Mio Art Pty Ltd v BMD Holdings Pty Ltd & Ors [2014] QSC 55

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS - DEFAULT OF PLEADINGS - where plaintiff has filed a fourth amended statement of claim - where all but two defendants seek to strike out statement of claim - where plaintiff's claim made under s 232 of the Corporations Act 2001 (Cth) - where conduct between various defendants alleged to be oppressive - whether the conduct was "of the affairs" of the relevant company - whether particular allegations have been adequately pleaded

CORPORATIONS - MEMBERSHIP, RIGHTS AND REMEDIES - MEMBERS' REMEDIES AND INTERNAL DISPUTES - OTHER ACTIONS OR REMEDIES - GENERALLY - where plaintiff seeks an order of compensation under s 233 of the Corporations Act 2001 (Cth) - whether s 233 confers a general freestanding right to compensation against third parties

CORPORATIONS - MEMBERSHIP, RIGHTS AND REMEDIES - MEMBERS' REMEDIES AND INTERNAL DISPUTES - OTHER ACTIONS OR REMEDIES - GENERALLY - where plaintiff seeks the discharge of loan agreements under s 233 of the Corporations Act 2001 (Cth) - where neither the plaintiff nor the relevant company is a party to those agreements - where company is a guarantor and third party mortgagor of liabilities under those agreements - whether order to discharge a contract to which the relevant company is a stranger may be made

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS - SUMMARY JUDGMENT - where plaintiff applied for summary judgment on particular claim against twelfth and thirteenth defendants - where twelfth and thirteenth defendants also applied for summary judgment in plaintiff's favour and a further order - where the twelfth and thirteenth defendants had not filed a notice of intention to defend - whether an order for summary judgment could be made - whether a defendant can seek summary judgment for the plaintiff's claim

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS - DEFAULT OF PLEADINGS - where plaintiff's sixth attempt at pleading - where all claims against particular defendants in the statement of claim have been struck out - where claim against those defendants based on unacceptable assumption - where lack of any articulated basis for relief - whether leave to re-plead should be granted

Uniform Civil Procedure Rules 1999 (Qld), r 5, 130(1)(k), 137, 139(1)(b), 155(1), 171, 292, 293, 367(1)

Corporations Act 2001 (Cth), 53, 79, 124, 125, 181, 182, 183, 232, 233, 1317H, 1322(2)

ANZ Trustees & Executors Trustee Company Limited v Qintex Australia Ltd (rec & mgrs apptd) [1991] 2 Qd R 360, cited

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, cited

Australian Hydrocarbons NL (1985) 10 ACLR 72, cited

Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359, cited

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304, cited

Caysand No 64 Pty Ltd, Re [1994] 2 Qd R 467, cited

Chime Corp Ltd, re (2004) HKCFAR 546, cited

Clarke & ors v Great Southern Finance Pty Ltd [2010] VSC 473; (2010) 80 ACSR 219, cited

Clark v Cutland [2003] 1 WLR 783, cited

Fexuto Pty Ltd v Bosjnak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672, cited

Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] UKPC 26; [2007] 4 All ER 164, cited

Howard v Mechtler [1999] NSWSC 232; (1999) 30 ACSR 434, cited

LPD Holdings (Aust) Pty Ltd v Philips Hicky and Toigo & Anor [2013] QSC 225, cited

Lowe v Fahey [1996] 1 BCLC 262, cited

Lumley v Gye [1853] EngR 15; (1853) 2 E & B 216, cited

McCausland v Surfing Hardware International Holdings Pty Ltd (No 2) [2014] NSWSC 163, referred to

McLaughlin v Dungowan Many Pty Ltd [2010] NSWSC 187, cited

Sanders v Snell (1998) 196 CLR 329, cited

Shelton v NRMA [2004] FCA 1393; (2004) 51 ACSR 278, referred to

Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118, cited

Weatherall v Satellite Receiving Systems (Australia) Pty Ltd [1999] FCA 218; (1999) 30 ACSR 698, distinguished

Whitehouse v Capital Radio Network Pty Ltd [2004] TASSC 12; (2004) 48 ACSR 569, cited

Yorke and Anor v Lucas [1985] HCA 65; (1985) 158 CLR 661, cited

F M Douglas QC and T O'Prince for the plaintiffs ("Mio")

DA Kelly QC and D Butler for the second to seventh, tenth, eleventh ("BMD defendants")

PK O'Higgins for the twelfth defendant ("Varitimos")

Carter Newell for the second to seventh, tenth and eleventh defendants

[1] JACKSON J: On 19 August 2013, I ordered that the third further amended statement of claim in this proceeding be struck out.

[2] The fourth further amended statement of claim ("4FASOC") was filed on 30 September 2013. All but two of the defendants apply to strike out the 4FASOC pursuant to the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR") r 171. The applicants also seek an order that there be no leave to re-plead. In effect, they seek a summary termination of Mio's claim for relief for oppression under s 233 of the Corporations Act 2001 (Cth) ("CA").

[3] In the alternative, the twelfth defendant ("Mr Varitimos") and the thirteenth defendant ("Mr Rex") apply for summary judgment pursuant to UCPR r 293 or the inherent jurisdiction of the Court on the plaintiff's ("Mio's") claim to be registered as a member of the twentieth defendant ("KHD").

[4] Mio opposes all applications. It informally cross-applies for summary judgment on the claim to be registered as a member of KHD.

[5] As a background description of the parties and the proceeding, I refer to pars 13 to 16 of my reasons for judgment dated 19 August 2013, without repeating them.

[6] The 4FASOC re-pleads the description of the initial Project arrangements in pars 16 to 38 as follows:

"16. On or about 4 July 2003, Spencer (acting in his capacity a trustee for the Spencer Family Trust), Perovich and Mango entered into an agreement known as the 'Share Sale Agreement' (SSA) pursuant to which:

(a) Spencer agreed to sell and Mango agreed to purchase 25 ordinary shares in KHD; and

(b) Perovich agreed to sell and Mango agreed to purchase 25 ordinary shares in KHD.

1. On or about 7 July 2003, each of Spencer and Perovich transferred 25 ordinary shares in KHD to Mango, with the result that Spencer and Perovich were each the registered owners of 25 ordinary shares in KHD and Mango was the registered owner of 50 ordinary shares in KHD.

1. On or about 4 July 2003, Spencer (acting in his capacity as trustee for the Spencer Family Trust), Perovich, Mango and KHD executed a deed known as the Shareholders Deed (SHD). The Plaintiff will refer to the terms of the SHD at the hearing of this matter as if the same had been fully set out herein.

1. On or about 24 June 2003, KHD and Mango entered into an agreement known as the Project Management Agreement (PMA). The Plaintiff will refer to the terms of the PMA at the hearing of this matter as if the same had been fully set out herein.
2. On or about 24 June 2003, pursuant to cl 19 of the PMA, KHD executed a mortgage over the Property in favour of Mango to secure the performance by KHD of its obligations under the PMA or the mortgage, or arising by operation of law, equity or otherwise out of the relationship established by the PMA, or any actual or alleged breach of the PMA, and on 15 October 2004 the mortgage was registered as Mortgage No.708139356.

1. On or about 24 June 2003, KHD, Mango and Neolido Holdings Pty Ltd (Neolido) entered into an agreement known as the Consultancy Services Agreement (CSA). The Plaintiff will refer to the terms of the CSA at the hearing of this matter as if the same had been fully set out herein.

22. On or about 24 June 2003, BMD Holdings, Spencer, Perovich and Neolido entered into a Deed of Guarantee and Indemnity as defined (DGI) whereby BMD Holdings unconditionally guaranteed and indemnified the other parties in respect of, inter alia:

(a) KHD's obligations to Spencer and Perovich to or in the connection with the SHD;

(b) Mango's obligations to Spencer and Perovich to or in connection with the SSA and SHD; and

(c) Mango's obligation to KHD to or in connection with the PMA.

1. By clause 3.1 of the SHD, Mango covenanted with KHD and the Original Shareholders that Mango would 'use its best endeavours to ensure that KHD successfully conducts the Business'; where:

(a) 'Business' was defined to mean the management of the Project (Business) (cl 1.1); and

(b) 'Project' was defined to mean the acquisition and development of the Property, including but not limited to the lodgement and management of the Development Application and such further applications as may be required to obtain the necessary Development Permits to develop the Property (Project) (cl. 1.1).

1. By clause 3.2 of the SHD, Mango KHD and the Original Shareholders each covenanted with each other that each would:

(a) not unreasonably delay any action, approval, direction, determination or decision required of the party (cl 3.2(b));

(b) make approvals or decisions that are required of the party in good faith and in the best interest of KHD and the conduct of the Business as a commercial venture (cl 3.2(c));

(c) be just and faithful in the party's activities and dealings with the other parties in all transactions concerning the Business and KHD (cl 3.2(d)); and

(d) give, without concealment or suppression, a true account of all transactions concerning the Business and KHD when an so often as an account is reasonably required by the other parties (cl 3.2(d)).

1. By clauses 4.1 and 4.2 of the SHD, Mango, KHD and the Original Shareholders each covenanted with each other that:

(a) Mango and the Original Shareholders would unanimously agree on a number of directors on the board of KHD (cl 4.2(b));

(b) the Original Shareholders would be entitled to appoint an equal number of directors on the board of KHD as Mango appointed (cl 4.1(b));

(c) initially there would be four directors, Brent David Hailey and Ingram (appointed by Mango) and Perovich and Spencer (cll 4.1(c) and (d));

(d) a director appointed by Mango would be chairman of the board of KHD (cl 4.1(e));

(e) a quorum for a meeting of the board of KHD would be a director appointed by Mango and a director appointed by the Original Shareholders (cl 4.2)(h));

(f) meetings of the board would be held once in every month (cl 4.1(f));

(g) the chairman would have a casting vote at any meeting of the board or of shareholders at which there was an equality of votes (cl 4.1(e)); and

(h) a director could appoint an alternate director who was resident in Queensland if the director was not resident in Queensland or was temporarily absent from Queensland (cl 4.2).

1. By clause 4.4 and 4.7 of the SHD, Mango, KHD and the Original Shareholders each covenanted with each other that:

(a) KHD would not enter into any commitment or liability other than in the ordinary course of ordinary business, unless otherwise agreed by all the Shareholders (cl 4.4(f));

(b) KHD would not provide any loan or any 'financial assistance', defined to include the giving of a guarantee, the granting of an encumbrance, the assumption or release of an obligation or the incurring or forgiving of a debt, to Mango, Urbex, BMD Holdings or any subsidiary of BMD Holdings (cl 4.4(k)); and

(c) KHD would not encumber its assets other than as provided in the SHD, the CSA, or the PMA and as might be required by Mango to secure a loan or loans for the development of the Property (cl 4.7).

(a) Mango, KHD and the Original Shareholders each covenanted with each other that Mango would be responsible for:

(i) the management of all activities of KHD in the conduct of the Business;

(ii) the day to day management of the financial affairs of KHD; and

(iii) the general administration of KHD, subject to directions from the Board from time to time (cl 5.1); and

(b) Mango covenanted with KHD and the Original Shareholders that it would lend or procure a loan or loans in an amount sufficient to enable KHD to settle the Contract at any time prior to 31 August 2004 but in any event no later than 90 days prior to 31 August 2004 (cl 5.2).

(a) Mango covenanted with the Original Shareholders that it would not lend money to, or at the direction, of KHD without the prior written consent of all other shareholders in KHD and except on the terms approved of by the other shareholders in KHD (cl 8.1); and

(b) Mango and KHD covenanted with the Original Shareholders that KHD would not lend money nor give financial assistance (defined to include the giving of a guarantee, the granting of an encumbrance, the assumption or release of an obligation or the incurring or forgiving of a debt) to Mango, Urbex, BMD Holdings or any subsidiary of BMD Holdings, without the prior written consent of all other shareholders in KHD and except on terms approved of by the other shareholders (cl 8.2).

1. By clause 14 of the SHD, Mango, KHD and the Original Shareholders agreed that where there is conflict between the provisions of the SHD and the Constitution of KHD, the provisions of the SHD prevail.

1. By cl 3.1 of the PMA, KHD and Mango agreed to associate in a joint venture on the terms set out in the PMA for the purpose of executing the Project.
2. By cl 4.2 of the PMA, KHD and Mango agreed that each would indemnify the other from and against any and all costs, losses, claims, damages and liabilities arising out of any negligent act or omission of the indemnifying party or that party's servants which is done or omitted or undertaken on behalf of the others or arising out of any assumption of any obligations or responsibility by the indemnifying party or by that party's servants or arising out of any wrongful act or omission or any act or omission contrary to the obligations of the indemnifying party under the PMA.
3. It was a term of the PMA that:

(a) Mango would bear wholly the commercial risk of the execution of the Joint Venture (defined to mean 'the Joint Venture between the parties for the execution of the Project') (cl 6.1);

(b) Mango would be liable for all costs of and incidental to the Project (cl 7.3);

(c) Mango would pay all costs in relation to the Project as and when they fell due (cl 7.3);

(d) Mango would be responsible for raising all finance required to fund the Project (Loan) (cl 9.1);

(e) if necessary, the Loan could be secured over the Property and KHD would execute all such documents as may be required by Mango to secured the Loan over the Property, on such terms as are required by the 'Financier' (undefined) (cl 9.2) and

(f) any interest which may be payable in respect of the Loan would be paid by Mango (cl 9.3).

(a) KHD and Mango would appoint a Management Committee to administer and co-ordinate the Project (cl 10.1);

(b) Mango would nominate two and KHD would nominate one Management Committee member (cl 10.2);

(c) the Management Committee would appoint one of its members as chairman, who would be entitled to vote and would have a casting vote in the event of an equality of votes (cl 10.3);

(d) Mango would appoint Urbex as the Project Manager without tender (cl 10.4);

(e) Urbex would undertake the Project under the direction and control of KHD and Mango in a good, commercially prudent and reasonable manner and in accordance with the provisions of the PMA (c9l 10.4);

(f) the Management Committee would appoint Urbex as the Development Manager without tender to lodge the Development Application in respect of the whole property and use its best endeavours to obtain Development Permits within 12 months from the date of the PMA in respect of the whole of the Property so as to maximise the potential yield and profit in relation to the Project (cl 10.5);

(g) the Management Committee would appoint BMD Consulting Pty Ltd, a wholly owned subsidiary of BMD Holdings, to carry out all civil design work for the Project without tender (cl 10.6);

(h) the Management Committee would appoint BMD Constructions to carry out all civil design work [sic] for the Project without tender (cl 10.7);

(i) all appointments by the Management Committee would be on reasonable arms-length commercial terms and conditions (cl 10.7);

(j) all appointment made by the Management Committee to administer and coordinate the Project would be made on reasonable arms-length terms and conditions (cl 10.8); and

(k) any dispute between Mango and KHD, or any one of the directors of KHD, as to whether the terms of appointment referred to in cl 10.8 were reasonable could be referred for expert determination or arbitration (cl 10.9).

1. It was also a term of the PMA, that upon the sale of the Property or any part of the Property:

(i) first, in payment of all "Costs" relating to the Project, where the expression "Costs" has the meaning in cl 1.1 of the PMA;

(ii) secondly, in accordance with cl 5 of the PMA; and

(b) Mango would pay any shortfall in proceeds required to pay any cost outstanding at that time (if any) (cl 11).

1. By cl 15.1 of the PMA, KHD and Mango agreed that "the due performance and fulfilment of the Parties of their respective obligations under the PMA and the Project generally shall be done by each respective party in good faith towards the other".

1. In around June 2004, in satisfaction of the obligation pleaded in paragraph 27(b) above, 2004 Mango obtained a bank guarantee from ANZ Banking Group Limited (ANZ Bank Guarantee) for $21.9 million.
2. On or about 23 June 2004, the vendor of the Property delivered executed transfers and certificates of title for the Property to KHD in exchange for Mango delivering the ANZ Bank Guarantee to the vendor.
3. On or about 9 July 2004, KHD was registered as the proprietor of the Property."

[7] From these allegations, the 4FASOC proceeds to the detail of the arrangements made in August and September 2004 to finance the acquisition of the land for the Project. For present purposes, some of that may be summarised.

[8] On or about 31 August 2004, Mango entered into a contract described as a facility agreement with Mango Hill (Prime) Pty Ltd ("Prime"). Prime was then known as Babcock & Brown Mango Hill Pty Ltd and was a wholly owned subsidiary of the Babcock & Brown Group. This is called the ("Prime-to-Mango FA")[1] in the 4FASOC. It provided for Mango to borrow $28,000,000 from Prime at a commercial rate of interest.

[9] Mio alleges that the loan was repayable on 2 November 2004 but that Mango failed to repay it, in breach of clauses 7.3 and 9.3 of the PMA.

[10] Although Mango was the borrower from Prime, KHD did not mortgage the land to Prime to secure the Prime-to-Mango FA. Prime was lender to Mango but Prime in turn borrowed the funds from others. Thus, it is alleged that Prime borrowed $13,750,000 from Abacus Finance Pty Ltd ("Abacus Finance") under a facility agreement described as the "Abacus Finance-to-Prime FA". Further, Prime borrowed $5,000,000 from Abacus Funds Management Limited ("Abacus FM") under a facility agreement described as the "Abacus FM-to-Prime FA". Thirdly, Prime borrowed $12,000,000 from Mango Hill (Mezzanine) Pty Ltd ("Mezzanine") under a facility agreement described as the "Mezzanine-to-Prime FA". At that time, Mezzanine was another subsidiary of the Babcock & Brown Group.

[11] There was yet another layer of relevant finance. Mezzanine borrowed the $12,000,000 required to make its advance to Prime under the Mezzanine-to-Prime FA. Mezzanine borrowed the funds from Babcock & Brown Real Estate Finance Pty Ltd and the fifth defendant BMD Properties Pty Ltd ("BMD Properties"). Each of those companies lent $6,000,000 to Mezzanine under a facility agreement described as the "BBREF/BMDP-to-Mezzanine FA".

[12] On 31 August 2004 and 3 September 2004, KHD mortgaged the land to each of the lenders to Prime (Abacus Finance, Abacus FM and Mezzanine) and executed a deed of guarantee and indemnity.

[13] On 22 December 2004, the financing arrangements were changed. The Commonwealth Bank of Australia ("CBA") advanced money to Prime which was used to repay the Abacus Finance-to-Prime FA. At the same time, the securities were restructured. KHD executed a security trust deed under which a CBA subsidiary was the trustee. The trustee was to hold the mortgages on behalf of the mortgagees which were assigned to it. A deed of priority gave relative priority to CBA, Abacus FM and Mezzanine. A further mortgage was executed by KHD in favour of the security trustee for the repayment of the secured monies as defined in the security trust deed.

[14] On 27 March 2007 and 20 April 2007, Tricom Equities Ltd ("Tricom") refinanced the Abacus FM advance at a commercial rate of interest. Amendments were made to the security documents so that Tricom replaced Abacus FM with priority over Mezzanine. The loan facility deed governing Tricom's advance is described as the "Tricom-to-Prime FA".

[15] On 20 August 2007, the Tricom-to-Prime FA was assigned to the second defendant, BMD Holdings Pty Ltd ("BMD Holdings"). BMD Holdings is the parent company of BMD Properties and the fourth defendant, Urbex Pty Ltd ("Urbex").

[16] As previously mentioned, Prime and Mezzanine were originally subsidiaries of the Babcock & Brown Group. Paragraph 90 of the 4FASOC alleges that on or about 15 June 2010 the shares in Prime and Mezzanine were transferred to BMD Properties.[2]

[17] On 25 June 2010, the security trustee was replaced. The incoming trustee was the ninth defendant, Tasovac Pty Ltd ("Tasovac"), a subsidiary of the National Australia Bank. It appears that the National Australia Bank refinanced the CBA-to-Prime FA. A substitution facility agreement was entered into described as the "CBA/NAB-to-Prime FA".

[18] Starting in par 43 with 2 November 2004 as the original date for repayment of the Prime-to-Mango FA, the 4FASOC alleges that relevant borrowings were not repaid. In a similar manner par 55 alleges that the Mezzanine-to-Prime FA was not repaid on 3 September 2005, par 62 alleges that the BBREF/BMDP-to-Mezzanine FA was not repaid by Mezzanine on 3 September 2007, par 63 alleges that the Mezzanine-to-Prime FA was not repaid since 3 September 2007 and par 82 alleges that the Tricom-to-Prime FA was not repaid on 20 April 2007.

[19] On 4 February 2013 Mango, Tasovac, others of the defendants and the NAB made changes to the financing for the Project by effecting the following variations to the following facilities:

(a) the Tricom-to-Prime FA was extended to 30 April 2021;

(b) the Mezzanine-to-Prime FA was extended to 30 April 2021;

(c) the Prime-to-Mango FA was extended to 30 April 2021; and

(d) the CBA/NAB-to-Prime FA was extended to 31 December 2013.

[20] In substance, Mio's complaint is that through the period and under the financing arrangements summarised above, the amount of debt secured over the land and by KHD's guarantee has climbed rapidly and continuously, so that it now exceeds $80,000,000.

(a) approvals for development of the land could have been obtained more quickly than they were obtained;

(b) the approvals that have been obtained are only for 1730 lots when approximately 3000 lots could have been approved;

(c) work on the southern precinct could have commenced within 12 months of 30 January 2007 and the precinct could have been developed and sold within seven years of that date.

(d) notwithstanding that development approval for the northern precinct took effect from 14 November 2007, minimal work was done for the purpose of developing the northern precinct until "recently"; and

(e) until the end of 2011 there was no development of lots for sale.

[22] Over part of the same time, Mio alleges that from 12 June 2007 until 15 December 2011 there were no meetings of the Management Committee provided for under the PMA and that there were no meetings of the board of directors of KHD from 27 November 2008 to 15 September 2011.

[23] Mio alleges that, between September 2011 and December 2011, Mr Varitimos and Mr Rex failed to respond to concerns expressed by Noe Vicca, a director appointed to the board of KHD at Mio's instance. The concerns raised by Mr Vicca related to the level of the debt to which KHD was exposed under the financing arrangements, the financial information not provided by Mango to KHD, the solvency of KHD, the make up of the accounts of KHD, whether the costs being charged for the Project were agreed at competitive rates, the progress of development of the Project and that, apart from the $13,750,000 owed under the CBA/NAB-to-Prime FA, all other debt was then ultimately owed to companies within the BMD Group.

[24] Mio alleges that since December 2011, Mr Varitimos and Mr Rex have: "purported to hold a number of meetings of directors of KHD without a quorum, for the purpose of facilitating the sale of developed lots in the Property for the purpose of transferring the assets of KHD to Mango purportedly pursuant to cl 11.1 of the PMA to the detriment of the Original Shareholders by repaying the whole of the amount alleged to have been owing by Mango to Prime under the Prime-to-Mango FA, notwithstanding that it is not capable of being recovered under cl 11.1 of the PMA, or there is a genuine dispute as to whether any amount is repayable having regard to the manner in which that debt has been accumulated, and right of set off and indemnity available to KHD under cl 4.2 of the PMA".

[25] Paragraphs 138 to 140 of the 4FASOC allege that Mr Varitimos and Mr Rex have: failed and refused to act so as to challenge the amount alleged to be owing under the Prime-to-Mango FA and the Prime-to-Mezzanine FA; not sought to establish the amount of costs properly due and owing from time to time under cl 11 of the PMA; not sought to establish a right of set off or indemnity under cl 4.2 of the PMA for damages for delays in the implementation of the Project and the underdevelopment of the Project in opposition to any claim made by Mango for reimbursement under cl 10.2 of the PMA; not sought to verify that the costs claimed by related parties or sought to challenge the validity of the securities granted over the property by KHD as surety of the obligations of companies within the BMD Group or sought to cause Mango to exercise its powers of management to accelerate the development of the Project and maximise its profitability or require the proceeds of sale of any developed lots to be used in reduction of the amounts secured in favour of the NAB; and not insisted that any security granted over the property was solely for the purchase price of the property and the amounts properly expended on developing the property and reimbursable under cl 11.1 of the PMA.

Allegations of conduct contrary to members' interests as a whole or unfairly prejudicial to Mio

[26] In all, there are 11 separate allegations in the 4FASOC of conduct "of KHD's affairs" contrary to the interests of the members of KHD as a whole. Summarising, so as to illustrate the nature of the allegations, but without doings so exhaustively,[3] they are:

(a) par 154 - Mango's failure to pay to Prime the amount outstanding under the Prime-to-Mango FA since 2 November 2004;

(b) par 155 - Mr Ingram's failure to disclose to Mr Spencer or Ms Perovich that Mezzanine was borrowing from BBREF and BMD Properties under the BBREF/BMDP-to-Mezzanine FA and the terms of the Mezzanine-to-Prime FA;

(c) par 156 - that on or about 22 December 2004 Mr Ingram and Mr Bird executed a power of attorney without disclosure to the original shareholders, approval of a meeting of the board of directors of KHD or independent legal advice and where new facility agreements and beneficiaries could be admitted to the benefit of securities over the property to the detriment of KHD under the proposed security trust deed;

(d) par 157 - Prime's failures to demand the amounts due to it under the Prime-to-Mango FA and failures to pay the amounts due from it under the Mezzanine-to-Prime FA and the Tricom-to-Prime FA have allowed the accumulation of interest to the prejudice of KHD;

(e) par 158 - Mezzanine's failure to demand repayment of the amount due to it under the Mezzanine-to-Prime FA and to pay the amount due from it to BMD Properties under the BBREF/BMDP-to-Mezzanine FA have allowed the accumulation of interest to the prejudice of KHD;

(f) par 159 - BMD Holdings failure to demand payment of the amount due to it under the Tricom-to-Prime FA has allowed the accumulation of interest to the prejudice of KHD and BMD Holdings entry into the transaction under which it took an assignment of the Tricom-to-Prime FA was a breach of the shareholders deed because it amounted to KHD providing financial assistance to BMD Holdings;

(g) par 160 - a series of dealings as directors between Mr Ingram and Mr Varitimos, on the one hand, and Mr Vicca, on the other hand, from 8 April 2008 to 27 November 2008 followed by their failure after 27 November 2008 to progress development of the Project by restructuring finance, or holding meetings of the board of directors of KHD, or holding meetings of the Management Committee, or by (presumably KHD) carrying out development work until September or December 2011 involved breaches of director's duties by Mr Ingram and Mr Varitimos;

(h) par 161 - that Mr Varitimos and Mr Rex and took the position that they did not agree with Mr Vicca's contentions as to KHD's rights and obligations;

(i) par 162 - that Mr Varitimos and Mr Rex held meetings of directors of KHD without a quorum (meaning without Mr Vicca's attendance);

(j) par 163 - that Mr Varitimos and Mr Rex had failed to act in accordance with the obligations of a director as an honest and reasonable person for the reasons set out above;

(k) par 164 - that Mango and Urbex failed to progress the development as set out above. Curiously, it is also alleged that Mango and Urbex did not have meetings of the board of KHD or the Management Committee; and

(l) par 166 - lastly, that all of the prior subject matters together were contrary to the interests of the members of KHD as a whole in that the conduct was in all the circumstances commercially unfair.

[27] Alternatively, it is alleged that all those matters are conduct that is unfairly prejudicial to or unfairly discriminatory as against Mio.

[28] The BMD defendants submit that a number of the paragraphs alleging conduct contrary to the interests of the members of KHD as a whole allege conduct which was not conduct of KHD's affairs. In particular, they challenge pars 154, 157, 158, 159, 160, 161 and 164. The BMD defendants submit that if those paragraphs are not capable of constituting conduct of KHD's affairs they must be struck out.

[29] There is an assumption underlying the submission that on the facts pleaded in the 4FASOC only "conduct of [KHD's] affairs" can engage ss 232 and 233 of the CA in respect of the allegations in those paragraphs.[4] For the purposes of further analysis, I proceed on that assumption.

[30] As to par 154, they submit that Mango's failure to pay the amount due under the Prime-to-Mango FA to Prime is not conduct of KHD's affairs because KHD is not a party to the agreement. They draw an analogy between this case and Weatherall v Satellite Receiving Systems (Australia) Pty Ltd.[5] In my view, the analogy is not apt.

[31] Although KHD is not a party to the Prime-to-Mango FA, it is alleged to have guaranteed and secured the land for the loans made to Prime which Prime on-lent to Mango. It is alleged that Mango is a joint venturer with KHD under the PMA for the purpose of executing the Project, that Mango is responsible for raising all finance required to fund the Project and that KHD agreed to execute all such documents as may be required by Mango to secure the loans over the land. As well, it is alleged that, under the SHD, Mango is responsible for the management of all activities of KHD, the conduct of the business, the day to day management or the financial affairs of KHD and the general administration of KHD, subject to directions from the board of KHD from time to time. Lastly, it is alleged that Mango covenanted with KHD and the original shareholders that it would lend or procure a loan or loans in an amount sufficient to enable KHD to settle the contract to acquire the land. It is alleged to have done that by the Prime-to-Mango FA.

[32] Under s 53 of the CA, the affairs of a body corporate for the purposes of s 232 include the "business, trading, transactions and dealings ... property ... liabilities ... losses, outgoings and expenditure of the body".

[33] In my view, on the allegations made in the 4FASOC summarised above, Mango's alleged failure to pay the amount due to Prime under the Prime-to-Mango FA is capable of constituting conduct of KHD's affairs.

[34] Secondly, the BMD defendants submit that the allegations in pars 157, 158 and 159 plead conduct of Prime, Mezzanine and BMD Holdings which is not conduct of KHD's affairs. The substance of the point made here is the same as the submission in respect of par 154. That is, because KHD is not alleged to be a party to any of the loans, the BMD defendants contend that the conduct is not conduct of KHD's affairs.

[35] In these instances, none of Prime, Mezzanine and BMD Holdings is a party to the SHD or the PMA, unlike Mango. BMD Holdings was a party to a guarantee of KHD's and Mango's obligations to the original shareholders under the SHD and Mango's obligations to KHD in connection with the PMA. Nevertheless, there is another alleged connecting factor as between KHD and Prime, Mezzanine and BMD Holdings. It is that KHD is a party to the guarantee, mortgages, and charge it granted securing the debts owed to them. KHD's alleged liabilities under those instruments in respect of the amounts payable to Prime, Mezzanine and BMD Holdings (and BMD Properties) are capable of constituting liabilities within the meaning of the affairs of KHD as a body corporate under s 53 of the CA.

[36] Thirdly, the BMD defendants submit that Mango's conduct as pleaded in pars 95 to 115 is not conduct of KHD's affairs. Paragraph 100 alleges that under cl 11 of the PMA Mango demanded that the proceeds of sale of part of the land to the Catholic Church be paid to it, in the sum of approximately $6,400,000. As a distribution of the proceeds of sale of KHD's property, in my view, that conduct is capable of constituting conduct of KHD's affairs.

[37] Paragraph 111 alleges that Mr Ingram, on behalf of Mango, sought to obtain approval of the board of KHD to a proposed financial restructure. In fact, nothing is alleged to have come of the proposal, but it was capable of constituting conduct of KHD's affairs.

[38] Next, par 115 alleges that after 27 November 2008 no attempt was made by Mango to obtain the consent of KHD to any restructuring of the finance arrangements for the joint venture and that until November 2011 no development work was carried out on the property, nor were steps made to progress the development of the property and no or insufficient funding was provided by Mango to progress the development of the Project. They are all matters which could constitute conduct of KHD's affairs. Throughout the period alleged, KHD was in joint venture with Mango to carry out the Project and Mango was responsible for the management of all activities of KHD in the conduct of the business including the day to day management and financial affairs of KHD and the general administration of KHD.

[39] Fourthly, the BMD defendants submit that par 161 alleges conduct of Mango amongst others that was not conduct of KHD's affairs. Paragraph 161 cross-refers to par 129 which alleges particular positions taken by Mr Varitimos and Mr Rex (as directors) and by Mango in relation to KHD's rights and obligations in response to Mr Vicca's concerns. In my view, Mango's conduct was capable of constituting conduct of KHD's affairs, for the same reasons as set out before.

[40] Lastly, the BMD defendants submit that par 164 alleges conduct of Mango and Urbex as to the limit of the extent of the approvals and delay of the development of the Project that was not conduct of KHD's affairs. In my view, for the same reasons as previously set out, Mango's conduct is capable of constituting conduct of KHD's affairs.

[41] As to Urbex, the position may not be so clear. Paragraph 33 of the 4FASOC alleges that the PMA provided that Mango would appoint Urbex as the project manager and that Urbex would undertake the Project under the direction and control of KHD and Mango in a good commercially prudent and reasonable manner and in accordance with the provisions of the PMA. Prima facie, Urbex's appointment as project manager will have been as a consultant to the joint venture comprising Mango and KHD under cl 3.1 of the PMA. However, Urbex's alleged failure to obtain appropriate approvals or carry out the Project without delay could constitute the business, trading transactions or dealings of KHD. Under s 53 of the CA, it is no bar that the joint venture's relationship with Urbex may have been a contract made by KHD and Mango jointly with Urbex. At this stage, it is not clear whether Urbex's alleged relationship with the Project is such that its actions are not capable of constituting conduct of KHD's affairs.

[42] For those reasons, generally, in my view the BMD defendant's submissions that the 4FASOC contains numerous allegations of conduct which is not conduct of KHD's affairs must be rejected. To the extent that Mr Varitimos and Mr Rex rely upon those contentions, their contentions must also be rejected.

[43] The BMD defendants submit that par 165 is bad as a matter of pleading. It alleges that the conduct of relevant directors being Messrs Ingram, Bird, Rex and Varitimos "identified in paragraphs 155-156 and 160-163" was conduct "that was procured or induced by Mango, BMD Properties and BMD Holdings".

[44] For a company to procure or induce the acts or omissions of the directors of another company will generally require a positive and knowing involvement in those acts or omissions. There are useful potential comparators in both the criminal law involving accessories before the fact and in statutory provisions such as s 75B of the former Trade Practices Act 1974 (Cth).[6] The context here is not on all fours with those comparators, but procuring or inducing in their ordinary meaning connote action beyond mere knowledge, something at least akin to encouragement. The ordinary meaning of procure includes to try to bring something about[7] and the primary ordinary meaning of induce is to lead, persuade or influence a person.[8]

[45] In my view, there is a substantial reason why it matters whether par 165 is struck out as inadequately pleaded or particularised. Under s 79 of the CA, procurement may make the procurer a "person involved in" a relevant contravention. Under ss 181(2), 182(2) and 183(2) of the CA a "person involved in a contravention" is deemed to be a contravenor of those sections. Under s 1317H of the CA, a contravenor is liable to compensate a corporation which suffers loss or damage by reason of a contravention of ss 181, 182 or 183 of the CA.

[46] Thus, if Mango, BMD Properties, or BMD Holdings were a person who procured or induced a contravention of s 181, 182 or 183 by one of Messrs Bird, Ingram, Varitimos or Rex, that might justify an order against it under s 233 for any oppressive conduct which comprised the relevant contravention, if it were also conduct which attracts s 233.

[47] On the other hand, absent exposure to liability as a contravenor of that kind, no other apparent factual basis is alleged for any order against BMD Properties or BMD Holdings, except that they are lenders to Prime secured by guarantee and mortgages granted over the land by KHD.[9]

[49] The particulars of the allegation of procurement or inducement subjoined to par 165 are that each of Messrs Ingram, Bird, Rex and Varitimos was a nominee director of Mango and that Mango was a wholly owned subsidiary of the BMD Group. Additionally, it is alleged that Mr Varitimos was a solicitor engaged by Mango or companies within the BMD Group and that Mr Rex was the general manager of Urbex.

[50] Mio substituted a particular under par 165 to the effect that because Mr Bird was a director of Mango and Mr Ingram was a director of BMD Properties each of them owed a duty to the relevant company to communicate all matters relating to the financing of the Project including any security provided by KHD. In a non sequitur, it is then alleged that "[a]ccordingly, each of Mango, BMD Properties and BMD Holdings is fixed with knowledge of each of their respective directors (Bird and Ingram) in relation to the said matters".

[51] These "particulars" are not allegations of acts or omissions of procurement or inducement of any of the conduct alleged in pars 155 to 156 or 160 to 163. They are not even proper particulars of knowledge by Mango, BMD Properties or BMD Holdings so as to show consent to particular conduct.[10]

[52] In my view, the 4FASOC does not allege material facts (or particulars which could serve the purpose) for the rolled-up allegation in par 165 that either Mango, BMD Properties or BMD Holdings procured or induced Mr Bird or Mr Ingram to act in particular ways. It is also appropriate in the circumstances to identify some of the effects of making the allegations of procurement or inducement in that rolled-up way.

[53] Paragraph 165 refers to pars 155 to 156 and 160 to 163. Paragraphs 155 to 156 and 160 to 163 cross-refer to other paragraphs of the 4FASOC. As sometimes happens when a pleader collects a whole lot of earlier paragraphs in this fashion, in my view inadequate attention has been given in par 165 to the differences between the acts or omissions of Mr Ingram and Mr Bird on the one hand and those of Mr Varitimos and Mr Rex on the other, as well as to the acts or omissions said to constitute any relevant inducement or procurement by Mango, BMD Properties or BMD Holdings. A further distinction can be made between Mr Varitimos's actions and Mr Rex's actions.

[54] Thus, Mr Varitimos and Mr Rex had nothing to do with the acts or omissions alleged in par 155 which are concerned with the state of affairs at the time of the execution of a power of attorney in August 2004. Paragraph 155 concerns only Mr Bird and Mr Ingram. In my view, the alleged facts that Mr Bird and Mr Ingram were directors of KHD, by reason of their agreed direct appointment under the SHD (Ingram) or because of the later exercise of a power of appointment by Mango under the SHD are not an adequate particular in support of the allegation that Mr Ingram and Mr Bird executed a power of attorney in August 2004 because they were procured or induced to do so by Mango, BMD Properties and BMD Holdings. In my view, the BMD defendants challenge to that allegation is well made.

[55] As to par 156, those allegations also do not concern either Mr Varitimos or Mr Rex. Further, par 156 refers to pars 70 and 71. Paragraph 70 alleges that the company secretary of Mango and a director of Mango executed a power of attorney purportedly on behalf of KHD. That was not conduct of Mr Ingram or Mr Bird either. Paragraph 71 alleges that on 22 December 2004 Mr Ingram and Mr Bird executed a power of attorney on behalf of KHD. Paragraph 156 alleges that occurred in circumstances where the power was not approved or considered at a meeting of the board of directors of KHD and in circumstances where the original shareholders had not seen it. Again, in my view, the BMD defendants' challenge to the allegation that the conduct of Mr Bird and Mr Ingram was procured or induced by Mango, BMD Properties and BMD Holdings is a good one. Nothing appears to support the allegations of procurement or inducement, except that Mr Bird and Mr Ingram were nominee directors.

[56] As to par 160, as previously mentioned, there are numerous allegations picked up in par 160 by way of cross-reference to pars 95 to 115. Some of those involve a period when Mr Bird, Mr Ingram and Mr Varitimos were directors. But they do not relate to the period when Mr Rex was a director. No care has been taken by the pleaders to identify which of the relevant paragraphs allege facts comprising the conduct of Mr Ingram, Mr Bird and Mr Varitimos during particular periods which is alleged to have been procured or induced by Mango, BMD Properties and BMD Holdings. The variety of the allegations contained in par 160, which results from cross-referring to all of pars 95 to 115 is such that, in my view, the BMD defendant's challenge to the allegation that the conduct was procured or induced by Mango BMD Properties and BMD Holdings is a good one. It is not enough to simply allege that the gentlemen in question were nominee directors and that Mr Varitimos was a solicitor engaged in respects which are unidentified.

[57] As to par 162, the allegations in that paragraph concern only Mr Varitimos and Mr Rex. Paragraph 162 cross-refers to par 130. Apart from anything else, par 130 contains a number of allegations of purpose by Mr Varitimos and Mr Rex on a number of different occasions. No attempt has been made by the pleaders to comply with UCPR r 130(1)(k). For the same reasons that have previously been mentioned, in my view, the allegation that conduct of Mr Rex and Mr Varitimos alleged in par 130 was procured by Mango, BMD Properties and BMD Holdings is inadequate.

[58] Lastly, par 163 cross-refers to the conduct of Mr Varitimos and Mr Rex alleged in par 140. That paragraph in turn cross-refers to a failure or refusal to act as set out in subparas 138(a) to 138)(h). Those subparagraphs constitute a plethora of allegations as to how an honest and reasonable person in the position of a director would have acted, including challenges by way of court proceedings of several different kinds, challenges to the validity of the securities granted by KHD and requiring or causing Mango to exercise its powers of management differently in broadly expressed ways. Again, having regard to the width of the allegations thereby made, in my view, the BMD defendants' challenge to par 165 as an inadequately pleaded allegation that Mango, BMD Properties and BMD Holdings procured or induced Mr Bird and Mr Varitimos to act in those ways is well made.

[59] In my view, it follows that par 165 should be struck out. The facts alleged will not support the conclusions alleged that Mango, BMD Properties and BMD Holdings procured or induced each of the alleged acts or omissions comprising the conduct of Messrs Ingram, Bird, Rex and Varitimos identified in pars 155 to 156 and 160 to 163. The relevant procurement or inducement relied on is not otherwise pleaded.

[60] Relying on a passage from Shelton v NRMA,[11] the BMD defendants also submit that the 4FASOC fails to set out the respects in which it is alleged that the conduct was contrary to the interests of the members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against Mio. For brevity, I will use the word "oppressive" to generically describe those forms of conduct in what follows.

[61] As to par 155, it is alleged that the conduct pleaded in pars 65 and 66 was oppressive conduct in that the circumstances pleaded in pars 155(a) and (b) existed. The BMD defendants point to par 155(a)(i) to (iii) as alleging facts as to why the power of attorney was invalid but not why its execution was oppressive. However, in my view, they overlook the specific allegations in pars 155(b)(ii) to (iv). The allegations there include that Mr Ingram's execution of a power of attorney breached obligations to act in KHD's interests, with due care and skill and not to act in conflict of duty and duty. Mio may or may not make out those allegations, but it has articulated what it says was oppressive.

[62] As to par 156, in similar fashion, the BMD defendants have overlooked pars 156(b)(ii) to (vi) as part of the articulation of the oppressive conduct alleged in pars 70 and 71. The allegations there include that Mr Bird and Mr Ingram's executions of another power of attorney breached obligations to act in KHD's interests, with due care and skill and not to act in conflict of duty and duty. Equally, although the BMD defendants question what was oppressive about the security trust deed, it seems to me that par 156(a)(iv) and (v) identify the extent of the allegation of oppressive conduct. First, it is alleged that the original shareholders were not given the final version of the document but one that omitted cl 1.8. Secondly, it is alleged the security trust deed permitted new facility agreements and beneficiaries to be admitted to the benefit of securities to the property to the detriment of KHD. These allegations may or may not be enough to constitute oppressive conduct. But Mio has sufficiently nailed its colours to the mast.

[63] As to par 166, the BMD defendants submit that the allegation that the conduct referred to in pars 154 to 165 is contrary to the interests of the members of KHD and that it is in all the circumstances commercially unfair is subject to the same vice as those paragraphs earlier mentioned. In my view, par 166 is objectionable but not for that reason. If the paragraph is read as simply restating the specific 11 prior instances of alleged oppressive conduct under the rubric that each of them "is in all the circumstances commercially unfair" there would be no difficulty. However, it seems to me that par 166 is intended to pick up all of pars 154 to 164 in order to support a general allegation of unfairness. In that characterisation, it seems to me that to the extent that par 166 may encompass something other than the specific allegations of conduct contrary to the interests of KHD as a whole, Mio should identify in what respects the conduct is unfair. Only when that is done can the potential additional issue upon par 166 be sufficiently identified so that it can be responded to by the defendants and the issue tried fairly.

[64] Apart from the specific matters previously dealt with, the BMD defendants submit in an overarching way that pars 154 to 167 do not allege how the relevant conduct was oppressive. In support of that submission, they point to the lack of any allegation that loans could have been obtained from other lenders without the need for security or that the interest rates for the facilities that were obtained were uncommercial. In my view, this submission is not well founded. It may or may not be that particular aspects of the alleged conduct which are identified as being oppressive will sustain Mio's case at the end of the day. However, it is not a criticism of the way in which Mio has pleaded its case that it does not allege other things which may or may not have contributed to oppressive conduct. That is simply not relevant to the case which has been formulated.

[65] The same sorts of criticisms are made in greater detail in Mr Varitimos's submissions. I will not set them out.

[66] The factual basis for a distinction between what can amount to oppressive conduct and what cannot is not a bright line. Mio has set out the facts for its contentions of oppressive conduct. It is of no use to ask what other facts it might have but does not rely upon. The only relevant facts are those in the 4FASOC. That is the only case of oppressive conduct Mio wishes to advance, or will be entitled to advance at trial.

[67] Paragraph 4(g) of the claim for relief in the 4FASOC seeks an order for payment of compensation. The claim is for an order that "each of the defendants, other than KHD...do a specified act, namely to compensate KHD and/or the Plaintiff for the losses they have sustained by reason of the conduct pleaded and particularised". That order is sought against all defendants except KHD. The BMD defendants submit that it is an embarrassing claim, because the facts pleaded do not sufficiently support it against some of the defendants. Mr Varitimos and Mr Rex join in that challenge.

[68] Mio seeks to add allegations of loss to the 4FASOC which it submits are relevant to the compensation claim. It will be necessary to return to those allegations of loss but there are some introductory points which will assist in framing the questions debated.

[69] Section 233 of the CA specifically provides for the orders that the court can make, inter alia, as follows:

"The Court can make any order under this section that it considers appropriate in relation to the company, including an order:

(d) for the purchase of any shares by any member or person to whom a share in the company have been transmitted by will or by operation of law;

(f) for the company to institute, prosecute, defend or discontinue specified proceedings;

[70] The grant of power to make an order is thus conferred in wide terms. However, the specific sub-paragraphs, including those set out above, identify some of the orders which are usually made.

[71] Mio identifies an order for compensation as being within the scope of the power to make an order that a person do a specified act. No authority was identified by Mio which would include an order of compensation within that inclusive aspect of the power to make orders. There is one such case of which I am aware, decided after the hearing in the present case.[12]

[72] More broadly, the question of whether an order for compensation can be made has arisen in a number of relevant contexts. Most recently, in LPD Holdings (Aust) Pty Ltd v Philips Hicky and Toigo & Anor[13] Philip McMurdo J rejected the contention that an order for compensation in favour of the company could not be ordered under s 233. As his Honour said:

"There are several comparatively recent cases in which it has been said that, under s 233 or it is analogues in other jurisdictions, there is a power to order compensation in favour of the company whose affairs are in question, notwithstanding the availability of a derivative action."[14]

[73] That conclusion is supported by the cases discussed in LPD Holdings.[15] It is also supported by other cases and texts.[16] Some of those cases approach the question as "whether a cause of action allegedly vested in the company can be prosecuted to judgment in an unfair prejudice application".[17] That way of approaching the question does not suggest that the section creates a general free standing right to compensation against any third parties.

[74] Secondly, the authorities show that it is permissible to join a party who is neither a director nor a shareholder of the company to a proceeding under s 233, including a former director or shareholder, in order to make them amenable to such an order.[18]

[75] The paragraph alleging loss Mio seeks to add is par 168 as follows:

"168. By reason of the conduct specified below (identified with reference to the paragraphs of this statement of claim), the following defendants have caused, or will (in the event that the relief sought in paragraphs 4(a)-(f) of the prayer for relief is refused) have caused, KHD and the Plaintiff to suffer loss:

(i) But for the conduct alleged, Mezzanine and BMD Holdings would have no interest in the Property, and KHD would not have suffered the losses particularised in paragraphs 162 and 163.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, Mezzanine and BMD Holdings would have no interest in the Property, and KHD would not have suffered the losses particularised in paragraphs 154, 162, 163 and 164.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, KHD would not have suffered the losses particularised in paragraph 164.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, Mezzanine and BMD Holdings would have no interest in the Property, and KHD would not have suffered the losses particularised in paragraphs 162 and 163.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, KHD's property would not be encumbered by the interest that has been allowed to accumulate on the Mezzanine-to-Prime FA and the Tricom-to-Prime FA.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, KHD's property would not be encumbered by the interest that has been allowed to accumulate on the Mezzanine-to-Prime FA and Tricom-to-Prime FA.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, BMD Holdings would have no interest in the Property.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, Mezzanine and BMD Holdings would have no interest in the Property, and KHD would not have suffered the losses particularised in particular (ii) to paragraph 164.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) Varitimos - paragraphs 160, 161, 162 and 163; and

(i) But for the conduct alleged, KHD would not have suffered the losses particularised in paragraphs 162 and 163.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

(i) But for the conduct alleged, KHD would not have suffered the losses particularised in paragraphs 162 and 163.

(ii) But for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of the SHD.

Further particulars for loss for each of paragraphs (a)-(j) will be provided after the service of expert evidence."

[76] Some initial observations can be made about proposed par 168.[19] First, there is no proper quantification of the loss. That is allied to a breach of UCPR r 155(1) which requires that the pleadings must state the amount of the damages claimed.[20] Mio's statement that further particulars of loss will be provided after service of expert evidence is insufficient. Mio's submission that it is too difficult to articulate the amount of the alleged loss because of other relief which may be granted is not a proper answer in these circumstances.

[77] Secondly, it will be recalled that Prime, Mezzanine, BMD Properties and BMD Holdings are all involved in the Project as lenders.[21] Prime is the lender to Mango. BMD Properties is a lender to Prime. BMD Holdings is a lender to Prime. Mezzanine is a lender to Prime.

[78] Under par 168(a) and (d), Mio seeks to make BMD Holdings and BMD Properties responsible for KHD's loss on the basis of par 165, namely the allegation that the conduct of Messrs Ingram, Bird, Rex and Varitimos was procured or induced by BMD Properties and BMD Holdings, as well as Mango. I have concluded above that par 165 should be struck out. No other basis of liability for KHD's loss is alleged against BMD Properties.

[79] As to BMD Holdings, it is alleged in par 168(a) that the conduct in par 159 (which cross-refers to pars 78, 80 and 83) is another basis for KHD's loss. Those paragraphs allege that on 20 August 2007, BMD Holdings took an assignment of the Tricom-to-Prime FA and became a lender and beneficiary under the security trust deed in substitution for Tricom. They further allege that thereafter interest on arrears accrued and that BMD Holdings failed to demand repayment. I note that it is not alleged that Prime could or would have made repayment to BMD Holdings.

[80] The particulars under par 168(a) allege that BMD Holdings thereby caused the loss alleged in pars 162 and 163. As allegations against BMD Holdings, the particulars of loss subjoined under those paragraphs are incomprehensible. First, it is alleged that there was a sale of property to the benefit of Mango which is loss and damage to KHD on the footing that the value of sales up to 26 July 2013 was $28,525,782. No factual causal basis is set out for the allegation that BMD Holdings caused loss in relation to the value of the sales of the lots in that amount by reason of the assignment that it took of the Tricom-to-Prime FA and by not demanding earlier repayment. Secondly, it is alleged that interest accrued under the Prime-to-Mezzanine FA. It is not alleged that had anything to do with BMD Holdings.

[81] As to Mezzanine, par 168(f) cross-refers to par 158. That paragraph, in turn, cross-refers to pars 57 and 59. Paragraph 57 alleges that Mezzanine failed to demand payment by Prime from 3 December 2005. Paragraph 59 is irrelevant. I assume the allegation which is intended to be targeted is par 62, that Mezzanine did not pay the amount owing to BMD Properties on 3 September 2007 under the BBREF/BDMDP-to-Mezzanine FA. I note that it is not alleged that Prime could or would have made repayment to Mezzanine.

[82] As to Prime, the allegations are similar - that it failed to demand repayment from Mango and that it failed to repay its lenders, now BMD Properties, BMD Holdings and Mezzanine. I note that it is not alleged that Mango or Prime could or would have made those repayments.

[83] The difficulty with those allegations of loss can be examined by looking at the position of Mezzanine by way of example. Facts are not alleged which arguably establish a basis of claim that KHD might otherwise have against Mezzanine to recover a money payment by way of compensation for "the interest that has been allowed to accumulate on the Mezzanine-to-Prime FA and Tricom-to-Prime FA" alleged in par 168(f).

[84] First, no facts are alleged to make Mezzanine in any way responsible for the interest payable by Prime under the Tricom-to-Prime FA to BMD Holdings as assignee of Tricom.

[85] Secondly, focussing on the Mezzanine-to-Prime FA, the claim for compensation against Mezzanine depends on the proposition that if Mezzanine, as lender, fails to demand repayment of its debt from Prime, with the consequence that KHD's exposure under the guarantee and mortgage and charge it has given is not reduced (by some unstated process presumably involving action by Mango and Prime to arrange and make repayment) then Mezzanine as lender is liable to compensate KHD by way of payment.

[86] No basis was articulated by Mio for such a right of compensation against Mezzanine, except to point to the width of the expression in s 233 conferring power to make an order that the court "considers appropriate in relation to the company", relying on the statements of French CJ in Campbell v Backoffice Investments Pty Ltd.[22]

[87] Acceptance of the proposition that the remedial armoury under s 233 is very wide does not mean that there are no limits. An order under s 233 may only be made in response to conduct of the company's affairs contrary to the interests of the members as a whole or which is oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member within the meaning of s 232. The scope of the orders which can be appropriately made is informed by that and by who can apply for an order under s 234.

[88] The purpose of an order or orders under s 233 is to remedy the oppressive conduct, usually by bringing it to an end. That may include the purpose of compensating for detriment including any loss that the conduct has caused. Those purposes may lead to a variety of orders in different circumstances, but in my view the existence of such conduct does not create a free standing right to compensation against third parties not involved in the company's internal affairs who are otherwise not obliged to refrain from the conduct or responsible for the alleged detriment or loss.

[89] It follows, in my view that the facts alleged in the 4FASOC do not disclose a reasonable cause of action for Mio to recover an order for payment by Mezzanine of compensation for KHD's loss, if any, caused by Mezzanine's failure to demand repayment of its debt from Prime.

[90] So far, my analysis has focussed on Mio's claim against Mezzanine for payment of compensation for loss of KHD. That is a claim for payment to KHD. Mio also claims payment of compensation for Mio's alleged loss that "[b]ut for the conduct alleged, Mio Art would have had a valuable opportunity to earn dividends from KHD calculated in accordance with the terms of SHD". In my view, Mio's alleged loss is reflective of the alleged loss suffered by KHD. Accordingly, the same analysis applies to Mio's alleged loss as applies to the alleged loss suffered by KHD, so far as Mezzanine is concerned. It is not necessary to examine Mio's separate position further, at this point.

[91] Further, the same analysis applies to the claims for payment of compensation against Prime.

[92] It also follows, in my view, that once par 165 is struck out, no adequately pleaded basis remains for the claims for payment by way of compensation against Prime, Mezzanine, BMD Properties and possibly BMD Holdings.

[93] Thus, in my view, Mio should not have leave to amend the 4FASOC in accordance with the subparagraphs of par 168 which allege loss against those defendants.

[94] Both Mr Bird and Mr Ingram also challenge the claim against them for payment of compensation under par 4(g) of the claim for relief. Proposed par 168 does not deal with any loss to KHD alleged to have been caused by their conduct. There is an amount alleged in the particulars under par 160(b) which is arguably such a loss. But loss is not otherwise alleged against them, notwithstanding numerous allegations of breach of duty made against them in the 4FASOC.

[95] In my view, where a claim for payment of compensation is made against a former director for loss in a claim under s 233, the loss and the amount claimed are matters which must be alleged in the statement of claim.

[96] Mr Varitimos and Mr Rex make similar complaints. The loss and damage alleged against them appears in pars 162 and 163. The allegation is that they facilitated $28,525,782 proceeds of sales to be paid to the benefit of Mango. That is capable of constituting loss to KHD. Other paragraphs of the 4FASOC allege breach of duty by Mr Varitimos and Mr Rex without alleging that conduct caused loss, or the amount of the loss. Mr Varitimos makes a number of precise criticisms about the details of the pleading in pars 162 and 163 and the paragraphs to which they cross-refer, but that does not cause any necessary problem in the scope of the relief claimed by way of payment of compensation made against him under the claim in par 4(g) of the relief.

[97] Any uncertainty can be resolved by directing that Mio identify the amounts of any other losses alleged to have been suffered by KHD and the amounts of all claims made against Mr Varitimos and Mr Rex under par 4(g) of the claims for relief.

[98] The other criticisms made by Mr Varitimos do not result in the conclusion that no reasonable cause of action is disclosed against Mr Varitimos, nor do I think that the other individual defects identified create significant procedural unfairness, provided the allegations of loss and amounts claimed by way relief are clearly and distinctly made.

[99] In similar vein, Mr Rex submits a number of criticisms of the loss alleged to have been suffered by Mr Rex's (and Mr Varitimos's) failure to do the things which pars 138 to 140 allege that he should have done. I accept that the detail of the intermediate causal steps have not been pleaded. But it may not be impossible to infer that the alleged losses were caused by alleged oppressive conduct, namely by failing to make some effective challenge to Mango's entitlement to the sum of $28,525, 782 and by repayment or discharge of the debts under the Prime-to-Mango FA and Prime-to-Mezzanine FA.

[100] Accordingly, in my view, Mio should have the opportunity to allege the facts which it says will sustain the causal allegation of the losses alleged in pars 162 and 163. However, they are facts which must be pleaded, not merely as particulars, but as facts justifying and material to the claim for relief in par 4(g), to the extent such a claim is made against Mr Varitimos or Mr Rex.

An order discharging the Mezzanine-to-Prime FA and the Tricom-to-Prime FA

[101] The BMD defendants submit that no clear factual basis is set out to support the claim in par 4(b) of the relief for an order discharging the Mezzanine-to-Prime FA and the Tricom-to-Prime FA. They base the complaint on the proposition that s 233 does not authorise an order discharging a contract to which KHD is a stranger.

[102] Mio rejects the contention that an order under s 233 would be beyond the power of the court.

[103] In my view, the question is not one of power or jurisdiction in the sense of whether the court can never make an order under s 233 discharging a contract with a third party or between third parties to which the company is not a party. The range of factual possibilities may well include cases where a company and the third parties are closely enough involved that the wide remedial sweep of s 233 could be engaged.

[104] However, that conclusion does not answer the question in this case about the claim in par 4(b) of the relief. Each of the Mezzanine-to-Prime FA and the Tricom-to-Prime FA was entered into in circumstances where a lender who was not a party to the joint venture arrangements between KHD and Mio or the shareholders agreements and arrangements within KHD made the advance to Prime. KHD's involvement in the lending to Prime was as a guarantor and third party mortgagor. There is no allegation of any other relationship involving KHD and either of Mezzanine or Tricom as lender to Prime. Once par 165 is struck out, the complaints against the lenders about the debts owing under those facility agreements are limited to the allegations that the lenders allowed Prime as borrower not to repay debts and thereby allowed interest to accrue.

[105] In my view, those facts do not, on their face, support a reasonable basis for the claim that the court would make an order discharging the Mezzanine-to-Prime FA or the Tricom-to-Prime FA. There is no articulated reason why Prime's obligations to its lenders should be struck down as the appropriate means of ending any oppressive conduct of KHD's affairs.

An order that Mango indemnify KHD pursuant to cl 4.2 of the PMA

[106] The BMD defendants challenge the claim in par 4(c) of the relief for an "order that Mango indemnify KHD pursuant to cl 4.2 of the PMA..." for the losses "caused by the conduct of Mango". They submit that the relevant conduct and losses are not identified.

[107] Mio does not directly respond to this point. On the face of it, KHD's entitlement upon Mango's indemnity under cl 4.2 of the PMA for losses arising out of Mango's negligent act or omission is a subset of the losses which it is alleged KHD has suffered. It is appropriate that Mio be directed to amend the 4FASOC to allege those losses within clause 4.2.

[108] The BMD defendants submit that there are a number of irrelevant allegations. Mr Varitimos and Mr Rex join in these submissions.

[109] First, pars 20, 21 and 22 allege that a number of other agreements were made as part of the joint venture arrangements. I agree with Mio's response that they aid in understanding the factual context of the other contracts and so I do not consider that they should be struck out.

[110] Secondly, pars 49 and 50 allege two further joint venture agreements made involving a number of companies in the BMD Group and other companies including some from the Babcock & Brown Group, but not including KHD or the original shareholders. In my view, they are not necessarily irrelevant. They could be relevant to the allegation that the Project was not progressed in accordance with the promises alleged in pars 23 to 35.

[111] Thirdly, par 93 alleges that the original shareholders did not consent to the substitution of the ninth defendant ("Tasovac") as security trustee. In my view, that allegation is not necessarily irrelevant. It may depend on the proper construction of the provisions of the SHD or on the facts surrounding Tasovac's appointment and the progress of the development.

[112] Fourthly, pars 98 and 100 plead the sale of a parcel of land to the Catholic Church the proceeds of which were paid to Mango under cl 11 of the PMA without deduction for the indebtedness to the CBA. In my view, they are not necessarily irrelevant to the various allegations that Mango failed to progress the development of the Project as it was obliged to do.

[113] Fifthly, pars 131 to 134 and 136 allege facts as to the solvency of members of the BMD Group. The dates of those allegations are after 30 June 2011 and after 30 June 2012. On the face of it, there is no obvious reason why they are material facts for any relief claimed by Mio under s 233. All that is said to justify them is that they "identif[y] contextual factual matters against which the commercial fairness and propriety of the BMD Defendants' conduct is to be judged". I do not understand that submission.

[114] I note that par 139 alleges that Mr Varitimos and Mr Rex have known those facts since May 2012. That knowledge is based on the allegation that Mio has been asserting those facts in this proceeding since then. I pass by Mio's assumption that if it alleges a fact that constitutes knowledge of the fact's truth by someone who is aware of the allegation.

[115] My concern is that pars 131 to 134 and 136 are possibly a stalking horse for the contention that Mr Varitimos and Mr Rex have acted to benefit companies in the BMD Group to assist in their alleged insolvency rather than acting in good faith and in the best interests of KHD, in breach of s 181 of the CA, or so as to gain an advantage for the BMD defendants, in breach of s 182 of the CA. If that is so, pars 131 to 134 and 136 are improperly pleaded, because those allegations are not made against Mr Varitimos or Mr Rex. Such allegations would amount to serious allegations of improper conduct or fraud. They cannot be left in the shadows.

[116] If that possibility is put to one side, because Mio does not make such allegations in the 4ASOC, I am unable to see a relevant basis upon which pars 131 to 134 and 136 are included in the 4FASOC. They should be struck out as irrelevant and unnecessary.

[117] Mr Varitimos applies for summary judgment pursuant to UCPR r 293 upon the claim made in pars 1 to 3 of the relief. Those paragraphs seek a declaration of right and orders to register Mio as a member of KHD. Mr Varitimos also applies for an additional declaration to be made, that Mio is bound by the terms of the shareholders deed referred to in par 18 of the 4FASOC.

[118] Mr Rex seeks the same orders. He seeks those orders under UCPR r 293 or under the inherent powers of the court. In addition, he seeks summary judgment upon the "claim" made in pars 130 and 162 of the 4FASOC that inquorate meetings of KHD were held by Mr Varitimos and Mr Rex on 15 December 2011, 23 February 2012, 29 March 2012 and 2 November 2012.

[119] It is unnecessary to enter upon these questions further in relation to Mio's claims under pars 1 to 3 of the relief. At the outset of the hearing of the applications, I was informed by counsel for Mr Rex that it was not necessary for me to decide Mr Rex's application for summary judgment as to pars 1 to 3 of the relief. Mio did not press its oral cross-application. Nor did Mr Varitimos's press his application for summary judgment. As well, in my view, there is in any event no reason why the court should resolve any of these questions when they are not presented regularly in a procedural sense.

[120] As to Mr Rex's claim for summary judgment on the "claim" as to the validity of inquorate meetings, in my view, it is inappropriate to deal with the subject of pars 130 and 162 by an order of summary judgment under UCPR 293. That rule is engaged for a relevant defendant "after filing a notice of intention to defend". Mr Rex has not filed a notice of intention to defend. A notice of intention to defend is filed under UCPR r 137 and must have the defendant's defence attached to it: UCPR r 139(1)(b). Mr Rex has not sought to do that or to obtain a direction under UCPR r 367(1) that his application for summary judgment should be heard inconsistently with the requirement that he first file a notice of intention to appear.

[121] Secondly, UCPR r 293 is directed to the plaintiff's claim or part thereof. Mio does not make a separate claim for relief based only on pars 130 and 162. They are allegations of conduct alleged to be oppressive conduct or part of oppressive conduct making it appropriate, with other conduct, to make the orders sought in the claim for relief. For example, the relief that might flow from those paragraphs is not confined to a claim for payment of compensation by Mr Rex under par 4(g) of the relief. It might include the date which should be set to assess the value at which Mango might be ordered to purchase Mio's shares in KHD.

[122] The substance of the submission by Mr Rex in support of this part of his application is that the proceedings of the meetings are not invalid merely because under the SHD they were inquorate due to Mr Vicca's absence, because of the operation of s 1322(2) of the CA. Under that subsection, "a proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court...". There is no doubt that lack of a quorum is a proceeding under the CA to which s 1322(2) applies and that conclusion is not repelled because a director or directors deliberately proceed with the business of an inquorate meeting.[23]

[123] Mio submits that the resolutions of the meetings were "ultra vires" and that it is for Mr Rex to raise a defence under s 1322(2), but that in any event validity under s 1322 does not resolve the question of oppressive conduct under s 233. In my view, Mio's first submission is wrong but the second is right, if the allegations otherwise support a claim for oppressive conduct. However, because the application for summary judgment by Mr Rex is irregular in any event, I will deal with the questions briefly, and also put to one side whether an order can be made under r 293 to strike out pars 130 and 162 against Mr Rex as "part of the plaintiff's claim" within the meaning of r 293.

[124] It is erroneous to invoke "ultra vires" in the context of the exercise of power by a corporation in 2014, given the provisions of ss 124 and 125 of the CA. Ultra vires, as a legal doctrine applied in this context died in the time of the Companies Code.[24] There is no question in the 21st century that an inquorate meeting may fail to have effect because of a lack of legal capacity or power of the kind which once was described as "ultra vires" a company.

[125] Further, in my view, it is for Mio to plead any invalidity rather than for Mr Rex to plead validity. That conclusion follows from the manner in which s 1322(2) of the CA operates. That subsection produces "automatic validation of a meeting... unless the court intervenes by order".[25] As well, the onus of proof of proving substantial injustice rests on the one alleging it.[26] The subsection "gives an initial presumption of validity to any 'proceeding under this [Act]', and that is only displaced by an actual declaration of invalidity".[27] In my view, a party who has the benefit of the presumption and who does not bear the ultimate onus on any issue of validity of the meeting or resolutions passed at it does not have to plead validity. Unless Mio alleges the contrary, and seeks a declaration that the meeting or some resolution passed at it was invalid, the issue of validity does not arise.

[126] Having said that, in my view, if directors of KHD proceed to meet and resolve on matters in a manner contrary to the agreed requirement under the SHD that a director appointed by Mio be present, there is no reason why their conduct could not be oppressive conduct. It depends on the facts. I am aware that some of the defendants contend that the reason why Mr Vicca absented himself from some meetings was to prevent business being transacted which he did not consider to be in KHD's or Mio's interests. This application is not an occasion where the extent or the effect of any conduct of that kind can be resolved.

[127] The answer to these questions does not change if the chosen procedural pathway is the inherent jurisdiction of the court. That jurisdiction is exercised sparingly because "the exercise of powers to summarily terminate proceedings [on the basis that the action is frivolous or vexatious or an abuse of process] must always be attended with caution".[28] Where the substance of the point in dispute seems to lie in Mio's contention that it is not required to plead substantial injustice until the defence raises s 1322, it does not seem to me that it is appropriate to proceed to a resolution of the question which may be moot whether the allegation of oppressive conduct is a reasonable basis of claim in the absence of that substantial injustice.

[128] The question should not be dealt with further, at this stage, as a pleading point.

[129] I have determined that par 165, pars 131 to 134 and 136, as well as par 4(b) of the claim for relief should be struck out. Further, par 4(g) of the claim for relief as against BMD Holdings, BMD Properties, Prime and Mezzanine should be struck out.

[130] The claims and the 4FASOC otherwise remain.

[131] The defendants submit that no further opportunity to re-plead should be given to Mio. The 4FASOC is the sixth attempt at a pleading by Mio. There is prejudice to the defendants in the way that Mio has prosecuted its claim to date. Repeated recast pleadings cause delay and expense which the opposite party must bear and which are not wholly compensated by orders for costs. The philosophy of UCPR r 5 encompasses the undesirable aspects of a protracted and expensive pleading process. There is no doubt that "limits may be placed upon re-pleading, when delay and cost are taken into account".[29] As well, where a party faced with substantial challenges to the sufficiency of its pleading struggles to overcome those challenges time and time again, the real question may be raised whether it can ever do so or should be permitted another attempt to do so.

[132] In my view, Mio should not be given another opportunity to try to dredge up some further case for a claim for compensation against BMD Holdings, BMD Properties, Prime or Mezzanine. The attempts to do so to date seem to have been informed by the unacceptable assumption that because they are lenders to Prime and Mango respectively, and because the amount of the debts owed to them by their respective borrowers has an effect on KHD's financial position as guarantor, charger or mortgagor, Mio is entitled to relief against them under s 233 for any oppressive conduct it can identify by others which affected the amounts of those debts. In my view, the lack of any articulated basis for relief, on those facts, supports the conclusion that as against BMD Holdings, BMD Properties, Prime or Mezzanine, neither general leave to re-plead nor leave to re-plead in respect of par 4(g) of the claim for relief should be given.

[133] I have set out the orders as to the parts of the pleading which should be struck out and the amendments that should be made in the orders set out at the beginning of these reasons. I will hear the parties as to the further orders which they seek consequent upon these reasons.

[1] The abbreviation "FA" stands for facility agreement.

[2] Inconsistently with that, pars 5(b)(iii) and 6(b)(iii) allege that the shares in Prime and Mezzanine were transferred to Urbex from 16 June 2010.

[3] And in doing so, I have eliminated the complex of cross references contained in the pleading.

[4] That is, the pleaded facts are not "an actual or proposed act or omission by or on behalf of the company" within the meaning of s 232 of the CA.

[5] [1999] FCA 218; (1999) 30 ACSR 698.

[6] See Yorke and Anor v Lucas [1985] HCA 65; (1985) 158 CLR 661, 667.

[7] Shorter Oxford English Dictionary, (Oxford, Oxford University Press, 2007, 6 ed), vol 1, p 2357.

[8] Shorter Oxford English Dictionary, (Oxford, Oxford University Press, 2007, 6 ed), vol 1, p 1369.

[9] I note that it is not alleged that any of the conduct picked up by the cross references in par 165 was a breach of contract or breaches of contract that Prime, BMD Properties or BMD Holdings procured or induced but I have not ignored that potential basis of liability. See Lumley v Gye [1853] EngR 15; (1853) 2 E & B 216; 118 ER 749; Sanders v Snell (1998) 196 CLR 329, 339.

[10] Clarke & ors v Great Southern Finance Pty Ltd [2010] VSC 473; (2010) 80 ACSR 219, 232 [32].

[11] [2004] FCA 1393; (2004) 51 ACSR 278, 285 [25].

[12] McCausland v Surfing Hardware International Holdings Pty Ltd (No 2) [2014] NSWSC 163 [46].

[13] [2013] QSC 225.

[15] In particular, Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359, 403 [199]; Fexuto Pty Ltd v Bosjnak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672; Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] UKPC 26; [2007] 4 All ER 164, 172; and re Chime Corp Ltd (2004) HKCFAR 546.

[16] Lowe v Fahey [1996] 1 BCLC 262, 268B; Clark v Cutland [2003] 1 WLR 783, 787 [8]; Hollington R, Share Holder Rights (London, Sweet and Maxwell, 5th ed, 2007) [8-06]; Joffe V, Drake D, Richardson G and Lightman D, Minority Shareholders, (Oxford, Oxford University Press, 3rd ed, 2008) [5.128]-[5.139].

[17] Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] UKPC 26; [2007] 4 All ER 164, 172 [27].

[18] Lowe v Fahey [1996] 1 BCLC 262, 268(a-b); Clark v Cutland [2003] EWCA Civ 810; [2004] 1 WLR 783, 786 [4], 786-7 [7] and [8], 793 [31]; Gamlestaden FastigheterAB v Baltic Partners Ltd [2007] UKPC 26; [2007] 4 All E.R. 164, 175 [37]; Joffe V et al, Minority Shareholders, op cit, at [5.137].

[19] There is an exception for the loss alleged in par 168(a) which is separately dealt with.

[20] See also LPD Holdings (Aust) Pty Ltd v Phillips [2013] QSC 225, [63]-[64].

[21] But not forgetting that BMD Holdings guaranteed Mango's performance of its obligations to KHD under the PMA.

[22] [2009] HCA 25; (2009) 238 CLR 304, 334 [74].

[23] Re Pembury Pty Ltd [1993] 1 Qd R 125; Whitehouse v Capital Radio Network Pty Ltd [2004] TASSC 12; (2004) 48 ACSR 569.

[24] For example, see ANZ Trustees & Executors Trustee Company Limited v Qintex Australia Ltd (rec & mgrs apptd) [1991] 2 Qd R 360.

[25] Howard v Mechtler [1999] NSWSC 232; (1999) 30 ACSR 434, 440-441.

[26] Australian Hydrocarbons NL (1985) 10 ACLR 72, 79.

[27] Re Caysand No 64 Pty Ltd [1994] 2 Qd R 467,472; McLaughlin v Dungowan Many Pty Ltd [2010] NSWSC 187, [307]-[308].

[28] Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118, 131 [24].

[29] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 213 [98].