that Ms Kennedy attempted to give herself a pay rise without authorisation or approval by Ms Franks or Yamari. Mr Di Francesco presses the submission, in closing, that Ms Kennedy had wrongfully increased her salary on 9 December 2022, although he restricts that submission to the position recorded on Yamari’s Xero accounting system and does not expressly put that change had any operative effect on payments made to Ms Kennedy. This allegation was not established, having regard to Ms Metters’ evidence which I have accepted above.

91. The second alleged “irregularity” is that Ms Kennedy preferred the interests of 1800 For Promo to those of Yamari. That allegation was not established in respect of dealings between Yamari and 1800 For Promo generally, where it is apparent that 1800 For Promo provided substantial support for Yamari and there is no evidence that it was paid in excess of wholesale of trade rates for that part of its support which was charged to Yamari. That allegation was also not established on a narrower basis, in respect of the payments that Ms Kennedy caused to be made to Yamari’s trade creditors including 1800 For Promo on 9 December 2022, where there is no suggestion that the debts that were then paid were not properly payable to those creditors.

92. Third, Ms Franks also complains that Ms Kennedy held herself out as managing director of Yamari. That description of Ms Kennedy was likely unjustified, although it appears that she was both general manager and a director of Yamari.

93. Fourth, Ms Franks complains that Ms Kennedy placed a hold on Yamari’s bank account without Ms Frank’s authority and “thereby prevent[ed] Yamari from making payments in the regular course of its business”. That allegation is also not sustained. First, a director of a proprietary company may properly request the company’s bank to place a hold on the account where there is a risk of unauthorised withdrawals from that account and it seems to me that that risk had arisen here after the acrimonious meeting on 9 December 2022. Second, the “hold” did not prevent Yamari from making ordinary course payments, where Ms Kennedy had caused trade creditors to be paid before the hold was imposed, and Mr and Ms Franks were able to pay wages although they did not choose to pay Ms Kennedy’s wage. Third, the period of the hold was lengthened by Ms Franks not attending the bank to remove that hold and introduce a joint authorisation process, so that it remained in place until Mr and Ms Franks could obtain control of Yamari’s account to Ms Kennedy’s exclusion.

94. Fifth, Ms Franks alleges that Ms Kennedy attempted to destroy, and in some cases did destroy, business records of Yamari. I recognise that Ms Kennedy’s explanation of this matter was less plausible than other aspects of her evidence, and I approach that evidence with caution. However, there is limited evidence as to this matter and, particular, the evidence is unclear as to when any deletions occurred and does not establish whether relevant records were ultimately lost or restored or whether this matter ultimately gave rise to any detriment to Yamari. It is not necessary to reach any final determination as to this matter, where it would not alter the result of the proceedings.

95. Ms Franks also raises wider matters from her “withdrawn” Cross-Claim in response to the oppression claim. The first is a claim that, on 13 December 2022, 1800 For Promo unilaterally and in breach of the alleged “At Cost Services Arrangement” and “Premises Arrangement” (as defined) terminated Yamari’s occupancy of the space within its offices. I do not accept that this claim is established or that it provides any answer to Ms Kennedy’s claim in oppression. First, as I noted above, the At Cost Services Arrangement and Premises Arrangement were, at best, informal understandings between Mr Browning and Mr Franks, to which Yamari, Ms Franks and Mr Kennedy were not party; and second, Ms Kennedy is not responsible for 1800 For Promo’s decision in that respect, where there is no suggestion that she induced it or had any capacity to prevent it.

96. Second, Ms Franks introduces an allegation from the “withdrawn” Cross-Claim as to the payments made to suppliers including 1800 For Promo on 9 December 2022. Mr Di Francesco submits that the “batch” payment of these invoices should not have been made on 9 December over Ms Franks’ objection. There is a dispute, which it is not necessary to resolve, as to whether Ms Kennedy did or did not know of Ms Franks’ position, as expressed in her two emails, before authorising the payment. I have noted above that there is no suggestion that the debts paid were not properly payable to those suppliers. Ms Franks contends that the payments were not required to be made until late December 2022 or January 2023 but a company has no obligation to pay its debts later rather than sooner and there was no basis for a further suggestion made by Ms Franks that those payments jeopardised Yamari’s financial position still less its solvency.

97. I accept that, as Mr Di Francesco submits, a determination of oppression must be reached in all the circumstances, but it seems to me that Ms Kennedy’s conduct after the meeting of 9 December 2022, even if it involved elements of the matters alleged by Ms Franks, took place in a context that both shareholders were seeking to protect their respective interests against the risk of the other’s conduct. Even if any part of Ms Kennedy’s conduct could be characterised (as Mr Di Francesco contends) as “baiting”, without regard to Ms Franks’ conduct at the same time, it does not rise to the level that it would justify the exclusion of Ms Kennedy from any ongoing involvement in Yamari, without Ms Franks taking any step to buy out her shares at fair value. Ms Frank’s claim, in her affidavit evidence and in cross-examination, that she could not value Yamari in order to make an offer to buy-out Ms Kennedy’s shares, is also undermined by the fact, first, she made no apparent attempt to do so and, second, by the fact that she has not established the large part of the “misconduct” which was alleged against Ms Kennedy, still less that any such misconduct had any significant economic impact on Yamari so as adversely to affect its value.

98. I accept that Yamari was established on the basis that both shareholders would at least have the opportunity to participate in its management, although Ms Franks only did so to a limited extent in the early years of its operation. That finding is supported by the correspondence which referred to the relationship as a “JV” or joint venture prior to the incorporation of Yamari and to the parties’ reference to their relationship as, colloquially, “partnership” (T227). I also accept that the termination of Ms Kennedy’s employment, combined with her subsequent removal as a director of Yamari and the cessation of any payments to her from Yamari (whether by director’s fees, dividend or otherwise), with the result that Ms Franks assumed complete control of Yamari and took any economic benefit of the venture for herself, was sufficient to constitute oppression. The position is closely analogous to that considered by the Court of Appeal in Tomanovic CA in that respect.

99. Importantly, as Ms Franks ultimately conceded in cross-examination in answer to questions from me, there was no realistic prospect that Ms Kennedy could sell her shares in Yamari to a third party purchaser after she was excluded from involvement with Yamari. There is no reason to think that a rational third party purchaser would choose to acquire a minority stake in a company controlled by Ms Franks for value, where it knew that the employment of Ms Kennedy had previously been terminated; Ms Kennedy had previously been removed as a director by the exercise of Ms Franks’ majority vote; and that purchaser would recognise, as Ms Franks accepted that she had herself recognised, that these steps allowed her to control Yamari to the exclusion of Ms Kennedy or, by extension, any purchaser of Ms Kennedy’s shares. I recognise that Mr Coudrey, the expert valuer called by Ms Kennedy, accepted in cross-examination (T247–249) that, “in theory”, a third party who he described as a “strategic” purchaser would purchase shares of a minority shareholder where a dispute existed. However, the questions that were asked of him and that the answers that he gave did not suggest that he had engaged with the matters to which I have referred above or with the fact that Yamari was a small proprietary company where the costs of a “strategic” purchaser defending its rights as a shareholder would likely outweigh any conceivable profit to it from buying into the dispute. The position here is again analogous to that recognised by the Court of Appeal in Tomanovic CA as supporting a buy-out order in that case. I am satisfied that oppression is established on this basis.

Claim for order that Ms Franks buy-out Ms Kennedy’s shares in Yamari

100. As I noted above, Ms Kennedy seeks an order that Ms Franks purchase her shares in Yamari at a value set so as to compensate her for the alleged oppression which has taken place. It is common ground that the case law allows such an order to be made although Yamari is now in liquidation: Re A Company No 008126 of 1989 [1992] BCC 542 at 554–555; Ubertini v Saeco (No 4) (2014) 98 ACSR 138; [2014] VSC 47; Re Imperium Projects Pty Ltd [2017] NSWSC 141 at [29]-[31]; Driver v Botanical Water Technologies Pty Ltd [2024] NSWSC 1409 at [191]; Queensgate Place Ltd v Solid Star Ltd & Ors (No 2) [2024] EWHC 1816; Mobius Distilling at [184]ff.

101. I am satisfied that the Court should exercise its discretion to make a buy out order, notwithstanding Yamari is in liquidation, where it is plain enough that Ms Franks’ management of Yamari since she excluded Ms Kennedy from involvement in Yamari, including decisions as to leasing of premises and employment of staff and financial dealings with companies associated with her and Mr Franks, has contributed to Yamari’s current financial position and liquidation. There is no reason why Ms Franks, having assumed control of Yamari to Ms Kennedy’s exclusion, should not bear the risk of the deterioration in its position under that control, or that Ms Kennedy should be denied relief because Ms Franks has been unsuccessful rather than successful in conducting Yamari’s business to her exclusion.

102. I now turn to the applicable legal principles in respect of questions of valuation arising in respect of a buy-out order. I bear in mind the nature of a “market value” test as described in MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 at [55], in the context of the purchase of shares on exercise of a call option, by Spigelman CJ (with whom Mason P and Hodgson JA agreed) as follows:

“A test of a “market value”, whether in a statutory or contractual context, usually invokes the test long established and frequently applied in Spencer v The Commonwealth of Australia (1907) 5 CLR 418 esp at 432 and 440–441 of a willing but not anxious purchaser and vendor, bargaining with each other. This approach was most recently expressed in a joint judgment of three judges of the High Court in Marks v GIO Australia Holdings Ltd [1988] HCA 69; (1998) 196 CLR 494 at 514:

“… The value … is to be identified according to what price freely contracting, fully informed parties would have offered and accepted for it.”

103. In Tomanovic v One Australia Pty Ltd (2015) 104 ACSR 596; [2015] NSWCA 11 at [180]–[188], Bathurst CJ set out the principles governing the valuation of company shares and observed, inter alia, that “[t]he process of valuation may produce a range of results from different judges valuing in accordance with accepted principle and making no error of law”.

104. I also bear in mind that the court has a broad discretion as to the mode of valuation in an oppression case, and the court’s task is to fix a price that is fair in all the circumstances having regard to the value that the shares would have had but for the oppressive conduct: United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514; [2003] NSWSC 910. In Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd (No 3) [2017] VSC 35 at [34]–[35], Sifris J observed that:

“The granting of appropriate relief requires the Court to fix a price which is fair in all the circumstances. The value that is fair is a value which the shares would have had, had it not been for the oppressive conduct.

The price to be paid is compensatory in nature and is aimed at redressing the wrong done (the oppressive conduct). Consequently the price to be paid will not always reflect the actual or real worth of the shares that might be obtained on the open market. Further, ‘the method of determining the price is not confined to ordinary valuation principles’. The relevant question is what is a ‘fair value’ to be attributed in all the circumstances and there is room for different approaches as to valuation. As the Full Court of the Federal Court stated in Dynasty Pty Ltd v Coombs [(1995) 59 FCR 122; (1995) 138 ALR 64] [“Dynasty”], it is not just a question of value; it is a matter of fixing a price that should be paid.” [footnotes omitted]

105. In Re Scientific Management Associates Pty Ltd (2019) 141 ACSR 115; [2019] NSWSC 1643, Rees J similarly observed that the basic requirement in an oppression suit is that “the valuation must be fair on the facts of the particular case” and will be determined as a “price that is fair in all the circumstances having regard to the value that the shares would have had but for the oppressive conduct” and that:

“The price to be paid is compensatory in nature, aimed at redressing the wrong done, so the price is not confined to ordinary valuation principles and will not always reflect the real worth of the shares …”

106. Turning now to the parties’ submissions as to valuation and the valuation evidence, Ms Kennedy’s primary submission is that the Court should order Ms Franks to buy out her shares in Yamari for $202,780. Mr Emmerson submits that:

“Ms Kennedy’s primary relief is that the Court makes orders to effect Mrs Franks’ purchase of Ms Kennedy’s interests in Yamari. Ms Kennedy contends that the fair value of Ms Kennedy’s interests ought to be determined by reference to the value of Yamari as at 20 December 2022 (plus pre-judgment interest), when Ms Kennedy’s employment was summarily terminated by Mrs Franks. In this regard, both parties’ witnesses, Mr Gwynne (for Mrs Franks) and Mr Bruce Coudrey (for Ms Kennedy) both opine on the value of Yamari as at 20 and 22 December 2022. Ms Kennedy’s primary position is the evidence of Mr Coudrey is preferred.

In the alternative, Ms Kennedy relies on the Mr Gwynne’s valuation but contends that no discount ought to be applied by virtue of Ms Kennedy’s interests being a minority shareholding, consistent with authority.”

107. Mr Emmerson also submits that:

“The Court has a broad discretion as to the mode of valuation in an oppression case and the court’s task is to fix a price that is fair in all the circumstances having regard to the value that the shares would have had, but for the oppressive conduct … Regard should be had to the proportionality between the conduct involved and the remedy sought …. It is also relevant that one of the objects of the remedy is to put an end to the oppression … [citations omitted]

In assessing the value of the buy-out, Black J considered the nature of the oppressive conduct and determined that it ought to be assessed at a point in time before the oppression took place (cf Mobius Distilling at [200]): here, in this case, Ms Kennedy submits that would be about 20 or 22 December 2022. Ms Kennedy relies on that observation in this case, especially in circumstances where Ms Kennedy took active steps in offering to M[s] Franks to buy out her shares in Yamari on 21 December 2022, 21 December 2023, and then 26 November 2025: FASOC at [33]-[35]; Exhibit P1. M[s] Franks has never made a buy-out offer, even after serving her own expert report, demonstrating Ms Kennedy’s holding as at least $71,699 at 22 December 2022.”

108. Ms Kennedy relies on an expert report of Mr Coudrey (Ex P2), who had experience as a valuer, including in the advertising and signage industry. Mr Coudrey valued Yamari’s business on 20 December 2022 on the express basis that Yamari would operate after that date as it had operated in the past. He adopted a capitalisation of future earnings methodology, and derived future maintainable earnings of $206,185 per annum, by reference to Proprietor Earnings Before Income Tax Depreciation Amortisation (“PEBITDA”). On that basis, he derived an enterprise value of $258,000; an equity value of $165,840 and a combined value of the business including goodwill and all of the shares of $413,840.

109. Mr Coudrey recognised the “outsourcing arrangement” (in his phrase) between Yamari and 1800 For Promo and also identified weaknesses of Yamari’s business arising from that relationship, including that it did not operate completely “in-house”, did not operate under normal market conditions and that it was difficult to ascertain its true gross profit and net profit due to operational processes, implicitly because of the support provided to it by 1800 For Promo. However, as Mr Coudrey’s cross-examination made clear, he made no allowance for the effect of a loss of support by 1800 For Promo for Yamari in his valuation, because he had been instructed to, and did, value the business immediately before that support would potentially cease. Mr Coudrey’s approach provides no real assistance to me in valuing Yamari, because it seems to me plain enough that the support provided by 1800 For Promo to Yamari reflected Mr Browning’s and then Ms Kennedy’s involvement in the business. An arm’s length purchaser of Yamari’s business, in valuing that business, would have regard to the risk that that support would not continue, either to the level at which it previously existed or at all, after Ms Kennedy exited the business, even if there had not also been a breakdown in the shareholders’ relationships; and would recognise that the withdrawal of that support would at least have an adverse financial impact on Yamari, because it would be required to incur additional leasing and staff costs, and would potentially also have a wider structural impact because of the extent of that previous support Mr Coudrey makes no attempt to adjust for these matters, and provides no basis on which the Court can do so.

110. Ms Franks relied on the expert report dated 3 July 2025 (Ex D3) of Mr Gwynne in response, which advanced a number of criticisms of the approach adopted by Mr Coudrey. Mr Di Francesco helpfully summarised Mr Gywnne’s views as follows:

“Mr Gwynne’s report:

(a) summarises the financial performance of Yamari at [7.18] ([Ex D3], 398);

(b) summarises the calculations of EBITDA at [7.28] ([Ex D3], 402);

(c) at [7.30] & [7.32]-[7.33] ([Ex D3], 403-404) acknowledges the benefit to Yamari of the 1800 [for Promo s]upport which will not continue after December 2022 and that it had contributed to the previous profitability of Yamari. Mr Gwynne acknowledges that a potential buyer of Yamari would factor that into assessing whether future earnings are maintainable and find they are not maintainable on the same basis and a new cost base would need to be considered.

(d) considers that the adjusted net asset value method is the more appropriate method to value Yamari on the basis that an EBITDA valuation would produce a lower result and future maintainable earnings are uncertain or non-existent: see [7.32]-[7.36] & Annexure 6 ([Ex D3], 404 & 428) and Mr Gwynne T262:9-263:15;

(e) Mr Gwynne considers discounts for a minority shareholding, if that is to be adopted by the Court: see [7.40]-[7.49] ([Ex D3] 406-407); and

(f) Mr Gwynne disagrees with Mr Coudrey’s PEBITDA methodology (Mr Coudrey T247:20-34). In short this is because Mr Coudrey’s analysis: (i) does not factor in that the 1800 [for Promo s]upport would not continue after December 2022. The 1800 [for Promo s]upport had been a significant factor in the prior profitability of Yamari but it would not be part of future maintainable earnings; (ii) PEBITDA does not make allowance for the commercial value of the labour input of the proprietors; (iii) Mr Coudrey does not treat the net tangible assets of Yamari as core business assets; (iv) Mr Coudrey does not remove once off Covid-stimulus payments (Mr Coudrey T250:44-251:9); and (v) Mr Coudrey adopts of multiple of 1.25x when the closer comparable sale is 0.7x: see [8.3]-[8.27.3] ([Ex D3] 408-413).”

111. In the result, Mr Gwynne valued the net tangible assets of Yamari as at 22 December 2023 at $146,325 and Ms Kennedy’s 49% interest in her shares at $71,699. For completeness, it seems to me that it is appropriate that the valuation be directed to a 49% interest in the shares, notwithstanding the parties’ informal agreement that a return from Yamari would be divided on an equal basis.

112. The disagreements between Mr Coudrey and Mr Gwynne were summarised in their joint expert report (Ex J1). While they agreed as to several uncontroversial aspects of the valuation process, they continued to disagree as to critical issues, including the impact of the relationship between Yamari and 1800 For Promo; the valuation methodology to be adopted; and the application of any minority discount. Mr Coudrey acknowledges in his report ([3.8.2]) that Yamari would have lacked the resources to deliver its product without 1800 For Promo’s support, and that other contractors would have been required to provide the services obtained from 1800 For Promo. As Mr Gwynne points out in the joint report, plainly, costs would have been incurred in respect of those other services, which is not reflected in Mr Coudrey’s valuation of Yamari. Mr Gwynne also there points to the difficulty with Mr Coudrey’s assumption that the Yamari business would continue into the future as it had been operated in the past, which would have been undermined not only by a breakdown of the relationship between the parties, to which Mr Gwynne refers, but also by a reduction of the services provided by 1800 For Promo to Yamari, after Ms Kennedy exited the business, even without a breakdown of the relationship. It is not necessary to address the difference of views between the expert witnesses as to the application of a PEBITDA measure of earnings, or as to the applicable multiple, where Mr Coudrey’s valuation on a PEBITDA basis cannot be accepted for the more fundamental reasons noted above. It is not necessary to address their different views as to the application of a minority discount, where I hold below that no such discount should be applied in the relevant circumstances.

113. I am satisfied that a buy-out order should be made with regard to the value of Yamari as at 22 December 2022, where that was the point at which Ms Franks commenced the process of Ms Kennedy’s exclusion from Yamari management, although that process was not formally completed until the resolution to remove her as a director was passed by the exercise of Ms Franks’ majority vote at the shareholders meeting on 24 January 2023. Ms Kennedy also sought to have that valuation adjusted for several matters, but the need for such an adjustment is displaced where, as I find, Ms Franks must buy her shares at the date she was excluded from involvement in Yamari and that value is not affected by subsequent steps taken by Ms Franks in the management of Yamari’s affairs.

114. I recognise that, where the Court is unable to accept the evidence of one expert, it is not necessarily required to adopt the evidence of another expert called by another party. However, Mr Gwynne’s report here set out an alternative valuation basis for Yamari as at 22 December 2022 which is not vulnerable to the loss of support of 1800 For Promo, by reference to Yamari’s net assets at the time that Ms Kennedy was excluded from involvement in Yamari. It seems to me that alternative basis provides a proper basis for the valuation of Ms Kennedy’s shares at that date.

Whether a minority discount should be applied

115. I should also address the question whether a minority discount should be applied in the valuation of Ms Kennedy’s shares At least where oppression or unilateral exclusion of the minority by the majority is established, it will generally not be appropriate to apply a discount to the value of a minority shareholder’s shares where shares are ordered to be purchased as a result of oppression: Re Bird Precision Bellows Ltd [1984] Ch 419 at 430 (upheld by the Court of Appeal in Re Bird Precision Bellows Ltd [1986] Ch 658), Nourse J observed that:

“On the assumption that the unfair prejudice has made it no longer tolerable for [a minority shareholder] to retain his interest in the company, a sale of his shares will invariably be his only practical way out short of a winding up. In that kind of case it seems to me that it would not merely not be fair, but most unfair, that he should be bought on the fictional basis applicable to a free election to sell his shares in accordance with the company’s articles of association, or indeed on any other basis which involved a discounted price. In my judgment the correct course would be to fix the price pro rata according to the value of the shares as a whole and without any discount, as being the only fair method of compensating an unwilling vendor of the equivalent of a partnership share.”

116. The same view was taken in later Australian cases including Dynasty at ALR 87; Re DG Brims & Sons Pty Ltd (1995) 16 ACSR 559 at 595. In O’Neill v Phillips at 1107, Lord Hoffmann observed that, where a majority shareholder wants to:

“put an end to the association … it will almost always be unfair for the minority shareholder to be excluded without an offer to buy his shares or make some other fair arrangement”.

117. His Lordship there identified characteristics of a reasonable offer as being to purchase the shares at “fair value” which, if not agreed, should be determined by a competent expert, and noted that a fair offer would be at “a value representing an equivalent proportion of the total issued share capital, that is, without a discount for its being a minority holding”. The matter giving rise to unfairness was there identified as exclusion from the management of the company without a reasonable offer for the plaintiff’s shares; and that analysis treated the majority’s decision to exclude the minority as the source of the obligation to make a reasonable offer for the shares. I recognise that, in Tomanovic CA at [231], Campbell JA noted that Lord Hoffmann’s remarks about the effect of a buy-out offer in oppression proceedings were dicta and, although they might provide some assistance to a judge in seeking to apply s 232 of the Act, should not be treated as an addition to or substitute for the statutory text, and also observed (at [237]) that those observations concerned a situation where there was exclusion from management.

118. Similarly, in CVC/Opportunity Equity Partners Ltd v Demarco Almeida [2002] UKPC 16; [2002] 2 BCLC 108, Lord Millett observed that, in the case of a quasi-partnership company, it is “unfair for the majority to insist on their legal right to exclude the petitioner without making a reasonable offer for his shares”. That analysis is premised on the majority’s exclusion of the plaintiff, and Lord Millett reached that result by distinguishing it from the more common position which he described as follows:

“If the going concern value is adopted, a further question arises: whether a discount should be applied to reflect the fact that the holding is a minority one. An outsider would normally be unwilling to pay a significant price for a minority holding in a private company, and a fair price as between a willing seller and a willing purchaser might be expected to reflect this fact. It would seem to be unreasonable for the seller to demand a higher price from an unwilling purchaser that he could obtain from a willing one. Small private companies commonly have articles which restrict the transfer of shares by requiring a shareholder who is desirous of disposing of his shares to offer them first to the other shareholders at a price fixed by the company’s auditors. It is the common practice of auditors in such circumstances to value the shares as between a willing seller and a willing buyer and to apply a substantial discount to reflect the fact that the shares represent a minority holding.”

119. In Mopeke Pty Ltd v Airport Fine Foods Pty Ltd (2007) 61 ACSR 395 at [109]; [2007] NSWSC 153, Brereton J also observed that it is “ordinarily inappropriate” to apply a discount for a non-negotiable or minority interest in the context of an oppression suit, again in a case in which oppression was established. In Short v Crawley (No 30) [2007] NSWSC 1322 at [1289]–[1290], White J noted another rationale for excluding a minority discount, that the valuation must exclude the depreciating effect on the plaintiff’s shares of the defendant’s oppressive conduct. That rationale is applicable here.

120. I took the same view in Byrne and observed (at [70]) that this approach:

“seem[s] to me to be directed to the situation where a minority shareholder is an unwilling seller in the sense that the sale of his or her shares has been forced upon him or her by the majority’s conduct.”

I also there noted that:

“The policy underlying a refusal to apply a minority discount is obvious enough where a shareholder has been unilaterally excluded from management and the majority would then benefit from then being permitted to acquire the minority’s shares at the lower value contemplated by a minority discount. I cannot see a basis for extending the application of that policy to circumstances where a person seeks to leave the business rather than being unilaterally excluded from it.”

121. Mr Di Francesco also fairly acknowledges that:

“It is generally inappropriate to apply any discount to the value of shares where a buy-out order is made as a result of oppression. Where a shareholder has been unilaterally excluded from management, the sale of shares forced upon the shareholder and the majority would then benefit from then being permitted to acquire the minority's shares at the lower value contemplated by a minority discount, the policy of the Court is normally to not apply a minority discount. However, a minority discount will normally be applied where a person seeks to leave the business rather than being unilaterally excluded from it [citations omitted]. In the present case, this will turn on the factual findings as to what has occurred here, but the evidence demonstrates that this is likely a case of a shareholder intending to cease their participation in the company, as opposed to simply being unilaterally excluded.”

122. It seems to me that the position here is that, although Ms Kennedy wished to exit Yamari, although not necessarily immediately, she was in fact excluded from it. I recognise that Mr Browning had proposed Ms Kennedy’s exit at the meeting on 9 December 2022, and Ms Kennedy had confirmed that position in subsequent correspondence; but what then occurred was a forced exclusion, implemented by Ms Franks, who could have but did not leave Ms Kennedy to take such steps to exit the business as she wished. A minority discount should not be applied in these circumstances.

123. For completeness, Ms Kennedy also contends that, in addition to the amount payable by reference to the value of her shares, she should be returned the amount of “seed capital” contributed by Mr Browning to Yamari, being $10,000, before the calculation of interest. I do not accept that proposition, where the amount of that contribution is reflected in the value of Ms Kennedy’s shares in Yamari as at December 2022.

124. In the result, an order should be made that Ms Franks buy out Ms Kennedy’s shares in Yamari at a price of $71,699 and leave should be granted, to the extent necessary, to allow a transfer of those shares although Yamari is now in liquidation.

Orders

125. Ms Kennedy also seeks an order for pre-judgment interest and costs. Ms Kennedy, Mr Browning and 1800 For Promo also foreshadowed that they would seek a costs order in respect of the cross-claim which was not prosecuted by Ms Franks. The latest offer made by Ms Kennedy, prior to the commencement of the proceedings, also raises the question whether an order for indemnity costs should be made, at least in respect of the several days on which this matter was heard. These matters are best addressed, if agreement is not reached between the parties, at the point of making orders in the proceedings.

126. I direct the parties to bring in agreed short minutes of order to give effect to this judgment, including as to pre-judgment interest, the costs of the cross-claim and any special order as to costs, within seven days and, in the event of disagreement, their respective draft orders and submissions not exceeding six pages in Arial font 12, one and a half spacing as to the differences between them.

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