Plaintiffs v Defendants

CORPORATIONS - Deadlock - Whether winding up on just and equitable ground justified - Whether other remedy available - Whether other remedy must be a legal remedy - Discretionary considerations; ss 461(1)k and 467(4) of Act; Host-Plus Pty Ltd v Australian Hotels Association [2003] VSC 145.

1 The First Plaintiff in this proceeding ('Peter') is the brother of the Sixth Defendant ('Ian'). They each hold, either directly or indirectly, 50% of the shares in each of the First to Fifth Defendants ('Extons group'). They are directors of those companies.

2 The Extons group[1] has been in business since the 1950s, when it was started by Peter and Ian's father and uncle. The Extons group engages in earthworks, excavating and contracting, and has been involved in works such as building irrigation channels, pipelines, drainage, roads and water basins throughout New South Wales and Victoria. From time to time, the Extons group also sells machines including machines that it holds for the purposes of its contracting work.

3 Peter started working for the Extons group in 1974. Ian started working for the Extons group in about 1981. Peter and Ian bought out their brother, Graeme, in about 2010.

4 Since 2010, Peter and Ian have divided the responsibility for conducting the business of the Extons group which they effectively jointly own and operate. Ian has mainly operated in the area of management and administration and Peter has mainly engaged in site management. The group has prospered.

5 Things changed from about March 2015. Peter and Ian disagreed about a particular job at Cohuna in northern Victoria. In essence Peter made it clear to Ian that he did not want Ian to treat him as a mere employee, but as an equal in the business. Peter has of course at all relevant times effectively been an equal owner and equal director. In around early 2015, he made it clear to Ian that he could not be treated as a mere works supervisor or machine operator. Peter suggested to Ian that they appoint a manager to manage the business. This short summary of the relevant origin of the dispute is largely common ground.

6 Peter contends that Ian refused to engage with him as an equal director and caused the affairs of the Extons group to be conducted, not only contrary to the interests of all members, but in a manner unfairly prejudicial to and unfairly discriminatory against Peter (and his company) as a member, director and employee of the Extons group.

7 It was submitted by Peter (and denied by Ian) that throughout 2015 and into 2016, Ian has also been engaging in conduct that is contrary to the interests of the Extons group as a whole. Ian has caused the Extons group to make payments to himself, his family and his friends. He has been causing the Extons group to sell machines inappropriately. And Ian has, it was submitted, been causing the Extons group to neglect its ordinary contracting business.

8 It was further submitted by Peter (and denied by Ian) that Ian has humiliated him and unfairly discriminated against him by telling suppliers that invoices must be signed by Ian and telling employees that Peter is not authorised to give instructions. Ian has sought to freeze Peter out of the conduct of the Extons group, no longer discussing business opportunities with him. Peter has been denied information and bank details for the Extons group, and Ian has caused the Extons group to change locks and refuse Peter access to keys. Ian has caused the Extons group to refuse to pay Peter's sons for work which the Extons group has benefited from, and has caused the Extons group to refuse to pay Peter for expenses incurred on the companies' behalf. Ian has caused the Extons group to withhold Peter's salary payment for no reason.

9 By their Second Further Amended Originating Process dated 21 October 2016 ('process'), the plaintiffs ('Peter' and 'P&K') apply under sections 232 and 233 of the Corporations Act 2001 (Cth) ('Act') for an order that the Sixth and Seventh Defendants ('Ian' and 'I&A') sell their shares in the First to Fifth Defendants ('Extons', 'Equipment', 'Mokoan', 'EEBB' and 'Debt-Flow') to Peter and P&K at such price as is determined by the Court ('plaintiffs' application').

10 By their Particulars of (alleged) Oppression dated 26 October 2016 ('the plaintiffs' particulars'), Peter and P&K allege that Ian has caused the affairs of 'Extons' to be conducted contrary to the interests of its members as a whole and oppressive of and unfairly prejudicial to Peter by reason of the matters alleged therein ('the plaintiffs' claim').

11 On 17 November 2016, Ian and I&A filed and served their response to the plaintiffs' particulars - Ian and I&A deny the plaintiffs' claim.

12 Further, by their amended summons in the proceeding filed 25 July 2016, Ian and I&A apply for orders that each of Extons, Equipment, Mokoan, EEBB and Debt-Flow be wound up pursuant to s 461(1)(k) of the Act, on the just and equitable ground.

13 Peter responded by submitting that in the particular circumstances of this case a winding up order was not appropriate because Ian did not have clean hands and in any event the companies were solvent and other remedies were available. In this regard reference was made to s 467(4) of the Act.

14 In respect of each of Extons, Equipment, Mokoan, EEBB and Debt-Flow the principal issues are:

(a) whether Ian is conducting the affairs of the company in a manner that is:

(i) contrary to the interests of the members of the company as a whole; or

(ii) oppressive of, or unfairly prejudicial to, Peter; and

(i) there has been a breakdown in the working relationship between the company's shareholders precluding all reasonable hope of reconciliation, friendly co-operation and mutual trust and confidence between them; and/or

(ii) the company's shareholders are deadlocked; and

15 This is a curious case and some preliminary observations are desirable.

16 First, this is clearly a bitter family dispute that is always best resolved away from the court. The parties should have tried harder to resolve all issues in this case or at the very least reduce it to a single issue. This is the next observation.

17 Ian and his interests are sellers. Peter and his interests are buyers. Ian wants $12,000,000. Peter has offered $8,500,000. There are of course a number of ways in which price can be determined. This is the real issue between the parties and it is most significant in terms of the relief to be granted in this proceeding.

18 There is however a difficulty in resolving the real issue, as identified above, absent agreement between the parties. This is because although there is clearly a deadlock between the parties - which usually attracts the just and equitable ground for winding up (s 461(1)(k)) - the buy-out orders, more appropriate for a solvent company are only usually attracted if there is conduct contrary to the interests of members as a whole or conduct that is unfairly prejudiced to and unfairly discriminatory against a member. Findings to such effect are required which necessitates evidence, usually, as in this case, detailed 'tit for tat' type evidence. If there are no such findings the companies are usually (but not always) wound up because of deadlock even though they are solvent and neither party wants (as their preferred option) this result. However, the Court does have a discretion in this regard.

19 I now turn to whether the provisions of s 232 of the Act are attracted. The issue is framed in paragraph 14(a) above.

20 As noted in paragraph 9 above, Peter relies on both s 232(d) and s 232(e) of the Act. Although there is an overlap, they are clearly separate grounds. The same facts often underpin each section.

21 Peter has identified eight broad grounds of oppressive conduct by Ian, whether viewed individually or in combination, as follows:

(a) Causing the Extons group to exclude Peter from the business (particular 1);

(b) Causing the Extons group to fail to tender for new work (particular 2);

(c) Causing the Extons group to make payments to Ian (particular 3);

(d) Causing the Extons group to make payment to Ian's son (particular 4);

(e) Using the funds of the Extons group for the benefit of Ian (particular 5);

(f) Causing the Extons group to make payments to a related company TGH for the benefit of Ian (particular 6);

(g) Causing the Extons group to make payments to Burns Equipment contrary to the contemporaneous documentary evidence (particular 7);

(h) Causing the Extons group to sell machinery outside the ordinary course of business (particular 8);

(i) Causing the Extons group to enter into the Bulldozer 47 transaction, outside the ordinary course of the Extons group's business (particular 9).

22 Ian denies that his conduct was in any way oppressive thereby attracting the relevant provisions. In summary, Ian contends -

(a) Whatever his (previous) conduct, there is no longer or no continuing oppression at the time of the hearing because since 14 October 2016, Peter has effectively been in control of the Extons Group, and the remedies are not available to those in control.

(b) A proper examination of all of the circumstances, including consent and the conduct of all parties including Peter, must viewed objectively, lead to the conclusion that Ian has not engaged in any unfair conduct.

(c) That oppression is not made out in relation to payments made to Ian because Peter agreed and consequently cannot claim to be oppressed.

(d) That the management of the Extons business was a settled and accepted course of conduct, where roles and functions were sufficiently defined and carried out. Further, in managing the business, as he had done for some time, Ian made various decisions in the best interests of the company notwithstanding some disagreement and disputation with Peter. It was submitted that it was not a question of excluding Peter, but simply giving recognition to these roles and functions which operated efficiently and effectively to render profits to the company.

23 Further, Ian pointed to conduct on the part of Peter that has to some extent informed his own conduct. In particular the following conduct of Peter was referred to -

(a) his refusal, in March 2015, to work as site manager for work for which Extons had successfully tendered and from which Extons would have made a profit of between $300,000.00 to $600,000.00, and despite Peter being employed by Extons as site manager for an annual wage of $103,260.00;

(b) his continuing refusal to act as site manager, or at all, which reduced the range of work and jobs for which Extons could tender;

(c) his objection to Extons' tendering for work that Ian was quoting or taking steps to quote or tender for;

(d) his changing the locks at the Mokoan Quarry (without informing Ian or providing a key to him);

(e) his taking of equipment which Extons needed to perform work (and in one instance, refusing to permit the equipment to be used by Extons) causing Extons to incur loss and costs;

(f) his taking and use of Extons' equipment, fuel, crushed rock, bark, parts and labour, from 6 August 2015 to about 5 December 2015, to a total value of at least $30,907.00;

(g) his withdrawal in February 2016 of the amount of $45,074.54, from an Extons bank account;

(h) his causing Extons to pay his personal expenses; and

(i) his taking of bulldozer track chains from Extons' depot on 29 May 2016.

24 Further factual and legal submissions made by the parties, will be referred to where necessary.

25 Ian submitted that as a finding of oppression is not open in the circumstances referred to, the companies must be wound up, despite his preference for a buy out at a fair and reasonable value.

26 There are four legal issues that require consideration. First, whether the grant of relief pursuant to s 233 of the Act is contingent on the oppressive conduct extending to the date of the hearing? Secondly, pursuant to s 232(d) of the Act, what constitutes conduct 'contrary to the interests of members as a whole'? Thirdly, pursuant to s 232(e) of the Act, what constitutes conduct oppressive to, unfairly prejudicial to or unfairly discriminatory against a member? Fourthly, whether the applicant's conduct is relevant to an assessment of the alleged oppressive conduct of the defendant? I will consider these issues in turn.

1. Is the grant of relief under s233 of the Act contingent on the alleged oppressive conduct extending to the date of the hearing?

27 The first question is whether the oppression must extend to the date of the hearing. Put another way, if the oppression has been removed or no longer exists as at the date of the hearing, is the section enlivened, and if enlivened, is relief available?

28 In Campbell v BackOffice Investments Pty Ltd,[2] after referring to a number of authorities, Giles JA said -

[132] In my opinion, it is not necessary that the conduct complained of be continuing at the time the court considers making an order. Rather, claimed relief founded on conduct which is no longer continuing may be refused, but will not always be refused, in the exercise of the discretion, and the discretion adequately allows for the logicality to which Hamilton J referred. I do not accept the first way in which Mr Campbell put his submission.

29 Addressing the issue with regard to the facts of the case Basten JA said -

[193] The factual premise to the submission must be accepted: the company was not carrying on business of any kind at the date of the order. No doubt the company will be wound up when the litigation is complete. However, it is necessary to address the underlying legal assumption that the company must be carrying on business at the time of the order. This assumption is based on the premise that the order must be directed to bringing an end to the oppressive conduct or, if it has come to an end, preventing its repetition. To address this issue, it is necessary to return to the authorities relied upon by the appellants, which have been identified but not discussed above.

[194] The appellants also put the argument on an alternative basis, namely that Backoffice, by putting the company into provisional liquidation, had made an election which was inconsistent with obtaining an order for the repurchase of its share. That was because a repurchase order assumed the continuation of the business of the company, the question of oppression having been resolved. That argument may also be addressed by reference to the authorities relied upon.

[195] There is nothing in the section which requires that relief only be available if the business of the company is continuing or is to continue. ...

30 Young CJ in Eq took a different view and said -

[382] In my view, the authorities still require one to show continuing oppression at the date of hearing unless one is complaining about an act in the past of a director or other controller of the company which has a continuing effect.

31 The High Court[3] appears to have adopted the view taken by Giles JA in the New South Wales Court of Appeal.

32 In Szencorp Pty Ltd v Clean Energy Council Limited,[4] Goldberg J said -

[73] The general trend of authority is that it is open to a court to grant relief under s 233(1) of the Act notwithstanding the fact that at the time of the trial or the making of an order the conduct or oppression complained of is not continuing.

[74] A considerable number of authorities in this context were considered by the members of the court in Campbell, above. I consider that the appropriate approach to take is that expressed by Giles JA in Campbell, (above) at [132]:

In my opinion, it is not necessary that the conduct complained of be continuing at the time the court considers making an order. Rather, claimed relief founded on conduct which is no longer continuing may be refused, but will not always be refused, in the exercise of the discretion, and the discretion adequately allows for the logicality to which Hamilton J referred [in Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35].

[75] Basten JA relied on the decision of the Privy Council in Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] UKPC 26; [2007] 4 All ER 164 as authority for the proposition that "neither the occasion nor the purpose of an order under s 233 need involve continuing oppressive conduct": Campbell at [203].

33 In Harding Investments Pty Ltd v PMP Shareholdings Pty Ltd (No 2),[5] Gordon J said -

[53] Before turning to consider the appropriate orders, it is necessary to consider that Lotic is now in administration. The Respondents submitted that the oppression must subsist at the time of the making of the order and that it does not now subsist because Lotic is in administration: Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35 at [6] and [7]. I reject that contention on two bases. First, at a factual level. The principal of Harding Investments has been, and continues to be, excluded from the management of the company and such exclusion was, and is, also contrary to the express terms of the BSA.

[54] Secondly, as a matter of principle. Lotic executed a Deed of Company Arrangement and the directors resumed control of the company and remain in control. Lotic is still trading, with the same shareholders and just two directors despite being subject to the BSA. Lotic is in an entirely different position to a company in liquidation or provisional liquidation: see Campbell at [179], [180] and [182]. Moreover, as the High Court said in Campbell at [182]:

[182] [T]he current form of the oppression provisions in Pt 2F.1 was introduced [Australia, House of Representatives, Corporate Law Economic Reform Program Bill 1998 (Cth), Explanatory Memorandum, p 34 [6.132]] with a view to making it clear that the Court may make orders even if the act, omission or conduct complained of has yet to occur or has ceased, it may very well be that the fact that there was no continuing oppression when this case came to trial does not entail that the Court had no power to make any of the orders for which s 233 provides. But that is a point that need not be decided.

34 From a review of the authorities, the better and predominant view is that the sections are enlivened if the conduct occurs at any time and notwithstanding that it may have ceased at the time of trial. However this will be of relevance in determining whether and to what extent orders should be made. There may be no need or utility for any remedy. Any remedy will depend on the particular circumstances of the case. The parties accepted this general statement of the law.

2. Pursuant to s 232(d) of the Act, what constitutes conduct 'contrary to the interests of members as a whole'?

35 The next legal principle concerns the meaning of the words 'contrary to the interests of members as a whole' (s 232(d)).

36 In Australian Institute of Fitness Pty Limited v Australian Institute of Fitness (Vic/Tas) Pty Limited (No 3),[6] Sackar J said -

[82] The concept of "contrary to the interests of the members as a whole" is independent of the "oppressive, unfairly prejudicial or unfairly discriminatory" ground: Turnbull v National Roads and Motorists' Association Ltd (2004) 50 ACSR 44; [2004] NSWSC 577 at [32] (Turnbull) per Campbell J. The section is of broad compass and "should not be hedged about by implied limitations": Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; 257 ALR 610; 73 ACSR 1; [2009] HCA 25 per Gummow, Hayne, Heydon and Kiefel JJ at [178].

[83] This element of s 232 has not been subject to extensive judicial exegesis. It is, however, clear that such conduct will not necessarily involve commercial unfairness. Campbell J, in Turnbull at [32], observed:

An action is capable of being "contrary to the interests of the members as a whole" in ways other than by being commercially unfair. Being pointlessly wasteful is one example.

[84] The test is objective: see Goozee v Graphic World Group Holdings Pty Ltd (2002) 42 ACSR 534; [2002] NSWSC 640 at [42]- [44] (Goozee). It is to be determined by reference to whether the conduct adheres to accepted standards of corporate behaviour or is in accordance with how reasonable directors would act in attending to the affairs of the company: Goozee at [41]. The decision of what is contrary to the interests of the members as a whole directs attention not to the interests of the persons who are, in fact, the members for the time being, but rather on the interests of an individual hypothetical member: Goozee at [42].

[85] It should be noted that a company has an interest, separate from its shareholders, in resisting a compulsory buyout order and in defending challenges to the validity of its decision-making: see, eg, Power v Ekstein (2010) 77 ACSR 302; [2010] NSWSC 137 at [111]- [121] per Austin J.

37 In Australian Securities and Investments Commission v Maxwell and ors,[7] and in a completely different context, Brereton J said -

[103] One consequence of this, of present significance, is that where there is an identity of interest between the directors and the shareholders, so that in effect the directors are the shareholders, the requirement to prevent self-interested dealing, constrain management and strengthen shareholder control - which is fundamental purpose and rationale of these duties - is much less acute. That is a circumstance which can impact considerably on the content of the duties. The significance of a correspondence between the identity of the directors and the shareholders is illustrated by the circumstance that, at general law, a fully informed general meeting can prospectively or retrospectively ratify the actions of directors of the company, though they involve negligence, breach of fiduciary duty or the exercise of the directors' powers for an improper purpose: North-West Transportation Co Ltd v Beatty (1887) 12 App Cas 589; Furs Ltd v Tomkies [1936] HCA 3; (1936) 54 CLR 583; 9 ALJ 419; Hogg v Cramphorn [1967] Ch 254 at 265-6; [1966] 3 All ER 420 at 426 (Buckley LJ); Regal (Hastings) Ltd v Gulliver [1942] UKHL 1; [1967] 2 AC 134; [1942] 1 All ER 378; Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666; (1975) 1 ACLR 222. Where the directors and the shareholders are one and the same, ratification is implicit. Although the shareholders of a company cannot release the directors from their statutory duties imposed by ss 180, 181 and 182 (Forge v ASIC [2004] NSWCA 448; (2004) 213 ALR 574 at 654-5; [2004] NSWCA 448; 52 ACSR 1 at 81-82; [2004] NSWCA 448; Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd (No 2) [2005] NSWSC 267; (2005) 53 ACSR 305 at 314-15; [2005] NSWSC 267; Angas Law Services Pty Ltd (in liq) v Carabelas (2005) 215 ALR 110; 53 ACSR 208, [2005] HCA 23 at [32]), their acquiescence in a course of conduct can affect the practical content of those duties, including any question of whether directors acted with a reasonable degree of care and diligence, and whether they made improper use of their position: Angas Law Services Pty Ltd (in liq) v Carabelas at [29]-[32].

38 Perhaps more relevantly in In the matter of Ledir Enterprises Pty Limited,[8] Black J said -

[177] I should first refer to the genesis of s 232(d) of the Corporations Act. Amendments to s 320 of the Companies (NSW) Code made in 1983 introduced a reference to orders in respect of oppression where the affairs of the company were being conducted in, or an act or omission was, "contrary to the interests of the members as a whole", and s 260 of the Corporations Law continued that reference, which then appeared in the same section as the other bases for relief in oppression. In New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86 at 96, the Court of Appeal noted that that formulation "reflects recognition of a long established principle of company law". The language of the section was amended by the Corporate Law Economic Reform Program Act (Cth) 1999 to separate the concepts which now appear in s 232(d) and (e) respectively. In Turnbull v NRMA (2004) 50 ACSR 44; [2004] NSWSC 577, Campbell J noted that an action may be "contrary to the interests of the members as a whole" in ways other than by being commercially unfair, and expressed the view that that concept was intended to be an independent alternative to the ground of "being oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member or members in that section". Conduct that is in breach of directors' duties, including in contravention of s 181 of the Corporations Act, may but will not necessarily, amount to oppression on this basis or under s 232(e) of the Corporations Act, to which I will refer below: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 at [527] (Fexuto) per Priestley JA; Goozee v Graphic World Group Holdings Pty Ltd (2002) 42 ACSR 534; [2002] NSWSC 640 at [41] per Barrett J; Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359; [2008] NSWCA 95 at [214] (Campbell) per Basten JA; Re Hollen Australia Pty Ltd [2009] VSC 95.

39 From a review of the authorities the better view is that s 232(d) is separate and distinct from s 232(e) and that a breach may not necessarily involve commercial unfairness. The court is required to examine all of the relevant facts and circumstances in order to determine whether the conduct under scrutiny is in the best interests of the company as a whole, apart from its members. In this context breaches of duty (whether statutory or fiduciary) by directors and officers may well be conduct that is not in the best interests of the company as a whole. Whether breaches of duty in a small family type company, where there is an overwhelming identity of interest between shareholders and directors, fall within the sections is a related matter. There is authority, as referred to above, to the effect that where there is consent or ratification of such conduct, it may, in context and in the circumstances, not be contrary to the interests of members as a whole or indeed unfair.

3. Pursuant to s 232(e) of the Act, what constitutes conduct, oppressive to, unfairly prejudicial to or unfairly discriminatory against a member?

40 In the High Court of Australia, in Wayde v New South Wales Rugby League Ltd,[9] Brennan J referred to the decision in Thomas v H W Thomas Ltd, and said:[10]

Section 320 [of the Companies (New South Wales) Code] requires proof of oppression or proof of unfairness: proof of mere prejudice to or discrimination against a member is insufficient to attract the court's jurisdiction to intervene. ...

At a minimum, oppression imports unfairness ...

The test of unfairness is objective ...

The court must determine whether reasonable directors, possessing any special skill or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision.

41 In Morgan v 45 Flers Avenue Pty Ltd,[11] Young J said:[12]

[I]n my view as a result of the decisions in New Zealand in Thomas v H W Thomas Ltd [1984] 1 NZLR 686; 2 ACLC 610; in England in Re Bovey Hotel Ventures Ltd (Chancery Division, Slade J 31 July 1981 unreported); Re R A Noble & Sons (Clothing) Ltd [1983] BCLC 273 at 290; and Re London School of Electronics Ltd [1985] 3 WLR 474 and in Australia in Wayde v NSW Rugby League Ltd [1985] HCA 68; (1985) 10 ACLR 87; 61 ALR 225, it has been accepted that one no longer looks at the word "oppressive" in isolation but rather asks whether objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair: see Wayde's case per Brennan J.

42 In Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd,[13] Young J said:

(a) "the mere fact that a company is a quasi-partnership is insufficient to raise a legitimate expectation that each partner will be able to take part in management";[14]

(b) "mere failure to agree between the majority and the minority is not usually itself sufficient to demonstrate oppression: see Re Five Minute Car Wash Service Ltd [1966] 11 WLR 745 at 751";[15]

(c) "I must assess the totality of the allegations to see if there is oppression. The authorities show that this type of case has to be judged on all the circumstances";[16]

(d) "[o]ne particular matter that judges take into consideration in this type of case is that the minority will often bait the majority to act in an apparently oppressive manner. ... When this occurs, and there is a reaction from the majority, the court both notes what happened and the reason for it happening";[17]

(e) "[b]ecause it is easily overlooked, it is necessary to repeat that a plaintiff must actually prove oppression before obtaining relief. Oppression is not normally established merely by showing that the majority are in control of the company, that the applicant is consistently outvoted nor because the majority have made some decisions which were questionable from a business point of view or have later turned out to be disastrous";[18] and

(f) "[e]ven if oppression is found, the courts have to bear in mind the principle of proportionality. Just because some oppression is found does not justify the court in ordering the remedy which it considers may best provide for peace in the future. The remedy must relate to eliminating the oppression found".[19]

43 In the New South Wales Court of Appeal in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd,[20] Spigelman CJ said:[21]

[89] It may be accepted that the existence of irreconcilable differences among persons involved in what is, in effect, a partnership, will destroy the personal relationship involving mutual confidence that lies at the heart of the partnership analogy. This analogy has been applied both to applications for winding up on the just and equitable ground and also to oppression suits. ... Irreconcilable differences may establish a basis for winding up, they do not of themselves constitute oppression or unfair prejudice: see McMillan v Toledo Enterprises International Pty Ltd (1995) 18 ACSR 603 at 614.

44 In Joint v Stephens,[22] Nettle, Ashley and Neave JJA said:[23]

[136] [T]he task of deciding whether there has been commercial unfairness is to be undertaken in the context of the particular relationship which is in issue: O'Neill v Phillips [1999] UKHL 24; [1999] 1 WLR 1092, 1098 (Lord Hoffman). As is observed in Ford's Principles of Corporations Law, 13th Ed [11.450], the assessment of commercial unfairness will not infrequently involve an examination of the conduct of the applicant. Thus as Nourse J said in Re London School of Electronics Ltd [1986] Ch D 211, 222 in relation to the English oppression provision:

The conduct of the petitioner may be material in a number of ways, of which the two most obvious are these. First it may render the conduct of the other side, even if it is prejudicial, not unfair: cf In re R. A. Noble & Sons (Clothing) Ltd [1983] BCLC 273. Secondly, even if the conduct on the other side is both prejudicial and unfair, the petitioner's conduct may nevertheless affect the relief which the court thinks fit to grant ...

[137] In Noble the prejudicial conduct consisted in one director running a quasi-partnership company virtually as his own, and it was held that that conduct was not unfair because the applicant had not shown any interest in being involved in management or decision making. (Footnotes incorporated into text).

45 In Nassar v Innovative Precasters Group Pty Ltd,[24] Barrett J referred to the judgment of Spigelman CJ in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd[25] and, before ordering the winding up, on the just and equitable ground, of the companies there in issue, said:[26]

[97] The Chief Justice also made the point that the jurisdiction to order winding up on the just and equitable grounds may become exercisable in circumstances that do not amount to oppression ...

[98] This is, in my view, an important point for the present case. There can be no doubt that there are irreconcilable differences between the shareholders and that there has been an irretrievable breakdown of the relationship that once existed. Indeed it was readily accepted by both counsel ... that this is a classic case for the making of a winding up order on the ground that irretrievable breakdown of the relationship between the members makes winding up just and equitable. But it by no means follows that relief under ss 232 and 233 - whether by way of winding up or otherwise - is warranted.

...

[119] There was, in short, no exclusion of the kind that might warrant a finding of oppression, unfair prejudice or unfair discrimination for the purposes of ss 232 and 233. There was the emergence of irreconcilable differences making it impossible for the parties to the quasi-partnership to continue in that relationship.

46 In Tomanovic v Argyle HQ Pty Ltd,[27] Austin J said:[28]

[39] ... as to the grounds in s 232:

(a) consistent with the principle that the purpose of relief is to terminate the effects of oppression, relief will generally be inappropriate as a matter of discretion if there is no continuing oppression: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, at [182];

(b) unfairness is assessed by reference to whether "objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair": eg, Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359, per Basten JA at [181];

...

(d) "it is important when assessing corporate activities to see if there has been oppression that judges do not remain in their ivory tower": Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688, Young J at 739;

(e) a particular matter which will be taken in account in assessing the gravity of any allegation of oppression, is the extent to which the minority shareholder has "baited" the majority shareholder to act in an oppressive manner: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688, at 741;

(f) there is no basis for an oppression claim in relation to conduct undertaken with the "acquiescence, or consent" of the applicant John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'Asia) Pty Ltd (1991) 6 ACSR 63, at 66 per Young J.

47 In Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Ltd (No 3),[29] Sackar J surveyed the authorities in respect of ss 232 and 233 of the Corporations Act and, in respect of the relevant tests under s 232(d) and (e), said:[30]

Contrary to the interest of the members as a whole

...

[84] The test is objective ...

...

Oppressive to, unfairly prejudicial to, or unfairly discriminatory against

...

[90] Although the test is again an objective one, the court should be informed by the context in determining whether a decision is unfair ...

...

[101] The relevant context to be taken into account includes the course of conduct undertaken by the parties, including the conduct of the plaintiff ...

48 From a review of the more relevant authorities, the critical issue is commercial unfairness, judged objectively. It usually results in some harm or prejudice by such conduct that is not reasonably or commercially justifiable. Of course all of the facts and circumstances and context needs to be examined in order to determine whether such conduct alleged is oppressive. Further, upon such examination conduct that may appear unfair may be fully justified. It goes without saying that the authorities referred to below deal with a range of different factual considerations and relationships. Each case must depend on its own facts and circumstances.

4. Whether the applicant's conduct is relevant to the alleged oppressive conduct of the defendant?

49 As some of the authorities referred to above,[31] and the authorities referred to below make clear, the conduct of the applicant may well be a relevant - and in some cases most relevant - factor in determining the nature and extent of any relief, as of course will the nature and extent of oppression as at the time of trial.

50 Also in Morgan v 45 Flers Avenue Pty Ltd, Young J said of the claimant's conduct in a claim for relief for oppression:[32]

[I]n my view the approach taken by Nourse J in Re London School of Electronics Ltd [1985] 3 WLR 474 at 482 is the correct one, that is that such conduct may either render the conduct on the other side not unfair or may affect the relief that the court thinks fit to grant ...

51 That approach was adopted and applied by the New Zealand Court of Appeal in Vujnovich v Vujnovich,[33] in which Casey J (who delivered the joint judgment of Cooke P, Somers, Casey, Bisson and Gallen JJ) said:[34]

[W]e disagree with [the primary judge and find] that each side established allegations that the affairs of the companies were conducted in a manner that was oppressive, unfairly discriminatory or unfairly prejudicial to him or them. Notwithstanding this, we are satisfied that [the primary judge] correctly diagnosed all these episodes as symptoms of the collapse of the underlying partnership between the three brothers. There were faults on both sides, but essentially their differences in character and personality made the breakdown inevitable. As the [primary] Judge said (at p 138), the situation was one "which became more divisive as time went on, feeding the growing antagonism between the two factions until any sensible sort of working relationship as partners was impossible and I think unwanted on either side. (Emphasis added)

52 In Ample Source International Ltd v Bonython Metals Group Pty Ltd (No 6),[35] Robertson J said:[36]

[44] ... an overall objective assessment is required of the conduct of which complaint is made by Ample Source and the countervailing conduct complained of by Bonython Metals.

...

[267] I accept that unfair conduct by an applicant may render the complained of conduct not unfair and that, in addition, it may affect the relief to be granted ...

53 In Szencorp Pty Ltd v Clean Energy Council Ltd,[37] Goldberg J said:[38]

[69] [B]y the commencement of the final hearing the substantive matters complained of by the plaintiff had been attended to ... That consequence gives rise to the question as to whether it is open to a court to grant relief under s 233(1) when the conduct complained of, although in existence at the time the proceeding was filed, is no longer continuing as at the date of the trial or thereafter.

...

[70] ... in considering what relief should be made available to a party seeking relief under ss 232 and 233, it is necessary to consider the appropriateness of the remedy as at the time of the trial, and not simply at the time the application to the court for relief was filed. Notwithstanding the width of the discretion in s 233 as to the relief which may be granted, the relief to be granted should be such as to terminate or remove the oppressive conduct or the conduct which is contrary to the interests of the members of the company. As Young J put it in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688 at 742:

The flavour of the section also is that the court is only to give the remedy which removes the oppression. Note the remedy in fact given in Re H R Harmer Ltd [1959] 1 WLR 62 at 68. Thus it is not enough merely to find oppression and then proceed to find some remedy that might bring peace to the company generally. The court should only grant the remedy that removes the oppression found.

[71] The proposition that the purpose of granting a remedy under ss 232 and 233 is to bring to an end the conduct or oppression of which complaint is made was explained by Giles JA in Campbell (above) (at [121]) ...

...

[77] As the council had attended to the substantive matters complained of by the plaintiff by the commencement of the final hearing, there is no conduct which needs to be the subject of an order or relief to operate prospectively.

...

[85] I do not consider that the relief sought is appropriate. As I pointed out earlier, it resolves no issue as to the conduct of the council nor any issue which might conceivably fall under the heading of "oppression".

...

[86] The application will be dismissed.

54 Also in Tomanovic v Argyle HQ Pty Ltd, Austin J said:[39]

[44] ... Further, there will ordinarily be no occasion for a buy-out if the oppression has otherwise been brought to an end: Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359 per Giles JA, at [123]; see also Young CJ in Eq at [382]; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, at [182].

...

[234] "Lack of trust" or "breakdown" is not a ground of oppression.

55 In my opinion the oppression provisions are engaged. In particular, there are three payments made by Ian that bring his conduct within ss 232(d) and 232(e) of the Act.

56 First (and most significantly), TGH (Vic) Pty Ltd ('TGH'), a company owned by Ian and his wife, received $335,012 earned by the Extons group. Ian paid and in fact diverted those funds to TGH ('the TGH Payment').

57 Ian's explanation - that Peter agreed or acquiesced in this course - cannot be accepted. Ian's subsequent repayment of those monies to the Extons group confirms the absence of any legitimate basis for their diversion. Further the evidence does not establish to my satisfaction Peter's agreement, in the event that it is relevant.

58 The diversion of these funds clearly represents a breach of fiduciary and statutory duty on the part of Ian. It ignored the corporate form. It ignored the fact that Extons was clearly entitled to the amount having paid for the equipment and the transactions having been undertaken on its behalf. It was not in the best interests of Extons as a whole. On the contrary Extons was impoverished to at least such extent. It earned and should have got the profit. The payment was taken because Ian thought - based on a discussion and a throw away line - that the equipment side of the business was, ignoring the corporate form his. He was wrong. Diverting the payment and the explanation given, evidence the most clear and quintessential breach of duty. The TGH Payment was clearly not in the interests of Extons as a whole and also was prejudicial to and discriminated against the other shareholders.

59 Ian submitted that the TGH Payment did not constitute a breach of duty and no consequences follow. First, it was submitted that the TGH Payment had been repaid and there was no longer any oppression in this regard. However, as the authorities suggest, although the oppression in this regard has gone, the section is enlivened and it remains a question as to whether there is any utility in any remedy or order. This is a discretionary matter and in my view there is every reason to grant relief. The type of relief paradoxically, but not surprisingly, is what the parties actually want.

60 Secondly, it was submitted, by reference to authority, that the nature and extent of the breach, in the context of the family group of companies was less significant because of the identity of interest between directors and shareholders, attracting principles of consent, acquiescence, ratification and the like.[40]

61 I am not in the least attracted by the argument. The facts differ markedly from the two cases referred to. The proposition may be relevant to hotel bookings or restaurant charges and the like, but not an egregious breach of duty, not consented to or ratified, as I have found, and indeed the cause of much concern on the part of Peter.

62 Thirdly, it was submitted that the constitution of Extons permitted in effect the profit to be paid to a director. I reject the submission. It was raised for the first time in final submissions and has no basis in the evidence.

63 The second set of payments that in my view relevantly constitute oppressive conduct took place in December 2015. Ian admits he made payments to or for his benefit totalling $30,800.00 ('December Payments').

64 Ian's evidence-in-chief in relation to the December Payments was that Peter had:

(a) from 31 October 2015 to 3 November 2015, used the first defendant's equipment (Extons' grader no. GR56 ('Grader 56') and one of Extons' scrapers) and material (approximately 810 tonnes of crushed rock from Extons' Lurg Quarry), to the value of $15,100.00, at Peter's property. During cross-examination Peter admitted using Grader 56 and one of Extons' scrapers and taking crushed rock from the Lurg Quarry. He denied that the costs of such were $15,100.00, but he admitted that he had not reimbursed Extons for the costs;

(b) on 5 December 2015, used Extons' equipment (the Grader) and material (approximately 450 tonnes of crushed rock from Lurg and approximately 30 metres of bark from the depot), to the value of $6,600.00, at his property. During cross-examination Peter admitted using the first defendant's equipment and taking its material on this date, though only 22 and not 30 metres of bark. Although he did not admit that the costs of such were $6,600.00, he did admit that the costs were probably in excess of $1,500.00 and that he had not reimbursed the first defendant;

(c) from 6 August 2015 to 30 September 2015, utilised Extons' labour for, and used Extons' parts in, work, at the depot, on his motor home to the value of more than $9,207.00. During cross-examination Peter admitted this.

65 Ian gave evidence that he caused the December Payments to be made because Peter had used Extons' equipment and resources, and material, to the same value as detailed above. It was submitted that the December Payments could therefore not be characterised as oppressive. If they were, Peter's appropriation of other property of Extons (crushed rock, bark) for his own benefit was oppressive of and or unfair to Ian. I am not attracted by the submission. The breach of duty is clear. It is of no assistance or relevance that the other director was also in breach. The breaches do not cancel each other out.

66 The third payment that in my view relevantly constitutes oppressive conduct took place in April 2016. Ian admits that after he discovered that cheques were written by Peter, he caused the first defendant to pay to or for himself, as an equalising distribution, the amount of $45,074.54.

67 Ian admits that it was not appropriate for him to withdraw the money. However, again he submitted that in the circumstances, the transfer of this amount could not be oppressive. If it were oppressive, it was submitted that Peter's withdrawals were oppressive of and or unfair to him. I am not attracted to the submission for the same reason.

68 In my opinion and in view of the firm decision I have come to in relation to the TGH Payment and the other payments it is neither necessary nor desirable to deal with all of the other suggested oppressive conduct. However, I will state my opinion in summary form.

69 I am not satisfied that the other conduct referred to crosses the line such that either section 232(d) or s 232(e) is attracted or enlivened. From the time of the falling out in about March 2015, both parties engaged in conduct that reflected their falling out and perception as to what was in the best interests of the companies and themselves. Of course in such circumstances there is always suspicion, mistrust and even paranoia. There is a sufficient dose of each in this case. Tactics and forensic decisions are also common. The point is that conduct does not occur in a vacuum.

70 Most of the complaints made against Ian are either not made out on the facts, or if made out on the facts did not involve conduct within the provisions. In other words the conduct was not, in context and in the circumstances, so unfair or unreasonable or contrary to the interests of members as a whole so as to enliven the provisions. In fact, for the most part Ian was probably entitled to take the course that he did.

71 Referring to the broad grounds set out in paragraph 21, the only grounds that I accept are those relating to the TGH Payment, namely (c), (e) and in particular (f) and the other two payments.

72 I am not prepared to make a finding on the evidence that Peter was excluded from the business. Various facts and matters were put forward as evidence of such exclusion. In my opinion they do not go so far as to evidence exclusion. Of course they evidence the tension, anxiety and difficulties between Peter and Ian particularly in light of Peter's desire to change his role in the business which departed significantly and substantially from the basis on which the brothers had operated. In this context Ian's reaction was neither unfair nor unexpected.

73 The question then is what is the appropriate remedy? I have come to the conclusion that the only proper remedy in the first instance is a buy out. This is after all what the parties want. All steps should be taken to enable the parties to achieve this. If it is not achievable, further remedies, including winding up will need to be considered. As the authorities make clear the remedy in each case will depend on the peculiar facts and circumstances of the case although the question, so far as Peter is concerned may have abated, the evidence and conduct of the parties suggests that the present arrangements and shareholders should not continue given the deadlock and breakdown in the relationship. It is clearly only a matter of time before there is further disputation.

74 Even If I am wrong and the oppression provisions are not enlivened, I would not in any event wind up the companies. I consider an alternative remedy is available to the applicant (and, indeed, desired by both parties), and the applicant is acting unreasonably by seeking winding up orders instead of pursuing that alternative.

75 Mr Young QC (who appeared with Mr Short of Counsel) submitted that I had no choice but to wind up the companies under the just and equitable provisions (s 461(1)(k)), because of the obvious deadlock. Mr Wyles QC (who appeared with Mr C Tran of Counsel) disagreed and submitted that in the circumstances of this case, there were two reasons as to why the companies should not be wound up. First, it was submitted that other remedies were available, and that Ian was acting unreasonably in seeking a winding up order essentially because Ian is a seller and Peter is a buyer.[41] Reference was made to s 467(4) of the Act. Secondly, it was submitted that Ian did not have clean hands.

76 Sections 467(1) and (4) of the Act are in the following terms -

467(1) Subject to subsection (2) and section 467A, on hearing a winding up application the Court may:

(a) dismiss the application with or without costs, even if a ground has been proved on which the Court may order the company to be wound up on the application; or

(b) adjourn the hearing conditionally or unconditionally; or

(c) make any interim or other order that it thinks fit.

...

467(4) Where the application is made by members as contributories on the ground that it is just and equitable that the company should be wound up or that the directors have acted in a manner that appears to be unfair or unjust to other members, the Court, if it is of the opinion that:

(a) the applicants are entitled to relief either by winding up the company or by some other means; and

(b) in the absence of any other remedy it would be just and equitable that the company should be wound up;

must make a winding up order unless it is also of the opinion that some other remedy is available to the applicants and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.

77 Mr Young submitted that there was no other remedy and that Ian was not acting unreasonably. Further, he denied that Ian did not have clean hands.

78 In 1989, in Bernhardt v Beau Rivage Pty Ltd,[42] Young J considered a predecessor to s 467(4) of the Corporations Act, namely s 367(3) of the Companies (NSW) Code, which, His Honour said:[43]

... provides that where an application is made by contributory petitioners for a winding up on the just and equitable ground, the court is not to make a winding up order if:

It is of the opinion that some other remedy is available to the applicants and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.

79 In 2000, in Belgiorno-Zegna v Exben Pty Ltd,[44] Hodgson CJ in Eq. set out s 467(4) of the Corporations Law and said that:[45]

[T]he court should not refuse winding up simply because of the availability of another remedy, unless the court is of the opinion that the applicant for winding up is acting unreasonably in seeking to have the company wound up.

80 In 2003, in Johnny Oceans Restaurant Pty Ltd v Page,[46] Palmer J said:[47]

[37] [I]f the grounds for a winding up order on the just and equitable ground are established, as in my opinion they have been in the present case, and if no other remedy is reasonably available to the applicant within the meaning of s 467(4) of the Corporations Act, as I think also is established, then that subsection provides that the Court must make a winding up order.

[38] It seems to me that where the ground is established to the Court's satisfaction that a winding up order should be made and there is no alternative order reasonably open within the provisions of s467(4), the Court has no discretion to refuse a winding up order.

81 In 2011, in Re Bluechip Development Corporation (Cairns) Pty Ltd,[48] Peter Lyons J said:[49]

Under s 467(4) of the Corporations Act, where a shareholder has brought a winding up application on the ground that it is just and equitable that the company should be wound up, and the court is of the opinion that the applicant is entitled to relief, and in the absence of any other remedy that it would be just and equitable that the company be wound up, then the court is required to make a winding up order, unless it is also of the opinion that some other remedy is available to the applicant, and that the applicant is acting unreasonably in seeking to have a company wound up instead of pursuing another remedy.

82 In 2012, in Re Amazon Pest Control Pty Ltd,[50] Black J reproduced s 467(4) of the Corporations Act and said:[51]

This section requires the Court to make a winding up order in that situation, unless it is of the opinion that some other remedy is available to [the plaintiff] and he is acting unreasonably in seeking to have the Company wound up instead of pursuing that other remedy.

83 In 2014, in Re David Ireland Productions Pty Ltd,[52] Black J referred to s 467(4) of the Corporations Act and said:[53]

This section requires the Court to make a winding up order ... unless it is of the opinion that some other remedy is available to the plaintiffs and they are acting unreasonably in seeking to have the Company wound up instead of pursuing that other remedy.

84 The expression "some other remedy" in s 467(4) of the Act has been construed very broadly to include not only legal remedies but alternative courses of action otherwise open to the parties, including commercial remedies such as an offer to purchase the applicant's shares.

85 In Host-Plus Pty Ltd v Australian Hotels Association,[54] Hansen J said -

[57] I reconvened the hearing on 8 May in light of these developments. Among other things, I drew counsel's attention to authorities on the meaning of the expression "other remedy" in s 467(4). They raised the question whether remedy in that context means a remedy in the sense of a cause of action or whether it is a term of wider meaning which comprehends a course of action which might be considered sufficient in the circumstances. There were two Australian cases, re Dalkeith Investments Pty Ltd[55] and Bernhardt v Beau Rivage.[56] In the latter case, Young J referred to English cases which, in respect of the same statutory provision, had taken the view that "other remedy" included an out of court offer to purchase the plaintiff's shares. To the cases cited by Young J in his judgment, I added a reference to a further and more recent decision of the English Court of Appeal in Virdi v Abbey Leisure Ltd; re Abbey Leisure Ltd.[57] This decision is referred to in Gower's Principles of Modern Company Law with the statement: "The alternative remedy need not be a legal one."[58] See, too, Palmer's Company Law.[59] I noted that in his judgment, Young J said, at 164, that in his view these cases went too far and that the words "other remedy" meant "other cause of action" whether at general law or statutory. I did not then express a concluded view on the matter, but drew attention to the point, arising as it did out of counsel's submissions, and because the parties might find the observations of assistance in determining their approach to the case and as to the means of resolving the differences between them.

...

[67] In so far as the matter of power is concerned, I am of the view that "other remedy" in s 467(4) is not restricted to a legal remedy in the sense of a cause of action but is to be understood in the wider sense of a course of action otherwise open to the party. This interpretation accords, in my view, with the nature of the ground, the flexibility desirable in the resolution of such cases, and is consistent with the dictionary meaning of the word "remedy". In the particular circumstances of this case "other remedy" would, in principle, extend to acquisition of the AHA shares, and constitutional change.

[68] I note the general acceptance by counsel of the power under s 467(1)(c). I do not consider it necessary to examine that power or its relationship with s 467(4). It is sufficient to note that s 467(4) deals with the just and equitable ground and, to the extent that it does, directs how the Court is to proceed in such cases.

86 In Joint v Stephens (No 2),[60] Robson J said -

[12] Re A Company[61] deals with the English equivalent of sub-s (4). In that decision, Vinelott J said that "some other remedy" referred to in the section is not merely limited to legal remedies, but encompasses the plaintiff who seeks relief being offered a price for his shares which was a fair price. In those circumstances the court could decline to wind up the company on the application of the plaintiff on the just and equitable ground if the plaintiff had been offered a reasonable sum for his shares and had refused to accept that sum.

[13] Accepting as I do the construction of s 467(4), the defendant has indicated that if I accept the plaintiff is entitled to relief under the just and equitable ground it is prepared to buy the plaintiff's shares at a fair value to avoid a winding up order being made. The plaintiff also accepts the authority of Re A Company.

...

[33] As I indicated earlier in my judgment, the decision of Vinelott J in Re A Company[62] on a similar provision in the English Companies Act, makes clear that the reference to a remedy includes accepting an offer by another person for the applicant's shares. In my view "other remedy" is wide enough to include other courses of action.

[34] It is also important to bear in mind what Vinelott J said at 860:

"What s 255 (2) of the 1948 Act contemplates is I think a situation in which the continuance of the company would be unjust to the petitioner and where that injustice cannot be remedied by any step reasonably open to the petitioner. If an offer is made to purchase his shares he is thereby provided with an alternative course. The question is whether he is acting unreasonably in rejecting it".

87 Because there is, at this stage, another remedy desired by both parties I will not wind up the companies. Because Ian wishes to be bought out at a fair and reasonable price, he is acting unreasonably, at this stage, in not pursuing this option, particularly because Peter is a buyer and the only issue is price. Of course the position may change and it may be necessary to revisit the appropriate relief.

88 Further, there are other discretionary matters that tell against the making of winding up orders.

89 Courts are "extremely reluctant to wind up a solvent company".[63] A reason for this reluctance is the potential adverse effect of winding up on employees, which is a relevant consideration pointing against the making of a winding up order.[64] As the Court of Appeal has observed, "[i]t is well accepted that the winding up of a solvent and flourishing company should be a last resort".[65] Courts will consider whether any other relief would be preferable to a winding up order.[66] In my view other relief is available.

90 Another relevant factor is whether the party moving for a winding up order has clean hands and should obtain the order. Of course this is also not a determinative factor.[67]

91 However, on the evidence and findings made as set out above, the companies are solvent and Ian does not, for the reasons given, have 'clean hands'.[68] I will not in the circumstances wind up the companies at this stage. The parties were advised of this on 9 December 2016. Peter, or his interests should be given an opportunity to buy out Ian and his interests at a price to be determined.

92 I will hear from the parties as to the appropriate form of order, if any, at this stage and the further progression of the matter.

[1] The Extons Group is referred to as a whole. There is no need in my opinion to deal with each company separately.

[2] [2008] NSWCA 95.

[3] Campbell v BackOffice Investments Pty Ltd [2009] HCA 25 (French CJ at [68]-[72]; Gummow, Hayne, Heydon and Kiefel JJ at [182]).

[4] [2009] FCA 40.

[5] [2011] FCA 567.

[6] [2015] NSWSC 1639.

[7] [2006] NSWSC 1052.

[8] [2013] NSWSC 1332.

[9] [1985] HCA 68; (1985) 180 CLR 459.

[11] (1986) 10 ACLR 692.

[13] [1998] NSWSC 413; (1998) 28 ACSR 688.

[20] [2001] NSWCA 97; (2001) 37 ACSR 672.

[22] [2008] VSCA 210.

[24] [2009] NSWSC 342; (2009) 71 ACSR 343.

[25] [2001] NSWCA 97; (2001) 37 ACSR 672.

[26] [2009] NSWSC 342; (2009) 71 ACSR 343, 360 [97]-[98] and 364 [119].

[27] [2010] NSWSC 152.

[29] [2015] NSWSC 1639; (2015) 109 ACSR 369.

[31] See Joint v Stephens at [44] above.

[32] (1986) 10 ACLR 692, 706.

[33] [1988] NZCA 53; [1988] 2 NZLR 129.

[35] [2011] FCA 1484; (2011) 285 ALR 488.

[37] [2009] FCA 40; (2009) 69 ACSR 365.

[39] [2010] NSWSC 152, [44] and [234].

[40] See above at [37], [38] and [39].

[41] In cross-examination, Ian said that "My position is that I'm prepared to take half what it's worth". Ian XXN T132.13-14.

[42] (1989) 15 ACLR 160 (Young J).

[44] [2000] NSWSC 884; (2000) 35 ACSR 305 (Hodgson CJ in Eq.).

[46] [2003] NSWSC 952 (Palmer J).

[48] [2011] QSC 368 (Peter Lyons J).

[50] [2012] NSWSC 1568 (Black J).

[52] [2014] NSWSC 1411 (Black J).

[54] [2003] VSC 145.

[55] (1984) 9 ACLR 247.

[56] (1989) 15 ACLR 161.

[57] (1990) BCLC 342.

[60] [2008] VSC 69.

[61] [1983] 2 All ER 854.

[62] [1983] 2 All ER 854.

[63] International Hospitality Concepts Pty Ltd v National Marketing Concepts Inc [No 2] (1994) 13 ACSR 368 at 372 per Young J.

[64] Short v Crawley [No 30] [2007] NSWSC 1322 at [1236] (White J); Re Hollen Australia Pty Ltd [2009] VSC 95 at [175] per Robson J.

[65] French v Smith [2004] VSCA 207 at [122] per Charles and Chernov JJA and Harper AJA; Sassine v Ray & Sons Construction Pty Ltd [2012] NSWSC 307 at [21] per Black J.

[66] Turner v Ulicorp Pty Ltd [2007] NSWSC 206 at [24] per Barrett J; Host-Plus Pty Ltd v Australian Hotels Association [2003] VSC 145 at [67] per Hansen J.

[67] Ruut v Head (1996) 20 ACSR 160 at 161 per Santow J; Malos v Malos [2003] NSWSC 118; (2003) 44 ACSR 511 at 516 [26] per Barrett J.

[68] Of course Peter does not have clean hands either but this was not a relevant issue in the proceeding.