Year Sales Operating Profit
1980 711,675 7,658
1984 2,355,787 82,942
1986 3,704,909 42,411
1990 6,408,807 44,104
1993 10,119,239 98,133
1995 14,889,412 1,066,817
1996 18,731,499 1,284,434
1997 N/A 1,401,020
One can see from these figures that the business of the company has continued to grow year by year in a most satisfactory manner and that it was after the death of Gerard, when Patrick obtained full control of Expressway Spares, that the operating or net profit of the company before tax became substantial. Under Patrick's management, the business of Expressway Spares has become a very substantial and valuable business. In his affidavit, Mr David Griffin gave this description of the business:
"6. When I commenced my employment at Expressway Spares as a parcel despatcher, the company was relatively small and unknown outside the local area. The company is now recognised as a world leader in its field.
7. Some of the company's dealings include substantial dealings with the mining industry all over Australia, New Guinea and New Zealand. In Australia, mining is currently Australia's largest industry. At the moment there is a very large peak in the industry which I believe will be maintained in the future.
8. The company is also exporting to the USA, Canada, New Zealand, Asian Pacific countries and the Middle East. The company has just sold five containers of machinery and parts to some of our clients in the USA. To give an indication of our present position, Caterpillar is the biggest company in the USA in this industry. It spends considerable resources providing protection to its authorised dealers from competition in machines or parts. Despite this, ES has developed its reputation to the extent that it competes successfully in the market against these Caterpillar dealers. In the USA, ES is looked at as the pinnacle of its industry."
Notwithstanding his undoubted success as a manager, Patrick has not been given a fixed contract of employment or, for that matter, any profit incentive which reflects his worth to the company.
I consider that Patrick's value to the family has been underestimated by his siblings and was underestimated by his mother. His father recognised his worth for his father appointed him manager of Expressway Spares. In that capacity, he has been very successful. Patrick is not flamboyant and does not have a large presence but he is a flexible and cooperative person and is an efficient and successful businessman. The business has developed well in his hands and observations of bank officials show that they believe that the business is well run and that Patrick has an efficient system of stock control in place. Patrick is well respected by the officers of the Colonial State Bank, whereas they found Claude to be difficult and did not have the same trust in him. Patrick gets on well with the employees, particularly the senior employees of Expressway Spares. The senior employees under his supervision have formed a successful team. Patrick is well liked by and trusted by customers. Claude, in his cross-examination, observed that he had no complaint about Patrick's day-to-day management of the company. Patrick has a proven record and I have come across nothing in the evidence which would cast doubt upon the fact that he is a capable managing director of Expressway Spares and the member of the Cassegrain family best suited to undertake that task.
No other member of the Cassegrain family has the same record. Claude, like many property developers, has moved through periods of financial success and through periods of financial stress. My impression is that Gerard's decision that Claude should cease to take any part in the management of Expressway Spares was a wise one. John's company, Vineyards, has a long history of annual losses. My impression of John is that he is not a businessman of the same calibre as Patrick. Denis established Tradition and its charcuterie business. However, that business failed. It is unfortunate that the two dominant members of the family are Claude and John, each of whom has his eye firmly fixed on the annual profits of Expressway Spares and each of whom has a different view as to what should be done with those profits. It is the dispute between them which has led to these proceedings and which has cost the Cassegrain enterprise millions of dollars in fees for lawyers, accountants, experts and advisers. In Gerard's time, Expressway Spares helped fund the activities of other companies in the group including GC & Co, Tradition and Vineyards as Gerard saw fit. After his death, that approach was no longer appropriate for the members of the family were not in agreement as to how the profits and the funds of Expressway Spares should be applied.
I assume that many of the losses of other companies have been hidden in the annual accounts of Expressway Spares, for the evidence shows that Gerard Cassegrain was loathe to pay tax if he could avoid doing so. I assume that, if a strict accounting were undertaken of the various companies' balance sheets, it would be found that they should be restructured. There appear to be loan accounts of doubtful accuracy or validity. None of that mattered during Gerard's lifetime for he decided how funds would be applied. I assume that Expressway Spares has not charged or received substantial interest on the intercompany accounts.
There is a problem which affects the security of Expressway Spares. The land on which the company has built its premises and on which it carries on business is owned by the estate of Mrs Cassegrain. Expressway Spares has no security of tenure. Presumably, this arrangement was entered into many years ago with a view to protecting the real estate from creditors should the company suffer financial difficulties. Instead of securing its future by purchasing the land or obtaining a long term lease, Expressway Spares has been applying its profits to alleviate the losses of other businesses. In the result, its current value is very much diminished. In my opinion, future profits should be spent on purchasing the land on which it carries on business or in acquiring a long term lease of the land. Expressway Spares should also build up substantial reserves on which it can call. If the company is not put on a proper commercial footing, the winds of economic adversity will sooner or later bring it down. The company also needs to have funds available to enable it to take up exceptional opportunities which arise in the course of its business. Bank finance is expensive and not always available.
As Patrick has followed the pattern which was established by his father or in his father's lifetime, there are necessarily aspects of the management of Expressway Spares which can be the subject of criticism. Of these, the most significant is that Expressway Spares has continued to fund the operations of Vineyards, the company which is managed by John. The profits of Expressway Spares have been dissipated in the losses of Vineyards. Patrick, Denis and Catherine either approve of this course or support it. Claude and Anne-Marie oppose what is occurring. Claude has also criticised some of the internal accounting procedures. I consider that none of these criticisms has any particular significance. I am satisfied that the business of Expressway Spares is well run. Of more importance, however, is the fact that the informal procedures that were established in Gerard's time for making payments to members of the family have been continued. As there are disagreements between the members of the family, it is essential that the informal procedures should be abandoned, that proper loan accounts should be established and that the profits of the company should flow to shareholders in accordance with their entitlements. However, I do not criticise Patrick in relation to what has been occurring. I believe he has been trying to do what he considered was in the best interests of the family.
Vineyards has established vineyards and a winery in the Wauchope District. The company commenced planting about seventeen years ago and has been trading for the last ten years. John is responsible for both the growing and purchase of grapes and for the making of the wines. Some of the grapes grown are of European varieties which are relatively unknown in Australia. The company also purchases grapes produced in the surrounding district. The companies with which Claude has been primarily concerned have developed what are called "clos farms", on many of which the lessees or owners have planted vines.
For many years, the members of the family were the shareholders of Vineyards and, at the time when the concept of the manager holding 40% of the shares was in place, John or John and his wife held 40% of the shares in the company. However, in 1994, the shares in the company were transferred to Expressway Spares to facilitate the obtaining of tax deductions by that company for the expenditure which it made to or for Vineyards.
Vineyards' wines have a developing reputation and have won medals. John considers that the company has great potential. But, in fact, it has not made a profit since its establishment. The annual reports of the company have constantly predicted profits in future years but that has not eventuated. It is not for me to predict when if ever Vineyards will make a profit or to decide what should be done with that company and its business. Ultimately, these are matters of business judgment on which the members of the family must form their own opinion. However, in these proceedings, the applicants are effectively asking me to support the current regime whereby the profits of Expressway Spares are applied to keep Vineyards from insolvency. Patrick, Denis and Catherine are content to support the business of Vineyards. Claude and Anne-Marie are not. It was because the profits of Expressway Spares were not passed through to its shareholders in accordance with their entitlements, because Anne-Marie was dissatisfied with the benefits which she was receiving from Expressway Spares and because Claude has considered that there were better things to be done with the profits of Expressway Spares than to apply them to John's company that Claude, Anne-Marie and Mrs Cassegrain took the steps which they did of voting to appoint Claude and Anne-Marie to the Board of Directors and later of ensuring that Claude became Chairman of Directors of Expressway Spares. Accordingly, it is necessary for me to form a view as to whether, because four member of the family are content to have the profits of Expressway Spares used in support of John's company, Vineyards, I should make an order which precludes Claude and Anne-Marie from taking steps to ensure that that does not occur.
I do not propose to go into the circumstances of Vineyards in any detail. There are in evidence at least two long reports by experts about the company and John has written a response to one of them. It is sufficient, I think, for me to express my view that Vineyards is a company with major problems in the production from its own vineyards, in the production and cost of grapes from the clos farms, in the efficiency of the winery having regard to its relatively low throughput and, lastly, in the development of a market for its wines. I have formed the view that these problems are long term problems and that they will not readily be fixed.
I have also formed the view that, while John may be an excellent winemaker, he is not a businessman of Patrick's standard. I have drawn that conclusion in part from the unfulfilled projections of future success which appear in the annual reports, in part from John's response to the experts' report of September 1997, which appears to me to fail to deal with the fundamental problems which that report outlined, and in part because of my own assessment of John. The view which John, amongst others, propounded in 1994 and early 1995 that there could be one overall enterprise in which all members of the company would have an equal share save for the managers of the companies who would have 40% and that there would be overall control of the group by family agreement seems to me to have been totally unrealistic and to have failed to take into account either the needs of the different businesses or the problems of obtaining consensus. What was propounded may have been a great ideal but it was unworkable. The idealistic and impractical nature of John's views were likewise reflected in his answers in cross-examination, for example:
"Yes. You accept now, do you not, that as between them, your mother, Anne-Marie and Claude together own and control a majority of the shares in Expressway Spares? No, I don't accept that.
…
You just do not like it, is that it?---I don't - the family structure was - that's not how we operated. The agreement of 1995 and the breakdown of that agreement has led to the situation we're in now.
That is why you do not like it?---It's wrong."
One can see from these answers that John is reluctant to face up to reality, to things as they really are. There has never been any doubt that Claude, Anne-Marie and Mrs Cassegrain held the majority of shares in Expressway Spares or that, after Gerard's death, it was not possible to govern the total enterprise by consensus among the children. I do not have confidence in John's assessment of the needs of and the likely future of Vineyards.
I would certainly not encourage the members of the Cassegrain family to continue to put money into Vineyards. I am firmly of the view that the profits of Expressway Spares should be spent on acquiring the land on which it carries on business or in obtaining a long term lease, in building up adequate cash reserves, in reducing the indebtedness to the Bank, in using funds to take advantage of any major business opportunities which may come along, and in paying dividends to the shareholders. Accordingly, I am of the opinion that Claude and Anne-Marie were entitled to take steps to stop the diversion of the funds of Expressway Spares to Vineyards and that this Court should not make any order which would have the effect of precluding them from achieving that aim.
In my opinion, both Claude and Anne-Marie have a legitimate cause of complaint concerning the way in which the profits of Expressway Spares have been devoted to supporting Vineyards, which is the company in which John has the greatest involvement. In my opinion, they were justified, if they chose to do so, to seek to change the manner in which the affairs of Expressway Spares have been handled. Anne-Marie, in particular, has for many, many years been the largest single shareholder in Expressway Spares. Yet she has received only insignificant benefits from this company.
The applicants take the view in effect that because Expressway Spares funded the losses of Vineyards during Gerard's lifetime and because a majority of the members of the family wish that to continue, it is oppressive conduct on the part of the majority shareholders to seek to prevent the diversion of the profits of Expressway Spares to Vineyards. In my opinion, the majority shareholders were entitled to act as they did and their actions could not be described as oppressive provided that they sought to achieve a legitimate end. The ending of the diversion of the profits of Expressway Spares to Vineyards was a legitimate aim.
In my opinion, after their father's death, the children approached the reorganisation of the Cassegrain enterprise in the wrong manner. In January 1995, an agreement which was not legally binding was reached in principle that all the children would have equal shareholdings save that the manager of a company would have 40% of the shares of that company. It was agreed to reorganise the group by setting up a management company to oversee all entities in the group with the idea of making each trading entity financially and managerially independent. It was a part of the overall arrangement that Expressway Spares would take over Cameron Furniture Pty Ltd, a company outside the Cassegrain enterprise which Anne-Marie and her husband operated. The agreement with respect to that matter was expressed as follows:
"The family agreed that when appropriate Expressway Spares would fund the purchase of 60% of shares in Cameron Furniture on call by Cameron Furniture on behalf of Françoise, Catherine and Jim, Patrick, John and Eva, Claude and Felicity and Denis subject to the following conditions -
a) Expressway Spares to have a surplus cash flow after cost of sales and all operating expenses of Expressway Spares, Cassegrain Vineyards and GC & Co and existing committed and approved capital expenditure has been completed.
b) Cameron Furniture will supply a business plan demonstrating a return in the order of 15%, or if less an amount at least greater than any other proposed capital expenditure.
It was mentioned this probably would not happen until such times as cross guarantees had been lifted and the existing companies were trading profitably."
This proposal may have seemed satisfactory in principle, intending as it did to bring Cameron Furniture into the fold. However, the conditions attached to the proposal were ridiculous. In the first place, Expressway Spares never had the necessary surplus cashflow to make the acquisition. Secondly, other existing companies did not trade profitably. Thirdly, it is difficult to understand why Cameron Furniture should have been required to demonstrate a return in the order of 15% as Vineyards had never made a profit, Tradition proved unsuccessful and GC & Co had more than once been on the brink of insolvency. Understandably, Anne-Marie came to the view that the applicants were not intending to treat her fairly.
The overall scheme had many defects. The primary one was that the applicants could not get along with Claude. The idea that there would be a general holding company dealing equally and fairly with the interests of each company in the Cassegrain group was fallacious. The companies had different interests. There was only one company at the time of Gerard's death which was clearly profitable and that was Expressway Spares. Even had all the companies been financially sound, there would have been disagreements as to how moneys should be expended when business opportunities or business problems arose. In the resolution of such issues, the applicants were unlikely to be able to agree with Claude. Inevitably, the agreement in principle was not progressed.
It was not for some time after Gerard's' death that Claude took any particular interest in Expressway Spares. However, when late in 1995, the agreement in principle broke down, as it was bound to do, Claude began to take an active interest in Expressway Spares. One cannot tell whether or not Claude thought that GC & Co could make better use of the profits of Expressway Spares than could Vineyards. I suspect that much of Claude's thinking is sub-conscious. In any event, it is clear, I think, that Claude was attracted to Expressway Spares by the profits it was generating and was dissatisfied to see the profits being used to support Vineyards. Anne-Marie was also dissatisfied with what she considered to be the applicants' approach to her interests. Anne-Marie and her mother both gave powers of attorney to Claude and he commenced to act on their behalf. In the middle of 1996, it was decided that Claude and Anne-Marie should seek election to the Board. A general meeting was called. The applicants instituted these legal proceedings seeking to prevent this but they were unsuccessful. Having the majority of votes, Claude and Anne-Marie were successful in obtaining their election to the Board of Directors. Subsequently, the Board was enlarged and other directors who were likely to support Claude were elected. Claude became Chairman of Directors about the end of 1996. Later, Mr Peschar and Mr Claude Griffith, who had been long time advisers to Gerard, resigned after having disputes with Claude.
In my opinion, what should have happened is that the affairs of Expressway Spares should have been managed for the benefit of its shareholders with dividends being paid to shareholders according to their entitlements. The applicants did not take that view, in part because they considered it unfair that Anne-Marie should have an unequal shareholding in Expressway Spares. When the hearing of these proceedings commenced, one of the orders which the applicants sought was an order equalising the shareholdings in Expressway Spares. Later, the applicants accepted that they had no ground whatever for depriving Anne-Marie of the shares which she has held since she was a young child.
In my opinion, Claude and Anne-Marie were entitled to take the view that the applicants were not managing Expressway Spares in their interests and they were entitled to take the view that their interests would be better served if they had a greater say in the Board of Directors and if Claude were appointed Chairman of the Board of Directors.
It was an unfortunate family circumstance that Mrs Cassegrain considered that Claude could do no wrong and that, when one or other of her other children complained to her of Claude or his actions, Mrs Cassegrain took offence.
In one letter which Mrs Cassegrain wrote to her children, she spoke well of Claude but criticised others of the children. For example, in the letter, Françoise stated:
"Claude had always the interest of his siblings at heart."
When speaking of Denis:
"I cannot understand how he suddenly stopped treating me as his mother. He never had the courage to give me a proper explanation, except when angry, and he told me it was because of Claude. I cannot accept this as an excuse."
Speaking of Patrick, Françoise said:
"Patrice spread the word that I shouldn't be fully informed of E.S. business anymore. I was offended."
The letter then went on to say:
"It is because of your attitude that I then asked Claude for his support and to represent myself. I felt at the time that he was the only one who would put my interest first."
One can see that Françoise could not understand the complaints which some of the children had about Claude and that this affected her relationship with Denis, who had been in dispute with Claude about Cassegrain Tradition, and with Patrick, who I am sure had nothing to hide about Expressway Spares, for it was going from strength to strength. In her oral evidence, Mrs Cassegrain said that she trusted only Claude. Yet, there is nothing in the material before the Court which suggests that any of the children took or contemplated taking a step which was against Mrs Cassegrain's interests. It seems to me likely that Claude promoted or failed to dispel disputes between his mother and his siblings. He had a dispute with Denis about Tradition, he was disputing with John about Vineyards and, I suspect, he raised issues with his mother about Patrick's management of Expressway Spares. I suspect that Claude did not make it clear to her that, under Patrick's management, the business of Expressway Spares was going from strength to strength and that profits were being generated which had never been earned in Gerard's lifetime.
In any event, Mrs Cassegrain joined with Claude and Anne-Marie in supporting Claude's desire that he should become active in the affairs of Expressway Spares. It was also unfortunate that Mrs Cassegrain appointed Claude and Anne-Marie as her executors. Much of her estate has been left on trust for the children and grandchildren to vest in the year 2015. Accordingly, the intent of the Heads of Agreement that Claude and Anne-Marie should cease to have any further interest in Expressway Spares was frustrated by the death of Mrs Cassegrain.
It was the voting power of Claude, Anne-Marie and Mrs Cassegrain which led, ultimately, to the institution of these proceedings. The applicants are unable to get along with Claude on business matters. With that view, I entirely sympathise. I shall later deal in detail with Claude's nature and his personality. The statement of claim alleges a number of matters which are said to have amounted to oppressive conduct by Claude. They include:
"Particulars of Claude's acts relating to the conduct of the affairs of Expressway Spares Pty Limited
(i) Threatening to sell Expressway Spares (or its business) ... that:
· it is a profitable trading enterprise which has afforded benefits to the family over a considerable period of time; and
· to do so would defeat the expectations of the family that the business is an integral part of their collective enterprise.
(ii) Subsequently taking active steps, contrary to the best interests of the company, directed towards ensuring the disposal of the company's business.
(iii) Threatening to remove Patrick Cassegrain as Managing Director.
(iv) Undermining Patrick Cassegrain in his position as Managing Director ... including:
· informing subordinate employees that he is contemplating sacking Patrick (in particular, threatening, to David Griffin, to use his power as Chairman of the Board of Directors to sack Patrick for no other reason than the fact that he was a party to the present proceedings in this Court);
· proposing to meetings of the Board that Patrick be reprimanded by the Board for matters of no importance to the affairs of the company
· attempting to usurp the role of Managing Director by moving at board meetings that Patrick be given responsibility for carrying out certain tasks but then carrying them out himself without consulting Patrick (ie communicating changes in ES board to staff); and
· seeking to intimidate the Managing Director by having the board obtain legal advice regarding Patrick's continued suitability for the office.
(v) Depriving the company of the services of independent advisers and directors, namely Claude Griffith and John Peschar.
(vi) Causing the number of directors to be enlarged unnecessarily.
(vii) Causing the appointment of directors to the company who have no interest or experience in the affairs of the company.
(viii) Purporting to single-handedly direct the affairs of the company in his role as Non-Executive Chairman.
(ix) Disrupting the performance of senior staff including:
· David Griffin
· Bob Mullot; and
· Chris Van Der Lay.
(x) Causing David Griffin, who was a valuable and trusted employee of the company since 1975, to resign.
(xi) Altering the cheque signing procedures within the company, and in particular:
· depriving trusted employees of cheque signing authority; and
· insisting he countersign all cheques.
(xii) Causing or permitting unnecessary time at meetings of directors to be spent considering matters of no significance to the operation of the company's business.
(xiii) Acting against the interests of the company and its members by:
· asserting that the company is not entitled to any allowance for the value expended by it in the construction of its buildings and improvements;
· inciting tenants of ES not to pay their rent to the company;
· persuading FranÇoise, whose land had been available as security for the company's overdraft, to arbitrarily withdraw that support, but then subsequently causing her to change her mind; and
· dealing with the company's bankers (Colonial State Bank) in a manner calculated to reduce the bank's confidence in the company.
(xiv) Inciting discontent amongst shareholders, whereas previously there had existed harmony cooperation between shareholders.
(xv) Insisting on being concerned in the operations of the company notwithstanding:
· his acknowledged lack of competence and genuine interest in its business activities;
· the distress it causes staff of the company; and
· the fact that his participation is wholly unnecessary.
(xvi) Using his position as a shareholder and director of the company to cause distress and disruption to other directors and senior officers of the company for the reason of wishing to punish others for a perceived lack of respect for him.
(xvii) Proposing that ES should subscribe for shares in Oceania Agriculture (the Manager or a tea-tree plantation which is conducted on land owned by a company in which Claude claims 50% beneficial ownership) without declaring his interest to the board and for no apparent reasons other than the benefits which would flow to himself and that other enterprise.
(xviii) Offering an employee of ES $1 Million in the event that he can procure a purchase of the company's business.
(xix) Using his position of confidence and trust with Françoise to instruct her how to exercise her vote at a meeting of shareholders.
(xx) Requiring the company to appoint independent solicitors in connection with the present disputes and then informing them that they will receive their instructions under the signature of the Chairman of the Board of Directors (himself).
(xxi) Causing long standing shareholder loan accounts to be frozen (with the exception of Françoise) whilst not taking the same action within GC & Co, thereby defeating the legitimate expectations of the family that each of the enterprises are being conducted for the benefit of the entire family."
I do not propose to detail all the facts which may be relevant to each of these items. Underlying the allegations, there are generally facts which have caused irritation to one or more of the applicants. Claude has been disruptive as the applicants expected that he would be. John Peschar and Claude Griffith resigned as directors after they had been in dispute with Claude. They found their positions on the Board to be untenable. David Griffin, the sales manager of Expressway Spares and a person in whom Patrick reposed great faith, resigned in part because of his dissatisfaction with Claude. If matters go on as they have, it is likely that Patrick will cease working for the company and that other long term employees may also resign.
However, it does not seem to me that these matters in themselves amount to oppression. If the majority shareholders want Claude in control of Expressway Spares, they are entitled to have him. He is what he is. He considers himself to be the best businessman in the family. He considers that he knows what is best for the family and for the businesses. It is inevitable that others who have different views will find it impossible to work with him and will leave. This does not necessarily amount to oppression of the applicants. The majority shareholders are entitled to have Claude participate in the management of Expressway Spares because they do not approve of the diversion of its profits to Vineyards.
None of the events relied upon is particularly significant in itself. Thus, Claude has, at times, discussed the possibility of selling Expressway Spares or its business. That does not amount to oppression. If the Cassegrain family cannot agree on how Expressway Spares is to be managed, the sale of the company or its business and the division of the company's assets is one option that could be taken. Such discussion was not oppression although it tended to destabilise the authority of Patrick as managing director and to engender a lack of confidence amongst the employees.
Claude has, from time to time, amongst the family and in discussions of the Board of Directors of Expressway Spares, queried Patrick's competence as managing director, has queried actions he has taken and has even on one occasion suggested that Patrick might be removed as managing director. However, Claude was on the Board of Directors and he was Chairman of Directors. As Patrick was an independent spirit who made it clear to Claude that he would not brook any interference by Claude in what he was doing, Claude understandably set out to undermine his authority. His actions were not oppressive conduct. Directors are entitled to work towards replacing a managing director even if they work by indirect means. The applicants complain that Claude undermined Patrick's position as managing director in various ways including proposing to meetings of the Board that Patrick be reprimanded, by raising issues of business of no particular importance, by taking part in the day to day running of the business, by seeking Board approval to limit Patrick's authority, by requiring that he, Claude, be a signatory to all cheques and by generally undermining the employees' confidence in Patrick. But, if the Board of Directors had any complaint about Claude's conduct, the Board could have passed a resolution reprimanding him or limiting the role which he, Claude, played in the company.
One of the difficulties which people find when dealing with Claude is that he tends to take a high moral stand or a principled approach to a matter whereas his true aim is directed to some other undisclosed end. That is part of his personality. There are at least two incidents which show that Claude will purport to act on the point of principle whereas his ultimate aim is one of his own devising, perhaps not even an object that he consciously has in mind. One example is that Claude raised at Board level and with Patrick an issue as to the terms of employment of David Griffin and his wife. Patrick was at first disinclined to have Claude meddling in that matter for he considered that David Griffin was an invaluable employee. In the end, Patrick was required to produce the agreements. One agreement with David Griffin provided for a fixed term of employment and for his remuneration. The other arrangement was with his wife whereby she was paid a regular emolument. The arrangement with the wife was structured on the advice of the company's accountant. Claude questioned with the Board whether the arrangement was a proper one. The point that I would make is that the arrangement was not of any significance to anyone other than David Griffin and his wife. David Griffin was a valuable employee. He was not being overpaid, even taking into account the amount paid to his wife. He was worth to the company what the company paid. This must have been clear to everyone including Claude. A result of Claude's interference was that David Griffin did not wish to be associated with Claude and later resigned. One wonders whether even Claude had worked out just what end he was seeking to achieve by raising the issue. Plainly, Gerard was wise to remove Claude from Expressway Spares when, in the middle 1980's, he was upsetting Max Griffiths.
Another example is that, when in early 1996 Claude obtained a power of attorney from his mother, he wrote to the companies which had premises on Mrs Cassegrain's land, which included Expressway Spares, Cameron Furniture, GC & Co and Tradition. The letter stated, inter alia:
"This memo is to inform you that I am seeking an application from each activity for tenure over the specific area of the above mentioned properties. You are on notice that I would like to see this matter completed by 30 September 1996. Therefore I request of you to put your mind to the matter that concerns your activity, so that you are well prepared to participate in a meaningful, preliminary discussion, which I will chair, to be held late May/early June (date & time to be notified).
I will be looking for supporting evidence for:
- Short term needs to 1997/1998
- Medium term projection 1999 to 2005
- Long term projection 2006 on
In anticipation that competing aspirations could occur over existing areas between C.F. and GC & Co, C.F. and E/S, E/S and GC & Co, F.D. and E/S, C.T. and E/S, I will be looking for some documentary evidence of consideration being given by Cost Benefit analysis of various warehousing options c.f. ground storage, Capital Costs c.f. operating costs, Pacific Highway exposure c.f. non-exposure, existing use c.f. projected use etc.
The best solutions should become easily apparent as a result of the thoroughness of the supporting evidence submitted to justify each activity's application."
This letter was outrageous both in timing and content and was inappropriate as no one, including Mrs Cassegrain, had any intention at the time of changing the arrangements which had evolved during Gerard's lifetime. Even Claude conceded in his cross-examination that the letter ought not to have been written, or not in those terms. One can only speculate what it was that motivated Claude to write it.
Such actions flowed from Claude's nature. He has always been an interferer. Sometimes he acts in good faith although unwisely. On other occasions, his good faith may be doubted. Problems like those which are the subject of complaint would be encountered by anyone who sought to carry on business in association with Claude but held views different from his. Claude is manipulative. Perhaps unconsciously, he acts in his own interests. He considers that his views are correct and that his actions are for the best. Other people find it difficult to be associated with him in business.
The applicants complain that John Peschar and Claude Griffith resigned and that other individuals were appointed to the Board. This seems to me to be a matter entirely for the shareholders. There is an allegation that Claude incited discontent amongst the shareholders. If this claim proceeds on the assumption that all was well between the shareholders after Gerard's death, the applicants are mistaken. There have been two major factors operating. One is Claude and the actions he has taken. The other is the fact that the profits of Expressway Spares have gone year after year to Cassegrain Vineyards. The result of this is that there have been no returns to shareholders. It is difficult to say that one of these factors is more significant than the other.
The applicants also complain that Claude has caused long standing shareholders' accounts in Expressway Spares to be frozen with the exception of that of Françoise. However, if there is any complaint about this, it is a matter for the Board of Directors. There is not information before the Court to say whether the taking of that step was desirable. Undoubtedly, steps should be taken to sort out the loan accounts and to put the relationship between Expressway Spares and its shareholders on a proper footing. The applicants no doubt have good cause for complaint that Claude did not take the same course in relation to GC & Co and has continued to draw on his $4.25m loan account in that company. This certainly emphasises Claude's propensity to take action which benefits himself. I shall later deal with the $4.25m account in more detail.
There are other complaints which have been made about Claude in relation to the affairs of Vineyards and Tradition and also in relation to the affairs of GC & Co. However, I do not think that any purpose would be served by dealing with those matters individually. They tend to be of the same nature as those which I have already discussed.
Claude may be a good businessman, although Patrick would not agree with that assessment. Claude has had extensive experience in business and the land development ventures in which he was involved in the Wauchope district have been regarded as imaginative projects. Claude's principal defect is that persons who do not agree with his views find it impossible to be associated with him in business. Claude considers himself to be a very good businessman, he considers his business judgment to be better than that of others, he considers that his views are formed logically and for the best of reasons and he considers that, once he has formed a view, that view is the best view. Other persons consider that Claude's views and actions are not always motivated by the best of reasons.
The points I have made are clear from Claude's own writings to other members of the family. Claude did not deal with the issues which arose in the family by calmly discussing the issues with a determination to arrive at a result in the best interests of everyone, but tended to write lengthy letters to the members of the family which explained his views and inflamed his siblings.
An example is a memorandum of 2 February 1994, which Claude wrote to his mother and his siblings expounding Claude's view that the family should not continue to fund Cassegrain Vineyards. The memorandum stated, inter alia:
"John and Patrick's decision is for the winery to continue operating without raising external capital. As this decision is strongly against my advice and so blatantly obvious against the best financial interest of a) the family as a group; b) Cassegrain Vineyards Pty Ltd; c) Gerard Cassegrain & Co; and d) Expressway Spares; I advise (as any shareholder has an entitlement to expect) that (to avoid problems between members of the family), there is a requirement for the family members holding responsible management positions, Directorships and Secretarial positions, to conduct themselves and make decisions more formally, and in accordance with proper commercial and company requirements."
That was a provocative statement. Claude went on to refer to the fact that his view on this matter was the source of contention in the family. Claude put the matter this way: