PATRICK ANTHONY CASSEGRAIN & ORS v CLAUDE GEORGE RENE CASSEGRAIN & ORS

REASONS FOR JUDGMENT In these reasons for judgment, I do not propose to discuss the many details which can be found in the affidavit and oral evidence and in the voluminous bundles of documents which have been tendered in evidence. In general, the individual matters of which the applicants complain are not significant in themselves. Individual facts can be given many different interpretations. It is the overall impact of the facts that matters. Nor have I found it useful to discuss aspects of the case under separate headings. Differing aspects of the case are simply part of the overall picture. I have therefore written these reasons in narrative form referring to relevant factors in those places in the narrative where they can most readily be fitted. Only a reading of the whole of the reasons will convey the sense of my views. The proceedings are brought under s 260 of the Corporations Law which provides, inter alia: "(2) If the Court is of the opinion:- (a) that affairs of a company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members (in this section called the "oppressed member or members") or in a manner that is contrary to the interests of the members as a whole; or (b) that an act or omission, or a proposed act or omission, by or on behalf of a company, or a resolution, or a proposed resolution, of a class of members of a company, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members (in this section also called the "oppressed member or members") or was or would be contrary to the interests of the members as a whole; the Court may, subject to subsection (4), make such order or orders as it thinks fit, including, but not limited to, one or more of the following:- … (d) an order for regulating the conduct of affairs of the company in the future; (e) an order for the purchase of the shares of any member by other members; … (j) an order restraining a person from engaging in specified conduct or from doing a specified act or thing; …" Section 461 of the Corporations Law, which specifies the grounds for a winding up, is also relied on. I have not thought it necessary to discuss in detail the concept of "oppression". Throughout these reasons I have used the term "oppression" to encompass actions which are or may be unfairly prejudicial to or unfairly discriminatory of a member or members of a respondent corporation. Counsel for the applicants has submitted that the section has been widely drafted in order to accommodate the almost limitless varieties of oppressive behaviour possible and the need for a court to have appropriately extensive discretionary powers to effect justice in the particular circumstances of an individual case. I agree that the Court has adequate wide discretionary powers to make any orders which may be appropriate in this present case. But before so acting, the Court must be satisfied that there are circumstances involving oppression, unfair prejudice or unfair discrimination in respect of which it is appropriate to make an order.

Principal Issues The proceedings were instituted by Patrick, John and Denis Cassegrain and their sister, Catherine Dunn, principally against their brother, Claude Cassegrain, and their sister, Anne-Marie Cassegrain. During the currency of the proceedings, the third respondent, Françoise Cassegrain, the mother, died. In her will, Mrs Cassegrain appointed Claude and Anne-Marie as her executors and, by order of the Court, they have been appointed to represent her estate. The 4th to 18th respondents are all companies in what may be called "the Cassegrain group". Their shareholders are the members of the family or other companies in the group. The relief now sought by the applicants does not directly concern most of their companies. The proceedings have arisen from the fact that the members of the Cassegrain family are linked together in the Cassegrain companies and they are unable to agree upon how those companies should be structured or how they should be managed.

Much of the delay that occurred in the disposition of the proceedings was taken up in an attempted resolution of the problems which the parties faced. At an early stage, I expressed the view that the problems confronting the parties and the objectives which the parties sought to achieve were such that only agreement between the parties could achieve a satisfactory resolution. Negotiations took place and, in October 1997, Heads of Agreement were signed, a term of which was that Claude and Anne-Marie were to sell their shares in Expressway Spares Pty Ltd ("Expressway Spares") to the applicants. Unfortunately, the applicants and their solicitors thereafter sought changes to the agreement and wrongly represented that the Colonial State Bank had not approved the grant of finance, which in principle it had done. Implementation of the agreement did not proceed. Later, the parties again expressed their approval of the Heads of Agreement. On 12 June 1998, I made an order that the Heads of Agreement be specifically performed by 26 June 1998. However, by that time, circumstances had changed for Mrs Cassegrain had died leaving Claude and Anne-Marie as her executors. Therefore, an aim of the settlement that Claude and Anne-Marie would cease to be shareholders in Expressway Spares could not be achieved. The Colonial State Bank refused to provide finance and the settlement failed. The applicants and their solicitors have themselves to blame for that result. The Cassegrain family migrated to Australia in 1951. The father of the family, Gerard Cassegrain, commenced a successful business as a logging contractor using the company, Gerard Cassegrain & Co ("GC & Co"). The enterprise expanded in very many ways and logging is no longer a part of the business. Expressway Spares has, for a number of years, been the main profit earner. Gerard Cassegrain died in October 1993. During his lifetime, his decisions were accepted by all members of the family. Gerard was a successful and presumably shrewd businessman but he had little time for the niceties of corporate law. In his time, the affairs of the group were run effectively as if there were only one enterprise. Funds were applied wherever they seemed to be most needed. Significant dividends were generally not declared or not distributed. Gerard Cassegrain gave to his children the impression that each had an equal share in the enterprise and that each would be equally rewarded one way or another from the profits of the enterprise. However, that was not the situation on Gerard's death. For a reason which has not been explained, Anne-Marie had a much greater shareholding in Expressway Spares than any of the other children, although she was less involved in the workings of the enterprise than were her siblings. At one time, it had been proposed that each of the sons would manage a company or a group of companies in the enterprise and would have a management interest of 40% in that part of the enterprise. That principle had been implemented at least in respect of GC & Co, Cassegrain Vineyards Pty Limited ("Vineyards") and Cassegrain Tradition ("Tradition"). However, after Gerard's death, Vineyards, which was managed by John, and Tradition, which was managed by Denis, were transferred to Expressway Spares for tax reasons. Patrick, who managed Expressway Spares under his father's control, never received 40% of the shareholding of that company. Problems with the corporate structure and with its management had flowed from Gerard's lack of interest in corporate law, from his preference to arrange affairs so as to reduce or avoid taxation and also, I think, from his preference to protect assets from creditors. When Gerard Cassegrain died, the shareholdings were in an untidy state and certainly were not fair or equal. The members of the family could not agree as to how to sort out their affairs. The problems were exacerbated when the applicants came to the realisation that they could not work with Claude Cassegrain, having regard to his personality. The division in the family increased when two members of the family who had had little to do with the affairs of the enterprise, the mother Françoise and Anne-Marie, joined with Claude to dominate the voting at shareholders' meetings. The profit-making company in the group, Expressway Spares, has for many years carried on business at Wauchope as a dealer in new and second-hand parts for motor vehicles, plant and equipment. The shareholding is: Shareholders Shares % Estate of Françoise Cassegrain 30 21.4 Anne-Marie Cameron 35 25 Claude GR Cassegrain 15 10.71 Patrick A Cassegrain 15 10.71 Catherine B Dunn 15 10.71 John B Cassegrain 15 10.71 Denis P Cassegrain 15 10.71 140 The shares of Françoise were held by Gerard Cassegrain during his lifetime and are now held by her executors. It is not known why Gerard arranged for 35 shares to be allotted to Anne-Marie, which happened when she was a young child. Before his death, Gerard was giving consideration to equalising the shareholdings. Of course, as no significant benefits flowed to any shareholders from their holdings, this was not an urgent matter. For some years, until the middle 1980's, Claude Cassegrain took part in the management of Expressway Spares. Gerard, Claude and Max Griffiths, an employee of the company, all assisted in the management. However, Claude had disputes with his father and he had many disagreements with Max Griffiths. Gerard decided that Claude should leave Expressway Spares and should concern himself with other activities. Claude, who had a great interest in land development, took over the affairs of GC & Co and became prominent in land development in the Hastings Valley. Patrick, who had worked in Expressway Spares for many years, was promoted to a management role. He got on well with Max Griffiths as he has with the other senior employees in Expressway Spares. Subsequently, when Max Griffiths resigned in about 1990, Patrick became manager of the company under his father's supervision. Since his father's death, he has been managing director of the company. Under Patrick's management, the business of the company has developed in a most pleasing way. The following is a schedule of sales and operating profit before tax during some relevant years.

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:

"I know the cynics amongst us will say AH!, but Claude is the one who is creating the problem, he is the one who wants to boss us all around'. I happen to believe that I have been gifted in certain disciplines that happen to be commercial logic and business principles'. I know I am useless as a spare parts salesman, as an auction sale purchaser, as a winemaker and more importantly as a public or human relations person. Nobody in the family and if comes to that, in the district, comes close to me in business nous. Few people come close to Patrick for public and human relations (outside the immediate family of course - joke); and few people come close to John for dedication and ability in winemaking and generally good, calm disposition." (emphasis added) One can see that Claude regards himself as the person in the family with the greatest business ability. However, it is not clear that members of the family shared that view. Claude made these two comments, inter alia: "I was experiencing difficulties with Dad, over the directions and policies and management of Expressway Spares and I believe that these difficulties were principally fuelled by my relationship with Max Griffiths. It is difficult to know because I admit that Dad and myself had many occasions to be completely at loggerheads with each other. In any event I was more or less sacked from any day to day detailed involvement with Expressway Spares. ... Never did the family really have a real risk associated with the possibility of the failure of CASSIRO. I was not the one that acted fraudulently with CSIRO and therefore I resent the inference from some members of the family who have on several occasions inferred that I risked the family's well-being or caused the family problems because of the CASSIRO venture ..." It can be seen from this passage that Claude's father did not share his view that he was the best manager in the family and, moreover, that others in the family thought that the CASSIRO project had risked the family's well-being. Claude then returned to the issue of the funding of Vineyards and stated: "I question, for example, the haphazard commitment that Patrick has made with John in relation to the funding of Cassegrain Vineyards. It would appear to me, that despite the fact that I have seriously questioned the assumptions and the financial performance of John in relation to Cassegrain Vineyards, Patrick has elected to make his decision principally on human relationship logic at the exclusion of sustainable financial logic. ... This of course has left me in the unenviable position of seemingly being the creator of problems within the family because I have now been obligated to write this bloody memo and I can now be accused of being pig-headed and wanting to simply force my way. When in fact, if I see what I believe is a wrong, I have no choice for the sake of the family to persist and give the appearance of being an asshole. I feel that this has now caused me to have deep hurt - the consequence of which I cannot predict." One can see that Claude considers Patrick's view with respect to the funding of Cassegrain Vineyards to be a decision dictated by human relationships rather than financial logic whilst his view, based on financial analysis, is the right view. In conclusion, when speaking of Denis and others, Claude stated: "... I will venture to suggest that now out of all the members of the family, other than Denis, I have the most real knowledge of his needs. Whilst I am on this point I will say that the same applies to the Winery and Viticultural business, Expressway Spares and its business and the development and rental of businesses for the Dunn family and the antique and manufacturing business of the Cameron family." One can see that Claude not only regards his own views as being the right views but he regards his financial and business abilities as greater than those of anyone else in the family. In the light of Claude's certainty about the correctness of his own views and his doggedness in pursuing them, it is understandable that the applicants have come to the stage where they find it impossible to work with him. It is very difficult to work with people such as Claude unless you agree with them or are prepared to subordinate your views to theirs. I think that not all that Claude has done has been done with the best of motives or with the best of reasons. I think that some of Claude's actions are manipulative, perhaps unconsciously so. For example, Claude has interfered to some extent in the management of Cassegrain Vineyards. In the memorandum of 2 February 1994, these passages appear: "I have always experienced a cordial and loving relationship with John, until it deteriorated more or less when I criticised and belittled some members of his staff. ... This was a worry for me because I do believe that John is capable of spitting the dummy - in fact he has more or less indicated that he would. The pity of it is that I believe that I could have helped John in managing the affairs of CV under a public company regime." An inference can be drawn that, whatever Claude thought consciously about the matter, his interference with John's management had the potential to cause disruption. This, of course, is precisely what is happening in Expressway Spares. It is interesting to note an earlier diary note made by Gerard on 13 May 1991 which said: "Monday 13 May 1991 - The meeting was not too bad yesterday but afterwards Claude attacked Jean (John) in relation to Harold. No matter who works at the Winery, Claude is always criticising. I can't wait to see Jean completely independent, the same goes with all the other affairs." One can see that Claude has a tendency to interfere and to cause disruption whether he is achieving anything or not. Not everyone agrees with Claude Cassegrain's assessment of his abilities. For example, a memorandum by an officer of the State Bank in May 1991 referred, inter alia to: "Ill judged efforts by Claude Cassegrain to have the family bankroll an optimistic development plan for the Port Macquarie area (termed the Hastings 2000 Project) have seen considerable funds directed into projects/land holdings that have no short term cash generation capacity. These funds have been supplied by the State Bank, successful sale of clos farms in previous years and redirection of Expressway Spares profits." At about the same time, Grant Summerell & Associates, who had been called in to advise GC & Co wrote, inter alia: "We doubt that GC & Co will avoid insolvency unless GC & Co both retains ongoing support from the State Bank and commits to a drastic restructuring that might allow it to meet its obligations in the future. ... The only strategy for survival will involve a total focus on short term cash generation. The efforts of GC & Co senior management are currently dissipated over a range of activities, some of which will not generate cash in the short term or the foreseeable future." Towards the end of 1991, a briefing note on the CASSIRO project had this to say: "The fundamental difficulty that has dominated over the past nine months has been the complete breakdown of working relationships with Claude Cassegrain and his refusal to abide by Board decisions and agreed management practices. Mr John Blackwell Chief Executive of Cassiro is of the firm opinion that Cassiro cannot succeed while Claude Cassegrain is actively involved in the company."

Claude's tendency to interfere and to express his own views indeed led him, in the course of these present proceedings in which he was represented by a leading firm of solicitors and by counsel, to write personally to the Court seeking an early disposition of the case and also, with the leave of the Court, to appear for himself on one occasion and to put views on certain matters notwithstanding that his solicitor was present and could have put the arguments if he had thought it fit to do so. Claude left the Court on that occasion in apparent ill humour when most of his submissions had been rejected. I fully appreciate the applicants' view that Claude's involvement in the business of Expressway Spares is likely to be harmful to the interests at least of Patrick and John. I agree with the view put forward on behalf of the applicants that it is likely that, if Claude takes an active part in the management of Expressway Spares, then sooner of later Patrick will resign if he has not already been dismissed and that the senior employees who worked and built the business up under Patrick's management may also leave the company. Patrick, of course, has no 40% shareholding in Expressway Spares, as Claude has in GC & Co and he has no contract which protects his position as manager of Expressway Spares. John's position with Vineyards is also at risk should Claude and Anne-Marie control Expressway Spares for Claude has made it clear for some time that he considers that the profits of Expressway Spares should not be devoted to Vineyards. As with Patrick, John has no 40% shareholding in Vineyards and has no contract which entitles him to a recompense if the business of Vineyards be sold. Denis was the founder of Cassegrain Tradition Pty Ltd ("Tradition"), which established a charcuterie business. The business was, however, unsuccessful and the company's only activity now is the leasing out of its premises. Denis receives some small benefit from that. Denis does not support Claude. Some time ago, Claude interfered in the affairs of Tradition. That caused a dispute between Claude and Denis and, subsequently, a rift between Denis and his mother. Catherine is the eldest of the children and works in Expressway Spares as a receptionist. Her husband, Jim Dunn, is a director of Expressway Spares. She has given her support to John. She is opposed to Claude's having any say in the management of Expressway Spares. However, I do not see oppression in the fact that the majority shareholders have control of Expressway Spares and have a different view about how the affairs of that company should be run than do the applicants. Provided that the majority shareholders run the affairs of Expressway Spares for the benefit of all the shareholders, I think that there would be no relevant oppression notwithstanding that John or Denis might not receive the benefits which currently they enjoy or that Patrick might consider that he should resign. I have said that there would be no oppression provided the affairs of Expressway Spares were conducted for the benefit of the shareholders. Claude has a personality which is conducive to oppression. That is because, whether he does so consciously or unconsciously, he has a tendency to act in his own interests and to consider that the business decisions which he makes are the best decisions and therefore in everyone's best interests. One might suspect that Claude's personality is such that, if he takes control of Expressway Spares, the profits of that company might be devoted to land development or to the support of his land development companies such as GC & Co. Land development is Claude's prime interest. If that were to happen, there could well be oppression of the applicants. However, at the present time, no such action by Claude has been threatened. The Court cannot make an order about something which is not threatened and which can only be envisaged as a future possibility. GC & Co is the company of which Claude was given the principal management when, in the middle 1980's, he was removed from the management of Expressway Spares. The shareholders of GCC are: Shareholders Shares % Françoise Cassegrain 20 16.61 Catherine B Dunn 10 8.33 Claude Cassegrain 10 } 10.71 Claude & Felicity Cassegrain 40 } 41.16 John B Cassegrain 10 8.33 Patrick A Cassegrain 10 8.33 Anne-Marie Cameron 10 8.33 Denis P Cassegrain 10 8.33 120 100

As can be seen, Claude and his wife hold a little over 40% of the shares, most of which were allocated when the 40% concept was being applied throughout the Cassegrain enterprise. Under Claude's management, GC & Co has engaged in land development in the Wauchope area district. Some of its subsidiaries are: Le Clos Sancrox Pty Limited Endwise Holdings Pty Limited Clos Farming Estates Pty Limited Le Clos Francoise Pty Limited

Much of the development was imaginative and involved the setting up of small farms or farmlets which joined together in the production and marketing of produce including grapes. Tenants or owners were given the opportunity of employing one of the Cassegrain companies as manager of their properties. Taxation advantages were pointed out to persons who might wish to own or lease a small property in the district. Many of the farms were laid down to vines and the annual produce was sold to Cassegrain Vineyards. The early developments were successful. Later, however, Claude became interested in an ambitious development project, called the Hastings 2000 project, which, although it was thought to be imaginative and might have been successful had the circumstances been different, had to be abandoned in the light of the economic conditions of the time. The financial position of GC & Co became serious. It became necessary to borrow additional funds from the State Bank. The fact that Expressway Spares supported Claude's company when there was need to do so was one of the factors which led the applicants to expect that like support would be given to Vineyards. GC & Co encountered another problem. It entered into an arrangement with CSIRO to develop a watering system for vineyards. Many millions of dollars were put into the project by GC & Co before CSIRO terminated the agreement. A joint venture vehicle, Cassiro Pty Limited, was established. Ultimately, there was a breakdown in the relationship between the officers of CSIRO who were involved in the project and Claude. While the venture was on foot, GC & Co invested a great deal of money into the project, more than $7m. Much of this had been borrowed from the Bank and the liabilities were such as to place the whole Cassegrain enterprise at risk. Once the venture had broken down, GC & Co sued CSIRO, claiming the following, inter alia: "1. A declaration that the affairs of the first respondent ("Cassiro") are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against the applicant. … 7. An order that CSIRO and/or Sirotech purchase the shares of the applicant in Cassiro for an amount determined by reference to the entire financial contributions made by the applicant since May 1987 directly or indirectly towards the activities which it has conducted jointly with CSIRO, Cassiro and/or Sirotech, (`joint activities') including losses incurred as a result of the purchase and development of land in connection therewith." On 5 May 1993, Claude wrote a "Without Prejudice" letter to the Chairman of CSIRO outlining the monetary value of the claims made, totalling a little over $56m. The claims included the following: "5 Damage to the name, reputation and standing of GC & Co, Cassegrain Family name, Cassegrain Group of companies, and Claude Cassegrain and his family as a result of being publicly associated with a failed venture involving bitter litigation and disruption to the family and their associated companies' business activities. $5,000,000" (emphasis added) In the middle of June 1993, a further amended statement of claim was drafted which, inter alia, would have added claims for damages for the loss of reputation of GC & Co by reason of false statements and abuse. However, the draft did not refer to Claude. Claude was not a party to the litigation. According to his evidence, at about that time he instructed GC & Co's solicitors, Messrs Garrett & Walmsley, to add him as a party. However, there is nothing in the documents before the Court which supports that allegation. Late in June 1993, there were settlement conferences. On 2 July 1993, it was agreed in principle that the proceedings and all other claims would be settled on the basis of a payment by CSIRO of $9.5m, an amount which was just a little less than the amount which GC & Co had invested in the project and its legal costs in the proceedings, which amounted to more than $2m. The mediator noted a settlement as follows: "The mediation discussions culminated in a proposed settlement involving a payment of $9,500,000 by CSIRO to Gerard Cassegrain & Co Pty Limited. The proposal is subject to approval on both sides. Such approval will be recommended by the legal advisers of both sides." The lengthy and complex terms of settlement which were formally executed included Claude, who gave a release, as one of the parties. They provided for payment by CSIRO to GC & Co or at its direction of $9.5m. The cheque when paid was paid into the State Bank in reduction of the indebtedness of GC & Co to that bank. At the time when the settlement was reached, the Income Tax Assessment Act 1936 (Cth) had been amended so as to bring capital gains to tax as assessable income but at a reduced rate of tax. There were, however, some exemptions. Section 160ZB of the Act provided: "160ZB(1) A capital gain shall not be taken to have accrued to a taxpayer by reason of the taxpayer having obtained a sum by way of compensation or damages for any wrong or injury suffered by the taxpayer to his or her person or in his or her profession or vocation and no such wrong or injury, or proceeding instituted or other act done or transaction entered into by the taxpayer in respect of such a wrong or injury, shall be taken to have resulted in the taxpayer having incurred a capital loss."

Once settlement had been agreed, it was appreciated by GC & Co's advisers that the sum to be received from CSIRO would be likely to be an assessable capital gain in the hands of the company. Mr Claude Griffith, the accountant, considered there might be value if the sum was divided so that some of it was received by Claude in the nature of a payment for defamation. The possibility of the amount being divided to avoid capital gains tax was noted in a memorandum by an officer of the State Bank on 5 July 1993. On 6 July, Mr Griffith wrote to Deloitte Touche Tohmatsu, Chartered Accountants, seeking advice: "The compensation has two components to it - · Compensation to the company for loss sustained by it on account of the defendants failure to discharge its duty of care to the company. · An amount payable to the person (director) for defaming the good name of the person Would you advise me of the CGT implications on each of the amounts agreed to. The transactions which give rise to the receipt of the compensation are all post September 1985." No sums were mentioned. On 9 July 1993, Deloitte Touche Tohmatsu advised that the payment would be taxable in the hands of GC & Co but that compensation or damages received by a person in respect of defamation was exempt under s 160ZB(1). In the meantime, Claude had apportioned the sum to his own satisfaction and had obtained Gerard's agreement. On 6 July 1993, Claude wrote to GC & Co's solicitors, Garrett & Walmsley, to say: "This is to advise you that I am prepared to accept in settlement of the proceedings $4.25m as personal damage. This has been discussed with the company at an extraordinary meeting held by the shareholders on Saturday 3 July 1993. The company and myself will agree on the apportionment of the legal expenses." On the same day, a letter signed by Gerard and Patrick on 6 July 1993 to Garrett & Walmsley stated: "It was resolved at an extraordinary meeting held by the shareholders on Saturday 3 July 1993 that the following offer in settlement of the dispute would be accepted by Gerard Cassegrain & Co Pty Ltd - · $5.25m to Gerard Cassegrain & Co Pty Ltd ($4.32 in respect of damages $.930m sale of GC & Co's share in Cassiro Pty Ltd). · $4.25m personal damages payable to Claude Cassegrain. The legal costs will be apportioned in a manner that is yet to be discussed between the company and Claude Cassegrain." Both Gerard and Claude had a keen eye to the reduction of tax. It is probable that Gerard looked upon this split between the company and Claude as a tax reduction device. As the rate of capital gains tax was 30% or thereabouts, one can see that the split, if it was effective, would save GC & Co almost $1.5m in tax. When Mr Griffith wrote to Deloitte Touche Tohmatsu on 6 July 1993, he was unaware of the split which Claude had arranged. It was not arranged with Mr Griffith's approval. Subsequently, CSIRO refused to divide the payment as requested but it was ultimately agreed that payment of the $9.5m should be made to GC & Co or at its direction. After the $9.5m had been paid to the State Bank, a loan account was created in the books of GC & Co which showed $4.25m of the settlement moneys as having been received on behalf of and lent to the company by Claude. Claude has given evidence that he considered the $4.25m to be his fair share of the settlement and that he could not recall discussing any issue of capital gains tax with Claude Griffith or with his father. I reject Claude's evidence on these matters and also that of Mrs Cassegrain. I am satisfied that the split was agreed to between Claude and his father with a view to reducing the capital gains tax otherwise payable on the $9.5m. I am satisfied that Gerard and Claude did not at the time regard the sum of $4.25m as Claude's money. In Gerard's lifetime, expenditure from loan accounts did not occur without his approval. Claude could not have drawn down the $4.25m unless his father had agreed to that course. And except as to legal expenses and perhaps other like matters, he did not do so during his father's lifetime. I am satisfied that the $9.5m was paid to GC & Co and received by it in settlement of its claim against CSIRO and that no attempt was ever made genuinely to estimate a sum for any personal claim by Claude including any claim falling within the terms of s 160ZB(1). Since Gerard's death, Claude has drawn upon the funds of GC & Co both by way of regular living expenses of $3,000 per month and for other personal expenses such as school fees. These sums have been debited to the loan account. These actions were wrong. The appropriate course for Claude to have taken was to arrange for a fair remuneration, not to apply the funds of the company as he chose. I should add in fairness to Claude, that it was originally at least an allegation of the applicants in these proceedings that the manager of a company was entitled to have access to the assets and income of the business when personal need arose. I assume that the family expected Claude to provide for his living expenses from GC & Co's funds. The purchase of the home and dairy farm would have fallen into a different category where consultation was expected. In like vein, Claude purchased a property from GC & Co which was a dairy farm and residence. The purchase price, which amounted to a total of $1.3m approx, was paid by debiting the $4.25m. This was not a transaction of which the approval of the shareholders was sought, Claude taking the view that the $4.25m was his and, furthermore, that he was entitled to receive a home as he has had to sell a home to support GC & Co during the time of its worst financial difficulties. More recently, Claude has had a swimming pool constructed at his home and has debited the cost to the loan account. Furthermore, during the interregnum between two hearings of these proceedings, the directors of GC & Co, Claude and Anne-Marie, resolved in a minute, which I cannot presently locate among the voluminous evidence, that the $4.25m had been lent in 1993 on terms as to reasonable interest which Claude was entitled to claim should he choose to do so. This resolution, of course, had no justification whatever. I am satisfied that there was never any agreement between Claude and GC & Co with respect to the payment of interest on the $4.25m. I am satisfied that neither Gerard nor Patrick, who signed the letter to Garrett & Walmsley of 6 July 1993, looked upon the $4.25m as Claude's money, nor had any conversation with Patrick with respect to interest. Claude's actions in arranging for the purported division of the $9.5 into $5.25m for GC & Co and $4.25m for Claude, his drawing upon that sum at his will as if it were his entitlement to do so and his arranging for the passing of the resolution which made provision for the payment of retrospective interest was exemplary of oppressive behaviour. It is a very plain illustration of conduct by a person who, in practical control over the affairs of a company, has acted to benefit himself to the detriment of the other persons who are interested in the company. The mere purported division of the $9.5m may not, of itself, have amounted to oppressive conduct for it was a step taken to reduce the tax liability of the company. It was the subsequent use of the money by Claude as if it were his own and the pretence that there had been some agreement for the payment of interest thereon which constituted oppression of the other shareholders. I do not say that, on a taking of accounts, a generous allowance should not be made to Claude for the time and effort spent by him on the CASSIRO project, on achieving the settlement and for participating in the settlement by giving his personal release. I assume that such an allowance would be made. However, I do not consider it to be the function of the Court in these proceedings to enter into the taking of accounts as between Claude and GC & Co. Counsel for Claude has submitted that I should not enter into the issue as to whether Claude's actions in relation to the $4.25m loan account amounted to oppressive conduct. Counsel submitted that the matter was not raised in any formal application which had been filed and that, if it had been raised, other witnesses such as the mediator and counsel may have been called. In my opinion, all counsel in these proceedings were ultimately content to proceed without arguing about amendments to the formal application and this particular issue was clearly raised and litigated. In my view, all appropriate witnesses were called and all relevant documents are before the Court. In my opinion, the events which occurred in relation to the settlement moneys provide a clear instance of oppressive conduct and I shall make a declaration accordingly. However, I do not think that I should make any other order with respect to GC & Co. These proceedings were not instituted because of anything that was happening in GC & Co. It was Claude's conduct in relation to Expressway Spares and Cassegrain Vineyards which caused the applicants to institute these proceedings. If the applicants wish to claim that Claude should repay moneys to GC & Co, those proceedings can be taken and an order for the taking of accounts as between Claude and GC & Co can be sought. I do not think that these present proceedings are concerned with that. Indeed, shareholders' rights have never loomed large in family discussions or thought. That is probably why the applicants at one stage sought a declaration that Claude held his interest in the $4.25m loan account on trust for all the members of the family equally. There was, of course, no basis for that claim. I consider that Claude has a personality which is conducive to the commission by him of conduct which is oppressive of others. However, he has not threatened any such action in relation to Expressway Spares and his conduct to date in relation to the affairs of that company has, if anything, been directed to the establishment of proper accounting systems, appropriate checks and so on. Accordingly, I could not make an order preventing Claude from taking part in the management of Expressway Spares because of any fear for the future. With respect to Expressway Spares, I have already expressed my view that I do not consider that the actions of Claude, of Anne-Marie and of Mrs Cassegrain have constituted oppression, notwithstanding that I agree with the view of the applicants that the involvement of Claude in the management of Expressway Spares is likely to be detrimental to the business of Expressway Spares and also to the interests of the applicants, particularly Patrick and John. In my view, the continuing application of the profits of Expressway Spares to fund the losses of Vineyards was wrong and Claude and Anne-Marie had a justifiable interest in taking steps to bring an end to that course of action. The applicants complain that the election of Claude to the Board of Expressway Spares by the majority shareholders was oppressive of themselves for they cannot work with Claude and Claude will, sooner or later, undermine the authority of Patrick at Expressway Spares and of John at Cassegrain Vineyards. The applicants say that the election of Claude to the Board of Expressway Spares brought an end to the continuation of the Cassegrain enterprise as previously it had been operated. In my opinion, the applicants had no right to expect and ought not to have expected the affairs of Expressway Spares to be conducted in the manner which occurred during Gerard's lifetime. The applicants should have ensured that the profits of Expressway Spares were applied for the benefit of Expressway Spares and its shareholders. Counsel for the applicants has sought the following order, notwithstanding that it was not sought in the application which has been filed: "5. An order pursuant to Section 260(2)(d) that the following directions be given for the further conduct of the affairs of ES and its subsidiaries - (a) ES be directed to enter into an employment contract with Patrick Cassegrain in his capacity as Managing Director of the company and the Expressway Spares' business for a term of not less than 5 years. (b) Claude Cassegrain to cease to hold office as a director of ES and CV; (c) Claude Cassegrain be restrained from directly or indirectly participating in the management or the conduct of the affairs of ES and CV, whether in his own right, on behalf of any other person, or through a nominee who acts on his behalf, other than with the prior consent in writing of all of the shareholders in the company."

It would be wrong for this Court to direct that Patrick be employed as managing director of Expressway Spares for a term of not less than five years if the majority shareholders are opposed to that course. Companies should be conducted in the interests of their shareholders, not in the interests of individuals. It would also be wrong for this Court to order that Claude should cease to hold office as a director of Expressway Spares and Vineyards and be restrained from participating in the management of the conduct of the affairs of Expressway Spares and Vineyards if the majority shareholders wish him to hold office and to so participate. I anticipate that, if Claude remains on the Board, he will sooner or later take control of the affairs of Expressway Spares and he will take control of the affairs of Vineyards. He will do that because neither Patrick nor John will subordinate their views to him and he will find it desirable to take control. He will prevail and Patrick and John will find other employment. If that happens, it will be because Claude has been supported by Anne-Marie and, together, they now own the majority of the shares in Expressway Spares which owns all the shares in Vineyards. Therefore, that which occurs will accord with the wishes of the majority who have a legitimate complaint about the manner in which the applicants are conducting the affairs of Expressway Spares. This Court cannot assist the minority shareholders to oppress the majority by ordering that that which the majority legitimately wish to occur should not occur. Should Patrick and John lose their positions, that will not be oppression for they have no entitlement to be managers of their respective companies if the shareholders consider otherwise. The applicants have a sense of grievance in that Claude and Anne-Marie hold the majority of the shares in Expressway Spares. When these proceedings first came on for hearing, a contention put for the applicants was that, in prior years, management roles had been allocated to particular family members which had given to them effective control of the day to day management of particular businesses. Subject to that, it was said that the Cassegrain family members all participated in decision-making in relation to the general business strategies of the businesses conducted by the companies, the development of them, the financing of development, the use of the land and the distribution of assets between individual companies without regard being had to the share capital of the Cassegrain family members. The statement of claim went on to allege that each of the members of the family therefore reasonably held expectations that each would be treated by all others equally, fairly and honestly in respect of their participation in decision-making in family businesses, their unimpeded or uninterfered-with management of the businesses allocated for their particular control and their access to the assets and income of the businesses when personal need arose and to the continuation of a relationship of mutual trust, respect and confidence between the parties. The statement of claim contended that the members of the family had a reasonable expectation that the decisions of the family as a whole in relation to the family businesses and the companies would be carried into effect by all members of the family and that the manager of a particular company would be allocated approximately 40% of the shares in that company, the rest of the shares being equally divided. The original application therefore contained the following claims: "1A. Declarations that: (a) each of the First to Third Respondents is estopped from denying the content and effect of the reasonably held expectations which are set forth in paragraphs 33 and 34 of the Amended Statement of Claim; and (b) each of the First to Third Respondents is estopped from insisting upon the strict legal and/or equitable rights which are conferred upon them by virtue of their shareholdings in each of the companies within the group, to the extent that such rights are inconsistent with the reasonably held expectations set forth in paragraphs 33 and 34 of the Amended Statement of Claim. 1B. Declarations, in respect of each of the companies within the group, that each of the shareholders, to the extent that their shareholding exceeds that of the other shareholders, holds that excess upon trust for the other family members, in equal shares as to capital and income, but not as to voting power." Orders of that type are no longer sought and, in particular, the applicants have come to accept that, as Anne-Marie has held her shares since she was aged 3, she is entitled to continue to hold those shares and to exercise all the rights which the Memorandum of Association of Expressway Spares, the Corporations Law and the principles of company law confer upon her. One can see the problems which confront the applicants. In Gerard's time, the Cassegrain enterprises were run without regard to legal niceties, to shareholdings or to entitlements. In his lifetime, Gerard assured the members of the family that each would be given, sooner or later, his or her fair share of the income and rewards of the Cassegrain enterprise. When Gerard died, the applicants, who include Patrick, Denis and John, each of whom was the manager of a particular corporation and none of whom had a 40% interest in the company which they managed, were faced with the situation that Claude and Anne-Marie held a majority of the shares and expected their voting entitlements to be respected. However, I reject the contention that the applicants have any legitimate right to expect that the affairs of the companies in the Cassegrain group would continue to be managed as they were during Gerard's lifetime. The informal system worked only because all the members of the family acquiesced in Gerard's authority and decisions. After his death, the members of the family were entitled to expect no more than that to which their legal rights entitled them. This point has in effect been recognised in the withdrawal by the applicants of the claim to have the shareholdings restructured. Nevertheless, I should comment, as I did during the course of the hearing, that it is highly desirable for the sake of family harmony and for the aim of setting Expressway Spares on a proper footing, that Anne-Marie should take steps to transfer some of her shares so that each of the children has an equal shareholding. Notwithstanding that the shares have been held since she was age 3, they have availed her little. In Gerard's day, the affairs of Expressway Spares were not conducted in accordance with the shareholdings. With a view to setting the company on a proper footing, I would urge her to arrange affairs so that each of the children has an equal shareholding. While the shareholdings remain unequal, there will obviously be reluctance on the part of the applicants to pass the profits of Expressway Spares to the shareholders by way of dividends. In my opinion, equalisation of the shareholdings would be in Anne-Marie's best interests and a first step to ensuring that the profits of Expressway Spares are used for the purpose for which they are earned, namely, to pay benefits to shareholders in accordance with the shareholdings. When the proceedings first commenced before me, emphasis was placed in the statement of claim upon the principle that 40% of the share capital should be allocated to each individual responsible for managing a company and that the rest should be equally divided amongst the remainder of the family. In my opinion, if a member of the company manages a company in the Cassegrain group, he or she should have a proper long-term contract and he or she should have built into that contract an appropriate profit incentive. I think it is desirable that Patrick should be given an appropriate contract with Expressway Spares and that the contract should take account of his record as a profit producer. I do not support the 40% concept, which is not a commercial approach to remuneration.

Miscellaneous Issues (a) The applicants seek an order for the winding up of GC & Co and CTK Engineering Pty Limited. However, I do not consider it would be appropriate to isolate two of the Cassegrain companies for winding up. The applicants have vigorously rejected the view that all the companies in the Cassegrain group should be liquidated and their assets distributed amongst the shareholders. It would be unjust and productive of discord were the Court to order that two of the companies in which Claude has a particular interest should be liquidated. (b) It was submitted that there was an element of oppression in that GC & Co has mortgaged some of its land for the benefit of Endwise Holdings Pty Limited ("Endwise"), which is a company involved in the development of tea tree plantations and the production of tea tree oil. There is very little evidence on this matter. Such evidence as has been given has led me to the view that this is not a matter on which it is worth spending words. I shall not discuss it. (c) Counsel for the applicants sought to interest me in resolving financial disputes between Vineyards and GC & Co. However, as I indicated during the course of the hearing, that is a matter which, if it is to be resolved, should be resolved by other means. There has been insufficient evidence given on the matter to enable me to form any view about it. (d) Counsel for the applicants has sought an order in the following form, notwithstanding that it is not sought in the application which has been filed. "4. An order authorising and requiring ES to institute proceedings against Mrs F Cassegrain (including making any application it might be advised to lodge under Section 45D of the Real Property Act, 1900) in connection with, and limited to, the company's occupation and tenure of part of the land described in Folio Identifiers 1/591340 and 2/591340 upon such terms and conditions as the Court may direct including (a) the proceedings may be heard before an arbitrator; (b) any participation by either John Cassegrain or Claude Cassegrain in the institution and conduct of the proceedings shall be limited to their role as witnesses; and (c) upon any such further terms and conditions as the Court directs." However, such an order would not be appropriate. In the first place, the issue between Expressway Spares and the estate of Mrs Cassegrain is not one involving oppression. In the second place, Mrs Cassegrain and her executors had not threatened to take any action which would prejudice the occupancy by Expressway Spares. Finally, my preferred view is that those involved in the affairs of Expressway Spares should stop litigating and should commence putting the affairs of Expressway Spares in proper order including purchasing or obtaining a long lease of the land which it occupies. Any relevant issues should be resolved by commonsense agreement or by mediation. (e) The statement of claim alleges the following act of oppression by Claude: "(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; ..." However, there appears to be a dispute as to who paid for the buildings, whether it was Expressway Spares or Gerard and Françoise out of their own moneys. That is a matter which, presumably, the accountants can work out. The company will have schedules of assets and will have claimed appreciation and so on. The company's accountant should resolve that issue. If not, it should be resolved by agreement or mediation. (f) The applicants seek an order that the allotment of 40 A Class shares in the capital of GC & Co to Claude and Felicity Cassegrain, by resolution of the directors of GC & Co made on 3 September 1987, be set aside on the ground that it was not made for any valid or proper purpose. In my opinion, this claim has no validity. The allocation of the 40 A Class shares, which I am informed may have slightly fewer rights than the ordinary shares in the company, was made to give Claude his 40% interest in GC & Co at the time when there was general agreement in the family that the 40% proposal should be implemented with respect to companies in the group. The allotment was made with the approval of the father, Gerard Cassegrain, and all members of the family. Like allotments were later made to give John and his wife a 40% interest in Vineyards and to give Denis and his wife a 40% interest in Tradition. The fact that the shareholdings in Vineyards and Tradition were later transferred to Expressway Spares for tax purposes does not raise any issue with respect to the allotment made in GC & Co. I am satisfied that all the shareholders in GC & Co were aware of the allotment and acquiesced in it. Documents in evidence show that the allotment to Claude and his wife took place at a time when there was a reorganisation of the family's affairs, in particular that certain real estate was to be transferred to members of the family at prices which were to be as low as possible so as to reduce stamp duty. A document proposing the changes was sent to members of the family in early 1987. On 6 February 1987, Mr Griffith wrote to Claude to say that he had held a conference with Gerard, Patrick, John, Anne-Marie, Catherine and Denis on the points raised in the earlier memorandum. He noted as to the share allotments to Claude that this was approved and that Gerard was willing to advance the issue price provided that the moneys were paid back to Expressway Spares. The allegation of oppression is without foundation. (g) I assume that the applicants no longer seek an order requiring any of the shareholders to sell their shares to others of the shareholders. The Heads of Agreement, which were complex, proposed such a remedy. However, bank finance for the sale was not forthcoming. (h) At the commencement of the proceedings, counsel for the applicants mentioned that Catherine Dunn was seeking relief in respect of two matters, one being her removal as a director of CTK Engineering and the second being her removal as a trustee of one of the trusts involving the Cassegrain family. I am not sure that these matters are still pursued. An amended application filed on 21 October 1997 did not raise them and a further amended application which was drawn up on 9 February 1998 but not filed did not mention them. I merely say that the Court has no information about the trust and little about CTK Engineering, which is one of the companies in which Claude is particularly interested. I have not heard sufficient evidence to conclude that I should make any order in respect of the complaints. (i) I should finally mention that the applicants also rely upon s 461 of the Corporations Law which specifies the grounds on which a corporation may be wound up. I need not discuss this section. As I have already said, it could be fair and just to all the parties if all the companies in the Cassegrain group were wound up and the net assets were distributed. However, that is not an order which any of the parties before the Court seeks. I am of the view that it is not appropriate to select one or more the companies in the group for a winding up, at least not in these proceedings which are primarily concerned with the relationship between the family members. I believe I have discussed the principal matters and the principal orders in which the applicants are interested. The task of doing so was made complex by the very lengthy and unstructured application which was filed at the commencement of the proceedings and which was substantially abandoned during the course of the proceedings. It was not replaced by a document which related orders sought to reasonably tenable claims. Orders I shall therefore declare that the actions of the first respondent, Claude George Rene Cassegrain, in treating the $4.25m loan account with Gerard Cassegrain & Co Pty Ltd as his entitlement to be drawn down at his will, in drawing upon the loan account as he saw fit and in causing the passing of a resolution of directors allowing for the payment of retrospective interest thereon were actions which were oppressive and unfairly prejudicial to the members of the company. I shall otherwise dismiss the application. I am satisfied that it was the conduct and attitude of the parties on both sides of the record which has brought about these proceedings. There is undoubtedly a situation that needs rectifying. Unless it is rectified by sensible action on the part of members of the Cassegrain family, it is likely that, sooner or later, the Cassegrain enterprise will encounter financial problems. Gerard was principally responsible for he left the companies in an unsatisfactory state. But the members of the family have not been able to formulate a proposal which overcomes their problems. In part, this is because none of the members of the family appears to have appreciated that Expressway Spares should be set up as a profit earning enterprise concerned with the sale of truck and plant spares and should be divorced from the concerns and problems of other companies in the Cassegrain group. I consider that all parties have contributed to the problems which have occurred. In the circumstances, I shall order that each party abide his, her or its own costs of the proceedings. In conclusion, I state again the point that I have already made, and which I made on more than one occasion during the hearing of the proceedings, that it is highly desirable that the affairs of Expressway Spares be put on a proper commercial basis. I am not speaking about the business of Expressway Spares. It is a well-run business. I am speaking about the devoting of the profits of the business to the interests of the business and the division of profits amongst the shareholders in accordance with the shareholders' rights. I have already indicated that I have no doubt that Patrick is a good manager of the business and the best of the Cassegrain family for that position. I am of the view that it is highly desirable that both Claude and John should resign forthwith as directors of Expressway Spares. I am of the view that Patrick, Denis, Catherine and Anne-Marie or their representatives should be the directors of Expressway Spares, together with at least two independent business advisers. I am of the view that the profits of Expressway Spares should be devoted to securing the land on which Expressway Spares carries on business, to building up reserves on which the company can call in the event of adversity, to building up a fund for the purchase of stock if exceptional business opportunities arise, to reducing the amount of the debt to the Bank, to paying appropriate dividends to the shareholders, and to assisting other companies in the Cassegrain group only if there be surplus funds available. I reiterate my view that neither Claude nor John should continue to take part in the management of Expressway Spares. Although they are the dominant members of the family, they both have interests which conflict with the best interests of Expressway Spares and its shareholders. They are in conflict with each other and their conflict has involved the family in huge costs. I fear that, if they continue their dispute, the harm to the Cassegrain enterprise and the family will be great. I do not make orders to give effect to these observations as such orders have not been sought by the parties. I certify that this and the preceding Forty seven (47) pages are a true copy of the reasons for Judgment herein of the Honourable Justice Davies.

Counsel for the Applicants: B.A.J. Coles QC & G.B. Colyer Solicitor for the Applicants: M.C. Curll McCabes Lawyers Counsel for the 1st & 2nd Respondents: D.J. Hammerschlag Counsel for the 2nd & 3rd Respondents: I.M. Jackman Solicitor for the Respondents: A.G. Hartnell Atanaskovic Hartnell with D. Chang Date of Hearing: 10 October 1997, 13-15 October 1997 17 October 1997, 20-23 October 1997 28 October 1997, 26 March 1998 5 June 1998, 12 June 1998 6 July 1998 Date of Judgment: 15 July 1998