Plaintiffs v Defendants

[2009] VSC 428

EQUITY - Business operated through corporate/unit trust structure - Equal one third ownership interests in the business held by the three owner/controllers through their respective family trusts - Arrangement implemented for one unitholder to hold the one third interest of another unitholder on trust for that unitholder - Arrangement devised by financial controller who was also one of the owner/controllers - Agreement between financial controller and remaining unitholder to extinguish other unitholder's interest - Unitholding held by financial controller's family trust on trust for other unitholder transferred to financial controller's family trust absolutely - Whether extinguishment of beneficial interest unlawful - Whether financial controller had conflict of interest - whether breach of fiduciary duties - Whether informed consent or ratification of conduct.

CORPORATIONS - Purchase of land by company - Director transferred funds from company of which director was financial controller and which was owned by the other director to effect purchase - Director established a unit trust and appointed the company as trustee of that trust - Land treated as asset of that trust - No knowledge of the unit trust nor any interest in the unit trust held by other director - Director then unilaterally removed other director from company without other director's knowledge or consent - Director caused company to purchase second portion of land using the first portion as security without disclosure of purchase or mortgage to other director - Whether funds transfer and the purchase of the two portions of land were within scope of director's authority or amounted to breach of his statutory and fiduciary duties.

CORPORATIONS - Directors - Statutory and fiduciary duties - Contract for management services - Whether excessive fees paid for management services - Whether director in a position of conflict which deprived the company of the opportunity to take appropriate steps to ensure fees were reasonable - Whether non-disclosure of personal interest - Whether account of profits proper remedy - s 181_Corporations Act 2001_ (Cth).

CORPORATIONS - Oppression - Whether a trustee company is a company to which s 232 Corporations Act 2001 (Cth) can apply - Meaning of "conduct of a company's affairs" - Alleged oppression arising out of exclusion from management, improper diversion of business, unauthorised payment of funds and exclusion from information - Remedies to be determined based on what is appropriate in relation to the company to ameliorate the oppression - Whether the court has the jurisdiction under s 233 Corporations Act 2001 (Cth) to order a buy-out of units in a unit trust - Whether buy-out appropriate - Ss 53, 232, 233, 461 and 467 Corporations Act 2001 (Cth).

1 There are five proceedings for determination, involving common parties and common subject matter. The proceedings were heard concurrently, with the evidence presented constituting the evidence in all proceedings. For ease of reference the proceedings may be identified as the "oppression proceeding", the "Brayrock proceeding", the "V&G misappropriation proceeding", the "CPS derivative action proceeding" and the "CPSIH derivative action proceeding". One other proceeding, which the parties called the "separation agreement proceeding", was discontinued. Although discontinued, the subject matter of that proceeding has some relevance to the determination of the other proceedings.

2 The common parties to the proceedings are the Vigliaroni interests and the Gargaro interests. The common subject matter concerns the administration, management and ownership of the CPS group of companies and underlying unit trusts ("the CPS group"). There has been a serious falling out between the owners and controllers, Ivan Vigliaroni ("Ivan") and Nick Gargaro ("Gargaro"). The breakdown in their business and personal relationship led to a series of claims:

• Gargaro was first to institute proceedings, instituting the separation agreement proceeding to enforce an agreement ("the separation agreement") that he alleged Ivan had made with him in either December 2007 or January 2008 for Ivan to resign as director of companies within the CPS group and to sell his interest in CPS entities to Gargaro. Gargaro discontinued this proceeding on the first day of trial but maintained throughout the hearing that he had an honest and reasonable belief that he had a legally enforceable agreement with Ivan and has sought to justify his actions by reference to that belief.

• Ivan instituted the oppression proceeding for relief against Gargaro based on oppression, within the meaning of s 232 of the Corporations Act 2001 (Cth) ("the Act"), and on the just and equitable ground pursuant to s 461 of the Act.

• Brayrock Pty Ltd ("Brayrock"), a company that is associated with Ivan's brother, Domenic Vigliaroni ("Domenic"), instituted the Brayrock proceeding, seeking declaratory and other relief against Gargaro and companies related to Gargaro and Ivan concerning Brayrock's ownership of shares and units in entities in the CPS group. Gargaro has refused to recognise Brayrock's ownership of those shares and units.

• V&G Concrete Constructions (Vic) Pty Ltd ("V&G (Vic)"), a company in the V&G group, a separate but associated group of companies and trusts to the CPS group, instituted the V&G misappropriation proceeding claiming that Gargaro misappropriated $400,000 of its funds to enable a CPS group member, CPS Property Holdings Pty Ltd ("CPSPH") to acquire a property at 15 Network Drive, Carrum Downs, which was then used by CPSPH as security for the acquisition of 17 Network Drive, Carrum Downs.

• The CPSIH derivative action, commenced by Ivan with leave of the Court in the name of CPS Investment Holdings Pty Ltd ("CPSIH"),[1] a CPS group member, is a mirror action to the V&G (Vic) misappropriation proceeding, claiming that Gargaro misappropriated funds from CPSIH to enable CPSPH to acquire the properties at 15 and 17 Network Drive, Carrum Downs.

• In the CPS derivative action, commenced by Ivan with leave of the Court in the name of Concrete Precast Systems Pty Ltd ("CPS"),[2] a CPS group member, CPS seeks declaratory and other relief against Gargaro and CPS Construction Group Pty Ltd ("CPSCG") in relation to the services that CPSCG provided the CPS group.

3 The determination of each proceeding involves the same relevant background material and, to some extent, an overlap of facts. I will start with the Brayrock proceeding as the facts material to its determination were first in time and those facts provide relevant background material for the other proceedings.

4 Brayrock is the trustee of Domenic's family trust, the Domenic Vigliaroni Family Trust, which was established by deed executed on 22 December 1989 and is controlled and owned by Domenic and his father, Giovanni Vigliaroni ("Vigliaroni senior") in equal shares. Domenic holds his interest in entities in the V&G group through his family trust. Domenic claims that he also has an interest in the CPS group, which is held through Brayrock in its capacity as trustee of his family trust. Gargaro refuses to recognise that interest, claiming that Brayrock agreed to the termination of its interest in July or September 2005 and that adjustments were made to the relevant shareholding and unit holdings accordingly. The beneficiaries of the adjustments were Ivan and Gargaro, via interests in Cresthill Pty Ltd ("Cresthill"), a company related to Ivan and TGF Investments Pty Ltd ("TGF"), a company related to Gargaro.

5 The relevant events commenced in 1994 when Ivan and Domenic set up V&G Concrete Constructions Pty Ltd ("V&G Concrete Constructions") to operate an in situ concrete business. The V&G group formed with the expansion and re-organisation of the business operations. Gargaro, who had for many years been Vigliaroni senior's accountant and close friend, assisted Ivan and Domenic in the in situ concrete business, providing accountancy and related consulting services, including those with respect to the management, development and structuring of the business. Domenic and Ivan had known Gargaro since they were children. In Ivan's words, his family "trusted [Gargaro] completely". That trust extended to appointing him, in 1998, financial controller of the V&G group and the newly formed CPS group which was set up to manufacture pre-cast concrete. Gargaro's initial involvement in the V&G group was as an employee but later he took an ownership share in, and became a director of, some companies in the V&G group.

6 The CPS group, from the outset, was a joint Vigliaroni/Gargaro venture. Gargaro devised the group structure, with Domenic, Ivan and Gargaro sharing the ownership and control in equal proportions. Domenic and Ivan, through V&G Concrete Constructions, provided the finance that was needed, in an amount of nearly $1M. Gargaro provided his professional skills. Domenic and Ivan were happy for Gargaro to have a one third ownership share in the new business and a role as director because of their long standing association and the "good job" he was doing with the administration of the V&G Group. Domenic and Ivan left the administration essentially to Gargaro, which included structuring the new enterprise as well as attending to all banking, accounting and regulatory matters whilst they handled the day to day hands on operations.

7 Initially, the CPS group comprised the CP Systems Unit Trust and the CPS Holdings Unit Trust, both set up for that purpose with corporate trustees. Ownership of the trusts was divided into three equal shares apportioned to Domenic, Ivan and Gargaro via shares held by their respective family trusts in V&G Investments Pty Ltd ("V&G Investments"), the sole unitholder in the CPS Holdings Unit Trust, which in turn was the sole unitholder in the CP Systems Unit Trust. The two corporate trustees were CPS, which was appointed trustee of the CP Systems Unit Trust, and CPSIH, which was appointed trustee of the CPS Holdings Unit Trust. Domenic did not have any role or ownership interest in the two trustee companies. The reason for this was not explained in the evidence. The two trustee companies during the relevant periods have been, and remain owned and controlled by, Ivan and Gargaro.

8 In 1999, Domenic was having matrimonial problems. He became concerned about protecting Brayrock's interests in the CPS group from any claim that his wife may have, in the event that the marriage did not survive. Domenic approached Gargaro for advice about what to do with Brayrock's interest in the CPS group. He did not seek advice about Brayrock's interest in the V&G group because, on his evidence, "I knew there was nothing I could do with that". Gargaro did not respond immediately. Approximately a week later he suggested "that one of the things that they could do would be that Ivan Vigliaroni could maybe hold Domenic's interests on trust". However, Ivan was also having matrimonial difficulties of his own and Domenic and Gargaro decided, with Ivan's knowledge, that TGF should act as trustee of Brayrock's interest.

9 The evidence establishes, in my view, that Domenic placed great trust in Gargaro and that Gargaro represented to Domenic that he was qualified to give that advice and was a person who could be trusted to protect his (Domenic's) interests. Gargaro actively assisted Domenic. In cross-examination Gargaro was asked whether he thought he was qualified to give the advice that Domenic had sought. Gargaro responded "I disagree with that" but his answer is not to be believed. It is informative that not only did Gargaro not decline to give any advice but advised Domenic on what he should do without warning him that he was not qualified to give the advice nor recommending to Domenic that he should seek that advice elsewhere.

10 Gargaro, acting on the advice he had given to Domenic and which Domenic accepted, adjusted the shareholding in V&G Investments so that TGF held two shares and Cresthill retained the other share. Gargaro appears to have adjusted the shareholding without TGF and Brayrock executing a share transfer instrument, although Gargaro had TGF execute a share transfer form to Brayrock, which he gave to Ivan for safe keeping in case Gargaro "was run over by a bus" and there was a need to transfer the share back.

11 In 2002, a new trust was established called the CPS Unit Trust. It apparently replaced the CP Systems Unit Trust. Although CPSIH as trustee of the CPSH Unit Trust was named in the trust deed as the original unitholder, the Register of Unitholders at 22 September 2005 recorded the initial unit holder as Cresthill (25), TGF (50) and GDS (25). It appears that the allocation of 50 units to TGF recognised that one half of those units was held by TGF beneficially for Brayrock. The evidence bears out that the affairs of the unit trust were conducted on that basis and that up until the 2005/06 financial year, Gargaro caused the trustee of the CPS Unit Trust to distribute Brayrock's profit entitlement to TGF.

12 Gargaro stated in oral testimony that one half of the $1.6M distributed by the CPS Unit Trust to TGF as of June 2005 was on account of Brayrock's share. That admission entitles Brayrock to recover the amount of $800,393.52 from TGF on account of profit distributions up to and including June 2005 as part of Brayrock's claim for its share of profit distribution received by TGF on its behalf. Gargaro's admission did not extend to trust distributions beyond June 2005 as it is Gargaro's contention that Brayrock relinquished all interest in the CPS group as and from September 2005, putting into effect an agreement that Ivan, on behalf of Brayrock, made with Gargaro in July 2005.

13 In July 2005 there were expansion plans on foot and steps had been taken to commence a business in South Australia. Until that point the only change to the group structure had been the addition, in 2002, of GDS Corporation Pty Ltd ("GDS"), a company owned and controlled by parties unrelated to the Vigliaroni and Gargaro interests, as a 25% ownership interest with the commensurate dilution of the ownership interests held by Domenic, Ivan and Gargaro. At the July 2005 meeting, Gargaro put to Ivan that he wanted a controlling ownership interest in the CPS group. He also asked Ivan for the interest in V&G Concrete Constructions that he claimed Ivan had promised him back in 1998. Ivan told Gargaro he would have difficulty in getting the Vigliaroni family to agree to Gargaro taking equity in V&G Concrete Constructions because it was a family company and their discussion focussed on Gargaro's interest in the CPS group. The accounts of that discussion are less than satisfactory but pivotal to Gargaro's defence that Brayrock agreed to the termination of its interest in the CPS group and to Gargaro increasing his interest to 40%.

14 Gargaro's evidence was that he requested a 51% interest but finally came to a compromise with Ivan that his interest would increase to 40%, that Ivan would increase his interest to 35% and that GDS would retain the 25% interest that it had taken in August 2002. His evidence was that they agreed that Domenic's interest was to be terminated altogether and that the increase from 25% to 40% was to be achieved by Brayrock's 25% interest being divided up, resulting in a 15% increase to Gargaro and a 10% increase to Ivan ("the termination agreement"). When asked in examination-in-chief about whether he had said anything about V&G Investments, Gargaro gave the following evidence:

Did you say anything about V&G Investments? - Yes. It was part of the CPS Group---

No. Did you say anything please, Mr Gargaro? - Yes.

What did you say? - That that would mean that the 40 per cent would be across the board and that Domenic's - the 25 per cent at the time that I held in trust for Brayrock would obviously not - no longer be the case as if - and going back to the two shares that I held in V&G Investments would remain as if - and that the transfer - or words to the effect that V&G Investments would be held by me in my own right without holding in trust any amount for Brayrock or Domenic Vigliaroni.

Did Mr Vigliaroni say anything in response to that? - He didn't have a problem with that.

Was there any further discussion about any of those issues on that date? - I asked him whether or not he thought that Domenic would have a problem and he said, "He won't have a problem with that and I will look after him out of the 35 per cent", because earlier on he had told me that - when we were talking about controlling my own right, he said, "If I give you all of that I won't have much for myself and Nick", and he felt that 35 - there would be enough there for him and to look after Brayrock or Domenic Vigliaroni.

In cross-examination Gargaro changed his evidence about whether there was a specific discussion about V&G Investments. He acknowledged that he had not discussed V&G Investments with Ivan and that it was his assumption that V&G Investments would be included in the arrangements. His evidence was consistent with Ivan's evidence that there were no such discussions and I find that V&G Investments was not discussed in the July 2005 meeting.

15 Gargaro agreed that after the July 2005 meeting, he "left it to Ivan to deal in whatever way he thought fit with Domenic" and that it was his position that it was sufficient that Ivan deal with Domenic. When put to him in cross-examination that Ivan did not say that he could talk on behalf of Brayrock, Gargaro stated that "he most certainly did" in the following words:

As best you can recall the words what did he say? - Well, he said words to the effect, "you know what the situation is with Domenic", and I knew from my past experience that Ivan Vigliaroni would always talk on Domenic's behalf and Domenic has never to my knowledge since I have known him made one business decision without referring that matter to his brother Ivan.

What did he say to you at the meeting when Brayrock came up? You said that he said to you that he could speak on behalf of Brayrock. What did he say? - Words to the effect, "You know Nick. He basically does what I tell him to do."

When you say "you know Nick", that's Domenic? - Domenic, yes. They used to call him Nick at the time.

"He basically does what"---? - "I tell him to do". You say that's what he told you?---Yes. I knew from past experience.

That's what he told you? - He told me at the time and it was also verifying what I also knew from past experience.

The course of events that followed indicates that Ivan did represent to Gargaro that he could talk on behalf of Domenic and I find that the representation was made. But the evidence does not show that Gargaro or Ivan brought to Domenic's attention that they intended that Ivan would look after Domenic's existing and future interest out of the Cresthill share nor does the evidence show that Ivan had authority from Domenic to strike a bargain with Gargaro on those terms. Moreover, although Gargaro stood to gain from Domenic forgoing his interest, Gargaro did not suggest to Ivan that Domenic or Brayrock should obtain independent advice nor did he suggest to Ivan that he, Gargaro, should speak independently to Domenic before the agreement was acted upon. Instead, Gargaro asked Ivan to get the transfer of share form that TGF had executed as "we had better tear it up". According to Gargaro's evidence, Ivan went to look for the share transfer form but could not locate it at the business premises and thought that it was at home.

16 Ivan's evidence was basically consistent with Gargaro's version, although he answered many questions evasively. I did not find him to be a completely truthful witness. It is clear from Ivan's evidence that Ivan intended that Domenic's interest held on trust for Brayrock by TGF would cease and that he intended to look after Domenic's interest through Cresthill. But Ivan gave evasive and contradictory answers to questions about the share in V&G Investments. He denied that V&G Investments was part of the discussions but in cross-examination agreed that he had discussed with Gargaro "that TGF would no longer hold any interest on the part of Brayrock". He did not deny that he went to look for the share transfer form but said that "[i]t didn't really have anything to do with that" without giving any other explanation. Initially he agreed that he did not keep Domenic informed of the discussions he was having with Gargaro but then reversed his evidence as follows:

Was it your position that you would look after him? By "look after him" I mean he would be part of the Cresthill 35 per cent interest?---Yes, that's correct.

Your evidence last week was that you did speak to your brother but only after the event. Do you recall how long after your agreement to permit TGF's increase from 25 to 40, how long after that did you speak to your brother?---I believe---

Weeks, months; do you remember?---It was around about a week. Within the following week.

You said that "he went along with it". Those are the words that were used. Is that right?---Yes.

When you presented it to him you said to him words to the effect, did you not, that you had agreed to a readjustment of the interests so as to give Nick a 40 per cent interest in the operating companies. Is that what you said to him?---That's correct.

He didn't argue with you?---No.

I do not find that evidence plausible or reliable but, even if it was accepted, it falls far short of what Domenic needed to be told in order to give informed consent to the arrangement and to the relinquishment of Brayrock's interest and far short of showing that Domenic/Brayrock were content to rely on Ivan to look after their existing and any future interests through Cresthill's interest. Domenic's response, on Ivan's evidence, cannot be accepted as constituting authority or acquiescence from Domenic to make such an agreement on behalf of Brayrock or that Domenic knew or understood that Brayrock would not have any separate interest in any new entities established either directly or held on trust for it by TGF. Furthermore, the conversation did not involve Vigliaroni senior, the other director of Brayrock, and there is no suggestion anywhere in the evidence that he was told about the agreement or that his authority was sought.

17 Gargaro gave evidence in chief that at a meeting in September 2005 at which Ivan attended to sign documents for the establishment of Concrete Pre-cast Systems (SA) Pty Ltd he mentioned to Domenic:

about what had been discussed with Ivan in the July meetings and if he was - and went through a brief summary, as I would normally do, and asked him whether he understood and was happy with what was agreed upon and he said he didn't have a problem with any of that.

Domenic said he could not recall any such meeting. Gargaro's evidence of the "brief summary" that he purportedly gave Ivan was that:

Could you say what the brief summary was please?---Basically my increasing the unit holding, Ivan's increase in his unit holdings basically the fact that he would have no more involvement in equity or ownership of the CPS Group except whatever he and Ivan decided as regards to what Ivan was holding and it would mean that that transfer would come to and (sic) end and that - as if it was never put in - the transfer wasn't there and that would have been from the inception of V&G Investments.

If, as Gargaro claimed, he truly wanted to be certain that Domenic agreed with what Gargaro and Ivan intended to do, his brief summary to Domenic was wholly inadequate.

18 I find Gargaro's evidence about the September 2005 discussions unsatisfactory and unreliable. His evidence lacked content and specificity and had the hallmarks of untruthfulness and self serving statements. Gargaro was asked whether he had had any discussions with Domenic about the share transfer that TGF had executed. Gargaro said that there had been discussions, but when asked in examination-in-chief about the content of those discussions, he said simply that "[a]t that point I asked Ivan, I think, to go downstairs and get the share transfer and - because [it] had come to an end." He then repeated the earlier evidence about Ivan having looked for the transfer form. I cannot be satisfied that Gargaro has recalled accurately what had taken place or that the discussions he said had taken place had, in fact, taken place. Furthermore, I am unable to find support in Ivan's evidence for Gargaro's version of events about the September meeting.

19 This meeting is relied on by Gargaro in support of a contention that Domenic gave his concurrence to the termination agreement and ratified the arrangement that Gargaro and Ivan had made about the exclusion of Brayrock from the CPS group and the transfer of Brayrock's interest to TGF absolutely. That contention is not sustainable in light of the evidence.

(f) Implementation of the July 2005 arrangement

20 The evidence shows plainly that as far as Gargaro and Ivan were concerned, Brayrock was out of the picture as from July 2005 or September 2005 at the latest and they dealt with Brayrock's interest as if it were their own:

• A change to the CPS unit holding was necessary as no earlier adjustment had been made. In September 2005, Ivan and Gargaro passed resolutions, in their capacity as directors of CPS, by which TGF took 65% and Cresthill the remaining 35% of the shares in CPS and, with respect to the units in the CPS Unit Trust, TGF took 40%, Cresthill 35%, with the interest of GDS remaining at 25% of the units.

• New entities that were thereafter set up were owned, by and large, in the proportions of TGF 40%, Cresthill 35% and GDS 25%. These new entities included the CPS SA Unit Trust, the CPS WA Unit Trust, and the Concrete Precast Systems (QLD) Unit Trust, which are set out in Appendix A.

• Gargaro also took steps to have Domenic removed as a director of V&G Investments.

21 It is not in dispute that Domenic signed a letter of resignation as a director of V&G Investments dated 28 February 2006. It is also not in dispute that Domenic, with Ivan and Gargaro, signed a memorandum (undated) of resolution of directors of V&G Investments in which his resignation was accepted. What is in dispute is Domenic's awareness of what he was signing. Gargaro had these documents prepared by an external accountancy firm, Banks Group. He acknowledged in examination-in-chief that he did not have any discussion with Domenic or Ivan about the documents before they were received by him. His evidence was as follows:

If you look back at page 17 which is the resolution, your signature together with Ivan and Domenic's appears on that document? --- Yes.

Do you recall the circumstances of signing that? --- Yes. I gave - I would have discussed it it at that particular meeting with Ivan and Domenic and basically said, "This is resigning you" which he agreed with in any case "from V&G Investments because as you know, you no longer have anything to do with it."

Is that what you said to him? --- Words to that effect.

What did he respond? --- "Yes", he said, "that's fine."

He then contradicted his evidence in chief in answers to cross-examination as follows:

Can you recall when you asked Banks to prepare this letter? --- Some time before 28 February, your Honour.

What was the circumstance which gave rise to you asking Banks to prepare this letter? --- There may have been a discussion concerning - as a follow-up to the September 2005 meeting where I discussed it with Ivan and Nick as regards to the transfer and informally I possibly would have discussed - well, I did discuss it with Ivan, that there was a loose end as regards to Domenic Vigliaroni still being a director of V&G Investments and accordingly, those documents were prepared by Banks Group.

It has the date of 28 February 2006. Did the form of the letter come with that date? --- I saw that, your Honour, and I cannot understand why the date is 28 February 2006. It it [sic] would have arrived under a covering letter, as was the practice of Banks Group, and it would have been around that time, around - that I would have received the letter from the Banks Group together with the memorandum.

Is 28 February 2006 a date that you provided to Banks as the date from which the resignation was to take effect? --- I would have contacted Banks some time prior to that and I cannot recall whether I gave them that date of 28 February 2006.

Yes. Thank you.

This letter of resignation was prepared by Banks on your instructions? --- Yes.

It had not been discussed with Domenic Vigliaroni before you gave the instructions to Banks? --- I don't agree with that.

Do you say that before you had the communication with Banks to prepare this resignation you told Domenic Vigliaroni that this was being prepared? --- Either Domenic or Ivan Vigliaroni. More likely Ivan Vigliaroni.

I want you to turn your mind only to Domenic Vigliaroni at the moment. Did you tell Domenic Vigliaroni that you were having a resignation letter prepared for him to sign by the Banks Group? --- I don't believe so.

The resignation was to take effect are [sic] from that date, from 28 February 2006? --- Yes. That date was Banks Group's date but I would imagine - I can't shed any light on that, Mr Magee.

What did you ask Banks to do? --- To prepare a memorandum for the resignation of Domenic Vigliaroni and - - -

But this was long after the termination agreement, wasn't it? --- Yes.

Ivan could not recall signing the directors' resolution. I find that difficult to believe. Domenic could not recall "too much" of the circumstances surrounding his resignation. He could not recall anything being said to him by Gargaro or Ivan as to why he was resigning but that he "still believed [that] my share was held in trust". I am satisfied on the evidence that Domenic did not know what he was signing. It was submitted on behalf of Gargaro that it is inconceivable that Domenic did not appreciate what he was signing when he resigned as a director of V&G Investments. That submission cannot be accepted in view of how Gargaro procured the resignation, bearing in mind that Domenic's evidence, which was not contradicted, was that he never questioned what was put before him to sign. It is plain on the evidence that Gargaro exerted total influence over him when it came to matters of business and that Domenic left the administration and management entirely to Ivan and Gargaro and did what they told him to do.

22 Brayrock was not paid out for its interests in the shareholding or unitholding. It received nothing. Gargaro alleged that he gave valuable consideration, being his/TGF's forbearance to pursue the interest in the V&G group that he claims Ivan had promised him in 1998 and the further time and effort required by him to expand the CPS business interstate. The evidence does not show that Domenic was made aware, or that Gargaro or Ivan brought to his attention, that this was the basis on which Ivan had agreed that Brayrock's interest would be relinquished or that Ivan had authority from Domenic to strike a bargain with Gargaro on those terms.

23 I am satisfied on the evidence that Ivan and Gargaro intended, and put into effect, Domenic's total exclusion from the CPS group. Further, it is clear on the evidence that Ivan and Gargaro both thought they could deal with Brayrock's interest in the CPS group, without regard to Domenic or Brayrock and without paying him for it.

24 I find that Ivan did not have Domenic/Brayrock's authority to bind Brayrock to the termination agreement.

25 I find that Brayrock did not authorise or agree -

• to the transfer of the Brayrock share in V&G Investments to TGF absolutely;

• to the relinquishment of its interest in V&G Investments;

• to the division of the Brayrock units held on trust for it by TGF in the CPS Unit Trust between TGF and Cresthill;

• to the relinquishment of its interest in the CPS Unit Trust.

26 I find further that Domenic did not expressly or by conduct ratify the termination agreement.

27 These findings are not displaced by the matters of credit raised in written submissions on behalf of Gargaro. In particular, I do not accept that the setting up of V&G (Vic) in 2005 and Domenic's understanding that he would not have any involvement in that company but that Ivan "would look after [him] in other ways" displaces the finding that Domenic gave informed consent to relinquishing his interest altogether in the CPS group. Domenic was able to provide an explanation for what he understood to be the reason for setting up V&G (Vic). The explanation may be misinformed but, significantly, in Domenic's mind was wholly unconnected with the CPS entities. I regarded Domenic essentially as being a witness of truth who had little comprehension about his role as a director or understanding of the nature of a company or trust and basically left that side of the business operations to Ivan and Gargaro.

28 It was submitted on behalf of Gargaro that it would be unconscionable for Brayrock to depart from the representation that Ivan made to Gargaro that Ivan had the authority to speak for and on behalf of Domenic as well as for himself and the representation by conduct that Gargaro, TGF, Ivan, Cresthill, Domenic and Brayrock had entered into a legally binding contract, in reliance on which Gargaro asserts that he has acted to his detriment. I reject that claim. Gargaro's account of the events as they unfolded does not reconcile with his professional duties as an accountant, with his responsibilities as a director of the corporate trustee of the Brayrock interests and with his knowledge of the trust that Domenic placed in him.

29 It was pleaded against Gargaro, and I find, that Gargaro owed to Domenic fiduciary obligations that he breached. In Chan v Zacharia,[4] Deane J stated:

The variations between more precise formulations of the principle governing the liability to account are largely the result of the fact that what is conveniently regarded as the one "fundamental rule" embodies two themes. The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage. Notwithstanding authoritive statements to the effect that the "use of fiduciary position" doctrine ... the two themes, while overlapping, are distinct. Neither theme fully comprehends the other and a formulation of the principle by reference to one only of them will be incomplete. Stated comprehensively in terms of the liability to account, the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it.[5] (references omitted)

The cornerstone of a fiduciary is often referred to as that of being a relationship of trust or loyalty.[6] The relationship between a trustee and a beneficiary is the archetypical fiduciary relationship. Gargaro owed fiduciary obligations to Domenic by reason that he was trustee for the shares held by TGF on behalf of Brayrock and also because of his professional relationship with Domenic as accountant, administrator and financial controller of the V&G and CPS entities. As a fiduciary, Gargaro could not, without the informed consent of Domenic, place himself in a position involving a real and sensible possibility of a conflict between his duty as fiduciary and his own interest. The no conflict and no profit duty is applied strictly by the courts. But Gargaro placed himself in a position of conflict. He stood to gain, and has gained, out of Domenic's exclusion.

30 Moreover, the breach was not negated by evidence of informed consent excusing the breach.[7] The onus is on Gargaro to demonstrate that informed consent was given. The High Court in Maguire v Makaronis[8] said that:

What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given.[9] (references omitted)

In The Principles of Equity,[10] at [1027] it is commented that:

The disclosure must be of all the relevant information necessary for the beneficiary of the obligation to make a proper judgment as to whether to give consent to the activity which would otherwise be a breach of duty. Those to whom the fiduciary duties are owed may also ratify or excuse a breach after the event if they are given sufficient information. (references omitted)

The onus is on Gargaro to show that Domenic gave informed consent and the threshold for discharging that is high. The evidence falls far short of supporting any finding that Domenic gave his consent or excused the breach, let alone informed consent or ratification of the breach on sufficient information. The evidence does not show that Gargaro or Ivan brought all the relevant information to Domenic's attention to enable him to make a proper judgment about whether he should consent to the termination agreement. As I said earlier, what he was told, if Ivan and Gargaro are to be believed, was wholly inadequate. Domenic's absolute trust in Gargaro was violated. I find that Gargaro misused his position for personal gain to the detriment of Domenic.

31 It was put on behalf of Gargaro that there should be a sanction against enforcing Brayrock's rights because the 1999 trust arrangement was set up for an improper purpose. I reject that submission. If there was a transfer to TGF for an unlawful purpose, Gargaro was not just complicit in effecting the arrangement. He was the architect of the arrangement. He should not be allowed to profit from it himself.

32 In light of these findings, it is unnecessary to consider the alternative and additional arguments relied on by Brayrock.

33 These findings entitle Brayrock to declaratory relief as against Gargaro, TGF and Cresthill in relation to Brayrock's interests in V&G Investments and the CPS Unit Trust and to an account of profits.

34 Additionally, Domenic seeks declarations that Brayrock has a one third ownership interest in the new entities established in the CPS group after September 2005 and an account of profits from Gargaro/TGF in relation to those entities. Domenic has claimed in this proceeding that the agreement he made with Gargaro in 1999 extended to any future entity established within the CPS group. In his words, "once CPS started I believed that I would hold a third share in the overall of CPS". I accept that he had an expectation in 1999 that the arrangement would extend to any future interest but I cannot conclude on the evidence that the arrangement he reached with Gargaro did extend to any future interest created. In 1999 there was no plan for expansion or consideration of the establishment of new entities. That did not occur until 2005. In 2005 there was a conscious and deliberate decision on the part of Ivan and Gargaro that TGF would take a 40% interest and that Cresthill would take a 35% interest in any new entities in their own right, with the balance of 25% to GDS. The evidence does not show that Gargaro or Ivan represented to Domenic that any part of their interests was held on account of Brayrock or that Domenic did not stake a claim in, or entitlement to, an ownership interest in those entities on the basis of some representation, or because he was induced to believe, that TGF or Cresthill held part of their interests on account of Brayrock. Accordingly, I find that Brayrock is not entitled to the declaratory and other relief that it seeks in relation to the entities other than V&G Investments and the CPS Unit Trust.

(2) V&G (VIC) AND CPSIH MISAPPROPRIATION PROCEEDINGS[11]

35 These proceedings can be considered together because they deal with the same subject matter, being the purchases of the properties situated at 15 and 17 Network Drive, Carrum Downs and involve the same facts. The issue is whether Gargaro misappropriated funds from V&G (Vic) and/or CPSIH to effect the purchases and breached fiduciary and statutory duties he owed to V&G (Vic) and CPSIH.

(i) Purchase of the property situated at 15 Network Drive, Carrum Downs

36 In about mid to late 2006, Vigliaroni and Gargaro made an in-principle agreement to purchase the property. They discussed setting up a new corporate entity as the purchaser. In fact, no corporate entity was set up until 10 September 2007, when Gargaro had CPSPH incorporated as a company owned by Ivan and himself in equal proportions and to which he had himself and Ivan appointed as the directors. In the meantime, Gargaro had taken steps to secure the purchase of the property. He paid a deposit on the property in two instalments, $5,000 on about 28 November 2006 and $37,000 on about 19 April 2007. He withdrew the deposit from CPSIH's account. Although Ivan denied that he knew about this, he plainly knew about the proposed acquisition and it may reasonably be inferred that he understood that a CPS entity would pay the deposit, if not CPSIH specifically. On about 13 June 2007, Gargaro entered into a contract in writing to purchase the property for a purchase price of $420,000 plus GST. The contract was prepared by the vendor's solicitor in the name of CPSIH as purchaser. It was amended by hand so that the purchaser was named as Gargaro and/or nominee. Subsequently, Gargaro had CPSPH substituted as the purchaser. Settlement of the property occurred on about 15 November 2007, when the balance of the purchase price was paid and CPSPH became the registered proprietor. In order to pay for the property, Gargaro transferred $400,000 from V&G (Vic)'s EFT facility into CPSIH's account. Gargaro then withdrew amounts of $420,202.50 and $23,380 from the account of CPSIH which he paid to Slidders Lawyers on account of CPSPH to complete the purchase of the property and pay the stamp duty. The transactions were recorded as debts due by CPSPH to CPSIH and a debt from CPSIH to V&G (Vic) in the books of those companies.

37 Then followed a remarkable course of events that were plainly hidden from Ivan. In either March or May 2008, Gargaro established the CPSPH Unit Trust, with the retrospective date of settlement of 10 September 2007. CPSPH was appointed trustee and the property was thereafter treated as an asset of the trust. There was no transfer for consideration. No meeting of directors of CPSPH was held to ratify the appointment and no meeting of the members of the company was held to pass a resolution that the property would be held in the trust and not by the company. The unit holders of the trust did not include Ivan, directly or indirectly. Sixty-five units were issued to TGF, twenty units issued to G Parakilas Nominees Pty Ltd, a company associated with George Parakilas and fifteen units issued to D Corp Group Pty Ltd, a company associated with Dennis O'Brien. Parakilas and O'Brien were employed in the CPS Group and held interests in GDS, which by then had an 18.2% interest in the CPS Group. Ivan said that he did not learn about the existence of the trust and that he had no interest in the trust until much later. I accept that evidence. Gargaro had no authority to have the property transferred from CPSPH into the CSPSH Unit Trust and the "transfer" was unlawful and ineffective. [12]

38 On about 6 June 2008, Gargaro filed a notice of cessation of a company office holder with ASIC purporting to remove Ivan as a director of CPSPH retrospectively from 10 September 2007 together with an unsigned letter of resignation that Gargaro had external accountants, the Banks Group, prepare. Gargaro's initial explanation for this was that Ivan had never signed a consent to act as director. He then sought to justify his action on the basis of the so-called separation agreement that he had made with Ivan in January 2008, when they decided to separate the administration of the V&G and CPS groups. In Gargaro's words "I suppose at the time it was a way of expediting the whole thing". Gargaro maintained throughout the hearing that he believed that Ivan had agreed with him in January 2008 that Gargaro could take the property as he:

wasn't particularly interested in the property as regards to we talked about what it was worth and we both agreed that it wouldn't have increased in value are [sic] as not a lot of time had transpired from when the settlement occurred to when we discussed it so it was only a very peripheral discussion and I think I made the comment, "Well, I will take it. I will take the property", as part of the discussions that we were having in January.

I do not accept that Gargaro had any honest and reasonable belief that he could just take the property without paying for it. The conduct was opportunistic. The means by which he effected the establishment of the unit trust and procured Ivan's resignation have the hallmarks of knowing and deliberate deceitfulness. This deceitfulness was compounded when Gargaro had Parakilas appointed as a director of CPSPH in about July 2008, with purported retrospective effect from 1 March 2008. There had been no resolution by the members of CPSPH to appoint Parakilas as a director and Ivan did not become aware that Parakilas had been appointed a director until September 2008. Parakilas has since resigned.

(iv) Purchase of the property situated at 17 Network Drive, Carrum Downs

39 On 27 June 2008, Gargaro caused CPSPH, in its capacity as trustee of the CPSPH Unit Trust, to enter into a contract in writing to purchase the property situated at 17 Network Drive, Carrum Downs, in circumstances knowing that CPSPH could not pay for the property without borrowing the funds that it needed, knowing that CPSPH had not repaid the funds owing to CPSIH and knowing that CPSIH had not repaid the funds owing to V&G (Vic). This property was purchased for $431,750 inclusive of GST. Gargaro did not disclose to Ivan that this had happened until a meeting on 16 August 2008. Settlement of the purchase of that property occurred on about 3 October 2008 and was wholly funded by a loan to CPSPH from National Australia Bank ("NAB"), secured by mortgages over both properties, 15 Network Drive and 17 Network Drive, Carrum Downs.

(b) Findings on misappropriation and breach of fiduciary and statutory duties

40 CPSIH is owed about $356,000 by CPSPH (excluding interest) and, in turn, owes $400,000 (excluding interest) to V&G (Vic). The loans are unsecured, undocumented, interest free and for an indefinite period. The market values as at 24 July 2009 of the properties, excluding GST and any transaction costs on resale are:

The CPSPH Unit Trust has no net equity in the properties after taking the secured and unsecured liabilities into account. The unit trust, aside from holding the properties, has no other activity. CPSPH's only activity is to act as trustee for the unit trust. There is no material to indicate that Gargaro had turned his mind to the capacity of CPSPH or the trust to repay the loan commitments or, in turn, the capacity of CPSIH to repay its loan commitments. There is no material to indicate that Gargaro had turned his mind to the terms on which the funds should be advanced.

41 Gargaro claims that the use of V&G (Vic)'s funds was done with the knowledge and approval of Ivan. This Ivan denies. Although I accept that Gargaro did not make Ivan aware specifically that V&G (Vic)'s funds were used, I do not accept that Gargaro did not have Ivan's authority to complete the purchase. What Gargaro said he told Ivan was that the property needed to be settled and that CPSIH did not have the funds and "that I would be transferring funds from within the group and possibly V&G and possibly left it at that" and "as per normal course Ivan would leave that up to me". The "per normal course" referred to, was a reference to the functions that Gargaro performed in his role as financial controller of the V&G group and the CPS group. These functions included what he termed a "treasury function" of looking after the flow of funds in the groups so that each entity had the funds required to meet their obligations. Ivan left it to Gargaro to do what was necessary. As at 15 November 2007, V&G (Vic) had a credit balance, which Gargaro transferred to CPSIH as neither CPSIH or CPSPH had available funds of its own.

42 However, such general authority as there was carried with it fiduciary and statutory duties[13] to V&G (Vic) and CPSIH. Those duties arose from the nature of the authority conferred in Gargaro.[14] The duties carried the obligation to pay proper regard to the interests of V&G (Vic) and CPSIH. That obligation was breached. I am satisfied that Gargaro did not turn his mind to whether the transfer of funds was in the interests of V&G (Vic) or CPSIH. Further, Gargaro entirely disregarded the separate corporate personalities and ownership interests of the companies and trusts of which he was financial controller.[15] The duties also carried the obligation to avoid a conflict of interest. This he did not do. He misused his position as financial controller of V&G (Vic) and CPSIH in the pursuit of his personal interests.

43 I am satisfied on the evidence that V&G (Vic) and CPSIH are entitled to relief against Gargaro and CPSPH in their respective proceedings relating to the properties at 15 and 17 Network Drive, Carrum Downs.

44 V&G (Vic) has also identified other "misappropriations" by Gargaro of V&G (Vic) funds: $150,000 on 24 August 2007; $500,000 on 21 March 2007; $200,000 on 23 May 2007; and $200,000 each on 25 July, 12 September and 13 September 2007. The evidence disclosed that Gargaro, in the course of activities as financial controller, transferred these funds to other companies in the CPS group. I am not satisfied that he lacked the authority to use those funds in the performance of his functions as financial controller but, again, such general authority as there was carried with it fiduciary and statutory duties to V&G (Vic), which I am satisfied on the evidence Gargaro breached. Gargaro maintained that he had done "hundreds of transactions like this". However, although he performed what he termed were treasury functions, V&G (Vic) was not a treasury company for the rest of the group. It just happened to have a credit balance that Gargaro utilised from time to time to meet other companies' liabilities. With respect to each transaction, Gargaro had to pay proper regard to the interests of V&G (Vic). There is no evidence that he did so.

45 I will allow the parties the opportunity to put submissions on the appropriate relief to be granted to V&G (Vic) and CPSIH consistent with these findings.

46 This proceeding arises out of Gargaro's appointment of CPSCG to provide administration and management services to the CPS group. CPSCG is a Gargaro owned and controlled company and the trustee of the CPSCG Unit Trust. Gargaro owns the majority of units in the unit trust via TGF. The other units are held by companies associated with Parakilas and O'Brien.

47 Gargaro had CPSCG and the trust set up in February 2008, following a decision in late December 2007 or January 2008 that Ivan and Gargaro made to separate the management and administration of the V&G group from the CPS group. Gargaro put the decision into effect by appointing CPSCG in its trustee capacity as the service entity to the CPS group as from 1 March 2008, in replacement of VVG Construction Services Pty Ltd ("VVG") in its trustee capacity of the VVG Construction Services Unit Trust which had been providing management and administration services to both groups, for a fee, since 2001.

48 Ivan knew in February 2008 that Gargaro had set up a new entity to take over the administration and management of the CPS group. On 26 February 2008, Gargaro had sent Ivan an email advising that he had set up CPSCG "to basically perform the some role as [VVG]". However, Gargaro did not tell Ivan that he would not have any beneficial interest in CPSCG or the underlying trust or that Ivan would not be made a director of CPSCG. Ivan claimed that he learnt that he did not have an interest in CPSCG only in September 2008. This is disputed by Gargaro who claims that he must have known in April 2008, when both of them attended the NAB to sign some banking documents to put in place combined loan facilities between the CPS companies and CPSCG, which had been arranged at Gargaro's instigation. Gargaro signed documents as sole director of CPSCG, whereas all other execution clauses required the signatures of both. Ivan said that he did not appreciate at that time that he was not a director of CPSCG and that he did not have any beneficial interest in it or the underlying trust. Gargaro has sought to make much of the circumstances in which these documents were signed.

49 I accept that Ivan should have been aware as at April 2008 that he was not a director of CPSCG. Any lack of appreciation on Ivan's part is explained by the fact that he would sign documents, as director, without giving any proper consideration to what he was signing but, rather, leaving it all to Gargaro. His abdication of responsibility as a director is no justification for his lack of appreciation.

50 Gargaro, on the other hand, was not candid with Ivan. He did not seek to bring to Ivan's attention, as the other director of CPS, that CPSCG was a Gargaro related entity and that Gargaro, alone, stood to benefit out of the appointment of CPSCG as the service entity to the CPS group. Gargaro was in a position of conflict. He had his duties to the CPS companies as director but had a personal financial interest, as beneficial owner of CPSCG, in the appointment of CPSCG as the service entity to the CPS group. Gargaro had obligations to the CPS companies to make full and frank disclosure of his relationship with CPSCG and the basis on which CPSCG would charge CPS. I am satisfied on the evidence that he did not do so and that he deliberately withheld this from Ivan at the time of engagement of CPSCG as the service entity to CPS and the other CPS entities. I find that Gargaro lacked the proper authority of CPS and the other entities to enter into contractual arrangements with CPSCG and to bind them to pay the management fees which CPSCG has charged. The contract was unlawful and was created in breach of Gargaro's fiduciary and statutory[17] duties to CPS and the other CPS entities.

51 Gargaro's position of conflict and non disclosure deprived CPS and the other CPS entities from the opportunity to take appropriate steps to ensure that the fee charges were proper and reasonable. There is some objective evidence that Gargaro may have knowingly misused his position as director of CPS and the other CPS entities to gain personal advantage by binding those entities to pay CPSCG management fees that were excessive. There is a marked discrepancy between the fees that VVG charged when it was the service provider, with the fees charged by CPSCG, such fees being substantially greater. The increase has been quantified in the order of about 225%, from an average of about $119,000 a month to an average of over $270,000 a month. The objective evidence also shows a decreasing profitability of certain companies within the CPS group since CPSCG took over the management, including decreasing profitability in CPS. Whilst a number of variables may provide the explanation for the discrepancy and losses, I cannot conclude on the evidence before me that this was not due, or partly due, to excessive fees charged by CPSCG. Gargaro relied on a report of an expert accountant, prepared for the purposes of this litigation, in which the expert expressed the opinion that the management fees were fair and reasonable. The opinion, however, was qualified. The qualification was that the expert had not independently verified the information provided to him and the assumptions set out in his report. The accuracy of those facts and assumptions has not been established and accordingly, I give no weight to the opinion. I do not, in any event, have to be satisfied that the fees were excessive in order to conclude that CPS is entitled to the relief that it seeks. It is no defence to a breach of fiduciary duty that Gargaro was acting in good faith and in the interests of the CPS group in causing the service arrangement with CPSCG.[18]

52 CPS is entitled to remedies against Gargaro and CPSCG. CSPCG was a knowing recipient of the benefits of Gargaro's breaches and is accountable in equity to CPS under the principles of Barnes v Addy.[19]

53 CPS has made an election for an account of profits. Gargaro has opposed the grant of that remedy on the basis that the taking of an account of profits would not be a useful exercise because, it was argued, CPS has not established that CPSCG derived any profit from its management contract. Although the grant of relief is discretionary, it is not conditional on CPS establishing that Gargaro profited or benefited from his breach of duty. As the High Court stated in Warman International Ltd v Dwyer:[20]

Although an account of profits, like other equitable remedies, is said to be discretionary, it is granted or withheld according to settled principles. It will be defeated by equitable defences such as estoppel, laches, acquiescence and delay. And, notwithstanding what was decided in Regal (Hastings) Ltd v Gulliver and Phipps v Boardman, it may be that:

"the liability to account for a personal benefit or gain obtained or received by use or by reason of fiduciary position, opportunity or knowledge will not arise in circumstances where it would be unconscientious to assert it or in which, for example, there is no possible conflict between personal interest and fiduciary duty and it is plainly in the interests of the person to whom the fiduciary duty is owed that the fiduciary obtain for himself rights or benefits."

The conduct of the plaintiff may be such as to make it inequitable to order an account. Thus a plaintiff may not stand by and permit the defendant to make profits and then claim entitlement to those profits.

It is necessary to keep steadily in mind the cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts. As Fletcher Moulton LJ observed In re Coomber; Coomber v Coomber:

"Fiduciary relations are of many different types ... and the Courts have again and again, in cases where there has been a fiduciary relation, interfered and set aside acts which, between persons in a wholly independent position, would have been perfectly valid. Thereupon in some minds there arises the idea that if there is any fiduciary relation whatever any of these types of interference is warranted by it. They conclude that every kind of fiduciary relation justifies every kind of interference. Of course that is absurd. The nature of the fiduciary relation must be such that it justifies the interference. There is no class of case in which one ought more carefully to bear in mind the facts of the case ... than cases which relate to fiduciary and confidential relations and the action of the Court with regard to them."

But the basic principle remains that a principal who so elects is entitled to an account of profits, subject to considerations of the kind already mentioned. (references omitted)

The burden is on Gargaro to establish that it would be inequitable to order any account or that it would be inequitable for him to account for the whole of the profit of his conduct. There is no acceptable basis for depriving CPS of any right to elect to have an account of profits. I will, however, give both parties the opportunity to put submissions on whether it is appropriate to allow Gargaro to have a proportion of profits or an appropriate allowance for skill, expertise and other expenses.[22]

54 Ivan's application was based primarily on oppression and for relief under s 233 of the Act. The originating motion also included an application for relief under s 467(1) of the Act. The oppressive conduct on which Ivan relies was identified as follows:

(a) Gargaro has wrongfully excluded Ivan from participation in the management of the CPS companies;

(b) Gargaro improperly diverted a corporate business from an entity in which Ivan had an interest (VVG) to an entity in which he does not (CPSCG);

(c) Gargaro has denied Ivan access to company information;

(d) Gargaro has used company funds to defend the oppression proceedings;

(e) Gargaro has made unauthorised payment of funds in breach of fiduciary duty;

(f) Gargaro has preferred his own interests to those of other members.

55 Gargaro disputes that he has conducted the affairs of the CPS companies in a manner which is "oppressive to, unfairly prejudicial to, or unfairly discriminatory against" the non Gargaro interests, within the meaning of s 232 of the Act.[24] Gargaro and TGF have admitted, however, that since about August 2008 there has been a breakdown in the mutual trust and confidence between Ivan and Gargaro and a deadlock in the management of the CPS companies in which they are directors/shareholders.[25] Gargaro's admission entitles Ivan to an order under s 467 of the Act.

56 Both s 233 and s 467 empower the Court to wind up the CPS companies, if that is the appropriate remedy. Senior counsel for Ivan informed the Court in final submissions that winding up of the company and the appointment of a receiver in respect of the property which is held on trust by those companies is not the preferred remedy. Ivan wants a separation of the Gargaro interests from the Vigliaroni interests completely, to be effected by an order requiring the Gargaro interests to sell their shares in the CPS companies and units in the unit trusts of which the CPS companies are trustees, to the Vigliaroni interests. Brayrock and GDS, which are parties to this proceeding, also support a buy-out of the Gargaro interests by the Vigliaroni interests. There is good reason for the continuation of the CPS group. The CPS group is solvent and has approximately 170 employees. Clearly, any remedy that would bring about the dissolution of the CPS group would be an extreme measure and should be a remedy of last resort.[26]

57 Gargaro's primary position is that no remedy should be granted under s 233 or s 467, even if oppression is found, on the basis that the settled practice in an oppression action, where the oppression has occurred in a company that is a bare trustee, is to refuse relief and the oppression proceedings should be dismissed on the basis that:

(a) there is no appropriate remedy under s 233 or s 467;

(b) there are buy-out provisions in each of the trust deeds and the parties should use the trust process; and

(c) if there was oppression, it could have been ameliorated by Ivan accepting the "reasonable offers" that Gargaro made to him to purchase the Vigliaroni interests or, alternatively to sell his interests.

Gargaro supports a buy-out of his interests and the interests of TGF in the CPS group, if the Court was to find oppression and determine that it has the power to make such an order.

58 I am satisfied that Ivan has made out the grounds for an order under s 233 as well as under s 467. I am satisfied that I have the power under s 233 to order a buy-out of the Gargaro interests by the Vigliaroni interests, including the unit holdings and I am satisfied that this remedy should be granted under s 233.

59 It was submitted on behalf of Gargaro that it is open to the Court to draw Jones v Dunkel[27] inferences against Ivan, Domenic and GDS by reason of their unexplained failure to call witnesses or give certain evidence and, accordingly, that Gargaro's evidence should be preferred where there was a conflict in evidence. This is not a correct use of the rule in Jones v Dunkel, but in any event, there is sufficient evidentiary basis for the determination of the oppression proceeding without resorting solely to matters of credit.

60 It was also submitted on behalf of Gargaro, albeit rather faintly, that Ivan may have commenced these proceedings for the collateral purpose of securing a better price for the Vigliaroni interests and not with the genuine objective of obtaining a remedy for oppression.[28] That submission cannot be accepted in light of the findings that I make in this proceeding.

61 The grounds for the making of an order under s 233 are contained in s 232. Relevantly, section 232 provides that:

The Court may make an order under section 233 if:

(a) the conduct of a company's affairs;

...

Is ...

...

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

62 Whether conduct falls within s 232(e) is to be determined by the standard of "reasonable directors possessed of any skill, knowledge or acumen possessed by the directors".[29] The application of the test requires an objective assessment of whether there has been some unfairness in the conduct of the company's affairs[30] affecting a member, whether as shareholder "or any other capacity".[31] That assessment is not to be done in a vacuum. The court will have regard to the particular context in which the conduct occurs[32] and consider whether, in all the circumstances, the conduct complained of imposed a disadvantage or burden on a member that, according to ordinary standards of reasonableness and fair dealing, was unfair.[33] This consideration may include viewing the putative conduct in its entirety, rather than as separate acts, in order to get an overall picture.[34]

63 It is not conduct at large that is caught by s 232. Section 232 requires the putative conduct to be "conduct of a company's affairs". This includes, relevantly, the affairs of trustee companies as the phrase "affairs of a body corporate" has a defined meaning for this purpose in s 53 of the Act. Relevantly, section 53 provides that the "affairs of a body corporate" for the purposes of ss 232, 233 and 234[35] include:

(a) ... business, trading, transactions and dealings ( ... including transactions and dealings as ... trustee) ...

(b) in the case of a body corporate (not being an authorised trustee corporation) that is a trustee (but without limiting the generality of paragraph (a)) - matters concerned with the ascertainment of the identity of the persons who are beneficiaries under the trust, their rights under the trust and any payments that they have received, or are entitled to receive, under the terms of the trust

Section 53 is clear in its terms. The affairs of trustee companies are within the statutory meaning of "affairs of a body corporate" for the purposes of s 232 and the scope of the statutory oppression remedy includes relief for conduct of the prescribed kind[36] that affects a member of the trustee company in that member's capacity as a beneficiary of the trust of which the company is trustee.[37] In other words, the statute specifically provides for remedy under oppression provisions where the oppression relates to the operation of a trust which has a corporate trustee.

64 The Court is given the power under s 233 to make any order "that it considers appropriate in relation to the company". The legislature deliberately conferred a wide discretion on the court, giving it extensive powers, so that the remedy will eliminate the oppression and enable the causes of any future oppression to be avoided.[38] The High Court in Campbell v Backoffice[39] very recently affirmed that ss 232 and 233 are to be read broadly and that "[t]he imposition of judge-made limitations on their scope is to be approached with caution".[40]

65 If oppression is found, counsel for Gargaro has urged me to follow Kizquari Pty Ltd v Prestoo Pty Ltd[41] and to refuse relief under s 233, despite s 53 and the wide discretion. In Kizquari, Young J (as he then was) held that it was not the function of s 233 to remedy oppression within a trust and that an order could not be made under s 260 of the Corporations Law (the predecessor section to s 233) in respect of a trustee company.

66 In Kizquari the plaintiffs successfully proved oppressive conduct by directors of a corporate trustee in paying themselves and their wives excessive remuneration, which diminished the profits available for distribution to the unit holders. Young J observed that the oppression "may well cease" if the corporate trustee pursued the overpayments or stopped distributions until the money had been replaced. However, the plaintiffs wanted to be bought out by the defendants. The plaintiffs sought an order that the defendants purchase the plaintiffs' shares in the corporate trustee at the fair value of their units in the unit trust. Young J formed the view that there were trust remedies that were available to effect the buy-out and would not make any order under s 260. His Honour reasoned as follows:

The company in question ... is a trustee company. It has no assets of its own. It operates a business as a trustee on the basis of loan capital. The only oppression is in relation to the operation of the trust. That oppression has not affected the value of the shares one whit. The shares in [the trustee company] either have no value or alternatively a value of $1 being the amount paid for each share and they continue to have that value. It would be a very bold step indeed to order the [defendants] to buy the plaintiffs' $1 share for a sum anything like say $189,000 on the basis that the plaintiffs thereby relinquished any interest in the trust.[42]

Young J declined to follow the decision of Vincent J (as he then was) in Re Bodaibo Ltd[43] where his Honour had made an order under the oppression remedy requiring the purchase of shares of a trustee company at the value of the business which the trustee company conducted on behalf of a unit trust, although the oppressive conduct had not directly affected the company or decreased its value but "rather created a situation that is intolerable for the minority shareholder".[44] Young J commented that "it would not seem that [Vincent J's] intention (sic) was drawn to the difficulty caused where the only business that the company carries on and the only assets it possesses are held pursuant to a trust in which it is not a beneficiary".[45]

67 Subsequent decisions have referred to Kizquari with approval, citing it as authority for the proposition that s 232 and s 233 cannot be used to remedy oppression in a company which holds all its assets on trust and that the shareholder must use trust or other equitable remedies to remedy the oppression:[46] see Re Bountiful Pty Ltd; [47] Re Polyresins Pty Ltd;[48] Surf Road Nominees Pty Ltd v James;[49] McEwen v Combined Coast Cranes Pty Ltd.[50] In Re Polyresins Pty Ltd Chesterman J in obiter said that a court could not in an application under the statutory oppression remedy provisions deal with the equitable interests conferred by a trust of which the company is trustee. In Ciccarello, re Adelaide Property Development Pty Ltd v Cubelic[51] Mansfield J referred to these cases and observed that:

The preponderance of authority is to the effect that, where oppression has occurred in a company which is a bare trustee so that all its assets are held in trust, relief under s 232 and s 233 of the Corporations Act is inappropriate.

Mansfield J appears to have understood the question to be one of "appropriateness", not power.[52]

68 These cases, properly considered, do not, in my view, place limitations on the kind of orders that I "consider[] appropriate in relation to the [CPS] company[ies]", having regard to the particular circumstances before me. The point that I have to consider was not dealt with in Kizquari or any of the other cases mentioned above. None of those cases considered the scope of the oppression power and jurisdiction of the Court to grant relief having regard to s 53, although s 53 appeared in the legislation at the time those cases were decided in terms similar to the provision as it now appears. It would appear that s 53 was not brought to the attention of the Courts in those cases. Section 53 has been brought to my attention and I must decide in light of s 53 whether my powers are circumscribed so that I cannot make an order under s 233 in respect of a trustee company. In my view, s 53 puts beyond any doubt that the Court's jurisdiction and powers under the statutory oppression provisions are not circumscribed in respect of a trustee company and accordingly I conclude that I should depart from the view expressed by Young J in Kizquari and the cases which have supported that view, in view of s 53. I would also respectfully disagree with the view that Chesterman J expressed in Re Polyresins Pty Ltd which Young JA cited with approval in McEwan that the equitable interests in the trust cannot be dealt with by the Court under The only limitation imposed on the Court on the kind of order that it can make under is the requirement for the order to be one that that the Court considers appropriate "in relation to the company". The phrase "in relation to" requires a rational and discernible link between the remedy and the company in which the oppression has occurred. In other words, any remedy granted under must not be extraneous to achieving the object of relieving the oppression and must be appropriate to putting an end to the causes of oppression, including where the company acts as trustee and the oppression relates to the affairs of the trust. In appropriate cases the remedy may include orders dealing with the equitable interests in the trust, in my view.

69 The fundamental responsibility of a court when it interprets a statute is to give effect to the legislative intention as it is expressed in the statute. It is not part of the court's function to perpetuate error and to follow single justice authority which does not give effect to the legislative intention.[54] Accordingly, if oppression is found, I should not decline to grant the relief sought merely to maintain a consistency of approach with the Kizquari line of authority. The issue for my consideration is the appropriateness of the buy-out of the Gargaro interests as the remedy for the oppression in this case, if oppression is found.

70 The "oppressive conduct" relied on has been broken up into several categories.

(i) Exclusion from participation in the management of the company

71 The allegation is that Gargaro has excluded Ivan from the management of each of the CPS companies since 1 March 2008, notwithstanding that Ivan continues to be a director of those companies. In my view this ground has been made out on the evidence.

72 There was a consistent pattern of self-interest in Gargaro's conduct. Since March 2008, Gargaro has conducted the affairs of the CPS group as if Ivan has no interest in the functioning of the group and as if there was no reason to involve Ivan unless his signature was required. This is evidenced in the findings that I have made in the V&G misappropriation proceeding, the CPSIH misappropriation proceeding and the CPS derivative action proceeding.

73 Additionally, Gargaro did not involve Ivan in key business decisions such as whether CPS should exercise an option to purchase the property at Womma Road, Elizabeth West South and whether the CPS group should secure further bank finance. He unilaterally made decisions in circumstances where his decision exposed Ivan, as a director, personally.

74 It was argued that Gargaro's conduct is to be viewed in light of the following:

(a) the decision that he and Ivan made in December 2007/January 2008 to separate the administration and management of the V&G and CPS groups as from 1 March 2008;

(b) his reasonable understanding and belief by the end of January 2008 that a mechanism for the sale and purchase of the Gargaro interests in the V&G Group and the sale and purchase of the Vigliaroni interests in the CPS Group had been put in place;

(c) Ivan's own conduct that perpetuated that belief; and

(d) the legal action instituted by Ivan which has made continued co-management untenable.

There are two responses: first it is pertinent to observe that it is not a condition of relief that Ivan show that Gargaro acted as he did in the conscious knowledge that what he was doing was unfair if, by the standards of the reasonable director, the conduct was unfair.[55] Secondly, the reasonable director, armed with Gargaro's professional skills as an experienced businessman and an accountant of some 30 years, would not, in my view, have considered that he had any proper basis for believing that he could conduct the affairs of the CPS companies as if Ivan had no interest in the functioning of the group, as if he was solely in control and as if the affairs of the CPS Group were being conducted for his benefit only. Although in January 2008 Gargaro and Ivan had discussed a buy-out of their respective interests in the groups, it went no further than that. They had not agreed on a buy-out price, there was no agreement as to a mechanism for determining price, they had not discussed the repayment of loan accounts, there was no time frame for effecting the separation of interests and there was no discussion about the removal of Ivan as a director. Ivan had, in my view, a legitimate expectation that he remain involved and that key decisions would not be made without consultation with him. I do not accept that Ivan's conduct provided justification for Gargaro to act as he did.

75 As from September 2008 the relationship between the two had clearly irretrievably broken down. Gargaro has not sought to justify his conduct on that basis, but rather on the basis of the alleged separation agreement. In such circumstances, the objective director would view Ivan's exclusion from management as unfair and not a necessary response to the legal actions which were commenced. Moreover, Gargaro's offers to buy Ivan's interests at valuation in August 2008 and subsequently September 2008 and July 2009 cannot be accepted as mitigating the unfairness in light of the need for Gargaro to account to the CPS companies for his misappropriations.

(ii) Improper diversion of corporate business/ Unauthorised payment of funds in breach of

76 The facts relevant to these grounds concern the engagement of CPSCG as the service entity to the CPS companies in substitution for VVG. In light of my findings in the CPS derivative action, I find that Gargaro engaged in oppressive conduct for the purposes of s 232.[56]

77 It is common ground that Ivan did not seek access to the books and records of the CPS companies between 1 March 2008 and 30 September 2008. On 30 September 2008, Ivan sought access to the books and records. That access was denied by Gargaro on the basis that the alleged separation agreement, the subject of the discontinued proceeding, disentitled Ivan to access those books. I have concluded already that he had no proper basis for believing that Ivan was not entitled to exercise his rights as director and shareholder. Ultimately Ivan had to obtain an order of the Court in order to gain access. I find the conduct oppressive for the purposes of s 232 of the Act.

(iv) Use of company funds to defend the oppression proceedings

78 The evidence revealed that Gargaro has used around $130,000 of CPS group funds to pay his legal fees in defending the oppression proceeding and prosecuting the separation agreement proceeding. The funds have not been used for the purposes of the companies but rather for his personal ends in his dispute with Ivan. The use of company funds to pay his legal fees is not justifiable and is oppressive conduct.

79 Cresthill, TGF and GDS as unit holders each have a loan account with each CPS unit trust reflecting the unit holder's entitlement to unpaid profit distributions. The loan accounts are used to finance the CPS group's operations. It was the mutual understanding of TGF, Cresthill and GDS that, absent the agreement of all the unit holders, profit distributions in the CPS trusts would not be paid to the unit holders but would be loaned back to the trusts immediately upon the distributions being declared, save only for the amounts necessary to meet tax liabilities payable on profit distributions and Gargaro/TGF being entitled to modest distributions if required to cover living expenses.

80 However, on 1 December 2006, Gargaro caused the sum of $1.2M to be paid out of the CPS Unit Trust for the benefit of TGF. This transfer was accounted for by Gargaro in the books of the CPS Unit Trust as a reduction in the unit holder loan account of TGF. In February 2006, TGF used these funds to purchase a property at 234 Beach Road, Black Rock in his wife, Angela's, name. Gargaro told Ivan that he had purchased the Black Rock property in about mid 2006 but Ivan became aware only in late 2007 that Gargaro had used CPS funds to settle the purchase. After the payment of $1.2M from CPS Unit Trust, CPS Unit Trust's bank account had gone into overdraft (notwithstanding that it had no overdraft facility).

81 Further, during the period between 14 May 2006 and 28 December 2007 Gargaro caused the CPS Unit Trust to pay a total of $595,000 in reduction of TGF's unit holder loan account, in addition to the $1.2M transfer.

82 Meanwhile, no distributions at all (save for sundry drawings) have been made to date to Cresthill or GDS.

83 Gargaro has favoured his company for personal benefit to the detriment of Ivan/Cresthill and GDS and this constitutes oppression for the purposes of s 232 of the Act.

84 I am persuaded that the conduct of Gargaro from 1 March 2008 was oppressive and that it has not ended. The Court can have regard to the circumstances as a whole and assess the cumulative effect of the putative conduct in determining whether oppression has been shown.[57] Although there was a mutual decision in January 2008 to part company, there was at that time no deadlock. I am not satisfied on the evidence that the relationship between them had then irretrievably broken down. That did not occur until later in 2008 when Ivan became aware of what Gargaro was doing behind his back with the CPS companies. Ivan has some responsibility for that in the sense that he made no attempt to be actively involved in the management or affairs of the CPS entities. On the other hand, Ivan had always placed great trust and the prime responsibility for the management of the CPS Group in Gargaro. Although Ivan, in some part, brought it upon himself through his disregard of his obligations as a director, Gargaro took advantage of this for his own personal gain. He persisted with that conduct when, in August 2008, Ivan sought to exercise his rights as director and member. His conduct was unfair and prejudicial to Ivan in his capacity as director, shareholder and unitholder.

85 In choosing a remedy under s 233, generally the order should seek to put the company back on the rails and avoid the causes of conflict and oppression.[58] The purpose of granting a remedy under the oppression provisions is to bring an end to the oppression and to compensate the person oppressed fairly.[59]

86 In my view, any order under s 233 must deal with the unit holdings as well as the shares in the CPS companies. It may be that in many cases it will be possible to separate the affairs of a company from those of a trust which is related to the company. Whether that can be done depends on the facts of the particular case. In analysing the facts it must be borne steadfastly in mind that the economic value to a shareholder of ownership of shares is but one of the groups of relationships that a shareholder has with, or in relation to, a company. In this case Gargaro deliberately chose to conduct the CPS operations under a corporate trustee/unit trust structure and so intertwined the affairs of the trusts with the affairs of the companies that a separation of the interests between companies and trusts is plainly artificial and bears little relation to practical reality. The company/trust structures are set out, in Appendix A.

87 In the circumstances, the compulsory purchase of the Gargaro interests, including the units held by TGF and Gargaro, and Gargaro's resignation as a director of the CPS companies would bring an end to the oppression and the causes of the oppression. I will give the parties an opportunity to put submissions on the appropriate basis of valuation, taking into account Gargaro's misappropriation and misuse of V&G and CPS group funds.

88 I will stand the matters over for a short period to allow the parties time to consider these findings and to put submissions on the form of orders and any orders as to costs.

V&G CONCRETE CONSTRUCTIONS (VIC) PTY LTD (ACN 116 140 820)

CONCRETE PRECAST SYSTEMS (SA) PTY LTD (ACN 116 151 841)

CONCRETE PRECAST SYSTEMS (WA) PTY LTD (ACN 124 393 595)

CONCRETE PRECAST SYSTEMS (QLD) PTY LTD (ACN 123 922 510)

NICHOLAS JOSEPH GARGARO and CPS PROPERTY HOLDINGS PTY LTD (ACN 127 466 362) as trustee of the CPS PROPERTY HOLDINGS TRUST

NICHOLAS JOSEPH GARGARO and CPS CONSTRUCTION GROUP PTY LTD (ACN 129 499 127) as trustee of the CPS CONSTRUCTION GROUP TRUST

V & G CONCRETE CONSTRUCTIONS (VIC) PTY LTD (ACN 116 140 820)

NICHOLAS JOSEPH GARGARO and CPS PROPERTY HOLDINGS PTY LTD as trustee of the CPS PROPERTY HOLDINGS TRUST (ACN 127 466 362)

CPS Investment Holdings Pty Ltd (ACN 082 687 438)

V&G Investments Pty Ltd ATF V&G Investments Unit Trust (100 units)

Concrete Precast Systems (SA) Pty Ltd (ACN 116 151 841)

1. Cresthill Investments Pty Ltd (35 units)
2. TGF Investments Pty Ltd (40 units)
3. GDS Corp Pty Ltd (25 units)

Concrete Precast Systems (WA) Pty Ltd (ACN 124 393 595)

1. Cresthill Investments Pty Ltd (382 units)
2. TGF Investments Pty Ltd (436 units)
3. GDS Corp Pty Ltd (182 units)

Concrete Precast Systems (QLD) Pty Ltd (ACN 123 922 510)

1. Cresthill Investments Pty Ltd (382 units)
2. TGF Investments Pty Ltd (436 units)
3. GDS Corp Pty Ltd (182 units)

Concrete Precast Systems Pty Ltd (ACN 082 330 710)

[1] Vigliaroni v CPS Investment Holdings Pty Ltd [2009] VSC 254 (Unreported, Davies J, 25 June 2009).

[2] Vigliaroni v Concrete Precast Systems Pty Ltd [2009] VSC 253 (Unreported, Davies J, 25 June 2009).

[3] Supreme Court proceeding number 5349 of 2009**.**

[4] [1984] HCA 36; (1983-84) 154 CLR 178.

[6] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 96 (Mason J).

[7] (1996 - [1997] HCA 23; 1997) 188 CLR 449, 467 (Brennan CJ, Gaudron, McHugh and Gummow JJ).

[8] (1996 - [1997] HCA 23; 1997) 188 CLR 449.

[9] Ibid 466 (Brennan CJ, Gaudron, McHugh and Gummow JJ).

[10] Ed Patrick Parkinson, The Principles of Equity (2nd ed, 2003).

[11] Supreme Court proceeding numbers 5073 of 2009 and 7408 of 2009.

[12] Mordecai v Mordecai (1988) 12 NSWLR 58.

[13] Corporations Act 2001 (Cth), s 181.

[14] Mills v Mills [1938] HCA 4; (1938) 60 CLR 150, 185 (Dixon J) citing Lord Northington from Aleyn v Belchier [1758] EngR 208; (1758) 1 Eden 132, 138; [1758] EngR 208; 28 ER 634, 637.

[15] Cf Maronis Holdings Ltd v Nippon Credit Australia Ltd [2001] NSWSC 448; (2001) 38 ACSR 404, 454 [190], [191], [192] (Bryson J).

[16] Supreme Court proceeding number 7394 of 2009.

[17] Corporations Act 2001 (Cth) ss 180, 181, 182 and 191.

[18] Warman International Ltd v Dwyer [1995] HCA 18; (1994) 182 CLR 544, 558 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ); Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46.

[19] (1874) LR 9 Ch App 244; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89.

[20] [1995] HCA 18; (1994) 182 CLR 544.

[21] Ibid 559-60 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ).

[23] Supreme Court proceeding number 5348 of 2009.

[24] Corporations Act 2001 (Cth) ss 232, 53.

[25] Ebrahimi v Westbourne Galleries Ltd [1972] 2 All ER 492.

[26] Cumberland Holdings Limited v Washington H Sole Paterson and Co Limited [1906] HCA 60; (1997) 13 ALR 561; John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63_; French v Smith_ [2004] VSCA 207 (Unreported, Charles and Chernov JJA, Harper AJA, 23 November 2004); ASIC v ABC Fund Managers [2001] VSC 383; (2001) 39 ACSR 443; Herbert v Herbert [2005] NSWSC 1034 (Unreported, Young J, 10 October 2005); Re Hollen Australia Pty Ltd [2009] VSC 95; (2009) 27 ACLC 199.

[27] [1959] HCA 8; (1959) 101 CLR 298.

[28] Re Dernacourt Investments Pty Ltd v Baker Davis Supply Co Pty Ltd (1990) 20 NSWLR 588.

1. [29] Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459, 472 (Brennan J); Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692.

[30] Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692, 704 (Young J).

[31] Corporations Act 2001 (Cth) s 232(e), s 234.

[32] Chase Coproration (Australia) Ltd v North Sydney Brick & Tile Co Ltd (1994) 35 NSWLR 1.

[33] Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459, 472 (Brennan J).

[34] John J Starr (re) Pty Ltd v Robert R Andrew (1991) 6 ACSR 63, 69 (Young J).

[35] Corporations Act 2001 (Cth).

[36] Section 233, Corporations Act 2001 (Cth).

[37] Section 234, Corporations Act 2001 (Cth).

[38] Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688.

[39] [2009] HCA 25; (2009) 257 ALR 610

[41] (1993) 10 ACSR 606.

[42] Kizquari Pty Ltd v Prestoo Pty Ltd (1993) 10 ACSR 606, 612 (Young J).

[43] (1992) 6 ACSR 509.

[45] Kizquari Pty Ltd v Prestoo Pty Ltd (1993) 10 ACSR 606, 613.

[46] Jeruth Pty Ltd v Haybale [2004] VSC 319 (Unreported, Redlich J, 30 August 2004).

[47] (1994) 12 ACLC 902.

[48] [1999] 1 Qd R 599.

[49] [2004] NSWSC 61 (Unreported, Einstein J, 20 February 2004).

[50] [2002] NSWSC 1227; [2002] 44 ACSR 244.

[51] [2008] FCA 141 (Unreported, Mansfield J, 22 February 2008) [28].

[52] Cf Benjamin Corporation Pty Ltd v Smith Martis Cork and Rajan Pty Ltd [2003] FCA 1471 (Unreported, Carr J, 11 December 2003).

[53] J & G Knowles and Associates Pty Ltd v Federal Commissioner of Taxation [2000] FCA 196; (2000) 96 FCR 402; State Government Insurance Office v Rees [1979] HCA 52; (1979) 144 CLR 549, 553-554 (Stephen J), 560-561 (Mason J); Technical Products Pty Ltd v State Government Insurance Office (Qld) [1989] HCA 24; (1988) 167 CLR 45, 47 (Brennan, Deane and Gaudron JJ), 51 (Dawson J), 54 (Toohey J); Construction Industry Long Service Leave Board v Irving (1997) 74 FCR 587, 595 (Spender, Drummond and Sackville JJ); Commissioner of Taxation v Scully (2000) 201 CLR 48.

[54] Babaniaris v Lutony Fashions Pty Ltd [1987] HCA 19; (1987) 163 CLR 1; Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499, 504 (Gummow J).

[55] Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459.

[56] Cf Re Bright Pine Mills Pty Ltd [1969] VicRp 121; [1969] VR 1002; Sanford v Sanford Courier Service Pty Ltd (1986) 10 ACLR 549; Re Hollen Australia Pty Ltd [2009] VSC 95 (Unreported, Robson J, 23 March 2009).

[57] Lucy v Lomas [2002] NSWSC 448 (Unreported, Young CJ in Eq, 24 April 2002).

[58] John J Starr (Real Estate) Pty Ltd v Robert r Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63, 74 (Young J); Re Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588, 620 (Powell J), Re Hollen Australia Pty Ltd [2009] VSC 95 (Unreported, Robson J, 23 March 2009) [78].

[59] Szencorp Pty Ltd v Clean Energy Council Ltd [2009] FCA 40; (2009) 69 ACSR 365, 381 [71] (Goldberg J), Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359, 387 [122] (Giles JA), Re Hollen Australia Pty Ltd [2009] VSC 95 (Unreported, Robson J, 23 March 2009) [78] and [84].