Lambourne v Baker

Judgment

1. BASTEN and GLEESON JJA: The appellants challenge orders made by Rees J in the Equity Division (Corporations List) dismissing proceedings brought by them against the respondents.1 The first two appellants, Marc Lambourne and Glenn Pollett, established an on-line business giving tips on horse-racing called the Punters Show. With the first respondent, Dallas Baker, they established a company, Punters Show Pty Ltd, which was the third appellant. At the material time, Mr Baker was the sole director of the company. The appellants' primary claims were that Mr Baker, in breach of his fiduciary duties to the company and to them personally, disposed of the assets of the company to the second respondent, Todd Buckingham, and a company associated with him, then known as TopBetta Holdings Ltd, the third respondent. Mr Lambourne also had a personal claim against Mr Buckingham for an outstanding debt of $30,000.
2. On 16 August 2021, after the hearing of the appeal, the solicitors for the respondents notified the Court that Mr Lambourne's personal claim against Mr Buckingham had been resolved.
3. There remained two outstanding issues. The first involved a claim for recoupment of certain "improper withdrawals" made by Mr Baker, the then director of Punters Show Pty Ltd, from the company's accounts. The amount of that claim included cash withdrawals of $187,791 and Items relating to such matters as "brothels", "chiropractor", "liquor purchases" and "parking/speeding fines" of $22,458, giving a total of $210,249. The claim was one which the company, now under the control of Messrs Lambourne and Pollett, was entitled to make. The respondents resisted the claim for recoupment of improper withdrawals on the basis that it had not been pursued at trial.
4. The second issue involved a claim for equitable compensation based on either the destruction of the value of Punters Show Pty Ltd through a strategic partnership with TopBetta, or as the value obtained by TopBetta through its association with Punters Show Pty Ltd when TopBetta listed on the ASX.

Improper withdrawals claim

1. The respondents gave no evidence in resistance to this claim. However it was not dealt with by the trial judge. The only issue on appeal was whether it had been abandoned at trial. That requires consideration of the course taken by the appellants at the trial.
2. That course has been recounted by Emmett AJA below and may be dealt with succinctly for present purposes. The starting point is the pleading in the amended statement of claim filed on 31 May 2018. Other than claims for costs and interest, the relief claimed was identified in eight paragraphs. Each was carefully formulated with respect to particular parties. Relevantly for present purposes par 3 read as follows: "3. The third plaintiff [Punters Show Pty Ltd] claims against the first defendant [Dallas Baker], damages and/or equitable compensation in regard to the causes of action pleaded below."
3. Paragraphs 1-15 were introductory. The first cause of action was addressed under the heading "Breaches of duty - improper withdrawals" and comprised pars 16-20. Relevantly, these provided: "16. Between at least August 2012 or earlier and August 2016 Baker withdrew $833,000.00 from the accounts of the Company, including $187,791.00 in cash from ATM's, the majority of which money was withdrawn by Baker in breach of his duties to Lambourne and Pollett, and in breach of his duties to the Company, and caused loss and damage. … 18. A substantial portion of the moneys withdrawn by Baker for his own personal purposes as described in paragraph 16 above, constituted revenue of the Company in regard to which Baker was bound to account to the Company …. 19. In withdrawing those sums described in paragraph 16 above, that portion of the said sum that should have been accounted for to the Company in accordance with the matters pleaded paragraphs 17 and 18 above, Baker breached his general fiduciary obligations to the Company, and his statutory obligations to the Company. …" In his defence, Mr Baker denied each of these paragraphs.
4. In an affidavit sworn on 28 May 2018, Mr Lambourne stated: "86 Soon after the proceedings commenced in November 2016, the First Defendant was ordered to provide me with copy of the Company's bank statements. My analysis of the bank statements (up until 14 September 2016) showed the Company had received $2,426,047 in revenue into the bank account. Dallas [Baker] had paid himself $813,497, Glenn Pollett $380,100 and me $216,413 … I observed substantial sums not business related. At [Blue Book, pp 254-258] are copies of schedules I prepared denoting non-business-related expenses with accompanying investigations." The amounts identified in the evidence included $187,791 identified as "cash withdrawals" and the smaller sums totalling $22,458. As to the three amounts paid to each of Mr Baker, Mr Pollett and Mr Lambourne, there was no clear demonstration of impropriety.
5. At the beginning of the hearing on 26 February 2019 Mr Lambourne, who appeared in person and was given leave to appear for Mr Pollett and the company (as he was in this Court), opened the plaintiffs' case by referring to the amended statement of claim and his own affidavit, together with the exhibit to his affidavit, ML1, which contained the summary of the alleged misappropriations and supporting documentation. The judge then asked him for a general overview of the case. [1] Mr Lambourne explained the main elements of the plaintiffs' complaints.
6. Counsel for Mr Baker (Mr Silver) noted that at or before an earlier directions hearing Mr Lambourne had identified "the basis of the claim as a Barnes v Addy type claim and that's repeated in the submissions." [2] Mr Silver continued: "So while it is a very different claim we say to the claim made out in the amended statement of claim in the sense that the claim there was articulated to be the loss of the value of the company, we now understand that the plaintiff's claim is made on two fronts: (a) the $30,000 … and a claim for equitable damages or compensation, the quantum of which is based on the increased value of the company or the shares. And those being the sum total of the claims against the parties, we will approach the objections in a way which is a bit more directed." Mr Silver then withdrew objections to other material and noted that two witnesses were not to be cross-examined, before seeking a short adjournment to consider his position with respect to Mr Lambourne. The judge responded: [3] "HER HONOUR: I just have a slight hesitation in that I do note that the plaintiff's written submissions are on Barnes v Addy, and I do note that the amended statement of claim is more wide-reaching. Given that the plaintiffs are self-represented, I just have in mind that things may change and move as the hearing goes on, and so you take the course that you think is appropriate but if the plaintiffs take a different view as the case unfolds, I'm not going to stop them from pursuing a pleaded part of their claim [if] it's not referred to in their written submissions. … SILVER: Yes. Your Honour, may I say this: I accept what your Honour says, of course, but the plaintiffs have been represented virtually the whole time in these proceedings by solicitors and/or junior counsel. HER HONOUR: But they're not represented now …."
7. During further exchanges, Mr Silver reiterated his understanding that the claim now made was basically one reliant on Barnes v Addy. The point taken was a little curious; the claim against Mr Baker did not turn upon him being privy to a breach of trust committed by others (as in Barnes v Addy), but on him being the party who breached his fiduciary obligations. Counsel for the other defendants (Mr Buckingham and companies associated with him) took no part in the discussion with the trial judge, although the claims against them involved participation in Mr Baker's breaches of fiduciary duty, which might properly have been described as Barnes v Addy claims.
8. In any event, the trial judge made it clear that however the matter had been opened up to that point, there was, in effect, no abandonment of causes of action set out in the amended statement of claim. She concluded: [4] "That doesn't seem to me to exclude them from relying on a pleaded [cause] of action. It doesn't seem to me to lock that out. So at the moment, it seems to me - it's a matter for you but you can proceed on the basis of what Mr Lambourne has outlined. If Mr Lambourne changes his mind and wants to go further or wider, then we'll just have to revisit the extent to which you might want to take other objection to other affidavits or change your course accordingly."
9. Mr Silver then indicated his understanding of the process, took no objection to Mr Lambourne's affidavit and did not require Mr Lambourne for cross-examination. Mr Lambourne then read his affidavit and the exhibit ML1 was admitted without objection. [5]
10. Once the plaintiff's case was closed, the defendants indicated that they did not read their affidavits and tendered no evidence. Mr Lambourne was clearly taken by surprise. Discussion followed as to whether he could read one of Mr Buckingham's affidavits or otherwise rely upon the verified defences, no doubt for the purpose of cross-examining the deponents. However, no such course was ultimately pursued. The matter proceeded to final submissions.
11. In his final submissions, Mr Silver adverted to the claim of misappropriation in the following terms: [6] "So, the next aspect is to consider the lengthy argument about the revenue that was taken supposedly from the company. Well, that's never been the articulated case, that they want that money back. There's just no case on that. The company has not suffered that loss in accordance with the way that this case is pleaded; and Mr Baker has certainly not been responsible for misappropriating those funds. He certainly hasn't had any benefit. He's never been a shareholder of any of the second to fifth defendants. He's never been a director. He was an employee, and then after the May agreement, things fell apart … and the whole relationship unravelled."
12. The statement that there had been no case pleaded that the company had suffered loss because of revenue taken from the company was factually erroneous, as has been demonstrated above. The case was expressly pleaded.
13. Oral submissions concluded with written submissions by Mr Silver which included the following propositions: "1 The plaintiffs have outlined two claims in their opening submissions. 2 The first is a claim for $30,000 against defendants other than the first defendant (Baker). It will not be addressed further. 3 The second is a claim against Barnes v Addy against all the defendants. 4 That claim cannot succeed against Baker for the following reasons. 5 A case based on Addy was not pleaded against Baker. 6 The first leg of Barnes v Addy involves knowing receipt of property acquired through a breach of fiduciary duty …. 7 There is no allegation in the ASOC that Baker received any property. On the contrary the plaintiffs say the transfer was to TopBetta. …. Leaving aside the pleading, there is no evidence that Baker received any property belonging to any of the plaintiffs. 8 The claim should be dismissed for this reason alone."
14. The remainder of the submissions were addressed to the allegation that TopBetta had benefited from the transfer of the benefits of the Punters Show business to it, the benefit flowing from the public listing.
15. The written submissions in reply for the plaintiffs dated 1 March 2019 immediately took issue with par 5 of Mr Baker's submissions that no Barnes v Addy case had been pleaded against him. That was stated to be false by reference to various paragraphs in the background part of the amended statement of claim; the submission concluded by referring to "breaches of such duties as set out at paragraphs 16 to 19 - except for the allegation at the end of paragraph 19; and his statutory obligations to the company; and 20."
16. In this Court, counsel for Mr Baker asserted that the claim against his client for improper withdrawals from the company bank account had only been made in submissions in reply in the trial court. That was not correct: what was pointed out in the reply was that the claim had been fully pleaded. The problem lay elsewhere. The problem was that the pleaded claim against Mr Baker with respect to improper withdrawals was not a Barnes v Addy claim at all: Mr Baker was not a person who received property as the result of a breach by a fiduciary, nor was he knowingly involved in a breach of a fiduciary; Mr Baker was the miscreant fiduciary. The company brought a claim against Mr Baker for equitable compensation. Although Mr Silver said that Mr Lambourne had referred to a "Barnes v Addy claim at a directions hearing", and had filed an outline of submissions prior to the commencement of the trial described as submissions "as to compensation under the Barnes v Addy type claim", at no stage did Mr Silver articulate what he understood that phrase to mean. When it was relied upon for Mr Baker before the trial judge, no explanation was given as to what was referred to by that phrase although it seems that the trial judge was conscious of the fact that there was a pleading of direct (not derivative) liability on the part of the company. (That pleading, correctly, did not refer to Barnes v Addy.)
17. It is necessary then to turn to the manner in which the claim was dealt with by the primary judge. At the outset of her judgment, she adopted the analysis of counsel for Mr Baker, stating at [4]: "Although the Amended Statement of Claim contained a number of causes of action, the plaintiffs pressed two claims at the hearing: (a) Mr Lambourne sought $30,000 plus GST from Mr Buckingham and TopBetta, together with interest; and (b) the plaintiffs sought equitable compensation from the defendants in a Barnes v Addy claim." (There is no need to deal with the judge's reasoning in relation to the $30,000 claim, which has been settled.) She observed that there was "no evidentiary basis to support the asserted loss and thus the Barnes v Addy claim failed for that reason alone."
18. In dealing with a claim for equitable compensation, the judge correctly noted that the rule in Barnes v Addy [7] "extends liability for breach of trust to third parties in certain circumstances", [8] those being cases of "knowing receipt" and "knowing assistance" in a breach of fiduciary duty. [9] In dealing with the pleaded case, the primary judge outlined the claims by Mr Lambourne and Mr Pollett that Mr Baker owed them fiduciary duties which had been breached. There was no reference to the company's claim against Mr Baker. The conclusion reached was expressed as follows: "[83] Thus, the claim for equitable compensation by Mr Lambourne and Mr Pollett against Mr Baker fails by reason of an absence of any fiduciary duties being owed to them, or evidence that any such duty was breached. … [84] As a director of Punters Show, it may be accepted that Mr Baker owed fiduciary duties to the company. The question is whether Mr Baker breached his fiduciary duties by revealing the whole of the company's financial and confidential information about its business to Mr Buckingham and TopBetta without any compensation or caused Punters Show to enter into the May 2015 agreement and be stripped of all of its assets for no compensation. As already outlined … these propositions have not been established by the plaintiffs on the balance of probabilities."
19. Two factors emerge from this consideration. The first is that at no point did the primary judge suggest that the claim pleaded in paragraphs 16-19 of the amended statement of claim had been abandoned. It was simply not addressed. Secondly, the omission was understandable, given the emphasis placed by Mr Lambourne on the claim, which he valued in the millions of dollars, based on the use of the Punters Show business to boost the listing price and valuation of TopBetta.
20. Nevertheless, the fact remains that the claim was overlooked. That it was pleaded, and supported by evidence to which no objection was taken, demonstrates that it should have been addressed. In this Court, counsel for Mr Baker did not submit that it was not raised in submissions, but only that it was referred to in "reply submissions made after the end of the hearing". [10]
21. Counsel did not submit that the matter was not raised by the submission in reply; nor did he suggest that he had had no opportunity to deal with it. No doubt it would have required leave to file a further submission, but that could have been sought had he been taken by surprise, or believed that his client was prejudiced by the reply submission.
22. In these circumstances, the judge was in error in not dealing with the claim for the "improper withdrawals". It was expressly raised, supported by evidence and referred to in the submissions in reply. Given the basis on which the matter had proceeded at trial, it is clear that the way was left open to the defendants to reconsider their forensic strategy if the plaintiffs' position changed in relation to the pleaded claims. They were entitled to raise the issue if they perceived that the written submissions in reply involved a change in position. At least, Mr Baker was entitled to, as it was not suggested that any of the other defendants was affected by any change in position. Mr Baker took no step.
23. In these circumstances, the claim should have been upheld and judgment may now be given in this Court. The claim was effectively limited to the amount of $210,249. The liability was not to the individual shareholders, but to the company which they now control.

Claim for lost value of Punters Show

1. The far larger claim for equitable compensation based on the misuse of the reputation and assets of Punters Show Pty Ltd must be rejected for the reasons given by Emmett AJA.

Notice of motion to call further evidence

1. By a further amended notice of motion efiled on 23 June 2021, Mr Lambourne sought a number of orders, most of which were unnecessary or fell away in the course of the hearing. However, in part the orders sought to rely on further evidence. That application was rejected and the motion dismissed. Emmett AJA has explained the reasons for that order.

Costs

1. Mr Lambourne's individual claim against Mr Buckingham having been settled, that issue has been dealt with by way of a consent judgment. However so much of the hearing as was concerned with that claim should not be the subject of any separate order for costs.
2. The claim for the improper withdrawals properly arose between the company, Punters Show Pty Ltd, and Mr Baker. In this Court, Mr Silver appeared for all five respondents and Mr Lambourne appeared in person on behalf of himself, Mr Pollett and the company, pursuant to leave. There is, therefore, some awkwardness in dividing up the costs of the proceedings.
3. Rather than attempt such a division, the Court should order that there should be no order as to the costs in this Court. The costs of the trial may be dealt with on the same basis. The parties can seek to reopen those order by a notice of motion filed within 14 days, in the ordinary course.
4. EMMETT AJA:

Introduction This appeal arises out of arrangements entered into in late 2010 by the first and second appellants, Mr Marc Lambourne and Mr Glenn Pollett respectively, and the first respondent, Mr Dallas Baker (together, the Participants), to engage in a joint venture. The object of the so-called joint venture was for the Participants to form and conduct a business that was to engage in producing and broadcasting, on internet television, a regular programme connected with thoroughbred horseracing to be called "the Punters Show". The intention was that products of one or more of the Participants would be promoted, marketed and sold from a website associated with the Punters Show, together with products of third-party providers, who would pay a commission to the proposed business. Mr Lambourne explained that "product" consisted of information, advice and predictions for thoroughbred racing, greyhound racing and trotting and pacing racing and that a "provider" was someone who sold such "product" on the Internet.

1. In pursuance of the so-called joint venture, Mr Baker, who was then a bankrupt, caused the third appellant, The Punters Show Pty Limited (the Company), to be incorporated on 20 December 2010 and caused 25 shares in the capital of the Company to be issued to each of the Participants. Following his discharge from bankruptcy, Mr Baker became the only director of the Company on 24 August 2012.
2. Mr Lambourne, Mr Pollett and the Company (together, the Claimants) claim that, in consequence of the arrangements briefly described above, Mr Baker owed Messrs Lambourne and Pollett certain fiduciary duties. They also claim that Mr Baker owed fiduciary duties to the Company in consequence of his being a director of the Company. The Claimants assert that Mr Baker has acted in breach of those fiduciary duties and claim equitable compensation in respect of the loss they allege that they have suffered as a consequence of such breaches of duty.
3. The principal breach of fiduciary duty on the part of Mr Baker was said by the Claimants to derive from an agreement made in May 2015 whereby the second, third, fourth and fifth respondents, Mr Todd Buckingham, Betmakers Technology Group Limited, formerly known as TopBetta Holdings Limited (TopBetta), 12Follow Pty Limited (12Follow) and Operis Momentus Pty Limited (Operis) respectively, would enter into a "strategic partnership" with the Company. The Claimants assert that Mr Baker urged and encouraged Messrs Lambourne and Pollett to agree to the proposed strategic partnership and that they did so because of misrepresentations alleged to have been made by Mr Baker in circumstances where Mr Baker's own interests were in conflict with his fiduciary duties to Messrs Lambourne and Pollett and to the Company. The Claimants also claim that Mr Buckingham, TopBetta, 12Follow Pty and Operis (together, the Buckingham Interests) were knowingly involved in Mr Baker's breaches of fiduciary duty and are therefore liable to pay equitable compensation to them.
4. In addition, Mr Lambourne claimed that Mr Buckingham agreed to pay to him or to cause to be paid to him the sum of $30,000 as consideration for his agreeing to begin promotional work for TopBetta and its associated companies. Mr Lambourne asserted that Mr Buckingham promised that, if the Buckingham Interests entered into the proposed strategic partnership, Mr Buckingham would ensure the immediate payment to Mr Lambourne of the sum of $30,000. However, after the hearing of the appeal, the parties informed the Court that the $30,000 claim by Mr Lambourne against TopBetta has been settled and that it is no longer pursued by Mr Lambourne. Accordingly, it is not necessary to say anything further on that question, although it may be relevant to the question of costs.
5. By originating process filed on behalf of the Claimants in the Corporations List of the Equity Division on 17 November 2016, the Claimants commenced proceedings against Mr Baker and the Buckingham Interests. I have set out in Appendix 1 to these reasons a summary of the relief claimed and the allegations made by the Claimants in their amended statement of claim filed on 31 May 2018 (the Amended Statement of Claim). The allegations are relevant to a contention advanced in the appeal on behalf of Mr Baker that it is not now open to the Company to seek recovery from him of amounts that were alleged in the Amended Statement of Claim to be "improper withdrawals" by him from the Company.
6. On 13 December 2019, for reasons published on that day, a judge of the Equity Division sitting in the Corporations List (the primary judge) ordered that the originating process be dismissed and ordered that the Claimants pay the costs of Mr Baker and the Buckingham Interests. The Claimants now appeal to this Court from the orders made by the primary judge.
7. Although the Claimants had legal assistance in connection with the formulation of the Amended Statement of Claim, they were not legally represented at the hearing before the primary judge or on the hearing of the appeal. Leave was given both at the hearing before the primary judge and on the hearing of the appeal for Mr Lambourne to address the Court on his own behalf and on behalf of Mr Pollett and the Company. Although Mr Lambourne completed law studies, he has not practised. At the hearing before the primary judge, Mr Baker, on the one hand, and the Buckingham Interests, on the other, were separately represented. However, all five respondents were represented by the same counsel and solicitors on the hearing of the appeal.

Application to Adduce Further Evidence

1. A considerable part of the first day of the hearing of the appeal was taken up with an application by the Claimants for leave to adduce further evidence in pursuance of a further amended notice of motion dated 23 June 2021. After considering written submissions and hearing oral argument, the Court indicated to Mr Lambourne that the application to adduce further evidence would be refused on the basis that special grounds had not been established. The Court indicated that it would give reasons for dismissing the application when disposing of the appeal. Those reasons follow.
2. The further evidence sought to be adduced consists of the following:

• Affidavit sworn by Mr Buckingham on 21 September 2018;
• Affidavit sworn by Mr Baker on 21 September 2018; and
• Email sent by Mr Buckingham to numerous addressees on 12 June 2016.

1. The hearing before the primary judge took an unusual course. Directions had been given for the parties to file affidavit evidence on which they wished to rely and several affidavits were filed on behalf of the Claimants, including affidavits by Mr Lambourne and Mr Pollett as well as affidavits by Mr William Saunders and Mr Paul Daily. The affidavit by Mr Baker of 21 September 2018 was filed on his behalf and the affidavit by Mr Buckingham of 21 September 2018 was filed on behalf of the Buckingham Interests.
2. Prior to the commencement of the hearing, significant parts of the affidavits filed on behalf of the Claimants were objected to on behalf of Mr Baker and the Buckingham Interests. As I have indicated, the Claimants were represented by Mr Lambourne. However, after Mr Lambourne finished his opening address to the primary judge, counsel for Mr Baker indicated that all objections to the affidavits filed on behalf of the Claimants were withdrawn and none of the deponents was required for cross-examination. Counsel for the Buckingham Interests adopted a similar position. Further, counsel for Mr Baker and for the Buckingham Interests also indicated that none of the affidavits filed on their behalf would be read at the hearing.
3. The primary judge expressly drew Mr Lambourne's attention to the fact that none of the defendants' affidavits was to be read. When Mr Lambourne said that he was "somewhat confused by what's going on", her Honour drew Mr Lambourne's attention to the fact that although affidavits sworn by Mr Baker and Mr Buckingham had been served, the defendants did not propose to call any evidence and were not reading those affidavits or calling those witnesses to give evidence. Her Honour pointed out that the documents that were exhibited to or were attached to those affidavits, as matters then presently stood, were not part of the evidence before her Honour and drew Mr Lambourne's attention to that fact in case it may be that he might wish to rely on some of the documents. Her Honour pointed out that, if there were documents upon which Mr Lambourne wished to rely, he could tender them in circumstances where the defendants' affidavits were not read. Mr Lambourne said that he understood. He then asked for an adjournment so that he could consider which of the documents annexed to the defendants' affidavits he needed for his case.
4. The primary judge indicated that Mr Lambourne should be given an opportunity to think about whether he needed any of the documents annexed to or exhibited to the defendants' affidavits and whether he wished to tender them if he needed them. Her Honour then suggested that an adjournment of half an hour would afford Mr Lambourne the opportunity of considering the material and Mr Lambourne responded that that would be convenient. After the adjournment, Mr Lambourne indicated that he was able to ascertain the annexures that he wanted to tender.
5. Mr Lambourne then said that he had not had sufficient time to consider the defendants' affidavits. The primary judge responded: "Well you can't ordinarily read the other side's affidavits, well you can, but it's a bit complicated. We will start with the documents shall we." Mr Lambourne then tendered a number of documents that had been annexed to or exhibited to Mr Baker's affidavit or Mr Buckingham's affidavit.
6. The primary judge then asked Mr Lambourne whether he wished to begin his closing argument or closing submissions that afternoon. Mr Lambourne responded that he had no anticipation of needing to be ready to submit final submissions or closing remarks. Her Honour acknowledged that things had moved "quite differently from what you might have expected" and then said: "There is another point that you did raise which was whether you wanted to read some of the defendants' affidavits. That is technically possible, but it might be a bit more of a problem. My job is not to give you legal advice as to how to put your case, but unless I hear from you further on that, I'll just assume that your case is closed, finished and you're all in, all done." Mr Lambourne responded that there was a particular example that struck him when he read one of Mr Buckingham's affidavits and referred to an email from an auditing firm. Her Honour responded that that email was in evidence.
7. Mr Lambourne then said that he was curious as to whether he needed the affidavit regarding the annexures to address any issue that might arise from the email. He said that what concerned him about the email was "the use of an auditor to sign off on something that perhaps needs re-investigation". The primary judge then said: "Well, I'm not sure I quite follow that, but at the moment what is in evidence is the email chain, which I will read, and no doubt you and [counsel for the defendants] will tell me what I should or shouldn't glean from it, but that's the state of the evidence at the moment on that email." Mr Lambourne responded that he understood what the primary judge was saying about the affidavits.
8. Mr Lambourne then asked about "the sworn defences", saying that there were substantial statements in the sworn defences. Her Honour responded that it was not necessary to tender Court pleadings, which formed part of the Court file. Her Honour said that they were verified by the parties who filed them so that Mr Lambourne could take her Honour, in due course, to admissions that had been made or statements that had been made in the defences. Her Honour confirmed that the defences formed part of the Court record and then said: "They are the articulation of the parties' contentions as to what they say in the defendants' [sic, defence], which parts of your claim they admit, which parts they don't and any particular reasons why they say you shouldn't be given the relief you seek in accordance with the Uniform Civil Procedure Rules. They're not affidavits."
9. The following exchange then occurred: "Mr Lambourne: So you wouldn't normally cross-examine anyone on the basis of any statement they made in the defence. Her Honour: Well, you've got no witness to cross-examine because they're not calling any. Mr Lambourne: Right. Sorry, for me to ask questions of the defendants who have sworn that defence. Her Honour: You can't because they're not calling them."
10. The primary judge then indicated that she proposed to adjourn the hearing until the following day. When asked whether he had a sense of how much time he would need for closing submissions, Mr Lambourne responded: "I am quite confused about the way the case has gone, and I am really struggling with my expectations and my obligations in this matter." Her Honour invited Mr Lambourne to take the time he needed, saying that, if he needed additional time, the matter could be stood down until later on the following day.
11. When the hearing resumed on the following day, the primary judge inquired of Mr Lambourne as to whether he had any rough sense of timing as to how long he might take with closing submissions. Mr Lambourne responded by thanking her Honour for adjourning on the previous day and that he was sure he would take at least until lunchtime.
12. Counsel for Mr Baker then referred to a communication on the previous day that the Claimants were going to reopen their case to apply for exemplary damages. Mr Lambourne indicated that he was "not planning to do anything at the moment" but that he reserved his rights. The primary judge indicated to Mr Lambourne that the point had been reached where "the territory is now very defined" and that, if Mr Lambourne wished to "change the territory", he would need to do that immediately. Mr Lambourne confirmed that he did not "plan to do anything along those lines". No mention of material in the defendants' affidavits was made at that time.
13. The email of 12 June 2016 was referred to in Mr Lambourne's affidavit, which was read at the hearing before the primary judge. It was clearly available to the Claimants at that time. Further, it is unlikely that the email would have any effect on the ultimate result. The thrust of the arguments advanced on behalf of the Claimants is that the email was relevant to whether Mr Buckingham participated in a fraudulent and dishonest design with Mr Baker to remove Messrs Lambourne and Pollett from the business of the Punters Show. Adding the whole of the contents of the email would not advance the Claimants' case that there was a dishonest and fraudulent design between Messrs Buckingham and Baker.
14. Clearly enough, the Claimants had the opportunity to make use of the affidavits of Messrs Buckingham and Baker. It was open to them to tender the affidavits as admissions by Mr Baker or Mr Buckingham as the case may be. Questions may have arisen as to whether Mr Buckingham's affidavit would have constituted admissions as against Mr Baker and whether Mr Baker's affidavit would have constituted admissions as against the Buckingham Interests. Nevertheless, the Claimants had ample opportunity following adjournments to consider the question of tendering the affidavits as admissions and, if need be, to obtain legal advice on that question.
15. It is relevant, of course, that the Claimants were not represented by lawyers at the hearing. However, the primary judge intimated that some use could be made of the affidavits if the Claimants sought to do so. Her Honour properly observed that it was not for her to give legal advice. Of course, if the affidavits had been tendered, Mr Baker or the Buckingham Interests may well have chosen to go into evidence by way of response. If they were now admitted on a basis that has not been made entirely clear to this Court, there would be a very real prospect of the need for a new trial. In any event, it is not apparent, even if the affidavits were admitted as admissions, how the admissions would have any effect on the ultimate outcome.
16. The hearing of an appeal in the present circumstances is by way of rehearing on the basis of the evidence before the trial judge. However, the Court may receive further evidence but must not do so except on special grounds. As a general rule, three conditions would need to be met before further evidence would be received. [11] First, it is necessary to show that the evidence could not have been obtained with reasonable diligence for use at the trial. Secondly, it must be shown that the evidence is such that there would be a high degree of probability that there would be a different result if the further evidence were admitted. Thirdly, the evidence must be credible. All of the further evidence sought to be adduced was available to the Claimants at the hearing before the primary judge. Accordingly, they failed to satisfy the first condition. In those circumstances, the Court considered that no basis had been established from the grant of leave to adduce the proposed further evidence.

The Claimants' Uncontested Evidence

1. The evidence of the Claimants consisted of affidavits by Mr Lambourne, Mr Pollett, Mr George Saunders and Mr Thomas Daily, which were read without objection, and none of those deponents was required for cross-examination. In addition, Mr Lambourne tendered some documents, including documents that were annexed to the affidavit of Mr Baker or the affidavit of Mr Buckingham. What follows is taken from those unchallenged affidavits and documents.

The Participants and the Joint Venture

1. Immediately after finishing high school, Mr Lambourne worked from time to time with bookmakers. From a young age, he accumulated form guides from "The Australian" newspaper and reviewed them from time to time in search of "winning patterns or systems". In the 1980s, Mr Lambourne visited racecourses and stayed at the course for more than an hour after the last race watching replays of the races. While completing law studies at the University of New South Wales, Mr Lambourne worked for numerous bookmakers, including Mr Peter Todd, whom Mr Lambourne described as "one of Sydney's leading bookmakers". Mr Lambourne assisted Mr Todd with the work of "setting the market" for each race in Sydney.
2. Mr Lambourne held a licence as a bookmakers' clerk from 1983 until 2017. Between 1990 and 1999, he also held a bookmakers' licence. Mr Lambourne has worked for at least 15 Sydney bookmakers and often stood in for bookmakers who could not attend a particular race meeting and ran their bookmakers' stands for them. By about 2009, Mr Lambourne was recognised within the thoroughbred racing industry as an expert form analyst, "market setter" and media commentator. Many bookmakers, jockeys and professional punters retained his services.
3. Mr Pollett has also had substantial expertise in the thoroughbred racing industry. He and Mr Lambourne have been personal friends for about 25 years. By about 2009, Mr Pollett had built up a 25-year reputation in horse racing circles as "a colourful and cavalier bookmaker, punter and professional poker player". Mr Pollett's particular skill was to predict winners from looking at horses in the mounting yard before each race.
4. By 2009, Mr Baker was known as an entrepreneur in the thoroughbred racing industry. He worked as a writer and producer on a digital platform known as "Racenet", which at that time was the leading online data repository for the thoroughbred racing industry. Mr Lambourne first met Mr Baker when Mr Lambourne appeared on a radio show produced by Mr Baker. Mr Lambourne considered that Mr Baker was "brimming with good ideas and sold his ideas well".
5. In 2009, Mr Baker invited Mr Lambourne and Mr Pollett to appear on the "Racenet" programme to talk about thoroughbred racing. After a few more on-air talks, they developed a show that was streamed weekly on "Racenet". The streamed videos became known as "the Punters Show". Mr Lambourne and Mr Pollett were not paid for appearing on "Racenet" and relied on Mr Baker's representations that the demands for their services and products would increase from exposure on "Racenet".
6. In 2009, Mr Lambourne was selling "products" such as:

• Marc's Comprehensive Set; and
• Lambourne Provincial Pearlers. Mr Lambourne explained the term "set" as being comparable to a "stock review or assessment" provided by a stockbroker. In relation to each horse in a particular race, Mr Lambourne provided a form summary and a range of odds and predicted the running positions that each horse might take during the race. That assists a punter to assess the odds being offered by taking into account actual weather and track conditions at the time of the relevant race.

1. Mr Lambourne characterised the Punters Show as being "unique and ground breaking" and as being "controversial" because it competed with form guides and thoroughbred racing commentary published by newspaper groups and popular radio stations. Mr Lambourne said that those publishers were controlled by the "TAB" and that he, Mr Pollett and Mr Baker shared "the anti-TAB" anti-establishment philosophy and campaigned for "the rights of the average punter".
2. After the popularity of the Punters Show increased, Mr Baker said to Mr Lambourne and Mr Pollett words to the following effect: "We are on a good thing here, but the idiots who run this place do not understand. They treat me like the office boy. Why don't we make some proper money out of this? I can give you even more exposure and your product sales will shoot through the roof. We make a good team and feed well off each other. We should all be making money from this!" Towards the end of 2010, Mr Baker said to Mr Lambourne and Mr Pollett words the following effect: "I told you your 'products' would take off!! [sic] Let's start making real money for ourselves as a team. I can create our own website through which I can promote you and your products. We can also create a digital shop front from which we can help other 'providers' like Marc and bookmakers, to sell their services online. Our show will be the 'magnet' to attract buyers and advertisers to our shopfront. We'll share the profits from selling products from the other providers and other services like advertising. You won't be charged any commission when we sell your own products. What have you got to lose?"
3. At the time of the conversation just referred to, Mr Baker did not have any "products". Mr Lambourne considered that he had nothing to lose in joining with Mr Baker in the proposed business since he very much enjoyed presenting the Punters Show with Mr Baker and Mr Pollett. Mr Lambourne, Mr Pollett and Mr Baker agreed that:

• Mr Baker would set up a company with a website, shopfront and merchant facilities;
• the Participants would continue to provide their "quirky videos" twice weekly to attract punters and advertisers to their website;
• Mr Baker would handle all management, technical, production and digital broadcasting issues;
• the Participants would devise new products to sell on the digital shopfront and share profits equally among themselves for any such new products; and
• the Participants would share equally all other profits from advertising and sale of other providers products.

1. As I have said, Mr Baker subsequently caused the Company to be incorporated and each of the Participants was allotted 25 of the 75 issued shares in the capital of the Company. At the time of incorporation of the Company, Mr Baker said words to the following effect: "I cannot be a company director for a while because of a bankruptcy issue, but I can still do all the work as if I was the sole director and secretary. This will make no difference. Let's stick to our game plan and I'll manage everything. We'll all come out winners and Racenet will get nothing." Accordingly, Mr Pollett and Mr Lambourne were named as the first directors of the Company. However, neither of them had previously acted as a director of the Company. Mr Lambourne understood that Mr Baker was assuming sole responsibility for all management tasks, including dealing with the financial affairs of the Company as well as the regular distribution of anticipated profits among the Participants as and when the Company's cash flow would allow.
2. Mr Pollett resigned as a director of the Company on 14 January 2011. Mr Lambourne resigned as a director on 24 August 2012 following Mr Baker's discharge from bankruptcy. Mr Baker was appointed as the only director from that time and at all times until 17 October 2017, Mr Baker was, in practical terms, the Company's sole director and secretary. Notwithstanding the incorporation of the Company, between the date of incorporation and 1 August 2016, the Company never held a directors' meeting, or a members' meeting, had never declared dividends and never raised any capital.
3. The Punters Show continued to be presented on "Racenet" until 11 April 2011. By that time, Mr Baker had organised for "shopfront, merchant facilities and website" for the Punters Show to "go live". The Participants then began producing the Punters Show exclusively for the Company's website, in support of the Company's "digital shopfront".
4. Messrs Lambourne and Pollett understood that all revenues generated through the Company's "digital shopfront" were channelled into an account of the Company with the Commonwealth Bank of Australia (the CBA Account). Mr Baker exercised exclusive control over the CBA Account and Messrs Lambourne and Pollett trusted Mr Baker implicitly as a partner, friend and business associate. After Mr Lambourne resigned as a director in August 2012, Messrs Lambourne and Pollett did not have access to or look at the CBA Account statements until after the commencement of these proceedings in November 2016.
5. As the Punters Show became more widely known, racing experts appeared on the Punters Show and used the Company's digital shopfront to promote and sell their products. Sales were processed through the Company's merchant facilities and the Company retained half of the proceeds of sales by way of commission. By early 2015, some 15 providers were using the Company's shopfront facilities. Online bookmakers also found the Company's website an attractive marketing medium. Online bookmakers were known as "affiliates" and their "banners", which included an electronic link to their own sites, were prominently displayed and promoted on the Company's website. Punters could open accounts directly through a bookmaker's electronic link. The Company received a "trailing commission" from each affiliate. Mr Lambourne asserted that, while such commissions should be due and payable up to the present time, they do not appear to have been credited to the CBA Account.

The Strategic Partnership

1. In about April 2015, Mr Baker said to Messrs Lambourne and Pollett words to the following effect: "Sorry guys, the cash flow will not improve. You guys must really think again about working with Todd. He's pretty much our only hope right now. With Todd we can reduce our overheads, get into more efficient revenue collection systems. Because Todd will be listing on the Stock Exchange, the Punters Show will get exposure if we help Todd promote the listing. You guys will get a guaranteed minimum income from Todd and long-term the Punters Show will become much better known and increase its client base as well!! [sic] I'll talk to Todd again and see what I can do."
2. Several days later, Mr Baker invited Messrs Lambourne and Pollett to attend a meeting with Mr Buckingham at the Pyrmont Point Hotel on 4 May 2015 (the May Meeting). Messrs Lambourne and Pollett attended the May Meeting.
3. At the meeting, Mr Lambourne's affidavit recounts that a conversation to the following effect took place: "Mr Buckingham looked at [Messrs Pollett and Lambourne] and said words to the following effect in what [Mr Lambourne] then considered to be a compassionate tone: 'Look, I know you guys are passionate about the Punters Show and want to keep your independence and all that but [Mr Baker] has been telling me you've been struggling even harder since our last meeting. [Mr Baker] and I have been talking. I think I could organise some regular cash flow for you without involving new capital or new partners. I love the Punters Show brand and would not want to change it. You guys and my group could form a strategic partnership and get to a win/win situation. All you have to do is find the time to promote us for the listing which must happen this year. [Mr Baker] is keen - what do you think?' [Mr Lambourne] said: 'Staying independent and speaking our mind sounds good! What do you have in mind?' [Mr] Buckingham replied in words to the effect: 'It would be great to have guys like you helping us out. Your show is unique and people who believe in digital/internet businesses think it's the future. I can pay each of you a monthly fee for you to help us promote TopBetta for the listing. [Mr Baker] has already agreed on his terms with me. …it's up to each of you to do your own deal with me now ...' Later [Mr] Buckingham said: 'As we said in December, we think the Punters Show has "pulling power" with the public. You just need to increase volume and bring your overheads down and the cash flow will improve. It's a no-brainer. What we do is: jazz up your website, cut out your management and merchant facilities expenses, we'll free up [Mr Baker] from all the administrative stuff and video production downloading etc, so that he can do more value-add work like marketing and PR for both the Punters Show and 12Follow. We can collect all the Punters Show fees through our existing 12Follow merchant facilities. Our's is better because we have "recurring billing" which saves the punters having to put their credit card details each time they buy a product on line. Our team can manage all the accounting and report to you and to your providers on a regular and more professional basis than you're doing at the moment. As far as I can see, this is a win-win situation for everyone. You guys are personalities but will get even more publicity from your work for the listing. We'll get your punters interested in the new stuff we are offering through the fantasy gaming. That's the next big thing in the industry. It's already booming in the States. [Mr Pollett] - you're great at tournaments - you can help us launch the social gaming side of the business. You all win by piggy-backing on our listing publicity but you keep your providers and affiliates as well as go on with your own products. We also won't charge any commission for managing your personal products.' [Mr Lambourne] replied: 'That sounds good. How much do we get paid for doing the promotion work?' [Mr] Buckingham said: 'We can start straight away as soon as we settle on the money. Let's have a drink now and drink to our listing!' While having a drink [Mr] Buckingham looked at me and said: '[Mr Lambourne], you think about it and ring [me] and we'll discuss your fee.' [Mr Buckingham then said to Mr Pollett]: '[Mr Pollett] you ring [me] and we'll do the same.'"
4. On 7 May 2015, Mr Pollett told Mr Lambourne that Mr Buckingham had agreed to pay Mr Pollett $108,000 and suggested that Mr Lambourne speak to Mr Buckingham as soon as possible. Mr Lambourne then spoke to Mr Buckingham and an exchange to the following effect took place: Mr Lambourne: "You already know my situation with a young family and Michelle not being able to work full time, I've worked out I need a minimum income of $104,000 plus GST for the next twelve months before I can consider anything. I also need a lump sum of $30,000 immediately. [Mr Baker] says he's already talked to you about this." Mr Buckingham: "That's great … done. Let's go!! [sic] I'll ask [Mr Baker] to start on the promotion stuff straight away." Mr Lambourne said that by that, Mr Buckingham meant that he would "up my profile so that I would add value to the TopBetta promotion". Mr Lambourne asserted that part of the agreement for starting with TopBetta was the promise that TopBetta would pay him the sum of $30,000 as soon as they started the promotional work. That assertion was made without objection.
5. Soon after that conversation, Mr Buckingham arranged for Mr Baker to film and produce an in-depth interview with Mr Lambourne. The interview covered more than half an hour and reviewed Mr Lambourne's "journey from competing with my school friends picking winners on the TAB to my work as a bookie's clerk and bookmaker". The interview also traced "the technological developments and cultural changes within the racing industry" during Mr Lambourne's career up to the point of starting the Punters Show with Messrs Pollett and Baker.
6. By 21 July 2015, Messrs Buckingham and Baker had caused a website known as "the Punters Show 2.0" to "go live". The original website for the Punters Show was disconnected and the related merchant facilities of the Company were also disconnected.
7. Mr Lambourne expected that the revenue previously collected by the Company's merchant facilities was now being collected through the 12Follow merchant facilities on behalf of the Company. He expected that 12Follow would account to the Company and to the Company's providers and affiliates. He also understood that 12Follow would charge a reasonable management fee that would be substantially lower than the Company's previous in-house management costs when Mr Baker was handling the management with one full-time paid assistant. He expected that his own products would continue to be sold without deduction of commission.
8. By 27 July 2015, Mr Lambourne had not received any payment. On about that day he telephoned Mr Buckingham who said words to the following effect to him: "With all this listing stuff happening we need to avoid the Punters Show accounts being mixed up with ours - and then needing auditing and all that stuff. As soon as we have done with the listing phase there will be a full accounting and you will be paid." Messrs Lambourne and Pollett continued their work through the Punters Show and helped to promote TopBetta and its gaming products as and when requested by Mr Buckingham.
9. Mr Lambourne believed that Mr Baker was still looking after his interests and the interests of Mr Pollett and the Company in their dealings with all third parties, including Mr Buckingham. Thus, whenever Mr Lambourne raised with Mr Baker the fact that he had received no payment, Mr Baker told him that they needed to go easy and be patient and that Mr Buckingham was their "best bet". He suggested that they show Mr Buckingham how they could help him and wait until "they list".
10. In August 2015, TopBetta received a capital raising proposal from a stockbroking firm. The proposal involved an initial public offering (IPO), rather than the "backdoor listing" that had previously been proposed. On 12 October 2015, at Mr Buckingham's request, the three Participants took part in a day-long photographic shoot as part of promotional work for the listing of TopBetta. The photos reflected the image that TopBetta wished to promote about the Punters Show team in connection with the proposed IPO.
11. On 25 November 2015, TopBetta issued a prospectus for its IPO to raise $6 million. The prospectus claimed that TopBetta was the first Australian-based wagering operator to combine a standard wagering platform with a "fantasy wagering platform", including the capability of conducting fantasy wagering tournaments. "Fantasy wagering" was said to be a closed competition in which each player would pay a small entry fee but would be given a large quantity of "fantasy" chips with which to bet on real races, with a large return in real money if the fantasy bets placed by the player were more successful than the other players in the competition. 12Follow was said to be the first service to use customers' mobile phones to follow their favourite runners offering a mobile content platform with analyst commentary. The IPO described Operis as licensed to conduct business as a bookmaker. No reference was made in the prospectus to the Punters Show, to Mr Lambourne or to Mr Pollett.
12. On 11 December 2015, TopBetta was listed on ASX, $6 million having been raised by means of the IPO. TopBetta made an announcement to the ASX in which it described the offer as "heavily oversubscribed". That figure of $6 million was the focus of the claim by the Claimants for equitable compensation as being indicative of the value of the Punters Show.
13. On 3 January 2016, TopBetta made a further announcement to the ASX that it had entered into an exclusive partnership with EON Sports Radio Pty Limited (EON Sports Radio), a new digital platform, to provide unique content to EON Sports Radio from TopBetta's "the Punters Show" premium content providers. Mr Buckingham was quoted as saying that he was looking forward to the launch of a Saturday morning racing show on EON Sports Radio, as follows: "The 'Punters Show' format has not been done this way before and it will be great for our listeners to actually hear from professional punters on how they will be handling the day's racing …". Thus, the Claimants assert, the Punters Show and its products, together with Messrs Lambourne and Pollett, were an important part of the content then offered by TopBetta to its customers and an important drawcard for TopBetta's online business platforms.
14. On 28 January 2016, Mr Lambourne asked Mr Buckingham about the $30,000 payment due to him. Mr Buckingham replied "send us an invoice and I'll make sure you get paid within fourteen days from the date of invoice". Mr Lambourne sent an invoice on the same day. By 15 February 2016, Mr Lambourne had still not received any payment. Mr Buckingham said words the following effect: "We're still finishing contracts. Things get a bit more complicated with a public company. We will pay you the $30,000 and the monthly payments will start as soon as contracts are signed." Mr Lambourne was never provided with any contractual document for consideration or signature. No contract was signed between the Company and any of the Buckingham Interests.
15. On 24 February 2016, Mr Lambourne received a payment of the sum of $9,166. He assumed that the payment was being made pursuant to the arrangements discussed in May 2015 whereby he was to be paid at a minimum rate of $104,000 per annum plus GST. Mr Lambourne received similar payments on 15 March, 15 April, 14 May and 13 June 2016. Some payments were made through a bank account of TopBetta and others were made through a bank account of 12Follow.
16. On 12 April 2016, Mr Lambourne again enquired about the $30,000 payment. Mr Buckingham responded: "Sorry for the delay. We will settle everything by the end of this month." On about 5 May 2016, Mr Buckingham telephoned Mr Lambourne and said words to the following effect: "We'll settle that invoice for $30,000 this week as promised." On 14 May 2016, Mr Buckingham sent a text message to Mr Lambourne saying: "Sorry I didn't get back to you through the week mate, the accountant now has the files and he is finalising the amounts outstanding." On 12 June 2016, Mr Buckingham telephoned Mr Lambourne and said words to the following effect: "The $30,000 will be paid by 30 June for sure."

End of the Strategic Partnership

1. The edition of the Punters Show for 6 June 2016 contained remarks concerning jockeys injured in falls during thoroughbred horse races. Mr Baker and the Buckingham Interests characterised the remarks as "offensive" and "inflammatory". On the other hand, Mr Lambourne suggested that TopBetta had promoted the Punters Show as "outspoken and controversial". On 12 June 2018, Mr Buckingham published an email that announced that Mr Lambourne had been "stood down" for two weeks, apparently as a consequence of the remarks made on 6 June 2016. The email was addressed to consultants for the Punters Show and providers of material for the Punters Show.
2. Mr Lambourne denies that he was ever "stood down" from the Punters Show. He considered that the comments in question formed part of the type of commentary from which the Punters Show had established its popularity and commercial value. Shortly afterwards, Mr Baker telephoned Mr Lambourne and said words to the following effect: "Mate do not worry about that announcement. We need to keep the racing people sweet. This is good stuff for publicity. You are not suspended. Don't mind the statement. [Mr Buckingham] had to do it. There is no such thing as bad publicity."
3. At 9.22 am on 19 July 2016, Mr Baker sent to Mr Lambourne by email a document headed "Punters Show / 12Follow / TopBetta Transition". The document file name, as it appeared in the email, was "Punters Show termination agreement.docx". The "AIM" of the document was stated to be as follows:

• to separate the Punters Show from the direct connection with TopBetta;
• to ensure the smooth transition for all service providers who have requested that business remains status quo in terms of payments and workload for them;
• get the Punters Show into a position to move forward;
• remove the $100,000 of debt that is currently on the Punters Show books; and
• allow 12Follow to move forward.

1. The document proposed that the following steps, inter alia, take place on 1 August 2016:

• the Punters Show is returned to current ownership of Mr Baker as director and shareholder and Messrs Lambourne and Pollett as shareholders;
• Mr Baker resigns as a director and shareholder and Messrs Lambourne and Pollett will appoint a director or directors;
• TopBetta to pay the sum of $100,000 to the Punters Show to cover debts still existing in the Punters Show being $60,000 for tax, $10,000 for accountants and $30,000 to Mr Lambourne;
• 12Follow to continue to provide the service of financial administration for the current service providers;
• the payment to TopBetta of $100,000 is in exchange for 12Follow to continue to provide the existing products it currently does retaining any revenues generated from those products, outside the products of Messrs Lambourne and Pollett; and
• the Punters Show to deal directly with service providers for deals associated with the Punters Show.

1. A list of providers was set out in the following terms: "- Darren Potter - Steve Fletcher - John McLeod - John Walter - Warren Huntly - Aaron Barby - Greyhounds - Hong Kong - Vince Accardi". Immediately below that list, the document provided as follows: "TopBetta will provide a website including back-end payment system for the branched off Punters Show that can be used by Punters Show TopBetta will provide full assistance in the transition stage with the administrative issues that will no-doubt arise All content from external providers can be used by Punters Show (i.e. Melbourne Punters Show, John Walter videos) Database passed on of 5,000 built up over the years, mainly through people who have purchased products Social media (Twitter approx. 4,500 followers, Facebook 7.500 [sic]) passed on Matt Taylor has elected to continue with TopBetta/12Follow Jake Henson has elected to continue with TopBetta/12Follow".
2. On 19 July 2016, TopBetta paid Mr Lambourne the sum of $4,583. That is the last payment he has received. On 25 July 2016, Mr Buckingham said: "TopBetta does not owe [Mr] Lambourne any money."
3. On 22 July 2016, Mr Lambourne sent an email to Mr Buckingham saying: "As a gesture of goodwill I request that you make payment prior to Tuesday's (26/7) meeting on the attached invoice. This invoice has now been outstanding for nearly six months. You have promised to make this payment in three face-to-face meetings, three telephone calls, two emails and one text message." Mr Buckingham responded later in the day saying: "I am a little confused by this email and SMS. What will we be getting for this payment?" Mr Lambourne responded saying: "The invoice relates to services rendered prior to the introduction of legacy payments, services you have already received. We agreed upon this invoice at our meeting on 28 January 2016, I emailed it to you the next day."
4. Mr Buckingham responded later on 22 July 2016 saying: "This was to be included in the purchase of The Punters Show as it is a debt owed by the business. If we purchased The Punters Show we would not be having a conversation at all, we would own it and be able to do what we like with the business. I am trying to help you out as much as I can and have proposed a solution. We didn't receive ANY services for a payment of $30k as you were paid for your services up until that point, and in fact the payments made to you over the previous 6 months ($9k/month) are now wasted payments as I am sure you would agree were substantially more then [sic] any services provided by yourself. Keep in mind we have paid you this money in a period where you produced around $10-12k in sales[.] Happy to have a discussion on Tuesday to get your thoughts but we will not be wasting any further time trying to sort out a solution. You guys will need to decide which way you go and if you want the business back you can take over the running of this from the 1st August".
5. At 8.14 am on 25 July 2016, Mr Lambourne sent by email a letter addressed to Mr Baker and Mr Buckingham saying as follows: "Thank you [Mr Buckingham] for your email of 19th July. I am writing to both yourself and [Mr Baker] jointly for obvious reasons. It now seems clear that [Mr Baker] is working for interests other than Punters Show Pty Limited, herein referred to as "the company". As you are both aware there has been a long history of promises made and contractual obligations not respected since [Mr Baker] first introduced the company to TopBetta. One clear example is the $30,000 debt owed to me since at least 21st July, 2015. It therefore is pointless to fool ourselves that anything will change. I am well aware that [Mr Baker] and [Mr Buckingham] have been travelling interstate in a bid to massage the company's clientele away from the company and otherwise misusing information belonging to the company. It seems clear that [Mr Baker] (whether aided/abetted by TopBetta or not) has been in serious breach of his duties as the Company's sole director. [Mr Baker] would be aware of his fiduciary duties towards the company and all its shareholders. TopBetta (whether aided/abetted by [Mr Baker] or not) has not only breached various contractual agreements between itself and the company but in addition and in conjunction with [Mr Baker] has been actively interfering with the company's contractual relationships with third parties. My respectful suggestion is that all issues concerning the clear need for all relations to be terminated as soon as possible should be made the subject of an urgent mediation process as soon as possible. This would include [Mr Baker] resigning as a director of the company forthwith. My enquiries reveal that entities such as the Australian Dispute Centre could organise this for a reasonable fee. My request is that you jointly or severally provide written undertakings by 4.00 pm on Monday 25 July 2016 to the following effect: 1- That the sum of $30,000 will be paid to me on or before close of business Friday 29 July 2016. 2- That until further notice TopBetta will cease and desist contacting any of the following (Darren Potter, Steve Fletcher, John McLeod, John Walter, Warren Huntly, Aaron Barby, Brendan McCoy, Alan Aitken, Vince Accardi) to discuss anything to do with the company except in relation to ongoing day to day issues related to provision of services by the company. 3- Similarly for [Mr Baker] whether in his personal capacity or in his capacity as the Company's director; 4- That [Mr Baker] and TopBetta will provide to each of the company's shareholders on or before Monday 1 August 2016 a full reconciliation and accounting of all funds received by either TopBetta or [Mr Baker] as agents/trustees for the company since 21st July 2015. 5- That on account of [Mr Baker's] egregious behaviour in his capacity as the company director, both Dallas and Top Betta will cause to be returned to me at 37 Knight Street Erskineville on or before Monday 1 August 2016 the following property of the company: Motor Vehicle and Computer Equipment listed as fixed assets on the company's balance sheet and books of account whether in digital form or not. 6- That both TopBetta and [Mr Baker] will agree to an urgent mediation organised by and through the Australian Dispute Centre, such mediation to be commenced on or before 29 July 2016. If the above undertaking, as requested, is not provided on or before 4.00pm on Monday 25 July 2016, c/o my email address herein, then I reserve the right to approach the Supreme Court Corporations List Duty Judge to obtain an 'ex parte' injunction against both TopBetta and [Mr Baker]. Incidentally the Duty Judge will be Justice Brereton who knows a thing or two about the Racing industry. Please advise the details of any lawyer you may have retained, or will retain, so that we may inform His Honour, should the need to seek the Injunction arise. I hope you will both use this window of opportunity to try to sort this matter honourably and without the need for expensive lawyers and/or damage to reputation."

Grounds of Appeal

1. In their amended notice of appeal filed on 12 March 2021, the Claimants relied on some 12 grounds of appeal. However, only six grounds were pressed on the hearing of the appeal. Those grounds may be restated as follows:

• the primary judge should not have determined that Mr Baker did not owe any fiduciary duty to Messrs Lambourne and Pollett without considering the basis of their assertion of the existence of the duty, namely, the joint venture;
• the primary judge failed to explain why she did not consider the pleading of the joint venture after acknowledging that there was no demur to the pleading;
• the primary judge wrongly determined that there was no evidence of breach of fiduciary duty on the part of Mr Baker;
• the primary judge effectively determined that the agreement to pay Mr Lambourne the sum of $30,000 was conditional upon "the deal being concluded" but failed to identify "the deal" or the basis for finding that "the deal" had not been concluded, in circumstances where there is no dispute that the administrative control of the Punters Show business was handed over to Mr Buckingham with Mr Baker's co-operation;
• the primary judge could not properly have absolved Mr Buckingham from any suspicion of knowing assistance without at least considering the implication for equity's conscience of the admitted fact that Mr Buckingham had employed Mr Baker since at least May 2015 while knowing that Mr Baker remained the sole director of the Company and after having been present at the meeting on 9 December 2014; and
• the primary judge failed properly to consider the "raw materials" that equity's conscience should have considered before determining that there was no evidence to support a claim for equitable compensation.

1. It is significant that there is no complaint in the amended notice of appeal that the primary judge failed to find that Mr Baker had a liability to repay to the Company the amount of "inappropriate withdrawals" by him that were alleged in the Amended Statement of Claim. The significance of the absence of such a complaint will become apparent in the next section of these reasons.

Alleged Abandonment of Claims

1. In the appeal, the Claimants pursued recovery on behalf of the Company of monies characterised by the Amended Statement of Claim as "improper withdrawals". However, Mr Baker asserts that a claim for repayment by him of "improper withdrawals" was not open in this Court because the allegations as to those matters were not pressed before the primary judge. Mr Lambourne, on behalf of the Company, did not accept that any such claim had been abandoned before the primary judge.
2. On the other hand, Mr Lambourne's oral submissions did not place any great emphasis on a claim by the Company for recovery of the amount of the "improper withdrawals". Mr Lambourne adverted to the question by saying that Mr Baker "squeezed the cashflow by virtue of spending on his own personal wants" and referred to the Schedules that appear in Appendix 2 to these reasons. Mr Lambourne was asked whether there was evidence before the primary judge verifying, by reference to primary documents, such as bank statements, that certain amounts of money were spent by Mr Baker, being evidence that verified the assertion in Mr Lambourne's affidavit that Mr Baker, for example, spent money at Crystal Car Wash. He was asked whether there was evidence that verified the payments rather than simply a schedule. By way of response, Mr Lambourne referred to an email that he received from Mr Baker on 29 July 2016, which was to the following effect: "With the bank account, as you know, I have used it for personal expenses through the journey; it's no biggie but my preference would be for a new one to be set up." Ultimately, Mr Lambourne relied only on the Schedules set out in Appendix 2 to these reasons as evidence of the amounts said to be personal expenses withdrawn by Mr Baker.
3. Thus, when Mr Lambourne was asked whether more precision could be given as to the figure that he said represented Mr Baker's personal expenditure, he referred again to the Schedules in Appendix 2. That exchange was in the following terms: "GLEESON JA: Can you give us a little bit more precision. What is the figure? Can you show us the figure and the integers in one of these schedules? APPELLANT: The figure that he shouldn't have taken? GLEESON JA: The figure that you say represents personal expenditure, for which I assume you say he's liable to pay to the company, repay. APPELLANT: I can't give you a schedule that looks like that but I don't need to. GLEESON JA: If you're going to make a claim that Mr Baker is liable to - is it [Schedule C]? Is that the summary? APPELLANT: That's the summary of those particular purchases, those particular - " While it might be assumed that Mr Lambourne's reliance upon the Schedules was for the purposes of advancing a claim on behalf of the Company against Mr Baker to recover the money used for his personal expenditure, Mr Lambourne did not expressly articulate that that was the purpose for his reliance upon the Schedules.
4. Subsequently, Mr Lambourne said as follows: "So in summing-up, we've got a joint venture that is agreed by Mr Baker in the defence. In his defence he's agreed that the joint - the, the trio was a joint venture. He's agreed that his responsibilities were to manage the business and account to us. He, by virtue of that joint venture, is proscribed from entering into a conflict position, which he has clearly done, in making deals with Mr Baker and Mr Buckingham that clearly disadvantage the revenues of the trio. That his conduct in spending all the money that he was given responsibility for has contrived a situation where Mr Pollett and myself become desperate for funds and become more inclined to accept his representations as to Todd is our best bet, we should trust him." Mr Lambourne was then asked whether it was his submission that the Company was entitled to recover the monies referred to in the Schedules set out in Appendix 2. His response was: "I believe so, but that would be a matter of Mr Baker, the first defendant accounting for his particular expenses." When asked whether, speaking on behalf of the Company, Mr Lambourne was seeking to recover "those monies", Mr Lambourne responded "I do". There was no other reference to a claim for recovery of monies improperly withdrawn from the Company's account by Mr Baker.
5. Mr Baker does not point to any specific abandonment by the Claimants but relies rather on an implied abandonment by reason of the absence of specific mention of the claim before the primary judge. The burden of establishing abandonment of pleaded claims by unrepresented parties may be somewhat greater than in the case of legally represented parties. In the circumstances, it is necessary to consider the relevant allegations made by the Claimants in the Amended Statement of Claim, the evidence and the conduct of the proceedings before the primary judge.

The Pleaded Claims

1. In the Amended Statement of Claim, the Claimants assert that, when he was the only director of the Company, Mr Baker caused funds of the Company to be paid to himself or for his benefit. Those payments are characterised as "improper withdrawals" and it is asserted that they constituted a breach by Mr Baker of duties he owed to the Company and to Messrs Lambourne and Pollett.
2. The allegations of "improper withdrawals" are made in paras 16 to 20 of the Amended Statement of Claim. Paragraph 16 claims that from between August 2012 or earlier and August 2016 Mr Baker withdrew $833,000 from the accounts of the Company, including $187,791 in cash from ATMs. However, there is no prayer for relief consisting of a money claim for $833,000 or any other sum, such as the sum of $210,249 representing the total of Mr Baker's personal expenses incurred from 2011 to 2016 extracted in Mr Lambourne's affidavit. Further, those paragraphs do not themselves focus on the payments made to Mr Baker as being specific breaches for which specific recovery might be sought. Rather, the claims made in the Amended Statement of Claim generally are focused on recovery of equitable damages or compensation, calculated by reference to the alleged value of the Company's business.
3. Specifically, in paras 52 to 54 of the Amended Statement of Claim, which summarise the relief claimed, there is no claim that the Company suffered loss or damage by reason of moneys being wrongly withdrawn by Mr Baker. Rather, it is alleged that Mr Baker caused loss and damage to the Claimants in that: 1. Mr Baker failed to deal with and account to Messrs Lambourne and Pollett for the revenue generated by the Company's business through the sale of products of Messrs Lambourne and Pollett; 2. Messrs Lambourne and Pollett have lost the share of profit that would otherwise have been derived by them from the conduct of the Company's business; and 3. the whole of the business of the Company was transferred to TopBetta without any proper or adequate compensation to reflect the true value of the business and assets conveyed to TopBetta. While it is also alleged that the Company has suffered loss and damage consisting of loss of the revenue of the Company misappropriated by Mr Baker and loss of the value of the business and assets of the Company transferred to TopBetta without any proper compensation or payment, there is no express claim for recovery of the amount of the "improper withdrawals".
4. The Amended Statement of Claim sought damages pursuant to s 1317H of the Corporations Act 2001 (Cth) (the Corporations Act) for breaches of ss 180, 181, 182 and 183 of the Corporations Act. Under s 180, a director of a corporation must exercise his or her powers and discharge his or her duties with an appropriate degree of care and diligence. Under s 181, a director of a corporation must exercise his or her powers and discharge his or her duties in good faith in the best interests of the corporation and for a proper purpose. Under s 182, a director of a corporation must not improperly use his or her position to gain an advantage for himself or herself or someone else or cause detriment to the corporation. Under s 183, a person who obtains information because he or she is, or has been, a director of a corporation must not improperly use the information to gain an advantage for himself or herself or someone else or cause detriment to the corporation. Under s 1317H, the Court may order a person to compensate a corporation for damage suffered by the corporation if the person has contravened any of those provisions and the damage resulted from the contravention.
5. Clearly enough, unauthorised withdrawal of money of the Company by Mr Baker would constitute a contravention of those provisions of the Corporations Act. Nevertheless, there is no specific claim for sums totalling $833,000 or $210,249 that the Company now seeks to recover in the appeal. Further, there is no ground of appeal directed specifically to that claim. While there is a ground that her Honour wrongly determined that there was no evidence of breach of duty on the part of Mr Baker, that ground does not refer expressly to misappropriation by Mr Baker of funds of the Company to his personal use or for his personal benefit.
6. The primary judge did not deal with a claim that Mr Baker, in effect, misappropriated funds of the Company to his own personal use. Mr Baker contends that the explanation for the absence of reference in her Honour's reasons to that claim is that it was not advanced before her Honour. Thus, at the beginning of the reasons, her Honour said that, although the Amended Statement of Claim contained a number of causes of action, the following two claims were pressed at the hearing:

• Mr Lambourne's claim for $30,000 from Mr Buckingham and TopBetta; and
• the Claimants' claim for equitable compensation from Mr Baker and the Buckingham Interests under Barnes v Addy. [13]

1. The primary judge also observed that the asserted loss of the Claimants, as put at the hearing, departed markedly from the way in which it had been pleaded. Her Honour observed that the defendants adopted the position that there was no evidentiary basis to support the asserted loss and thus the Barnes v Addy claim failed for that reason alone. As will appear below, her Honour accepted that assessment of the position as being correct.

Conduct of the Hearing before the Primary Judge

1. Mr Lambourne's written submissions filed on behalf of the Claimants before the primary judge on 20 February 2019 asserted that the main issue of concern was in relation to the "damages" issue. The submissions asserted that the Participants agreed to enter into a joint enterprise for the purpose of exploiting the Punters Show as originally presented on "Racenet". It was alleged that Mr Baker managed and controlled the financial records of the Company and took all decisions relating to the everyday running of the Company, such that the Claimants were entirely dependent upon Mr Baker for any documentation or information concerning the internal workings of the Company as well as any dealings between the Company and Mr Baker or the Buckingham Interests.
2. Mr Lambourne's written submissions said that there were numerous difficulties, if not impossibilities, with the Court making a fair assessment of the value of the Company or its business at any particular time, including as at May 2015, 11 December 2015 or 5 August 2016. They were respectively the dates on which the strategic partnership commenced, the date on which TopBetta was listed on ASX and the day when Messrs Lambourne and Pollett discovered that Mr Baker was working for TopBetta and they no longer had control of the Punters Show business. The submissions then dealt with the possible assessment of compensation. There was no mention of any claim against Mr Baker in respect of alleged misappropriation or "improper withdrawals".
3. In written submissions made by Mr Baker to the primary judge, no mention was made of "improper withdrawals". Similarly, the written submissions filed on behalf of the Buckingham Interests made no mention of "improper withdrawals". They now say that that was because no mention had been made in Mr Lambourne's submissions.
4. On the first day of hearing before the primary judge, after her Honour had dealt with leave for Mr Lambourne to appear on behalf of Mr Pollett and Company, Mr Lambourne indicated that the Claimants relied upon the Amended Statement of Claim and the affidavits to which I have referred above. Her Honour then heard opening oral submissions on behalf of the Claimants by Mr Lambourne. In the course of the submissions, her Honour inquired of Mr Lambourne as to the compensation sought by the Claimants. Her Honour noted that there was a monetary claim for $30,000 and then a wider claim for equitable compensation and damages. Her Honour inquired as to what "general sense" Mr Lambourne could give her as to the amount of the equitable compensation or damages sought by the Claimants. Mr Lambourne's response was that the Claimants were entitled to upwards of $1,500,000 "given that the crystallised gains that were made by listing TopBetta using Punters Show revenue".
5. The primary judge then asked Mr Lambourne whether, in quantifying the damages, Mr Lambourne would be taking her Honour to the documents that were available and would point out how to calculate or assess the damages. Mr Lambourne responded that the Claimants were arguing that the Punters Show brought considerable benefit to TopBetta in enabling it to go from a proposed backdoor listing to a $5 million to $6 million public offering with content services valued at $1.8 million in the public offering. He said that the Claimants contended that the valuation of the benefit to TopBetta of the Punters Show was more relevant than the actual valuation of the Punters Show as a going concern. Mr Lambourne said, that the listing of TopBetta on the ASX would not have been possible without the revenue stream from the Punters Show and no other part of the TopBetta business was growing but was in fact diminishing.
6. The primary judge then asked Mr Lambourne whether he was inviting her to draw an inference from the figures as to how TopBetta's business was comprised before it acquired the Punters Show and what it was then launched for, that the "uplift" was referrable to the Punters Show or that some part of it was referrable to the Punters Show and that that would be the measure of damages. Mr Lambourne responded "yes".
7. After a short adjournment, for the purpose of considering objections to affidavits, counsel for Mr Baker referred to submissions made orally by Mr Lambourne at an earlier directions hearing and in an email to the Court identifying the claim as being based on Barnes v Addy. Counsel for Mr Baker observed that, while that was a different claim from the claim made in the Amended Statement of Claim, which was articulated to be the loss of the value of the Company, Mr Baker now understood that the Claimants were claiming on two fronts, being the $30,000 claim against Mr Buckingham and the Buckingham Interests and a claim for equitable damages or compensation, the quantum of which is based on the increased value of the shares in TopBetta.
8. Counsel for Mr Baker said that those were the sum total of the claims against the defendants and that he would approach the objections to affidavits in a way that was "a bit more direct". He said that, on the basis of the claims now pressed against the defendants, the objections to Mr Pollett's affidavit were withdrawn in full and neither Mr Saunders nor Mr Daily would be required for cross-examination. Counsel for Mr Baker also said that, if given five more minutes, the process of objections to Mr Lambourne's affidavit might be made very much shorter and it may be unnecessary to go through each of the objections.
9. The primary judge then observed that the written submissions for the Claimants were based on Barnes v Addy but that the Amended Statement of Claim was more wide-reaching. Her Honour said that, given that the Claimants were self-represented, her Honour had in mind that things may change and move as the hearing goes on. Her Honour invited counsel for Mr Baker to take such course as he thought appropriate but that if the Claimants were to take "a different view" as the case unfolded, her Honour was not going to stop them from pursuing a pleaded part of their claim that was not referred to in their written submissions. Her Honour observed that one needed to be careful, where parties are not represented, to try to confine them to particular technicalities that might be easier to do where a party is represented by senior counsel. Counsel for Mr Baker accepted what her Honour said but observed that the Claimants had been represented "virtually the whole time in these proceedings" by solicitors and junior counsel.
10. The primary judge responded that the Claimants were not then represented and that, with a six-day trial, "we're all going to get through this carefully". Counsel for Mr Baker accepted what her Honour said. He then observed that he did not cavil with the basis of the damages claim if it is the loss of the value of the business that was being claimed. However, counsel said, it was important for the defendants to know what the Claimants were seeking against the various defendants in order to know how to run their case. Counsel said that Mr Baker was quite content to proceed on "this Barnes v Addy or whatever other basis the claim for the transition of this business created a loss and, on the claim for $30,000". Counsel said, however, that without knowing what the case is otherwise, it was going to be very difficult for the defendants to proceed and work out what to cross-examine on.
11. The primary judge then observed that she suspected that that was why the matter had been listed for six days to allow a bit more time for those things to be explored so that all of the disputes between the parties could be finally resolved. Her Honour again invited counsel for Mr Baker to take his own course and said that her hesitation was that where she had a litigant-in-person, a pleading and written submissions, she was not going to stop the Claimants from articulating their claim within the confines of those two documents as the evidence unfolded.
12. Counsel for Mr Baker then said that the submissions on behalf of the Claimants, which were in response to a Court order to articulate their claims, articulated a claim based on Barnes v Addy, as well as the claim for $30,000. They are the two claims mentioned by the primary judge at the commencement of her Honour's reasons. The primary judge observed that that was the way the Claimants had articulated their claim in their written submissions and in their oral opening and said that she was not suggesting or inviting the Claimants to spread their claims more broadly.
13. The primary judge then observed that the hearing was taking place against the backdrop of an amended statement of claim that puts matters more widely and that, if the Claimants proceed in the manner explained by Mr Lambourne, counsel for Mr Baker was "on notice of that". Her Honour said that, if at some point Mr Lambourne decided that he wanted to pursue some other aspect of the Amended Statement of Claim, her Honour could not see why she would stop him doing that, but that, if he decided to go further afield, counsel for Mr Baker may "need to revisit something". Her Honour said that the directions given previously did not exclude the Claimants from relying on a pleaded cause of action. Her Honour said that it was a matter for counsel for Mr Baker but he could proceed on the basis of what Mr Lambourne had outlined. Her Honour said that, if Mr Lambourne changed his mind and wanted to go further or wider, it would be necessary to revisit the extent to which Mr Baker might want to take other objections to other affidavits or change his course accordingly. Counsel for Mr Baker said that he understood.
14. Counsel for Mr Baker then said that, on the basis of what had been said and the written submissions, no objections to Mr Lambourne's affidavit would be pressed. Neither counsel for Mr Baker nor counsel for the Buckingham Interests wished to say anything further in opening. Accordingly, her Honour invited Mr Lambourne to read his affidavits. Her Honour then took as read, without objection, an affidavit by Mr Lambourne of 26 May 2018. The documents exhibited to the deponent at the time of swearing the affidavit were also admitted without objection.
15. Paragraph 86 of Mr Lambourne's affidavit was in the following terms: "Soon after the proceedings commenced in November 2016, [Mr Baker] was ordered to provide me with copy of the Company's bank statements. My analysis of the bank statements (up until 14 September 2016) showed the Company had received $2,426,047 in revenue into the bank account. [Mr Baker] had paid himself $813,497, Glenn Pollett $380,100 and me $216,413. This leaves $1,016,037 still unaccounted, only from the one declared bank account. While I accept substantial sums for company overheads and one employee plus motor vehicle, I observed substantial sums not business related. At pages … are copies of schedules I prepared denoting non-business-related expenses with accompanying investigations." Set out in Appendix 2 to these reasons are copies of Schedule A, Schedule B and Schedule C, which were contained in the bundle of documents exhibited to Mr Lambourne when he affirmed his affidavit. The bundle of documents was admitted without objection from Mr Baker.
16. Schedule A draws attention to para 21 of an affidavit by Mr Lambourne. That appears to be a mis-reference, since para 21 of the affidavit has nothing to do with expenses. The heading of Schedule A states that it is a sample of Mr Baker's "personal wants funded from company account" from 30 July 2013 to 5 June 2014. The total of the amounts in Schedule A is $12,729.99. Schedule B is said to be a table "showing only a small sample [Mr Baker's] personal wants paid through company accounts" from 30 June 2014 to 8 January 2016. The total of the amounts in Schedule B is $10,064.31.
17. Schedule C is said to be a "summary table of personal expenditure for [Mr Baker] from 2011 to 2016". The total of the amounts in Schedule C is $211,249. The total of the amounts in Schedule A and Schedule B is $22,794.30. If the amount of cash withdrawals shown in Schedule C, of $188,791 is added to that total, the aggregate is $211,585.30. There is thus a difference of $336.30 between that total and the total of the amounts in Schedule C. There was no reconciliation of those figures and there was no other explanation of the amounts in the three schedules.
18. That would be understandable if para 86 and the three schedules were regarded as being irrelevant to the claims being pressed by the Claimants before the primary judge. On the other hand, had the primary judge and counsel for Mr Baker understood that the Claimants were seeking judgment for the Company against Mr Baker in the amounts derived from the three schedules, one would have expected a reconciliation and further explanation.
19. While each of the amounts in Schedule A and Schedule B has a description, the total of $188,791 in Schedule C for "cash withdrawals" has no narrative to indicate the purpose of the withdrawals. The only evidence about them is the bald assertion in para 86 of Mr Lambourne's affidavit that the amounts are "non-business-related expenses". While it may be possible, from the narrative describing the amounts in Schedule A and Schedule B, to conclude that the withdrawals from the Company for those purposes were for "non-business-related expenses", there is nothing but a bald assertion about the total amount of "cash withdrawals".
20. The affidavit evidence as to those matters would probably have been rejected had objection been taken on behalf of Mr Baker. If the Company was not pursuing the claims articulated in the Amended Statement of Claim of improper withdrawals, that material would appear to be quite irrelevant. Further, had objection been taken to it on grounds other than relevance, it would almost certainly have been rejected as no more than a submission. It is against that background that Mr Baker now contends to this Court that the Company abandoned any claim for recovery from Mr Baker of the amounts of the alleged "improper withdrawals".
21. Since Mr Lambourne's affidavit was read without objection, there is unchallenged evidence that there were withdrawals from the Company's account that were "non-business-related". An inference can be drawn that the withdrawals were made without the knowledge or consent of Mr Lambourne or Mr Pollett, although there is no express evidence from them to that effect. If the finding can be made that the withdrawals were made for "non-business-related" expenses without the knowledge or consent of two of the three equal shareholders of the Company, it would follow that Mr Baker acted in breach of duties owed by him to the Company in his capacity as a director or officer of the Company. That is to say, it appears that the Company authorised its bankers to permit Mr Baker to make the withdrawals in question. Since they were not for the proper purposes of the Company, his actions in effecting the withdrawals constituted breach of his duties to the Company. Without anything further, if a claim for repayment of the amounts shown in the schedules were pressed at the hearing before the primary judge, it is likely her Honour would have directed the entry of judgment in favour of the Company against Mr Baker for some amount.
22. On the other hand, if such a claim had been expressly pressed before the primary judge, it might be expected that the conduct of the case might have been considerably different from the standpoint of Mr Baker. It might be expected that objections to Mr Lambourne's affidavit would have been pressed and that Mr Baker may well have gone into evidence to explain the withdrawals, depending upon how successful the objections were.
23. After hearing submissions on the admissibility of evidence, the primary judge heard oral submissions from Mr Lambourne. In the course of that process, the primary judge drew Mr Lambourne's attention to the commencement of the Amended Statement of Claim, which set out the types of claims being made by the Claimants as follows: "1. Directors' duties, sections 180, 181, 182, 183 and 79 of the Corporations Act 2001. 2. Remedies pursuant to section 1317H of the Corporations Act 2001. 3. Damages pursuant to the provisions of section 236 of the [Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law ("Australian Consumer Law")]. 4. Breach of fiduciary duties. 5. Equitable damages." Her Honour said that as she now understood the type of claim that was being pursued was 4 and 5. Mr Lambourne responded "yes".
24. That exchange is hardly consistent with Mr Lambourne pressing the claims in relation to "improper withdrawals" which would fall clearly within ss 180, 181, 182, 183 and 79 of the Corporations Act. The abandonment of claims 1, 2 and 3 and pressing only claims 4 and 5, being for breach of fiduciary duties and equitable damages, suggests that an independent claim in relation to "improper withdrawals" was not being pressed.
25. While the topic of "improper withdrawals" was not expressly mentioned in terms during the hearing before the primary judge, counsel for Mr Baker, in the course of final oral address, said as follows: "So, the next aspect is to consider the lengthy argument about the revenue that was taken supposedly from the company. Well, that's never been the articulated case, that they want that money back. There's just no case on that. The company has not suffered that loss in accordance with the way that this case is pleaded; and Mr Baker has certainly not been responsible for misappropriating those funds. He certainly hasn't had any benefit. He's never been a shareholder of any of the second to fifth defendants. He's never been a director. He was an employee, and then after the May agreement, things fell apart … and the whole relationship unravelled."
26. The reference to "the lengthy argument" about "misappropriation" of the Company's revenue, in context, was a reference to the discussion about allegations that TopBetta (along with Mr Buckingham and/or Mr Baker) had "misappropriated" the Company's revenues for the purpose of improving TopBetta's performance on the stock market, which actually occurred during the hearing before the primary judge. Counsel for Mr Baker was taking issue with that claim, which Mr Lambourne asserted in oral submissions, with corresponding references in his affidavit, but which seemingly was not articulated in the pleadings.
27. Thus, during the hearing, Mr Lambourne said the following: "Well, I'm not - I'm a racing analyst so I'm not an expert in assessing financial benefits or what the difference in a valuation of backdoor listing versus an IPO - this is not my field - but it seems to me that previously the parties that we've approached for help in this matter have been unable to grasp the point that here is a revenue stream that's been misappropriated and used to achieve something quite enormous, and how then do you value the misuse of that revenue stream. I am a lay man but it appears to me that the listing wouldn't have been possible without that revenue stream because I'll present later some documents where are in the Court Book which basically allude to the fact that no other part of the TopBetta business was growing. In fact, it was diminishing." (emphasis added)
28. By way of further example, in his reply submissions, Mr Lambourne provided particular reference to his affidavit, which gives more details of the relevant "misappropriation": "[T]he listing date (11 December 2015) is not related to any claim for loss. It is related to the claim for equitable compensation in accordance with the principles of Barnes v Addy. 31. The date is appropriate because it is the date on which the Defendants may be deemed to have received the fruits of their joint dishonest and fraudulent conduct. 32. The above claim is separate from the individual claim for $30,0000 made by Pollett for breach of contract. 33. The above claims are also separate from the losses incurred by Lambourne and Pollett when their personal products were being sold through channels other than the Punters Show website and for which there has been no accounting to date. 34. Evidence of the company's property having been transferred and/or misappropriated. [reference to par 207 of Mr Lambourne's affidavit]".
29. That paragraph in Mr Lambourne's affidavit referred to relevantly concerns allegations that Messrs Baker and Buckingham had altered a website to divert customers from the Punters Show shopfront to 12Follow merchant facilities. Mr Lambourne alleged that TopBetta's claimed 300% increase in revenue was the result of Messrs Baker and Buckingham misappropriating or passing off the Company's figures as TopBetta's and/or misappropriating the Company's income by misappropriating products such as ProBetta Live and "robsmail.com.au", thereby causing the sales proceeds to be collected through 12Follow's merchant facilities and selling the Company's products directly on 12Follow's merchant facilities in direct competition with the Company's own shopfront.
30. Thus, it is clear enough that the "misappropriation" to which counsel for Mr Baker was referring when he mentioned "the lengthy argument" about "misappropriation" was not the "improper withdrawals" alleged in the Amended Statement of Claim. The only evidence of "improper withdrawals" consisted of the schedules annexed to Mr Lambourne's affidavit, to which reference is made above.
31. Towards the end of Mr Lambourne's oral address, the following exchange occurred with the primary judge: "Mr Lambourne: Perhaps if I propose to before I sort of sum-up to return to the pleadings which I rely upon and being self-represented I am a little at sea and I do have the benefit of the pleadings having been drafted by senior counsel, so certainly I am quite reliant on the pleadings as they stand. So I would like to go through the pleadings with you and if there was any fact that I needed to ascertain in relation to these pleadings I would be very keen to assist you. Primary judge: I have only read them very briefly in preparation for this hearing so as I understand it your claim now is more refined than perhaps when the pleading was put on which was almost a year ago, and the case is now really focusing on Barnes v Addy damages? Mr Lambourne: In the sense of equitable compensation for the or I am sort of unclear now as to whether it is knowing receipt or knowing assistance. I know that the second defendant through his company has obtained inclusion with the first defendant something that enabled him to make a significant financial windfall. Primary judge: I'm not going to stop you from relying on the second limb if you think the first limb is also applicable. That seems to me to come within the ambit of a Barnes v Addy claim so there's nothing to stop you as I see it from relying on both limbs if you wish. Mr Lambourne: It would appear there would be elements of both if that makes it any clearer. Primary judge: All right, yes. Mr Lambourne: And as a lay person obviously the pleadings are constructed in the Corporations Act and when I with my lay eyes ran my eyes across the Corporations Act they seemed to have a number of the elements of the Barnes v Addy that I seek to plead in this case. Am I reading them incorrectly? Primary judge: I'm not sure what you mean and the Corporations Act is rather a large Act. Mr Lambourne: Yes but specifically the ones that we have relied upon in the pleadings which is the director's duties, 180 to 183 and 79 which I think is knowing contravention or involving contravention, sorry your Honour. Primary judge: Yes I think as I said on the first day of this hearing I can't give you legal advice as to which claims to pursue. I am just simply trying to flesh out the claims which I understand that you are now focusing on and bring your claim on which is a Barnes v Addy breach of fiduciary duties, equitable damages part of the pleading. So that's not the same as the statutory claim under the Corporations Act of breach of director's duties Mr Lambourne: Yes I understand it is more the proscriptive duties rather than the other duties that are relevant to a Barnes v Addy type claim. Primary judge: I don't really know what proscriptive duties means in that context but they are different types of claim. But I think as I understand it we are focusing on the type of claim which is in your document at court book p 3. Mr Lambourne: Yes, the numbers 4 and 5. Primary judge: Yes. So if you look at p 4 of the Court book I take it consistently with that and you tell me but consistently with that you are looking at 2 and 3. Is relief number (1) is that referable to the Barnes v Addy? Mr Lambourne: No, your Honour this is another matter that was part of this process. Primary judge: And that's the money which you say you agree with Mr Buckingham that he would pay you and he hasn't paid you? So are you pressing the relief in number 1? Mr Lambourne: Yes. Primary judge: So I have got 1, 2 and 3 and then 7, 8, 9, 10 essentially, is that correct? Mr Lambourne: Yes that's correct. Primary judge: All right, I follow that. Just looking at the body of the statement of claim the key paragraphs which encapsulate the breach of fiduciary obligation and equitable compensation is the ones you have been taking me to which is para 44 of the statement of claim under court book where the breach of duty is pleaded. Mr Lambourne: Yes. Primary judge: That would be breach of fiduciary duty-- Mr Lambourne: Yes, correct." No mention was made by Mr Lambourne of a claim for misappropriation or in respect of "improper withdrawals".
32. Mr Baker made written closing submissions to the primary judge, which said that the Claimants had outlined two claims in their opening submissions, being the claim for $30,000 against Mr Baker and the Buckingham Interests and the claim under Barnes v Addy against all of the defendants. Paragraph 5 of Mr Baker's closing submissions said that a claim based on Barnes v Addy was not pleaded against Mr Baker. In reply to Mr Baker's closing submissions, Mr Lambourne filed submissions dated 1 March 2019, the day after the hearing before the primary judge concluded. In those submissions, Mr Lambourne dealt point by point with the written submissions made on behalf of Mr Baker. The only possible reference to the "improper withdrawals" was as follows: "1. As to paragraph 5: The Barnes v Addy case pleaded against [Mr] Baker can be found at the following paragraphs: (a) by way of background: 7, 8, 10, 11; (b) paragraph 12 establishes the fiduciary nature of the relationship among Lambourne, Pollett and Baker not only in relation to each other, but in relation to the company and its affairs; (c) this is expanded at paragraphs 13 and 14; (d) breaches of such duties are set out at paragraphs 16 to 19 - except for the allegation at the end of paragraph 19: and his statutory obligations to the company; and 20. 2. The above paragraphs also serve to set the scene for the type of behaviour one may expect from Baker and which may assist in the determination of any 'dishonest and fraudulent' behaviour within Barnes v Addy terms." (emphasis added)

Whether Relevant Claims are Open

1. The claims numbered 1, 2 and 3 in the Amended Statement of Claim were not pressed. Further, as I have said, the claims articulated in paras 16 to 20 of the Amended Statement of Claim are not expressly dealt with in the prayers for relief. It is of some significance that para 15 of the Amended Statement of Claim, the last allegation under the rubric "Formation of Joint Venture", is the allegation that Mr Baker was under duties as a director of the Company imposed by ss 180, 181, 182 and 183 of the Corporations Act. Thus, that assertion comes before the rubric "Breaches of Duty - Improper Withdrawals", under which par 16 to 20 are set out. The Amended Statement of Claim is unclear as to whether the allegations made under that rubric depended upon the allegation in the previous paragraph that Mr Baker was under the duties imposed by the Corporations Act. While breaches of duties owed to the Company were mentioned throughout, and often alongside breaches of duties owed to Messrs Lambourne and Pollett, the thrust of the particulars furnished by the Amended Statement of Claim is breaches of duties owed by Mr Baker to Messrs Lambourne and Pollett derived from the so-called "joint venture" pleaded earlier in the Amended Statement of Claim.
2. Further, there was no reference to a claim in respect of "improper withdrawals" in Mr Lambourne's opening submissions, nor in the course of oral submissions or nor in any of his closing submissions. The only focus in each was on the sum of $30,000 and the breach of duty by Mr Baker in relation to the arrangements made with the Buckingham Interests, the two matters referred to by the primary judge at the commencement of her reasons. Further, it is of some significance that, as indicated above, no complaint is made by the Claimants in their amended notice of appeal about any failure on the part of the primary judge to find in favour of the Company in relation to any claim on behalf of the Company in relation to the "improper withdrawals".
3. On the hearing of the appeal, counsel for Mr Baker expressly eschewed any express abandonment of claims by the Claimants. However, counsel asserted that "it was very clear" that claims in respect of the "improper withdrawals" were not being pursued. Reference was made to the observation by the primary judge that, if the Claimants addressed their case more widely than the pleaded case and the two causes of action identified above, the defendants would be entitled to change their position and run the case on that assumption.
4. Counsel for Mr Baker asserted that there was no change in the Claimants' approach to the case and, therefore, no objections were taken and witnesses were not cross-examined. He asserted that the evidence was not challenged purely because it was thought that there was no need to do so in respect of the "improper withdrawals". It is important, therefore, to consider the chronology of events in order to determine whether it could be said that, in reliance upon the stance adopted by the Claimants, Mr Baker's counsel elected to abandon objections to affidavits and elected not to cross-examine the deponents.
5. Counsel for Mr Baker asserted to this Court that the position adopted "very early in the piece", after discussion about the two claims that were to be pressed by the Claimants as articulated above, was that there would be no objection to the evidence. The primary judge expressed "a slight hesitation" given that the Claimants were self-represented and said that she had in mind that things "may change and move as the hearing goes on". Her Honour said to counsel for Mr Baker that he should take the course that he thinks appropriate but that, if the Claimants were to take a different view, as the case unfolded, she was not going to stop them pursuing "a pleaded part of their claim if it is not referred to in their submissions".
6. Counsel for Mr Baker then said that, in terms of what the Claimants were seeking against the various defendants, it was important for the defendants to know how to run the case. He said that they were quite content to proceed "on this Barnes v Addy, or whatever other basis the claim for a transition of the business created a loss" and on the $30,000 claim, if they are the cases made out. He said that they would "approach the case on that basis" but that it would be difficult to proceed and work out what to cross-examine on because there were lots of documents and lots of issues.
7. Counsel for Mr Baker accepted that the primary judge said that she was not going to stop the Claimants from articulating the claim within the confines of the pleadings as the evidence unfolded, her Honour was not taken through any of the documentation that supported the claim by the Claimants other than the claim for $30,000 and the breach of fiduciary duty leading to what the primary judge characterised as "the uplift claim". The "uplift claim" was the claim that the value of the business of the Company, which was alleged to have been appropriated by TopBetta, was to be measured by reference to the increase in the value of the listed shares in TopBetta.
8. The primary judge cautioned counsel for Mr Baker on the basis that she had litigants-in-person before her. Her Honour observed that the contents of the Claimants' submissions as to liability for loss and relief did not exclude them from relying upon a pleaded cause of action. Her Honour said that it was a matter for counsel but he could proceed on the basis of what Mr Lambourne had outlined. However, her Honour said, if Mr Lambourne changed his mind and wanted to go further or wider, the extent to which counsel for Mr Baker might take some other objection would have to be revisited and he would have to change his course accordingly.
9. Once Mr Lambourne had read the affidavits on behalf of the Claimants, which contained the evidence about alleged misappropriations of funds of the Company by Mr Baker, counsel for Mr Baker had to make a forensic judgment, namely, whether to read Mr Baker's affidavit or not or to object to evidence that, it was contended, was no longer relevant. Counsel for Mr Baker suggested that there is no need to object to evidence that is relevant only to a claim that has not been articulated and is otherwise irrelevant. Indeed, there may well be occasions where evidence that is irrelevant to the issues is admitted without objection. However, in such circumstances, it would be unfair for that evidence to be relied upon, on appeal for example, in support of a claim that had not been articulated at first instance. Nevertheless, the position will be very different where the evidence is relevant to a claim that is articulated in the pleadings and is not abandoned. Thus, the question is whether a claim on behalf of the Company for recovery of the "improper withdrawals" was articulated before the primary judge.
10. Had counsel for Mr Baker objected to the relevant parts of Mr Lambourne's affidavit and the schedules prepared by him, as he may well have done on the basis of what is now put on behalf of Mr Baker, it would have been necessary for the primary judge to explore with Mr Lambourne the basis upon which he was tendering that material. It would then have been incumbent upon Mr Lambourne to support the relevance of the material by reference to paragraphs 16 to 19 of the Amended Statement of Claim or accept that it was irrelevant.
11. It is by no means clear whether Mr Lambourne would have supported the relevance of the material. For example, Mr Lambourne characterised the claim in respect of "improper withdrawals" being made on behalf of the Company as Barnes v Addy claims. Whereas the claims made against the Buckingham Interests can fairly be characterised as Barnes v Addy claims, the claim by the Company against Mr Baker was not a Barnes v Addy claim. In his submissions of 1 March 2019, Mr Lambourne referred to the breaches of duty set out in paragraphs 16 to 19 of the Amended Statement of Claim. He characterised those claims as part of the Barnes v Addy case pleaded against Mr Baker.
12. Clearly enough, Mr Lambourne did not comprehend the distinction between a Barnes v Addy claim against a person not directly involved in a breach of fiduciary duty, on the one hand, and the claims that might have been formulated against Mr Baker directly on the basis of improper withdrawals. Even allowing for the fact that Mr Lambourne and the other Claimants are not practising lawyers, it is difficult to see in the submissions of 1 March 2019 a claim for repayment by Mr Baker to the Company of monies improperly withdrawn. Rather, the submissions are directed towards the loss of the value of the business of the Company. There is nothing in the submissions that would have alerted Mr Baker and his legal representatives to a specific claim on behalf of the Company for repayment of monies alleged to have been improperly withdrawn. There is no other reference in the submissions made by Mr Lambourne either in writing or orally directed to the allegations made in paragraphs 16 to 19 of the Amended Statement of Claim.
13. The question is whether Mr Baker was fairly entitled to conduct the proceedings before her Honour on the basis that the only claims that were being pressed by the Claimants were Mr Lambourne's claim for $30,000 and the claim for equitable compensation based on benefits alleged to have been lost to the Company by reason of the deployment of the Punters Show in the affairs of TopBetta. There has been no evidence from the respondents before this Court to the effect, for example, that the forensic decision not to object to the Claimants' affidavits, not to require the deponents of the affidavits for cross-examination and not to go into evidence was made on the basis that no independent claim for the "improper withdrawals" was being pursued. Nevertheless, an inference is certainly available that the forensic judgment made by counsel for Mr Baker not to deal with any claims other than the claim for $30,000 and the claim for loss of the business was based on the understanding that the Claimants were not pressing an independent cause of action in relation to the "improper withdrawals". That inference can be drawn in the light of the exchanges between the parties and the primary judge.
14. The primary judge did not direct her attention to any possible independent cause of action by the Company. There was no formulation in the Amended Statement of Claim of the amount claimed in such a cause of action. I consider, on balance, notwithstanding the material under the rubric "improper withdrawals" in the Amended Statement of Claim, the hearing before the primary judge was conducted on the basis that the Claimants were not pressing an independent cause of action for the Company to recover from Mr Baker the amounts of the "improper withdrawals". In the circumstances, it would be unfair to permit the Company to depart from the basis upon which Mr Lambourne conducted the proceedings at first instance.
15. If the claim were to be allowed, it could be necessary to remit the proceedings for a further hearing. However, that possibility has not been suggested.

Breaches of Fiduciary Duties owed to all Claimants

1. The Claimants allege that Mr Baker breached fiduciary duties owed by him both to Messrs Lambourne and Pollett and to the Company. The fiduciary duties are said to arise out of the arrangements entered into by the Participants in late 2010 and the appointment of Mr Baker as the only director of the Company, which the Claimants characterise as a "joint venture". It does not appear that the Company was regarded as a party to the so-called joint venture. Rather, the Participants were the parties to the so-called joint venture and the Company was the vehicle for the conduct of the joint venture. That is of significance in determining to whom Mr Baker owed fiduciary duties.
2. There are also allegations in paras 25 to 34 of the Amended Statement of Claim relevant to the contention advanced on behalf of the Claimants that the Buckingham Interests were knowingly involved in breaches of duty by Mr Baker. I shall return to that question below, to the extent that it is relevant.
3. It is clear enough that the Participants engaged in a venture whereby the Company was incorporated and one-third of the issued share capital of the Company was allotted and issued to each of the Participants. Shortly afterwards, Mr Baker became the sole director of the Company. However, the pleading is not entirely consistent with that structure.
4. The principal thrust of the claims advanced on behalf of the Claimants is that Mr Baker acted in breach of fiduciary duties allegedly owed by him both to Messrs Lambourne and Pollett and to the Company by inducing them to enter into the "strategic partnership", whereby the Company was deprived of the benefit of its substantial asset, "the Punters Show", and Messrs Lambourne and Pollett were deprived of the opportunity of being paid monies due to them by the Company for sale of their "products" and of the benefit of the value that their shares in the Company would have had but for the loss of the Punters Show. While there is an element of duplication, it was not contended by the Claimants that they were entitled to recover compensation for the Company for loss of the benefit of the Punters Show as well as compensation for loss of value in their shares. The essence of their claim was for the asserted value of the Punters Show. There was no evidence of that value as such. Rather, the Claimants sought to have inferences drawn as to the value from the circumstances of the IPO of TopBetta.

Findings of the Primary Judge

1. The primary judge observed that the Claimants asserted that, at the time of the May Meeting, Mr Baker owed fiduciary duties directly to Messrs Lambourne and Pollett. Her Honour noted that the particulars in support of that allegation amounted, essentially, to the proposition that the strategic partnership amounted to a sale of the business of the Punters Show, for which substantial sums should have been paid and that Messrs Lambourne and Pollett were reliant on Mr Baker to provide them with information about the financial state of the Company and whether to enter into the strategic partnership. Her Honour observed that, at the time of the May Meeting, Messrs Lambourne and Pollett were shareholders of the Company and that, in that capacity, they had what was in effect an indirect interest in the net assets of the Company. Thus, her Honour said, the capacity in which Messrs Lambourne and Pollett claimed that Mr Baker owed fiduciary duties to them was as shareholders of the Company. However, as her Honour observed, directors do not ordinarily owe fiduciary duties directly to shareholders.
2. The general principle is that a director's fiduciary duties are owed to his or her company and not to shareholders. [14] After referring to authorities said to support the existence of exceptions to that general rule, the primary judge observed that this case was not one where Messrs Lambourne and Pollett were "at the mercy" of Mr Baker. Rather, between them, Messrs Lambourne and Pollett held two-thirds of the issued share capital and thus retained control of the Company in general meeting, although they chose to leave it to Mr Baker to carry on the day-to-day management of the Company. There was no sale of shares in the Company and no sale or transfer of property of the Company. As her Honour said, Messrs Lambourne and Pollett retained the full range of remedies for which company law provides, including suing for breach of duty owed to the Company, by a derivative suit if necessary. In any event, it was within their power to remove Mr Baker and appoint themselves or some other person as directors of the Company. Her Honour concluded that there was no compelling reason why a fiduciary duty would have been owed by Mr Baker, as a director of the Company, to Messrs Lambourne and Pollett, as shareholders of the Company.
3. In any event, the primary judge concluded, if Mr Baker owed such a duty to Messrs Lambourne and Pollett, there was no evidence that Mr Baker had breached such a duty. Mr Baker, as a director of the Company, appears to have perceived that it would be in the interests of the Company to enter into arrangements with TopBetta, as a result of which he expected that benefits would flow to the Company and would have benefited all shareholders equally. Such benefits included the payment of outstanding debts of the Company, more regular income for Messrs Lambourne and Pollett, improving profitability by reason of the transfer of the administrative side of the Company's business to an apparently more organised, more efficient and more substantial operation in the guise of TopBetta and 12Follow, and enhanced profile for the Punters Show and its products by being associated with a publicly listed company, namely, TopBetta.
4. The primary judge observed that the evidence indicated that Mr Baker's efforts were directed to achieving benefits for the Company and all of its shareholders and did not suggest that Mr Baker's intentions were other than good or that he intended to treat the shareholders of the Company differently in relation to the benefits sought to be attained through the strategic partnership. Her Honour considered that the evidence pointed to a straightforward attempt by a director to improve the financial position of his company or to realise or enhance the value of the assets of his company in the performance of his duties as a director. Her Honour concluded that the claim for equitable compensation by Mr Lambourne and Mr Pollett against Mr Baker failed by reason of the absence of any evidence that any duty to them was breached, assuming that a duty was owed directly to them.
5. The primary judge accepted that, as a director of the Company, Mr Baker owed fiduciary duties to the Company. Her Honour observed that the claim advanced on behalf of the Claimants was that Mr Baker breached his fiduciary duties to the Company by revealing the whole of its financial and confidential information about its business, without any compensation. Alternatively, the claim was that he caused the Company to enter into the strategic partnership as a result of which it was stripped of all of its assets for no compensation. Her Honour was not persuaded that there was any such breach.
6. Thus, the primary judge observed that the evidence did not reveal what financial or other confidential information of the Company, if any, was provided by Mr Baker to the Buckingham Interests. Her Honour observed that there was no evidence that anything Mr Baker told Messrs Lambourne and Pollett about the financial position of the Company before the May 2015 meeting was incorrect. In particular, there was no evidence to suggest that the cash flow problems referred to by Mr Baker in his discussions with Messrs Lambourne and Pollett did not in fact exist. Rather, the evidence suggested that the Company owed money to its accountant and to the Commissioner of Taxation, which it had difficulty in paying.
7. Further, the primary judge considered that there was nothing to suggest that the advantages of the proposed strategic partnership with TopBetta were not, in fact, fairly described by Mr Baker. Thus, her Honour considered that it appeared that TopBetta was a more substantial enterprise that may well have offered advantages to the Company if it took advantage of the administrative and information technology capacities of TopBetta by means of the strategic partnership. Her Honour observed that it was unclear how entry into the strategic partnership with TopBetta failed to compensate the Company adequately for the benefit of its assets. Rather, the evidence indicated that TopBetta offered to pay various sums of money to the Company and to Messrs Lambourne and Pollett as consideration for entry into the strategic partnership. It was not suggested by the Claimants that the assets of the Company were sold to TopBetta and there was no evidence that any asset of the Company passed to TopBetta.
8. In any event, when "the strategic partnership" failed, the Punters Show website, the domain name, the information technology passwords and the database belonging to the Company were all returned promptly to Mr Lambourne and Mr Pollett. There was no evidence that TopBetta or 12Follow retained any property or assets of the Company. However, while the business of the Company was returned to the control of Messrs Lambourne and Pollett, they appear to have lacked the necessary administrative, information technology and accounting experience to exploit the Company's business further.

No Evidence of Breach

1. The Claimants summarised their main arguments in a written submission dated 12 April 2021 (the Summary). The Summary began with the proposition that Mr Baker owed fiduciary duties to each of Messrs Lambourne and Pollett by reason of the arrangement that was characterised in the submission as "the ad hoc 'Joint Venture'". Thus, the Claimants urged, the imposition of fiduciary duties on Mr Baker predated any putative duty owed by Mr Baker as a director of the Company, whether in December 2010 or in August 2012. In any event, they asserted, Mr Baker's exercise of discretionary powers as a director of the Company was at all times constrained by, and subservient to, Mr Baker's pre-existing fiduciary duties to each of Messrs Lambourne and Pollett, such that. "Equity's Conscience" would not allow Mr Baker to use the Company as a shield to avoid the "prophylactic policy" behind fiduciary duties.
2. The Claimants contended that the purpose of the so-called joint-venture had been to optimise the reputation of the Participants within the thoroughbred racing industry and the financial rewards for each of them. They say that an ancillary joint purpose had been to provide an alternative channel of communication and platform for "thoroughbred racing aficionados" interested in challenging the power of the regulatory and commercial establishment within the industry. They say that, by 2014, the Participants had largely achieved that goal, in that the Punters Show was recognised as a unique and influential platform within the industry. They asserted that, notwithstanding the lack of any proper accounting, the Punters Show business appears to have been more valuable than Mr Baker and Mr Buckingham asserted.
3. The Summary asserted that, instead of Mr Baker sharing the financial returns of the Punters' Show fairly with Messrs Lambourne and Pollett, Mr Buckingham induced Mr Baker to divert the assets and resources of the joint venture to the benefit of the Buckingham Interests. The Summary asserted that, instead of allowing the success of the Punters Show to lift the reputation of Messrs Lambourne and Pollett within the thoroughbred racing industry, Mr Buckingham damaged them as from June 2016.
4. The Summary asserted that the unconscientious conduct of Mr Baker and Mr Buckingham included:

• using the business resources of the Punters Show, including the talents of Messrs Lambourne and Pollett, for the benefit of the Buckingham Interests;
• using those resources as a head start for the ASX listing of TopBetta on 11 December 2015; and
• using those resources to support the share price of TopBetta in the vital first two years after listing on the ASX while Mr Buckingham sought to focus on the core technological expertise of the Punters Show business, which eventually supported the share price of TopBetta.

1. The Claimants asserted in the Summary that the onus was on Mr Baker to establish the extent to which he and the Buckingham Interests severally and jointly should disgorge the benefits and profits obtained as from August 2014. They said that, without the Punters Show resources, including "the talents" of Messrs Lambourne and Pollett, the Buckingham Interests would not have had the "headstart" that allowed TopBetta to reach a $19 million capital valuation on 11 December 2015. They asserted that, rather than dissociating themselves from their previous unconscientious conduct, the Buckingham Interests continued, after 11 December 2015, not only to despoil the Punters Show business but also to despoil the personal reputation of Messrs Lambourne and Pollett within "the intimate community of Thoroughbred Racing professionals".
2. The Summary asserted that the benefits, profits and advantages obtained by the Buckingham Interests were very similar to those proposed at the presentation on 9 December 2014. The Claimants said that Mr Buckingham well knew as from that day that Messrs Lambourne and Pollett were strongly against the proposals contained in the presentation of that day.
3. The Summary contended that, between 2014 and 2017, the Buckingham Interests had more efficient sales and marketing management facilities but its digital platform lacked the vital "content" without which it could not establish the viability of its business model and technology. The Summary asserted that it was only through misappropriation of the content of the Punters Show that the Buckingham Interests managed to convince the public of the value of its digital technology, which has now become the core business of the Buckingham Interests.
4. The Summary asserted that, without the Punters Show products and services, the Buckingham Interests had, figuratively speaking, "an empty pot with no honey". The Claimants said that it was the Punters Show products and services that "attracted the bees to Buckingham's otherwise uninviting honeypot" and that it was only once the investment community had become familiar with the ecosystem around "the honeypot" that the Buckingham Interests were able surreptitiously to alter the quality and nature of "the honey without the 'bees'" losing interest and abandoning the honeypot of the Buckingham Interests.
5. It is significant that no mention was made in the Summary of the alleged "improper withdrawals" made by Mr Baker of the funds of the Company.
6. In their detailed written submissions in support of the appeal, dated 28 February 2021 (the Submissions), the Claimants set out in more detail contentions similar to those contained in the Summary. Having asserted the existence of a fiduciary duty owed by Mr Baker to Messrs Lambourne and Pollett and the content of that duty, the Submissions addressed the question of breach of that duty. The Submissions then addressed the question of breach by asserting that it was self-evident from the statement of facts contained in the Submissions that Mr Baker had breached his specific duties. Thus, the Submissions asserted, Mr Baker accepted employment from the Buckingham Interests but failed to tell Messrs Lambourne and Pollett and did not make the required disclosure after being asked in writing to do so. Thus, it was asserted, Mr Baker was employed by the Buckingham Interests at a minimum salary of $100,000 per annum by 1 May 2015, to be increased to $120,000 per annum after the expected listing of TopBetta. It was said that whenever Mr Lambourne complained about Mr Buckingham's tardiness in relation to the payment of $30,000, Mr Baker would warn him "not to upset the applecart" because Mr Buckingham "is our best bet". Neither Mr Baker nor Mr Buckingham ever informed Messrs Lambourne and Pollett that Mr Baker had started to work for the Buckingham Interests.

Conclusion

1. In the light of the above conclusions, I would dismiss the appeal. In the light of the compromise of the claim for $30,000, it would be appropriate to afford the parties the opportunity of making further submissions as to costs, if they are so advised. The record should be altered to show that the name of the third respondent has been changed to "Betmakers Technology Group Limited".

The Amended Statement of Claim The substantive prayers for relief in the Amended Statement of Claim were, relevantly, as follows: 1. claim by Mr Lambourne against Mr Buckingham and TopBetta for the sum of $30,000; 2. claim by Messrs Lambourne and Pollett against Mr Baker for damages or equitable compensation; 3. claim by the Company against Mr Baker for damages or equitable compensation; 4. claims by the Company against Mr Baker for damages pursuant to s 1317H of the Corporations Act for breaches of ss 180, 181, 182 and 183 of the Corporations Act; 5. claims by the Company against the Buckingham Interests for damages pursuant to s 1317H of the Corporations Act by reason of their knowing involvement in breaches of ss 180, 181, 182 and 183 of the Corporations Act; 6. claim by Messrs Lambourne and Pollett against Mr Baker for damages pursuant to s 236 of the Australian Consumer Law in relation to breaches by Mr Baker of s 18 of the Australian Consumer Law; 7. claims by Messrs Lambourne and Pollett against the Buckingham Interests for equitable compensation; and 8. claims by the Company against the Buckingham Interests for equitable compensation. Mr Baker and the Buckingham Interests asserted that prayers 4, 5 and 6 were not pressed. Paragraphs 52 to 54 inclusive make allegations as to the relief claimed against Mr Baker. Those allegations may be restated as follows:

• In consequence of the breaches by Mr Baker of fiduciary duties owed to Messrs Lambourne and Pollett, Mr Baker caused Messrs Lambourne and Pollett loss and damage as follows: (i) Mr Baker failed to deal with and account to Messrs Lambourne and Pollett for the revenue generated by the Company's business through the sale of products of Messrs Lambourne and Pollett; (ii) Messrs Lambourne and Pollett have lost the share of profit that would otherwise have been derived by them from the conduct of the Company's business; and (iii) that the whole of the business of the Company was transferred to TopBetta without any proper or adequate compensation to reflect the true value of the business and assets conveyed to TopBetta.
• Alternatively, but for the breaches of s 18 of the Australian Consumer Law, Messrs Lambourne and Pollett would not have entered into the May 2015 agreement and would not have agreed to the Company entering into the strategic partnership and would not have suffered the loss of the value of their shares which, after 2015, became valueless.
• In consequence of the breach by Mr Baker of the duties owed by him to the Company, the Company has suffered loss and damage consisting of: (i) loss of the revenue that the Company misappropriated by Mr Baker; and (ii) loss of the value of the business and assets of the Company transferred to TopBetta without any proper compensation or payment. Paragraphs 7 to 15 of the Amended Statement of Claim made Allegations concerning "Formation of Joint Venture" and may be restated as follows:
• In or about late 2010, the Participants agreed: (i) to form and conduct a business to produce and broadcast a regular programme on Internet television to be called the "Punters Show"; (ii) to promote, market and sell products of the Participants associated with horseracing from the website associated with the programme; (iii) to promote, market and sell products of third parties who would pay a commission to the business; (iv) to provide to persons described as "affiliates" the facility to place bets directly with clients of the Punters Show in exchange for a trailing commission for future bets placed by clients of the Punters Show; (v) to generate revenue from advertisers; (vi) to generate revenues from the appearances by Messrs Lambourne and Pollett as "talent" for a fee; and (vii) to generate revenue from extending the Punters Show media presence through radio and pay television channels.
• It was further agreed between the Participants in relation to the conduct of the Punters Show business that: (i) the Participants would jointly own directly or indirectly the digital shopfront, platform and website; (ii) the Participants would be entitled to sell their own products through the business free of any charge or commission and would receive the whole of the revenue from the sale of their respective products; (iii) the Participants would share equally in the profits from the conduct of the other activities of the business; (iv) Mr Baker would manage and administer the marketing, promotion and sales of the products, as well as collect revenue, deduct fees and account to the vendors of the products on a regular basis; (v) Mr Baker would also manage, administer and promote all aspects of the business and the Punters Show brand, simultaneously with the personal promotion of Messrs Lambourne and Pollett as "talent" within the racing industry; (vi) Messrs Lambourne and Pollett would devote their time and skill to the production of broadcasts of the Punters Show; (vii) the business would manage, promote and sell only those products for which it obtained exclusive sales rights; and (viii) the business would be conducted by a company to be incorporated and managed by Mr Baker in which each of the Participants would have an equal shareholding.
• In accordance with the agreement described above, Mr Baker caused the Company to be incorporated and caused 25 shares in the capital of the Company to be issued to each of the Participants;
• In reliance upon representations made by Mr Baker, Messrs Lambourne and Pollett agreed for Mr Baker, from December 2010: (i) to act as the sole director of the Company; (ii) to exercise exclusive control and supervision of the Company's bank account, finances and accounting; (iii) to determine and pay to them such monies as they were entitled to receive from the business and in accordance with their agreement; and (iv) to determine and pay all and any legitimate expenses of the business to any third parties.
• In consequence of the above, there existed between the Participants at all times up to July 2016 mutual trust and confidence in relation to the conduct of the business and the affairs of the Company;
• In consequence of the above matters, Mr Baker owed Messrs Lambourne and Pollett, from the time of the formation of the business until late 2016 fiduciary duties to act in the best interests of Messrs Lambourne and Pollett, to avoid a conflict of Mr Baker's interest with that of Messrs Lambourne and Pollett and not to misuse any opportunity or advantage gained from acting on behalf of Messrs Lambourne and Pollett in relation to the following matters: (i) The promotion and marketing of the products of Messrs Lambourne and Pollett through the Punters Show; (ii) the collecting and accounting to Messrs Lambourne and Pollett for the proceeds of sale of their respective products; and (iii) promoting Messrs Lambourne and Pollett as "talent".
• At all material times, in consequence of being a director of the Company, Mr Baker owed fiduciary duties to the Company: (i) to avoid conflicts between his interests and those of the Company; and (ii) not to use information gained by him in his capacity as a director, to advance the interests of himself or third parties at the expense of the Company.
• At all material times, Mr Baker was under duties as a director of the Company, imposed by ss 180, 181, 182(1)(a), 182(1)(b), (183)(1)(a) and (183)(1)(b) of the Corporations Act. Paragraphs 16 to 20 of the Amended Statement of Claim, which make allegations in relation to "improper withdrawals" by Mr Baker, may be restated as follows:
• Between August 2012 at the latest and August 2016, Mr Baker withdrew the sum of $833,000 from accounts of the Company, including $187,791 in cash from automatic teller machines;
• The majority of those monies were withdrawn by Mr Baker in breach of his duties to Mr Lambourne and Mr Pollett and in breach of his duties to the Company;
• A substantial proportion of the monies withdrawn by Mr Baker for his own private purposes as described above constituted the proceeds from the sale of the products of Messrs Lambourne and Pollett for which Mr Baker was obliged to account for Messrs Lambourne and Pollett;
• A substantial portion of the monies withdrawn by Mr Baker for his own personal purposes constituted revenue of the Company in relation to which Mr Baker was bound to account to the Company, to ensure that it had paid all of its expenses and in relation to such proportion as represented profit from the conduct of the Company's business, to distribute that equally among the Participants or otherwise cause it to be invested in the Company's business;
• By withdrawing those sums that should have been accounted for to the Company, Mr Baker breached his general fiduciary obligations to the Company and his statutory obligations to the Company;
• If and to the extent that Mr Baker has purported to pay money to himself for services performed by him to the Company, such payments constituted a breach of the duties owed by Mr Baker to Messrs Lambourne and Pollett directly or was a breach of the duties owed by him to the Company. The particulars of the allegations in relation to "improper withdrawals" by Mr Baker of $833,000 in breach of his duties to Mr Lambourne and Mr Pollett were follows:
• During the relevant period Mr Baker caused $320,000 to be paid to Mr Pollett and $216,000 to Mr Lambourne, each of whom produced the majority of the product for sale through the Company's business and the majority of the sums paid to Mr Baker could not have been in regard to the sale of products of Mr Baker through the Company's business;
• Mr Baker would have sold approximately $100,000 of his products through the Company during the relevant period;
• The Company has declared no dividends since incorporation;
• At no material time did Mr Baker inform Mr Lambourne or Mr Pollett that he was making substantial payments to himself from the funds of the Company or otherwise seek their consent or approval for making substantial payments for himself;
• Mr Baker had no right or entitlement to be paid by the Company the amounts that he caused the Company to pay him; and
• The said payments were upon the private living expenses and entertainment expenses of Mr Baker. In relation to the allegation of breach of general fiduciary obligations to the Company by Mr Baker in withdrawing the sums, the following particulars were provided:
• in paying the monies to himself, Mr Baker failed to account for the monies to the Company in accordance with his obligations as a director;
• Mr Baker preferred his own personal interests to the interests of the Company in dealing with the money; and
• Mr Baker misused his control as sole director of the Company and sole control of the Company's bank accounts to access money and pay himself sums to which he had no lawful entitlement. Finally, the allegation that the payments made by Mr Baker to himself constituted a breach of the duties owed by Mr Baker to Messrs Lambourne and Pollett directly or a breach of the duties owed by him to the Company was particularised as follows:
• Each of the Participants worked full time in the conduct of the business of the Company;
• No salary was paid to Mr Lambourne or Mr Pollett as remuneration of the work performed by them on behalf of the Company's business;
• Mr Baker was already paying from the Company bank account a salary for an assistant;
• the Participants had agreed at the commencement of the business that the revenue of the Company would be deployed in payment of expenses and in payment in regard to any products sold by the business and otherwise divided equally;
• Mr Baker never informed Messrs Lambourne and Pollett that he was paying himself any sum to which they would not have been equally entitled; and
• in causing himself to be paid any such sum and not paying an equal sum to each of Messrs Lambourne and Pollett, Mr Baker used his control and knowledge of the affairs of the Company to advance his own interests in breach of his duty to the Company and its members as a whole. Paragraphs 21 to 24 inclusive consist of allegations that Mr Baker made representations to Messrs Lambourne and Pollett concerning the financial state of the business of the Punters Show. Those allegations do not appear to have been pressed as separate causes of action. Paragraphs 25 to 34 inclusive of the Amended Statement of Claim appear under the heading: "[Mr Baker's] Conduct in Improperly Favouring the Interests of the [the Buckingham Interests]" The allegations may be relatively restated as follows:
• By early 2012 and up to July 2016, the Company held valuable intellectual property, confidential information and goodwill associated with the Punters Show business in that: (i) the Punters Show was a frequently watched Internet television programme on thoroughbred horse racing; (ii) the name the "Punters Show" was a recognisable mark or name to those interested in following thoroughbred horse racing and obtaining tips; (iii) the Punters Show programme attracted a number of recognised experts providing services and products in relation to thoroughbred horse racing, whose services were being advertised through the Punters Show programme and platform; (iv) the Company held data relating to approximately 3,980 registered clients; (v) the Company held data relating to more than 4,427 registered Twitter accounts; (vi) the Company held data relating to more than 7,468 Facebook accounts; (vii) the Company held information and data relating to its billings since 2010, which was a valuable resource in regard to the determination of products likely to be profitable in a business such as that conducted by the Punters Show; (viii) the Company was recognised amongst aficionados of thoroughbred horse racing and held goodwill associated with the Punters Show programme.
• In about mid-2014, without prior consultation or consent of Messrs Lambourne or Pollett, 12Follow was: (i) selling the same products that had previously been sold exclusively from the Punters Show digital shopfront; (ii) promoting the fact that 12Follow had a "strategic alliance" with the Punters Show; (iii) promoting the claim that the Punters Show business was part of 12Follow's stable of products and experts; and (iv) being provided with direct access to the "back of house" facilities of the Punters Show and all of the Company's commercially valuable data.
• 12Follow could not have benefited from the matters, facts and circumstances just set out without the consent of Mr Baker. The Amended Statement of Claim then makes allegations in paras 35 to 43 inclusive in relation to arrangements described as "May 2015 Agreement", which are also referred to as "the strategic partnership". The allegations may be restated as follows:
• On or about 4 May 2015, Mr Buckingham made certain representations to Messrs Lambourne and Pollett concerning 12Follow, Operis and TopBetta and the benefits that would ensue for the Participants and Company if the Company entered into a strategic partnership with 12Follow and TopBetta;
• At the time of the representations, Mr Baker urged and encouraged Messrs Lambourne and Pollett to agree to the strategic partnership proposed by Mr Buckingham and to the detailed terms and conditions proposed by him;
• Messrs Lambourne and Pollett agreed to the proposed strategic partnership and to the terms and conditions proposed by Mr Buckingham because they believed that: (i) the Company and its business we were in a poor financial state as described by the representations made by Mr Baker in breach of s 18 of the Australian Consumer Law; (ii) the business would be unable to provide them with adequate income in the immediate future; (iii) the business was not as valuable as they had anticipated it would be; (iv) the intellectual property, confidential information, data and goodwill of the Company and its business were not a valuable asset that could have been sold or licensed to TopBetta for a substantial sum; (v) the strategic partnership proposed was the only practical means by which the business could be carried forward so as to yield sufficient income to support them; and (vi) the strategic partnership proposed was the only practical means by which the business could be carried forward so as to maintain the integrity and exclusivity of their joint venture under the agreement made in 2010.
• Those beliefs were induced by the representations made by Mr Baker and the statements made by Messrs Buckingham and Baker;
• In consequence of the agreement made in May 2015, Mr Buckingham caused a new website known as the "Punters Show 2.0" to be created and that website commenced its consumer facing trading activity soon after 21 July 2015;
• As a further consequence of the May 2015 Agreement, Messrs Lambourne and Pollett received monthly payments variably from either TopBetta or 12Follow bank accounts;
• As at 21 July 2015, all commercially valuable data previously stored on the original Punters Show data storage facilities was transferred to the Punters Show 2.0 website controlled by TopBetta;
• That commercially valuable data included all the valuable intellectual property, confidential information and goodwill associated with the Punters Show business described above;
• The representations made by Mr Buckingham and Mr Baker concerning the strategic partnership did not materialise after July 2015; and
• The substance and practical effect of the strategic partnership was to cause the whole of the goodwill, intellectual property, confidential information and commercially valuable data that had been held by the Company prior to May 2015 to be transferred irretrievably to TopBetta without any compensation to the Company for the value of those assets, thereby depriving the Company of a valuable business. Paragraphs 44 to 46 inclusive of the Amended Statement of Claim make allegations as to breaches of duty by Mr Baker in relation to the May 2015 Agreement. The allegations may be restated as follows:
• In relation to the making of the May 2015 Agreement, Mr Baker owed fiduciary duties directly to Messrs Lambourne and Pollett in relation to the information that Mr Baker provided and otherwise failed to provide to Messrs Lambourne and Pollett regarding the financial state of the Company or its business and in relation to the advisability of entering into the May 2015 strategic partnership agreement;
• Such fiduciary duties arose from the following: (i) the strategic partnership was equivalent to a disposal by the Company for the whole of its business undertaking and was similar or comparable to a sale by Messrs Lambourne and Pollett of their shares in the Company; (ii) Mr Baker had full knowledge of the true financial state of the Company and the business and of the advantages to the Buckingham Interests of the arrangement that was proposed; (iii) Mr Baker knew that the goodwill, intellectual property, confidential information and commercially valuable data of the Punters Show business constituted valuable assets for which persons such as the Buckingham Interests would be prepared to pay a substantial sum to acquire in May 2015; and (iv) Messrs Lambourne and Pollett were, to Mr Baker's knowledge, reliant upon him for information concerning the financial state of the Company and its business and the advisability of entering into the strategic partnership.
• Mr Baker breached those duties to Messrs Lambourne and Pollett in encouraging them to enter into the strategic partnership proposal in that Mr Baker: (i) misled Messrs Lambourne and Pollett as to the financial state of the Company; (ii) knew that the intellectual property, confidential information, data and goodwill of the Company were valuable assets; (iii) ought to have advised Messrs Lambourne and Pollett that the strategic partnership inadequately compensated the Company for the benefit of those assets; and (iv) failed to advise Messrs Lambourne and Pollett that the substantial effect of the performance of the strategic partnership was to strip the Company of its business and irretrievably transfer it to TopBetta with the consequence that Messrs Lambourne and Pollett would go from being the major shareholders of a company through which they owned and controlled the Punters Show business, to having no control whatsoever over the business that they had helped to establish.
• Mr Baker breached his fiduciary duties and statutory duties to the Company with respect to the May 2015 Agreement and thereby caused it loss and damage in that: (i) prior to the May 2015 Agreement, Mr Baker revealed the whole of the financial and other confidential information of the Company to the Buckingham Interests without any attempt to preserve the confidentiality of the information or acquire any compensation or license fee from the Buckingham Interests; and (ii) Mr Baker exercised his powers as director of the Company to cause it to enter into the May 2015 Agreement and thereby cause it to be stripped of the whole of its business and all of its intellectual property, confidential information and goodwill, without any adequate compensation for the value of those assets. Paragraphs 47 to 51 inclusive of the Amended Statement of Claim are concerned with the alleged involvement of the Buckingham Interests in breaches of duty by Mr Baker.

Schedules of Non-business-related Expenses Schedule A. Period: Please refer to paragraph 21 of Lambourne Affidavit Shows sample of [Mr Baker's] Personal Wants Funded from Company Account from 30/7/13-5/6/14: DATE TRANSACTION DESCRIPTION $ 1 30/7/13 The Sleep Doctor DEE WHY 2000.00 2 13/2/14 Crystal Car Wash 0001 Brookvale 550.00 3 27/2/14 Tennis Warehouse Fitzroy Aus 596.95 4 3/3/14 Potts Point Bistro Potts Point AU 900.00 5 4/3/14 Kingsley Steak and Woolloomooloo AUS 550.00 6 6/3/14 Sheraton On The Park S Sydney NS AUS 448.90 7 12/3/14 Manly Seaside Phoeni Manly NS AUS 350.00 8 1/4/14 Novotel Darling Harbour Sydney NS AUS 245.63 9 8/4/14 Beauty Mineral Hillsdale NSW 250.00 10 9/4/14 Sovereign Place Serv Balgowlah NS AUS 610.00 11 10/4/14 Peter Doyles at the Quay AUS 334.10 12 23/4/14 Darling Hotel at The Star Pyrmont 757.35 13 28/4/14 Adina Apartment Hotel Coogee NS 866.60 14 21/5/14 ThaiAIRW Sydney AUS 3576.96 15 22/5/14 Ribs & Rumps OPE Manly NS AUS 284.50 16 5/6/14 SYD APRT EPARK ONL28 Sydney 160.00 17 5/6/14 SYD APRT EPARK ONL28 Sydney 249.00

SCHEDULE B: Table showing ONLY a small sample of [Mr Baker's] personal wants paid through company accounts from 30/6/14-8/1/16: Date Transaction Description $ 1 3/7/14 Crowne Plaza Coogee Beach 690.20 2 17/7/14 LK Royal Suite Chonburi Thailand accommodation 1326.13 3 10/9/14 Crowne Plaza Coogee Beach 476.04 4 7/10/14 QANTAS AI24412083100 943.00 5 10/10/14 Virgin AU7952116638302 Spring Hill Aus 910.70 6 10/10/14 Virgin AU7952116638424 Spring Hill Aus 416.70 7 14/10/14 Cecconis Cantina Melbourne 455.00 8 12/11/14 Novotel Newcastle 469.38 9 14/4/15 The Facial Rejuvenat Sydney 2900.00 10 20/7/15 Miele Australia Frenches Forest 737.16 11 23/10/15 Sunglasses Hut Warringah Mall 300.00 12 8/1/16 Entourage Limousines Artarmon 440.00

SCHEDULE C: SUMMARY TABLE OF PERSONAL EXPENDITURE FOR [Mr Baker] FROM 2011 - 2016 Type of Expenditure $ 1 Brothels 5250.00 2 Chiropractor 2905.00 3 Liquor Purchases 11711.00 4 Parking/Speeding fines 2592.00 5 Cash withdrawals 187791.00

Endnotes

1. In the matter of Punters Show Pty Limited [2019] NSWSC 1777.
2. Tcpt, 26/02/19, pp 3(35)-4(1).
3. Tcpt, p 25(20).
4. Tcpt, p 26(15).
5. Tcpt, p 27(40)-(45).
6. Tcpt, p 28.
7. Tcpt, 28/02/19, p 91(5)-(15).
8. (1874) LR 9 Ch App 244.
9. Judgment at [65].
10. Judgment at [66].
11. CA tcpt, 24/06/21, pp 45(40)-46(10).
12. See Atkins v National Australia Bank (1994) 34 NSWLR 155 at 160.
13. Extracted above at [116].
14. (1874) LR 9 Ch App 244. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 September 2021