Spence v Rigging Rentals WA Pty Ltd

AND: RIGGING RENTALS WA PTY LTD (ACN 105 556 563)

JUDGE: GILMOUR J DATE: 29 October 2015 PLACE: PERTH

REASONS FOR JUDGMENT 1 This proceeding concerns the unfortunate breakdown of the relationship between Mr Spence, the plaintiff, on the one hand and Messrs McGillivray and Sweetapple, the second and third defendants, on the other, in relation to their company - the first defendant - Rigging Rentals WA Pty Ltd (the Company). The shares in the Company are held equally between Mr Spence and the personal respondents, to whom, together, I will refer as "the majority". Mr Spence alleges oppression at the instance of the majority. He seeks relief under s 233 of the Corporations Act 2001 (Cth) (the Act). 2 He alleges that on or about 1 August 2014 the majority demanded that he consent to the allotment of additional shares to them with the effect of reducing his shareholding to 25% and increasing theirs to 37½% each. Acceptance of this demand was said to be the price of the majority agreeing to the continuation of negotiations, in effect, for sale of the Company whether by a sale of all the shares or alternatively the business of the company, which was then in contemplation. 3 The alleged demand is contained in an email written on behalf of the majority by Mr Sweetapple sent to Mr Spence dated 1 August 2014 (1 August email). Mr Spence further alleges that it may be inferred from the email, that the majority would, absent his consent to the share allotment, cause or procure his exclusion from the management of the business of the Company. 4 The Company has cross-claimed for compensation pursuant to s 1317H of the Act for alleged breaches by Mr Spence of s 182(1) of the Act or, alternatively, equitable compensation for alleged breach of his fiduciary duties. 5 Within two months of commencing this action Mr Spence's employment was terminated and his day-to-day involvement in the affairs of the Company ended. Since then he has not received income or dividends from the Company. The opportunity for the sale of the Company which existed in or about July and August 2014 is no longer available. 6 Mr Spence submits that the additional share allotment demands of the majority constitute oppressive conduct, as does his exclusion from management. Mr Spence seeks relief in the form of an order for the purchase of his shares by the majority. 7 The expert evidence was agreed by the parties to be to the effect that $1,800,000 represented the market value of the Company and $600,000 represented a market value of one-third of the shares owned by Mr Spence as at 30 November 2014.

The background facts 8 The following background facts, most of which are not controversial, are substantially taken from the parties' respective closing submissions in combination. Whilst largely uncontroversial their relevance and effect is often in dispute. For example, there is no dispute as to the expenses of the Company incurred by Mr Spence. The issue rather is whether they were reasonably incurred in the course of the business of the Company (or perhaps - were incurred in breach of his duty to the Company). Where the facts are in dispute I have resolved that dispute. 9 Further, at the outset of the trial, Mr Spence took objection to various paragraphs in the written statements adduced on behalf of the defendants. It is not necessary to deal with each of those objections due to the conclusions I have reached. Where it is necessary, though, I will set out my rulings in these reasons.

Establishment of the Company 10 From about 1990 until 2002, Messrs Spence, McGillivray and Sweetapple were all employed by Sling-Rig Pty Ltd (Sling-Rig), a manufacturer and supplier of lifting, rigging and materials handling equipment. In about late 2001 Sling-Rig went into receivership. Shortly after this, Mr McGillivray resigned to set up his own lifting equipment company - Lifting by Design Pty Ltd (Lifting by Design). At about the same time Messrs Spence and Sweetapple were recruited to join Bullivants Pty Ltd (Bullivants), a national lifting equipment firm. Mr Spence managed the Perth branch of Bullivants and Mr Sweetapple managed the Bunbury branch. 11 In early 2003, Mr Sweetapple perceived an opportunity to establish a business of hiring out lifting, rigging and materials handling equipment. He discussed this opportunity with his then colleagues Messrs McGillivray and Spence. All three agreed that there was an opportunity in this field and that they should form a company to exploit the opportunity together. The business plan for the proposed new venture was to begin by hiring equipment to Lifting by Design for on-hire to its customers, and then to grow from that business base. 12 The Company was incorporated on 16 July 2003, initially under the name "LBD Hire Pty Ltd" (LBD Hire) reflecting the proposed close relationship with Mr McGillivray's company Lifting by Design. Each of the three participants in the venture took up ten shares. Messrs Spence and Sweetapple, who at this stage were still employed by Bullivants, took up their shares through trusts. Mr McGillivray took his shares in his own name and became the sole director. 13 Mr McGillivray also carried out the management of the Company, in conjunction with the management of Lifting by Design, for the first two years (from mid-2003 to mid-2005). 14 The original plan was that when the Company's business became established, Mr Sweetapple would resign from his employment and take over management. However, in early 2005 when the Company reached the stage where it could justify having a full-time manager, the three shareholders agreed that Mr Spence, instead of Mr Sweetapple, would resign from his employment and take over management of the Company. Mr Spence took up this position on 11 July 2005. 15 The shares in the Company held in trust for Mr Spence and Mr Sweetapple were transferred into their own names on 17 January 2007. Since that time each of the three parties has held ten shares in his own name. 16 Mr Sweetapple was appointed a director of the Company on 27 September 2006. Mr Spence was appointed as a director on 8 March 2007 and as company secretary on 8 May 2008. The defendants in their defence and cross-claim acknowledge that Mr Spence was Chief Executive Officer and also Managing Director of the Company. 17 In or about June 2007, Mr Spence commenced working for four days in a week for the Company. 18 Two other companies were also formed, with Messrs McGillivray, Sweetapple as Spence as shareholders and directors. One of these was LBD Supply Pty Ltd, trading as Hoisting Equipment Specialists WA (HESWA). Messrs McGillivray, Sweetapple and Spence each took up 25% shareholdings in HESWA with the other 25% being taken up by Mr Bradley Gardiner who was also a former employee of Sling-Rig and Bullivants. HESWA was incorporated in April 2005 and both Messrs Sweetapple and Gardiner were later employed by HESWA. 19 The other company was Total Lifting and Rigging Pty Ltd (TLR), which was incorporated on 11 August 2006. Its shares were divided equally between the four shareholders of HESWA and a fifth person, Mr Francis Parish. TLR is based in Karratha. 20 Lifting by Design, LBD Hire and HESWA shared an office and warehouse at 203A Star Street, Welshpool (Star Street office). From 2005 to 2010 Messrs McGillivray, Sweetapple, Spence and Gardiner all worked in that office. In October 2010, after growth in the companies at those premises, HESWA moved to different offices. 21 There was, I find, a general discussion about what expenses could be incurred in the name of the Company. Any agreement reached was never recorded in writing.

Deterioration of relationship 22 The relationship between the three shareholders of LBD Hire initially progressed satisfactorily. However, from about 2006 onwards the relationship deteriorated and a degree of animosity developed between Mr Spence and his fellow directors - particularly towards Mr McGillivray. 23 In May 2008 Messrs McGillivray, Sweetapple, Spence and Gardiner were considering the formation of a new company, Lifting Online Pty Ltd (LOL), with each taking a one-quarter shareholding. In the weeks leading up to the incorporation of LOL, Mr Spence approached Mr Sweetapple in the Star Street office and proposed that Mr McGillivray should be excluded from participation in the proposed new company. Mr Sweetapple declined this proposal and LOL was formed with four shareholders as originally planned.

National brand proposal - Rigging Rentals Victoria 24 In late 2009 and early 2010 Mr Spence was approached by industry contacts in Victoria, Mr Richard Johnson and Mr Nathan Van Berkel, who had established a company in Melbourne under the name "Rigging Rentals Pty Ltd" (RRVIC). Mr Van Berkel made a proposal to the Company in an email dated 21 December 2009. The proposal invited "Eric and stakeholders from LBD Hire" to participate, and stated the three broad objectives quoted below: (1) Establishment of a lifting equipment hire company in the Eastern States and South Australia; (2) Partnering with LBD Hire to create a national brand in this sector; (3) Packaging and disposal of part or all of the business in the long term. 25 Mr Spence informed his fellow director/shareholders of this opportunity. However, he also approached Mr Sweetapple and asked him if he was prepared to take a bigger share of this opportunity and cut Mr McGillivray out. Mr Sweetapple declined. 26 The shareholders of the Company took a 25% interest in RRVIC between them, with each holding 8.33% (five shares) personally or through a personal investment vehicle. Notification of the share issue was given to the Australian Securities and Investments Commission (ASIC) on 23 July 2010. 27 As part of the commitment to participate in the proposal to create a national brand, the Company registered the business name "Rigging Rentals WA" on 12 April 2010 and immediately began trading under that name. 28 Mr Spence became a director of RRVIC but the majority did not. 29 Subsequently, in about mid-2011, the shareholders of the Company agreed that it should change its name to "Rigging Rentals WA Pty Ltd" (RRWA). This represented a further step towards the national brand proposed by Mr Van Berkel in his email of 21 December 2009. The name change was notified to ASIC on 9 December 2011.

Mrs Amber Mildon 30 In June 2010, the Company required the services of a bookkeeper. Mr Spence engaged Mrs Amber Mildon to fill that role. Mrs Mildon commenced employment on 25 June 2010. In addition to her work as bookkeeper Mrs Mildon's bookkeeping services were contracted to TLR and TLR paid the Company a fee for those services. 31 Over the months that followed Mr Spence developed a close personal relationship with Mrs Mildon. She became his friend and confidante. On 29 September 2010, approximately three months after Mrs Mildon joined the Company, Mr Spence sent her an email containing a gratuitous and offensive reference to Mr McGillivray. 32 As I mentioned earlier, in October 2010, HESWA moved out of the Star Street office to larger premises in Canning Vale and from that time, Messrs Gardiner and Sweetapple were no longer in close daily contact with Mr Spence or Mrs Mildon. 33 In late 2010 Mrs Mildon relocated with her family to Busselton. Mr Spence continued to employ her as bookkeeper for the Company, working remotely from her home in Busselton. She worked on the electronic financial records using the internet and communicating with the employees of the Company by telephone, email and mail. She recorded the hours that she spent on her work as it varied from week to week and was remunerated on an hourly rate. 34 From time to time the bookkeeper performed bookkeeping work for companies associated with Mr Spence and the other directors and the cost of her work was charged by the Company to the other companies and paid by those entities to the Company. Mr Spence explained the scope of her work in his evidence as more than mere bookkeeping. 35 The defendants point to a number of matters which occurred after Mrs Mildon's move to Busselton which they submit evidence her close and personal friendship with Mr Spence: (a) When Mrs Mildon visited Perth on 29 April 2011, Mr Spence took her to lunch at Incontro Restaurant, charging the cost of $193 to the Company; (b) Mrs Mildon confided in Mr Spence through the company email system about intimate personal matters in an email exchange on 31 May 2011; (c) In June 2011 Mr Spence took Mrs Mildon with him on a business trip to Melbourne and Sydney. They flew business class on the return journey from Sydney to Perth; (d) On 23 August 2011 Mrs Mildon sent Mr Spence, through the company email system, photographs of several scantily-clad obese women; (e) When Mrs Mildon visited Perth on 5 September 2011, Mr Spence took her to lunch at Friends Restaurant, charging the cost of $209.50 to the Company; (f) On 11 November 2011 Mr Mildon sent Mr Spence, through the company email system, another photograph - this time of a scantily-clad blonde woman lying on a bed; (g) In late November 2011 Mr Spence took Mrs Mildon with him on another business trip, this time to Brisbane. Again they flew business class for part of the journey. 36 Mr Spence justified taking Mrs Mildon with him on business trips by saying that she could provide him with instant access to accounting information and, importantly, broke the ice with anyone he met at business meetings. He elaborated on this in cross-examination by saying that as Mrs Mildon "basically ran the admin, it sort of helped to create that relationship between [the Company's] admin and their administrative functions".

Establishment of Rigging Rentals Queensland 37 On 4 April 2011, Mr Spence, together with Mr Dean Nelson and Mr Johnson, who were directors of RRVIC, held a meeting in Perth to discuss a number of matters including expansion into Queensland and New South Wales. The majority were not informed of this meeting nor of the plans for expansion into Queensland and New South Wales, as discussed at the meeting. 38 A new company, Rigging Rentals (Qld) Pty Ltd (RRQLD), was registered on 1 March 2012. Mr Spence was a foundation director and a company under his control, Alderann Pty Ltd (Alderann), took up 20 of the 120 shares issued - a one-sixth shareholding. 39 The majority were not informed of the incorporation of RRQLD at the time. No shares in RRQLD were offered to any of the defendants.

Meeting of 2 March 2012 40 In the period prior to March 2012, Mr McGillivray became suspicious about the level of expenses, including travel expenses, being charged to the Company by Mr Spence. Mr McGillivray looked briefly at the accounting records of the Company on the MYOB accounting system, and found some expenses that he considered "alarming". 41 Mr McGillivray discussed his concerns with Mr Sweetapple. 42 The majority then called a meeting with Mr Spence. This meeting was held at the Star Street office on 2 March 2012 (2 March meeting). All three were in attendance. 43 At the meeting the majority questioned Mr Spence about his expenses, and also about his relationship with Mrs Mildon. There was never a schedule or specific itemisation of the amount required according to the evidence of Mr McGillivray. 44 As to what happened at this meeting and what the outcomes of the meeting were, there is a conflict of evidence. For example, Mr Spence does not accept that he was never to fly business class. I make no finding one way or the other about this conflict and in particular concerning air travel although I would find it surprising if someone in Mr Spence's position was required to fly economy on domestic business trips. Nonetheless, Mr Spence agreed to make a global payment to the Company in respect of some expenses. The amount of the payment was left to be agreed at a future time. 45 It was also agreed that Mr Spence would set up a discretionary account to which he would debit expenses which were not properly chargeable to the Company. This would be a loan account and he would be liable to clear the account by offsetting amounts due from the Company to him, or by making payments to the Company. 46 Mr Spence did create that account and did make repayments from time to time and that there remains an amount of $3,427.18 that remains outstanding on that account. 47 In or about October 2012, the Company had outgrown the available space at the Star Street office and moved to its own premises in Bibra Lake, WA. At that time Mr Spence and two employees of the Company moved to the new premises. From that time the other directors did not visit the Bibra Lake premises very often, if at all. 48 The amount of compensation to be paid by Mr Spence remained unresolved for some time. It was still unresolved as at 24 December 2012, when Mr McGillivray sent Mr Spence an email following up the matter, although the claim was not itemised. 49 On 24 December 2012, Mr Spence responded by an email. Mr Spence proposed that the Company could withhold from him $10,000 from a proposed dividend of $30,000, that is, the withheld amount would constitute the proposed repayment. According to his evidence it was just a "ballpark number". The majority did not accept that proposal. The discussion was in rounded amounts. It was resolved that the Company would withhold from Mr Spence $17,500 from the next dividend. That amount was withheld. The final agreement in part is reflected by an email dated 19 July 2013. 50 Mr Spence's position following the 2 March meeting was clearly stated in emails he sent to Mrs Mildon. He would not change his behaviour. Shortly after this meeting, Mr Spence wrote to Mrs Mildon stating he was determined to cut the ties with the majority and was working to make that happen sooner rather than later.

Conflict over shareholding in RRQLD 51 In late July 2012 Mr Sweetapple became suspicious that RRVIC might be planning to open a branch in Queensland. He telephoned Mr Spence to ask him what was going on. Mr Spence told him that RRQLD had been established, that he had taken shares in the company personally, and that the majority had been excluded. 52 Mr Sweetapple asked Mr Spence how he could do that, when he was employed to represent the shareholders in the Company. Mr Spence responded that he had taken the shares because Mr Sweetapple and Mr McGillivray had threatened his livelihood at the 2 March meeting. In cross-examination Mr Spence conceded that he made this statement. When it was pointed out to him that the RRQLD shares had been issued on 1 March 2012 (the day before the meeting), he said that he made the statement to "validate" his decision to exclude Mr Sweetapple and Mr McGillivray. The only substantive reason he was able to give for excluding them was that "[t]here was already animosity going way back before this". 53 Mr Sweetapple told Mr McGillivray the news he had been given by Mr Spence, on or about 29 July 2012. This situation was described in an email sent by Mr Spence to Mrs Mildon on 30 July 2012: I've started world war 3 with Craig and Cliff which has been interesting if not a little stressful but admittedly of my own doing this time as I left them out of the QLD deal.

Mr Spence and Mrs Mildon - 2012 54 After the 2 March meeting with the majority, Mr Spence sent an email to Mrs Mildon with an account of the meeting. Mrs Mildon responded in terms that were sympathetic to Mr Spence and critical of the majority. However, she did suggest that Mr Spence might be better off "starting anew" with a different bookkeeper: Now that I have everything running smoothly it will be a lot easier for someone to takeover. Perhaps hire a regular Norma type who can get the job done and not cause any speculations and issues … 55 Mr Spence did not take up this suggestion in his response, but said: Amber, it's really nice knowing I have someone I can trust and talk too [sic]. I'll make sure I get this sorted to suit us. 56 Mr Spence's disclosure to Mrs Mildon of the questions raised at the 2 March meeting about the relationship between them led to Mrs Mildon confronting Mr Sweetapple. Again Mrs Mildon suggested that it might be better for her to look for another job. It was in response to this suggestion that Mr Spence said: I definitely want to cut the ties and am working to make that happen sooner rather than later. So please hang in just a little longer and let's see what I can do. 57 Mrs Mildon did continue to work for the Company. On 16 April 2012 she sent Mr Spence an electronic birthday greeting containing a photo of a nude model. On 8 June 2012 she sent him another email attaching photographs of a young woman in suggestive poses. 58 The outbreak of conflict over the RRQLD shares led to another exchange of emails between Mr Spence and Mrs Mildon, commencing with the email of 30 July 2012 referring to "world war 3". Mrs Mildon commiserated with Mr Spence but also encouraged him in his decision to exclude the majority from participation in RRQLD. She said: I am very sorry to hear you have another war on your hands but very glad they don't get to share in the QLD deal and make more money doing nothing but whining their scaly arses off on every decision you make. 59 Later in the same email exchange Mrs Mildon offered further advice to Mr Spence, culminating in the following words: Just remember there [sic] opinion means nothing to you and you don't need there [sic] approval. Business is business. 60 Mrs Mildon visited Perth on 14 September 2012 and Mr Spence took her to the El Ocio restaurant. He charged an amount of $121 to the Company. 61 In late November and early December 2012 Mr Spence took Mrs Mildon with him to an oil and gas conference in Singapore. Both were booked to travel business class and the cost of the business class flights was booked to Mr Spence's discretionary loan account. Subsequently Mrs Mildon cancelled her business class flight and travelled economy class. Her economy class fare was not debited to the discretionary loan account but was charged to the Company. 62 Shortly after his return from the Singapore trip Mr Spence sent Mrs Mildon an electronic Christmas greeting containing pornographic material.

Attempts to sell the company 63 In the period since early 2013 Mr Spence and the majority were looking for a possible purchaser of the Company or its business. 64 In an email of 10 January 2013 to Mrs Mildon, Mr Spence reported that he had had a meeting the previous day with a potential buyer of the Company who was "very keen to do a deal". 65 In early April 2013, Mr Spence received an indicative offer for the shares in the Company from EC Hambro Rabben & Partners Ltd (Hambro), acting on behalf of a UK company called Fendercare Ltd (part of the James Fisher and Sons group). 66 Mr Spence met with representatives of the potential buyer in London during a trip to Europe in April 2013. 67 Mr Spence informed the majority of the Hambro offer. After discussion with them he instructed Gooding Partners, the Company's accountants, to write back to Hambro declining the offer and asking for a higher offer. 68 Hambro submitted a "Preliminary Indicative Offer" on behalf of Fendercare on 19 June 2013. The consideration referred to was a payment of A$3.5 million on settlement, with further payments approximately one and two years after completion if certain earnings targets were met. The letter contained a number of conditions. 69 With the agreement of the majority, Mr Spence instructed Gooding Partners to send back a response proposing a higher payment on settlement (A$4 million) and a pro rata structure for the subsequent payments based on meeting earnings targets. 70 On 2 July 2013 Hambro advised by email that the James Fisher group did not wish to proceed with the purchase of the Company. Four risk factors were referred to in the email, as justification for the decision not to proceed. These were said to be factors which Mr Spence himself had identified when he met with Hambro in London. One of these factors was the corporate structure of the Rigging Rentals group of companies and licence of the trade name. 71 In parallel with the discussions with Hambro, Mr Spence had been seeking to interest another potential buyer in making an offer to acquire the Company. He had been introduced to Mr Harry Gandhi, CEO of Unique Maritime Group (Unique Group), based in the United Arab Emirates. Unique Group was related to Seaflex Limited (Seaflex), a major supplier of the Company. Mr Graeme Brading of Seaflex had made the introduction and acted as a "go-between" in Mr Spence's communications with Mr Gandhi. For this service Mr Spence agreed to make a payment to Mr Brading. 72 Mr Gandhi had already "registered an interest" in a possible purchase of the Company prior to Mr Spence's meeting with Hambro in London. Mr Spence spoke of this as his "plan B" if the negotiations with Hambro were not successful. 73 In the email informing the majority that the James Fisher group were not proceeding, Mr Spence told them he had commenced "plan B". By a subsequent email of 19 July 2013 Mr Spence informed them that he had spoken with Mr Gandhi and was obtaining a "non-disclosure form" from him. 74 In early September 2013 Mr Spence met with Mr Gandhi in Singapore. Mr Gandhi told him that the Unique Group was raising capital and would not be in a position to consider the purchase for five or six months. Mr Spence reported this by email on 10 September 2013 to the majority.

Mr Spence and Mrs Mildon - 2013 75 In April 2013 Mr Spence took a trip to Dubai, Germany, England, Dublin, Paris and Amsterdam. Mrs Mildon joined him for the latter part of this trip (Dublin, Amsterdam and Paris). Mr Spence admitted that Mrs Mildon was not required for any business purpose on that trip; he took Mrs Mildon on what was effectively a holiday, as a "chance to repay". 76 Mrs Mildon's airfare was charged to the Company but debited to Mr Spence's discretionary loan account and subsequently paid for by Mr Spence. However, none of the cost of Mrs Mildon's accommodation or other travel costs appear to have been debited to the discretionary loan account. 77 In September 2013, Mr Spence took Mrs Mildon on a trip to Singapore. The purpose of the trip was to meet with Mr Harry Gandhi of Unique Group to discuss the possible sale of the Company. Mr Gandhi had met Mrs Mildon previously and "more or less suggested [that] it would be nice to meet her again". The costs of this trip, except for Mrs Mildon's airfare, were charged to the Company, although an amount put towards accommodation was subsequently recharged to Mr Spence's discretionary account.

Establishment of RRNSW and conflict over shareholding 78 On 12 August 2013 a company by the name of "Rigging Rentals (NSW) Pty Ltd" (RRNSW) was established, as the Sydney branch of the Rigging Rentals brand network. Mr Spence again took a one-sixth shareholding (through Alderann) and became a director from the time of registration, as he had in RRQLD. 79 Mr Spence did not inform the majority of the establishment of RRNSW, either before or after that company was registered. Mr Sweetapple learned of the establishment of RRNSW when he received an email from Mr Johnson, the manager of RRVIC. announcing the appointment of a Sydney branch manager. This email was dated 6 January 2014, some five months after the incorporation of RRNSW. 80 Mr Sweetapple emailed Mr Spence on 8 January 2014 to ask what the shareholding situation of RRNSW was. Mr Spence replied "Same as QLD". An exchange of terse emails followed, culminating in an email from Mr McGillivray to Mr Spence including a request to Mr Spence to improve communication with his fellow directors.

Mr Spence and Mrs Mildon - first half of 2014 81 Between 5 and 8 March 2014 Mr Spence took Mrs Mildon with him on a trip to Melbourne and Sydney. He said the trip was for a meeting of the Global Lifting Group and a meeting of the Eastern States Rigging Rentals companies. Mr Spence explained that Mrs Mildon acted as an icebreaker and helped with relationships. 82 Approximately one month later, Mr Spence took Mrs Mildon with him to a Global Lifting Group meeting in Melbourne on 9 and 10 April 2014. This meeting was also attended by Mr Sweetapple. Mr Sweetapple observed that Mr Spence arrived in the afternoon of 9 April and missed most of that day's meeting, but he and Mrs Mildon attended together at the Global Lifting Group dinner that was held on the night of 9 April. 83 On Friday, 11 April 2014, Mr Spence and Mrs Mildon attended a meeting of the Eastern States Rigging Rentals entities. They then flew to Brisbane together and stayed the night in Brisbane. On Saturday, 12 April they went to Noosa together. On the nights of 12 April and 13 April they stayed at the Little Cove Court in Noosa. They returned to Perth together on 14 April. 84 The cost of Mrs Mildon's travel on this Melbourne/Brisbane/Noosa trip was charged to Mr Spence's discretionary loan account. Mrs Mildon did reimburse the Company for part of the accommodation cost.

Dealings between Mr Spence or the Company and RRQLD and RRNSW - 2011 to 2014 85 It has already been noted that Mr Spence participated in a meeting of directors of RRVIC on 4 April 2011, at which expansion into Queensland and New South Wales was discussed. It has also been noted that Mr Spence became a director of each of those companies and took up a one-sixth shareholding in each of them, again through his company Alderann. 86 On occasions in the period between April 2011 and early 2014, Mr Spence had some involvement in RRQLD and RRNSW. He attended directors' meetings, including a meeting on Magnetic Island, Queensland on 15 July 2013, a meeting at the Radisson Hotel, Sydney on 21 November 2013 and the previously mentioned meeting in Melbourne on 11 April 2014 (also attended by Mrs Mildon). He inspected, or participated in inspections of, warehouse premises in Brisbane on 18 May and 26 July 2012. 87 In addition, at the direction of Mr Spence, the Company sent some equipment either on consignment or "hire for on-hire" arrangements to the Eastern States companies to be used in their rental business. In December 2014, Company equipment valued at $412,530 was held by RRQLD and Company equipment valued at $89,478 was held by RRNSW. 88 Mr Spence explained the business purpose of sending equipment to locations closer to customers. He said that it helped achieve "greater spread", that is, greater utilisation of the fleet of equipment in order to meet the demands of specific jobs in the other locations. 89 None of the dealings between Mr Spence and RRNSW or RRQLD were reported by Mr Spence to his fellow directors, except to the extent that his interests in those companies were disclosed during discussions which took place when the majority found out about them. In particular, the majority were not aware at the time of the amount of equipment sent to the Eastern States companies on consignment. 90 The nature of the arrangements for provision of equipment by the Company to RRQLD and RRNSW, and the effect of those arrangements on the Company, were the subject of conflicting evidence. Mr Spence asserted that the arrangements were beneficial to the Company in that they generated revenue. The majority, on the other hand, held different views. They considered them as detrimental to the Company because the equipment was unavailable for hire in WA, the rates received from the Eastern States companies were low, the equipment was sent on consignment which meant that it was not always on hire to a customer, and the Eastern States companies were slow in paying. 91 Mr Spence accepted that the consignment arrangements with RRQLD and RRNSW were very beneficial for the start-up of those companies, although the Company had no equity interest in the companies. The majority expressed the opinion that by assisting the start-up of these companies without any equity interest in them or any long-term arrangement assuring a favourable revenue outcome, the Company had gained nothing but had created a potential competitor. Mr Spence disputes this conclusion.

Meeting of 19 June 2014 92 By early June 2014, no further expression of interest had been received from Unique Group. 93 In or about early June 2014, the majority discussed the future of the Company. It was their opinion that Mr Spence's expense claims were still excessive and that he was still taking Mrs Mildon on business trips unnecessarily. 94 The majority called a meeting of the directors and shareholders of the Company for 19 June 2014 (19 June meeting). This meeting was held at Ramon's Café, Canning Vale and all three directors attended. 95 Again, there is some conflict of evidence over what happened at the meeting and the accuracy of the minutes prepared by Mr McGillivray. However, it appears to be accepted by all parties that the matters discussed at the meeting included: (a) efforts to progress the sale of the Company, given that no offer had been received from Unique Group; (b) the need for a better relationship between shareholders and a requirement for Mr Spence to keep the majority informed of all Company dealings of note; (c) a proposal by the majority that a shareholders' agreement should be put in place to set out boundaries as to how the business of the Company could operate; and (d) the assertion by the majority that the wages paid to Mrs Mildon were excessive by reference to comparable roles in associated companies. They requested Mr Spence to comment and propose a resolution.

Events between meeting of 19 June 2014 and meeting of 30 July 2014 96 Mr McGillivray sent the minutes of the 19 June meeting, as prepared by him, to Mr Spence by email on 23 June 2014. He pointed out that there were a few points for action by Mr Spence. He added two "personal comments" about the sale of the Company and the relationship between shareholders. 97 On 16 July 2014 Mr McGillivray sent a follow-up email to Mr Spence asking for his response to the action items in the minutes of the 19 June meeting. 98 Mr Spence sent an email to Mr Gandhi of Unique Group on 16 July 2014. He asked Mr Gandhi to confirm "as a matter of priority" the interest of Unique Group in the purchase of the Company concluding with: "My circumstances are such that I need to have this matter clarified as soon as possible". 99 On the same day Mr Gandhi replied saying: We are in a position to consider our options Please can you issue your latest end of june accounts, structure, reports etc and what u are looking for. We are planning to be in Singapore in august so we can organize a meet in perth. (Errors in original.) 100 Mr Spence instructed Gooding Partners to prepare updated information on the Company. He informed the majority of the response from Mr Gandhi by an email dated 20 July 2014. 101 Mr McGillivray responded asking for the correspondence received from Unique Group, and asking that all future correspondence about sale of the Company (including correspondence with Gooding Partners) be copied to him and to Mr Sweetapple. 102 At some time between 20 and 25 July 2014, Mr McGillivray spoke to Mr Sweetapple about the proposed sale of the Company. It remained their opinion that there was ongoing unjustified expenditure of Company funds by Mr Spence. They agreed between themselves that this concern would have to be resolved before they would agree to sell their shares in the Company. Mr Sweetapple's evidence is that this followed a further review of the books and records of the Company. 103 On 25 July 2014 Mr McGillivray sent an email to Mr Spence and Mr Crawford of Gooding Partners, with a copy to Mr Sweetapple and Mr Bourke. This email was sent in response to copy emails received by Mr McGillivray from Mr Spence and Mr Crawford, concerning the information memorandum to be provided to Unique Group. Mr McGillivray's email said: Craig and I wish to place an immediate hold on proceedings until further notice. Please do not forward any information to the prospective buyer or representative of. 104 After receiving Mr McGillivray's email, Mr Spence telephoned Mr Sweetapple to ask for an explanation. Mr Sweetapple gave an explanation referring to Mr Spence's failure to respond to requests for information, and the view of the majority that Mr Spence had engaged in "large-scale misappropriation of company funds". 105 On the night of 25 July 2014, Mr Spence sent an email to the majority. In this email he provided brief responses to the matters requiring his comments or attention from the meeting on 19 June. He then raised a different subject, as follows: Mediation Meeting Your attendance is requested at a mediation meeting to be chaired by Glenn Bourke of Goodings at Goodings offices. . . . The purpose of this meeting is to reach a resolution regarding the proposed offer of sale of RRWA to Unique Group. I feel that our business relationship is such that it requires the presence of Goodings to ensure that each of us is represented in a fair and open manner. Your attendance at this meeting is imperative in order to move forward and have a speedy resolution to the potential sale. Non-attendance would indicate your lack of commitment to a 'better shareholder relationship'. Minutes of this meeting will be taken independently and you will receive a copy as soon as can be arranged after the meeting. I reiterate my support of the working relationship as previously stated. (Emphasis added.) 106 On receiving the request for this meeting, Mr Sweetapple discussed it with Mr McGillivray. They agreed that they would consent to the meeting, provided it was accepted as a meeting of directors and shareholders at which resolutions could be passed. Mr McGillivray so informed Mr Spence by an email dated 28 July 2014. They made this stipulation because they wished to make use of the meeting to pass resolutions concerning governance of the Company in the event that a sale did not proceed.

Meeting of 30 July 2014 107 The meeting went ahead on 30 July 2014 (30 July meeting). All three director/shareholders attended. The meeting was held at the office of Gooding Partners with Mr Bourke and Ms Tamara Erdash of that firm also in attendance. 108 Ms Erdash took detailed handwritten notes during the meeting. Mr Bourke took brief handwritten notes. 109 The discussion was detailed, but in addition to the question of the sale of the Company to Unique Group the following occurred: (a) The majority raised three issues which they believed had "cost [them] significantly". They said that if they sold their shares, they would get no recompense for the value loss caused by these issues. The three issues were: • remuneration of Mrs Mildon; • expenses incurred by Mr Spence; and • the shares Mr Spence had acquired in RRQLD and RRNSW. (b) Mr Spence asked what the majority wanted financially. An audit of expenses or ledger review was discussed. Mr Sweetapple proposed that he and Mr McGillivray "may be able to save some grief by coming up with a figure that we can negotiate [with] Eric". (c) Mr Spence said he wanted a deal "now". The majority responded that they could not get a dollar figure on the table now. Mr McGillivray said they would put down their conditions in writing by Friday, 1 August 2014 to progress with the sale. (d) There was further discussion about the future employment of Mrs Mildon, but it was eventually agreed that this issue would be put to one side and her position would be considered if the sale did not proceed. (e) At the meeting the other directors proposed amendments to his authority. Mr Spence accepted all of these proposed amendments without argument. (f) The majority proposed a series of eight motions concerning the future conduct of the Company's business. Mr Spence agreed to all of these motions and Mr McGillivray thanked him for doing so. (g) During proposals about the shares held in RRQLD and RRNSW, Mr Spence offered no resistance to the debate as to whether those shares ought to be offered to the Unique Group as part of the sale or otherwise. (h) Mr Bourke summed up the position at the end of the meeting. The two current issues were expenditures by Mr Spence, and both RRQLD and RRNSW. The majority were to look at these two issues and revert to Mr Spence. 110 Pursuant to a request made of him at the 30 July meeting, Mr Bourke sent an email on 1 August 2014 to the meeting participants setting out the outcomes of the meeting, as he saw them. 111 I do not accept that his summary of what occurred is entirely accurate. In particular, he characterised the "losses" as the losses of the majority. This is not what was discussed at the meeting. I prefer the comprehensive notes made by Ms Erdash. It may be seen that at the end of the meeting it was agreed that the majority would look at the issues of alleged unreasonable expenditures incurred by Mr Spence in the name of the Company and the issue of equity in the RRNSW and RRQLD. These issues clearly concerned claims against Mr Spence at the instance of the Company. 112 Mr Spence submits that Mr Bourke, who was an adviser at the meeting of directors, could not unilaterally insist that the directors reconvene for any purpose whatsoever as he purports to do this in his email. I accept this submission. This was not discussed at the meeting and there is nothing in the notes of the meeting to suggest a further meeting would be called if the proposal was not accepted or that the other directors were willing to "negotiate" any of their "conditions" for proceeding with the proposed sale to Unique Group. 113 The handwritten notes record that Mr Spence wanted to progress the provision of information for a sale and he is recorded as saying "[L]et me concentrate on [the] sale". At the end the notes also disclose that following their review of the above issues, the majority would "revert" to Mr Spence and then he would "revert on queries [and] be reasonable". There was no suggestion of a dilution of Mr Spence's shareholding in the Company or that the claims for reimbursement of accounts unreasonably incurred by Mr Spence were other than claims of the Company.

Relevant events after 30 July 2014 114 It is evident from an email exchange on 31 July 2014 and paragraph 1 of Mr Bourke's email of 1 August 2014 that at the 30 July meeting, it was agreed that information on the Company could be sent to Unique Group while the majority were preparing their offer to Mr Spence. An information memorandum was in fact prepared with the assistance of Gooding Partners, and sent to Unique Group on 31 July 2014. 115 On 31 July 2014, Mr Spence and Mr Bourke sought the agreement of the other directors as to the sale price for the Company and the other directors agreed the sale price would be $3.95 million. 116 As agreed at the 30 July meeting, Mr Sweetapple did send an email to Mr Spence, which is dated 1 August 2014: the 1 August email. The majority objected to the tender of this email under s 131 of the Evidence Act 1995 (Cth) (Evidence Act). I will resolve this objection later in these reasons. 117 The 1 August email set out the majority's "conditions to proceed with the sale" to the Unique Group. The 1 August email required as a "condition" to progressing the sale that the following occur: 1) The shares currently held by Eric [Spence] in RR Qld and RR NSW be transferred to RRWA." 2) RRWA issues an additional 10 shares taking the total number of shares in the company to 40. These additional shares be issued to Cliff [McGillivray] and Craig [Sweetapple] (5 shares each). 118 There was also a warning to Mr Spence for his comments made to the Unique Group: [W]e strongly suggest you exercise better judgment in future. Alternatively, we have no issue in withdrawing our support for the sale and running the business as a going concern. 119 Mr McGillivray agreed in evidence that a return to running the business as a going concern was completely contrary to Mr Spence's proposals at the 30 July meeting. 120 The 1 August email concluded with the words: We look forward to your prompt confirmation to the above so that the sale proceedings can continue. 121 The effect of these conditions was that on any sale of the company, the sale proceeds would be divided as follows: 37.5% to each of Mr McGillivray and Mr Sweetapple, and 25% to Mr Spence. The amount of value sacrificed by Mr Spence under this proposal, compared with the one-third share he would receive under an equal division of sale proceeds, would depend on the sale price. In effect Mr Spence would sacrifice 8.33% (33.33% minus 25%) of the sale price, and the value sacrificed by him would be shared equally between Mr McGillivray and Mr Sweetapple. At a sale price of $3.95 million, for example, the majority would share equally the amount of approximately $330,000 more than Mr Spence would receive. 122 On 4 August 2014 Mr Spence received an email from Mr Rupesh Mehta of Unique Group, requesting the Company's financial statements for the financial year ended 30 June 2014. Mr Spence instructed Messrs Bourke and Crawford of Gooding Partners to provide the information by an email dated 5 August 2014 copied to the majority. 123 By 5 August 2014 Mr Spence had not responded in substance to the 1 August email and on that day Mr McGillivray sent an email to Messrs Bourke and Crawford copied to Mr Spence that said: As we have had no response or acknowledgement to date from [Mr Spence] as to our conditions of sale sent on Friday 01/08/2014, Craig and I again wish to place an immediate hold on proceedings until further notice. 124 Mr McGillivray agreed in evidence that in this email he was exercising the warning in the 1 August 2014 email. Mr Sweetapple agreed that sale negotiations were stopped because Mr Spence had not responded. 125 On 5 August 2014 Mr Spence provided a response to some draft notes on the 30 July meeting and requested access to the handwritten notes taken at the meeting. That request was followed up by his solicitor via a letter addressed to Mr Bourke, dated 8 August 2014. While notes of the 30 July meeting were circulated for settling on 18 August 2014, Mr Bourke was instructed not to make the handwritten notes of his associate available to Mr Spence's solicitors. 126 Mr Spence sent an email to Mr Sweetapple (with copies to Mr McGillivray and Mr Bourke) on 5 August 2014, saying "I'm considering your proposal and will revert". However, by 18 August he had not provided any substantive response. On 18 August, Mr McGillivray sent a follow-up email to Mr Spence, asking for a response by 19 August and saying: Please either confirm your acceptance to allow the sale process to continue or advise otherwise. 127 On 22 August 2014 Mr Bourke sent to the directors the financial statements for the Company unsigned. Mr Spence took the view that they could not be sent to the Unique Group unsigned and without the consent of the other directors to progress the sale. 128 On 30 September 2014, Mr Spence commenced this action. 129 Mr Spence took a payment from the Company of approximately $15,000, on 28 October 2014. This payment was entered in the books of the Company as a payment of long service leave. The amount of approximately $15,000 represented the net amount of the payment after deduction of tax, and the total cost of the payment to the Company was $25,651.45. This amount forms part of the Company's cross-claim. 130 On 28 November 2014 the majority terminated the employment of Mr Spence. 131 Since that date Mr Spence was required and did return to the Company a computer and mobile phone as well as credit cards and keys. Mr Spence has not received any income in the period since then. 132 The Company has continued to trade. The performance of the company is recorded in the records of the Company. 133 While a profit is disclosed by those records no dividend since 1 July 2014 has been declared as a return to the shareholders.

OPPRESSION 134 Section 232 of the Act relevantly provides: Grounds for Court order The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) . . . (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company. 135 Section 233(1) of the Act relevantly provides: Orders the Court can make (1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: . . . (d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law; (e) for the purchase of shares with an appropriate reduction of the company's share capital; . . . (i) restraining a person from engaging in specified conduct or from doing a specified act; (j) requiring a person to do a specified act. 136 There is no issue that under the provisions of s 234 Mr Spence had standing to bring this application. 137 A single instance of oppression is sufficient to constitute a basis for relief: Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279 at 289. 138 The key to the expressions in s 232(e) - "oppressive", "unfairly prejudicial", and "unfairly discriminatory" - is a test of commercial unfairness: Wayde v New South Wales Rugby League Limited (1985) 180 CLR 459 at 472; Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Hillam v Ample Source International Ltd (No 2) (2012) 202 FCR 336 at [4]. The test is an objective one, as if the conduct were viewed through the eyes of a commercial bystander: Morgan at 704. 139 The conduct must be assessed in its commercial context. Where, as here, the context includes allegations of misconduct by the plaintiff, his conduct may also be relevant as Nourse J noted in In re London School of Electronics Ltd [1986] Ch 211. His Honour also observed that "there is no independent or overriding requirement that it should be just and equitable to grant relief or that the petitioner should come to the court with clean hands": at 222. 140 This statement of principle in London School of Electronics was approved by Young J in Morgan at 706, and by the Victorian Court of Appeal in Joint v Stephens [2008] VSCA 210 at [136]. 141 Furthermore the Court must assess the conduct in the context of the particular relationship which is in issue: Hillam at [4], citing Joint at [136]. 142 Here, the oppression pleaded is confined to conduct taking place "[o]n [or] about 1 August 2014", consisting of: (a) conduct of the affairs of the Company by the majority; (b) an action or proposed action on behalf of the Company by the majority; or (c) a resolution or proposed resolution by the majority as members (not directors) of the Company. 143 The conduct of affairs, action, proposed action, resolution or proposed resolution complained of is specified in paras 4(a) and 4(b) of the Statement of Claim. Two actions of the majority are pleaded: (a) stating in the 1 August email that it was or would be a condition for their consent to a sale of the shares in the Company, or consent to the resolution to undertake the sale of the business of the Company that the Company issue a further five shares to each of Mr McGillivray and Mr Sweetapple; and (b) making an inference in the same email that they would together cause or procure the exclusion of exclude Mr Spence from management of the Company.

Alleged oppressive action 1: statement in 1 August email 144 As to the first of these the majority make the following three submissions: (a) The email is a communication between persons in dispute, in connection with an attempt to negotiate a settlement of the dispute. It cannot be adduced in evidence because of s 131 of the Evidence Act. Therefore there is no admissible evidence of the alleged oppression. (b) Even if the email can be adduced in evidence, the statements in the email are not oppressive, unfairly prejudicial or unfairly discriminatory when considered in the context of all relevant facts, including the antecedent conduct of the plaintiff. That is, in all the circumstances the statements are not commercially unfair. (c) Even if the email can be adduced in evidence and the statements in it can be classified as commercially unfair, they did not cause oppression, prejudice or detriment to the plaintiff in any of the ways pleaded.

Admissibility of 1 August email 145 Mr Spence contends that the email falls within one or more of the exceptions to s 131 of the Evidence Act as provided in s 131(2)(f), (i) or (k). None of these has operative effect. 146 Nonetheless it is, in my view, admissible. Section 131, relevantly, excludes evidence being adduced which is a communication that is made between persons in dispute in connection with an attempt to negotiate a settlement of the dispute. 147 The 1 August email is not such a communication. The dispute was between the Company and Mr Spence. The claims for unreasonable expenses, or overpaid salary and otherwise were claims which only the Company could advance. The majority had no claims personally. So much was acknowledged by them. It is no answer to say as they do that the "ultimate damage was to the economic interests of the individual shareholders". 148 The 1 August email was made on their personal behalf concerning their shares in the Company. The consideration demanded by them would have been for their personal benefit, not that of the Company. 149 I will accordingly admit the 1 August email in evidence.

Commercial fairness and oppression 150 It is convenient to deal with the last two of the majority's submissions together. 151 The majority submit that the context in which their conduct, its commercial fairness or otherwise, in sending the 1 August email falls to be considered embraces the entirety of what, in effect, they say is the misconduct of Mr Spence in relation to the affairs of the Company since at least the time when he became its Managing Director. Much of this misconduct is the subject of the cross-claim by the Company. 152 These contentions assert that Mr Spence breached the relationship of trust and confidence between him and them in the running of the Company. They point to what they regarded as his disloyal communications about them to Mrs Mildon; his acquisition of interests in the RRNSW and RRQLD companies, the sending of Company equipment on consignment to those companies, his taking of fees from those companies through his company Alderann, the alleged overpayment of Mrs Mildon and the alleged unreasonable expenses incurred and paid for by the Company. 153 Even if everything alleged by the majority against Mr Spence were made out and as I will explain later, I do not find that it has, it would still not have been a warrant for their conduct in sending the 1 August email. It was conduct which I find to have been commercially unfair and oppressive to Mr Spence. 154 It is the condition numbered 2 in the 1 August email, relating to the issue of additional shares, which is challenged as oppressive. The majority submit that, in substance, they said they would agree to the sale of their shares in the Company if Mr Spence agreed to the issue of five additional shares to each of them. The effect of this would be to alter the distribution of the proceeds of sale; Mr Spence would sacrifice 8.33% of the sale proceeds and this amount would be divided equally between Mr McGillivray and Mr Sweetapple. This is not a complete description. It is vital to appreciate that this offer or demand was a condition of the majority agreeing to the continuation of negotiations for the sale of the Company. So much is made clear by the introductory words of the 1 August email. This may have been effected by a sale of the shares held by the three shareholders or by a transfer of the Company's assets. 155 As the majority correctly observe the amount sacrificed by Mr Spence to their benefit would depend on the sale price. As I mentioned earlier, at the sale price of $3.95 million proposed to Unique Group, the value transfer would be approximately $330,000 ($165,000 each to Mr McGillivray and Mr Sweetapple). That was the value attributed by the directors to the Company at that time. I do not think it relevant, in this context, to have regard to the figure of $1.8 million, which was the value attributed to the Company, by agreement between the parties during the course of the trial. This was not the figure in contemplation as at 1 August 2014. 156 The majority submit that their complaint made at the 30 July meeting was that value had been taken out of the Company by the actions of Mr Spence, in relation to three matters: remuneration paid to Mrs Mildon, expenses charged to the Company by Mr Spence, and the setting up of RRQLD and RRNSW. They then submit that if the Company was sold and the proceeds were split equally, the value taken by Mr Spence would be a windfall gain to him and the majority would receive no compensation. 157 Mr McGillivray's evidence is that in the two days he and Mr Sweetapple had to calculate the amount of value taken out by Mr Spence, they came up with an approximate figure of $171,250. The logic they then used, as paraphrased by the counsel at trial, was: "You have taken out about $170,000 for your self-indulgent purposes with no benefit to the company - we should each be entitled to take an additional $170,000 out of the sale proceeds to even things up". 158 The majority then submit that the amount of $171,250 referred to by Mr McGillivray is less than the relevant amounts now claimed by the Company in the cross-claim. The liquidated demands in the cross-claim, as pleaded, are approximately $87,000 for unjustified expenses and approximately $126,000 for overpayment to Mrs Mildon. 159 As the majority submit, Mr Sweetapple's email provided two specific justifications for condition 2. The first was that unjustified expenditure reduced earnings before interest and tax (EBIT) and as a purchaser was likely to determine a purchase price based on a multiple of EBIT, the additional expenses incurred in any year had a multiplied downward effect on purchase price. For example, the total of unjustified expenses and overpayment to Mrs Mildon, as originally pleaded in the cross-claim for the 2012-13 year, is approximately $90,000. Applying a relatively conservative multiple of 2.5 to the earnings of that year to arrive at a notional sale price, the price would increase by $225,000 if those expenses were written back. 160 The second justification provided for condition 2 in the 1 August email was, on the majority's submission, that Mr Spence's devotion to his own interests above those of the Company had cost the Company the opportunity to acquire a substantial equity position in RRQLD and RRNSW (equivalent, for example, to the 25% originally offered in RRVIC). Had the Company held a 25% equity position in each of RRQLD and RRNSW, it would not only have had potentially valuable shareholdings among its assets, but would also have had a strong influence on the national Rigging Rentals network and a stronger ability to protect its brand, trade name, website and other pooled assets, thereby mitigating a significant business risk. They refer to the fact that Mr Spence took a one-sixth equity interest in both of these companies, in the name of his own company, and submit that he deprived the Company of a larger opportunity and, by locking it into the national brand strategy, he exposed it to a business risk. 161 The majority submit that they had the following reasons to expect that Mr Spence would come back and negotiate with them to improve the terms offered. First, they had specifically stated at the 30 July meeting that they would come up with a figure that they could negotiate with Mr Spence. Secondly, Mr Spence was an experienced negotiator who understood the tactic of "[pushing] the limits" in an offer, with the expectation that the other side would come back and negotiate. Thirdly, Mr Spence had previously negotiated with them over the compensation for pre-2 March 2012 expenses. 162 The majority assert that there was a further commercial reason for their conduct namely, that they did not wish to have to pursue Mr Spence for compensation once he had received cash from the sale. 163 I do not accept these submissions. The 1 August email did not leave open the door for negotiations expressly or impliedly. Acceptance of the conditions was the price of their agreement to proceed towards a sale of the Company. 164 As I explained above the claims against Mr Spence were claims by the Company. Even if the claims were established by agreement or otherwise, at say, $170,000 which was what Mr McGillivray thought this was the amount owed to the Company (not to the majority), Mr Spence would have had a one-third interest in that amount were it to have been paid to the Company. At its highest then, assuming that sum were due to the Company, the majority's indirect interest in it was to the extent of two-thirds, namely $113,000 approximately. At a prospective sale price of $3.95 million, Mr Spence was being told he would have to sacrifice approximately $330,000, being three times the amount of the majority's indirect interest as calculated by Mr McGillivray. 165 However, the claim by the Company against Mr Spence had not then been itemised. It had not articulated its claim with any specificity. Time was of the essence in progressing sale negotiations. It was a take it or leave it offer by the majority. They improperly, in my view, employed the potential sale of the Company to obtain an advantage from Mr Spence for their personal benefit which far outweighed even their own assessments of its worth. 166 What would have been reasonable was for the majority to allow the sale negotiations to proceed and to propose, for example, that part of the proceeds, should a sale have been effected, be held in a joint trust account pending the particularisation of the Company's claim and its resolution by agreement, court action or some form of alternative dispute resolution. The amount posited by Mr McGillivray of $170,000 could have been so retained. 167 I have no hesitation in concluding that the majority acted in a way which was commercially unfair. It denied Mr Spence any opportunity to defend the Company's claims however they might, in due course, be particularised. Their conduct quite deliberately sought to use the threat of halting negotiations for the sale of the Company to pressure Mr Spence, in effect, to waive his right to defend any claims by the Company. It was conduct which was in a very real sense, oppressive to him. He was denied the opportunity to realise the value of his shareholding in the Company in the event that negotiations for its sale were successful. 168 I find that the oppressive action of the majority which I have identified was unfairly prejudicial to and unfairly discriminatory against Mr Spence. The proposed act or resolution for the reduction of his share capital and the corresponding increase in that of the majority would have had that effect. It was unfair and discriminatory in that the proposed reduction lacked demonstrated justification at the instance of the majority. That is certainly so given that the claims made against Mr Spence were claims of the Company. Even if those claims are taken, indirectly, to be referrable to the majority they nonetheless were no more than claims. Moreover, the share reduction called for, in its monetary effect, could have varied widely depending on the sale price.

Alleged oppressive action 2: inference arising from 1 August email 169 The second alleged head of oppression is that the 1 August email contained an inference that the majority would together cause or procure the exclusion of Mr Spence from management of the Company. 170 I reject this claim. There is nothing in the text of the email to support the alleged inference.

RELIEF FOR OPPRESSION 171 The working relationship between the directors is completely fractured. Mr Spence's employment has been terminated. 172 The appropriate relief is for the majority to acquire the shareholding of Mr Spence. The injunction sought in the application is no longer pressed. 173 The evidence is that the Company continued to trade. The available results indicate that it has made a profit in the period to 30 May 2015. 174 It has been agreed between the parties that the value of the Company as at 30 November 2014 is $1.8 million and that Mr Spence's shares are worth $600,000. 175 Mr Spence submits that whilst that is the starting point, the directors as at 30 July 2014 were preparing an offer to the Unique Group of $3.95 million which put Mr Spence's share in the region of $1.26 million. He submits that as a consequence of being unable to complete the sale because of the oppressive conduct, if the experts' evidence is the only guide, the majority will be purchasing Mr Spence's share at half of that value because the effect of the oppressive conduct was to terminate in substance the interest of a "real purchaser" and Mr Spence's share is now substantially less in value. 176 I reject this submission. The value has been agreed. Mr Spence cannot now be heard to say that this agreed value is to be treated merely as a guide.

Income lost on termination of his employment since the oppressive conduct 177 Mr Spence has not received income since the termination of his employment. His employment was terminated on 28 November 2014. At that time he was paid an annual salary of $167,000. To the date of termination he was paid $70,000. 178 He claims that, as a consequence, to 30 June 2015 he has not been paid $97,000 and that but for the oppressive conduct he would have been employed and received income to that amount. 179 I do not think that would have been the case. As I said the necessary relationship of mutual trust had been fractured by the time his employment as Managing Director was terminated. He was, in any event, planning to leave the employ of the Company which is why he caused the Company to pay him a proportion of his long service leave entitlement. It has not been demonstrated that this termination was unlawful. I make no finding in that regard.

Dividends declared and not paid and not declared since the oppressive conduct 180 Mr Spence has received his distribution of the dividends declared on the financial results to the end of June 2014. 181 He also seeks an order for the payment of a dividend on the performance of the Company in the period since the oppressive conduct. The table put to Mr McGillivray set out the estimated dividend on the periods from 1 July 2014 to 30 November 2014 and from 1 July 2014 to 30 May 2015. 182 This table is based on profit and loss statements of the Company that are in evidence. The Company submits that the figures are unreliable and gives three examples to support this submission. First, the figures do not include depreciation expense or provision for payroll tax; second, wages and superannuation would be considerably less because Mr Spence is no longer employed and legal expenses would be incurred as a result of this action; third, plant and equipment amounts have increased from the financial year ending June 2014 to the period of 1 July 2014-25 May 2015, showing that the company has invested available cash in the renewal and expansion of its fleet. 183 I reject this submission for the following reasons. First, wages and superannuation expenses would have decreased upon Mr Spence's termination of employment which would have increased the amount of profit. Further, legal expenses of approximately $50,000 are set out under 'Expenses' for the relevant profit and loss statement for 1 July 2014-25 May 2015. They were payable to Trinix Lawyers, the solicitors on the record for the Company in this proceeding. Accordingly, these expenses have been taken into account. 184 Second, depreciation expense is referrable to tax, rather than a cash expense. In any event, even if it were otherwise, it would be offset by the first point I outlined above. Third, I consider the increased plant and equipment value relevant to the asset value of the Company, not to the issue of its distributable profit. Accordingly, I regard the calculations in the table as a reasonable estimate of distributable dividends from which is calculated the dividends payable to Mr Spence for these periods of time. 185 A 33% share of the estimated dividends for the following periods would be: (a) For the period to 30 November 2014 - $50,624. (b) For the period to 25 May 2015 - $87,364. 186 I would not grant relief in relation to the estimated dividends for the period 1 July 2014 to 30 November 2014 as I infer any undeclared dividend would have been taken into account upon the agreed valuation of the Company as at that date. 187 However, I find that Mr Spence is entitled to his one-third share of dividends on profits since 30 November 2014 to 25 May 2015 of $36,740 ($87,364 less $50,624). 188 Accordingly, there will be an order that each of Mr McGillivray and Mr Sweetapple should forthwith pay Mr Spence $300,000 in consideration of the transfer by him, to each of them, of five shares in the Company. 189 Further, there will be an order that the Company pay Mr Spence $36,740.

THE CROSS-CLAIM 190 I have considered the Company's cross-claims as identified in their closing submissions. The Company cross-claims under the following six heads: (a) Mr Spence's unpaid loan account. (b) Payment taken by Mr Spence on 28 October 2014, purportedly in discharge of an entitlement to long service leave. (c) Amounts received by Mr Spence as fees from RRVIC and RRQLD. (d) Excessive payments of remuneration to Mrs Mildon. (e) Disputed expenses charged to the company by Mr Spence. (f) Expenses and lost profits relating to RRQLD and RRNSW.

Unpaid loan account 191 The amount claimed is $3,427.18 and is admitted by Mr Spence.

Payment taken as long service leave 192 Mr Spence caused the Company to make a payment of $25,651.45 on 28 October 2014. He was paid approximately $15,000 of this sum with the balance paid in respect of PAYG tax. 193 The records of the company show that the amount of $25,651.45 was taken as payment of his long service leave. 194 The Company asserts, correctly, that as that 28 October 2014, Mr Spence did not have any long service leave entitlements because he had not been employed continuously by the Company as at that date for 10 years nor had his employment then been terminated. He had worked continuously up to that time for the Company for 9 years 3 months. 195 Mr Spence would have been entitled, pursuant to the Long Service Leave Act 1958 (WA) s 8(3) to an amount of long service leave being a proportionate amount on the basis of 82/3 weeks for 10 years of continuous employment. This is in circumstances relevantly, where his employment was terminated other than for serious misconduct. 196 Mr Spence's employment was terminated by the Company one month later on 28 November 2014. Although the Company pleads that Mr Spence's employment was terminated for serious misconduct it has not, in my view, established this to have been so. I make certain findings below as to Mr Spence's conduct. However, I do not find that any of it was serious misconduct. Indeed I have rejected the majority's allegations of misconduct, serious or otherwise. 197 Accordingly, on termination he was entitled to a proportionate amount of long service leave on ordinary pay. I do not understand the Company to dispute the amount paid to Mr Spence but rather his entitlement to it. Whilst he arranged for the payment to be made before his employment terminated he plainly had in mind that it would shortly, one way or another, be terminated. He had earlier made up his mind to leave the employ of the Company and indeed informed Mrs Mildon of this which I earlier referred to. He knew at least from the Company's letter of 8 October 2014 that it was looking to terminate his employment. In this letter, the Company sent to Mr Spence a list of matters requiring Mr Spence "to respond immediately" and to take the letter as: an official and formal warning letter. Your full response to this letter and requests herein is required within seven days, failing which we will take your inaction as yet another blatant and reckless disregard of directions and your duties as a director and employee of the Company constituting serious misconduct, upon which we reserve our rights to immediately terminate your employment with the Company. 198 This it did on 28 November 2014. In other words he caused payment for an entitlement which had not then accrued but which did accrue shortly thereafter, on 28 November, as he knew it would. Even assuming a technical breach of duty by Mr Spence in this respect, the Company has suffered no loss or damage as it would have been liable to pay the very same amount to Mr Spence upon his retirement.

Amounts received by Mr Spence as fees from RRVIC and RRQLD 199 Mr Spence admitted in his amended reply and defence to cross-claim that he received $27,237.40 in director's fees from RRVIC over the period from March 2012 to September 2014. The Company claims that he is liable to account to it for those payments. 200 The admitted amount broadly corresponds with the aggregate amount of invoices submitted by Alderann to RRVIC, for "management fees". Mr Spence acknowledged in cross-examination that they were more correctly described as "management fees". I do not, in any event, consider this distinction to be a material one. 201 During this time Mr Spence was employed and remunerated as Managing Director of the Company. 202 The majority were aware that Mr Spence was a director of RRVIC but asserts they were not aware that he was receiving and retaining fees for that role. 203 Despite this knowledge the majority submit that Mr Spence's role as a director of RRVIC placed him in a position of potential conflict with his duties as Managing Director of the Company. They accept that he had their informed consent to hold the position of director of RRVIC, but assert that he did not have their informed consent to receive and retain any remuneration for that position. 204 I do not accept that Mr Spence was in a position of conflict. Mr Spence was in receipt of salary for carrying out his employment duties as Managing Director for the Company. There is no suggestion that he did not perform those duties. Indeed the evidence is that the Company prospered under his management. The additional work done by him for RRVIC was for the benefit of that Company and its shareholders, including the majority. There was no breach of duty, whether statutory or as a fiduciary of the Company, in receiving fees for those services. The work done by Mr Spence for RRVIC was additional to the duties he performed for the Company. Did the majority think he was doing this extra work for nothing? 205 I reject the claim for compensation in this respect. 206 The position is no different in respect to his directorship of RRQLD, or his receipt of fees from that company. He performed work for that company as a director. It was not a competitor of the Company. Indeed, it was a source of income for the Company. That he took a shareholding in RRQLD was a breach of his fiduciary duty to the Company. It was a benefit that should have been obtained on behalf of the Company. He has, for some time, acknowledged this and that those shares are held on trust for the Company. Again the work he performed for RRQLD was in addition to the work he performed as Managing Director to the Company.

Excessive payments of remuneration to Mrs Mildon 207 The Company submits that after 6 March 2012, it was unnecessary for Mrs Mildon to work more than standard hours, and that standard hours can be measured by the evidence presented by Mr McGillivray. 208 The problem with this is that what Mr McGillivray asserts to be "standard" hours is an expression of his personal opinion. Little assistance can be gained from a comparison of what she was paid compared to other bookkeepers. Moreover, it is evident that Mr Spence, as Managing Director, gave her additional duties which may be characterised as including "business hostess" and "ice-breaker" functions at business meetings. 209 The Company submits this is implausible and that no small company like the Company could afford this to employ a person for these functions. This general submission is not attractive. It is not in issue that under Mr Spence's management the Company grew and prospered. As Managing Director of the Company it was his judgment that utilising Ms Mildon in such roles was for the benefit of the Company. Beyond the general submission referred to, nothing was advanced by the Company which proves otherwise. The majority benefited from his management of the Company. The evidence does not justify a finding that he breached his duties as Managing Director of the Company by, in effect, causing the Company to pay Mrs Mildon for work either not done or which was not necessary. 210 The Company demonstrated that there was at times a less than professional relationship between Mr Spence and Mrs Mildon. That is a separate matter. He is not on trial for his moral standing. 211 I reject the claims in relation to payments to Mrs Mildon.

Disputed expenses charged to the Company by Mr Spence 212 Messrs McGillivray and Sweetapple assert that they carried out investigations into the books and records of the Company and identified expenditure which was not necessary for or beneficial to the company's business. They compiled a schedule of the relevant expenses and that schedule is in evidence. The process by which the schedule was compiled is described by Mr McGillivray. Most of the content of the schedule is factual. 213 The cross-claim under this head was prepared on the basis that the Company would claim all improper expenditures, but credit Mr Spence with the $17,500 compensation payment made in respect of expenses incurred before the 2 March meeting. The Company is now prepared to accept that the $17,500 payment discharged Mr Spence's liability for expenses incurred up to 2 March 2012, so that its claim is limited to those expenses listed in para 5 of the Defence and incurred after 2 March 2012. This reduces the amount of the claim to $70, 455.63, made up as follows: • 2012 financial year from 2 March 2012 to 30 June 2012: $3,095.76 • 2013 financial year $50,982.98 • 2014 financial year $16,376.89 214 The Company submits that by presenting the evidence referred to above, the majority, in their capacity as directors of the Company, have made out a prima facie case that the relevant expenses were not incurred for the benefit of the Company. It submits that the onus passes to Mr Spence to justify the expenses as properly incurred but that this attempt to do so has been in the most general and generic sense. 215 I do not accept that there has been any evidentiary onus shifting to Mr Spence. 216 As to the claims that expenses were not incurred for the benefit of the Company a number of points arise. First, merely because Mr Spence entertained fellow directors in RRVIC, RRQLD and RRNSW does not mean that it was not in the interests of the Company. The Company was doing business with each of those companies. Mr Spence said that he was engaged at those times in advancing the business interests of the Company. It has not been demonstrated to the contrary. 217 I am unable to find on the evidence that any of the expenditure incurred between 2 March 2012 and 30 June 2012 was unauthorised by the Company. Mr Spence had a general authority to incur business related expenditure on its behalf. There is nothing self-evidently unnecessary or excessive in the expenses described for that period. 218 I find that for the following financial year ended 30 June 2013 certain expenditures were unjustified and should have been allocated to Mr Spence's loan account. 219 The expenditure incurred on the trip to Europe by Mr Spence in April 2013 when he travelled with Mr Nelson falls into this category. These visits I find related primarily to Mr Nelson's business and not that of the Company. Mrs Mildon also accompanied Mr Spence. However, her airfare was charged to Mr Spence's loan account and was paid to the Company by him. 220 The total of these non-Company expenses for this trip I assess at $8,500. This represents a rounded approach to the expenditure from 2 April 2013 to 30 April 2013 set out in the table in para 5 of the Defence. 221 Mr Spence took Mrs Mildon on trips to Singapore in November and December 2012. The purpose of the September 2013 trip was to meet with Mr Harry Gandhi of Unique Group to discuss the possible sale of the Company. As I outlined earlier, Mr Spence explained Mrs Mildon's presence by saying Mr Gandhi had met Mrs Mildon previously and "more or less suggested [that] it would be nice to meet her again". 222 Mr Spence obviously judged that taking Mrs Mildon ought assist in securing a sale of the Company for the benefit of its shareholders. Whilst the majority, had they had the day to day management of the Company, may not have done this, I am not prepared to find that it was not appropriate for Mr Spence to do so. 223 Mr Spence undertook frequent trips to the Eastern States, often using the pretext of a "Global Group meeting". However, he conceded that a number of the trips were connected with establishing RRQLD, which he described as "that customer". He also claimed in the 30 July meeting that he had taken annual leave for these trips. A distinction needs to be drawn, however, between the trips undertaken to help establish RRQLD and the later trips undertaken to conduct business between the Company and RRQLD. 224 I am satisfied that RRQLD became, in effect, a customer of the Company. Meetings in relation to that company were accordingly for the benefit of the Company. To the extent that any of those expenses related to the acquisition of shares in RRQLD by Mr Spence's private company he accepts that these shares are held on trust for the Company. Viewed in that way such expenditure, which is unspecified, will adhere to the benefit of the Company.

Expenses and lost profits relating to RRQLD and RRNSW 225 The Company submitted that while purporting to engage in its business, Mr Spence actually engaged in the establishment and development of other companies in which he had taken a personal interest to the exclusion of the Company, and which were potential competitors of the Company. By doing so he made improper use of his position as a director of the Company to: (a) gain a direct advantage for someone else (RRNSW and RRQLD); (b) gain an indirect advantage for himself; and (c) cause detriment to the Company in contravention of s 182(1) of the Act. 226 Travel expenses relating to the establishment of the Company form part of the claim for improper expenses, above. The Company's claim under this head may be divided into several parts, which are dealt with below.

Lost opportunity of material equity participation in national Rigging Rentals network, and business risk of commitment to national network without equity participation 227 The Company forthrightly acknowledges that it is extremely difficult for it to quantify its claim under these heads. 228 Nonetheless, without any evidence whatsoever to support it the Company seeks compensation payable to the company under s 1317H of the Act at $100,000. No evidence was tendered of hiring opportunities foregone by the Company as a result of some of its equipment being located, for on-hire, in the Eastern States. Such a claim has no evidentiary foundation and is in the realm of pure speculation. I reject it.

Lost revenue from equipment sent to RRQLD and RRNSW 229 Mr McGillivray said in evidence that the Company has suffered loss by providing equipment on consignment to RRQLD and RRNSW. 230 Mr Spence gave evidence that the provision of equipment to RRQLD and RRNSW brought benefit to the Company. 231 The Company asks the Court to infer that in sending equipment to RRQLD and RRNSW, Mr Spence acted for the benefit of those companies and to the detriment of the Company in terms of lost revenue or the cost of replacement equipment. 232 Again, the Company acknowledges that it has been difficult to for it to quantify the expenses and lost profits associated with the provision of equipment on consignment to RRQLD and RRNSW, and the purchase of replacement equipment to meet demand in WA. Nonetheless it asks the Court to assess its loss under this head at an estimated figure of $50,000 and order Mr Spence to pay that amount in compensation. There is no relevant evidence which could enable the Court to "assess" such a compensation claim. I reject this claim.

Time spent by Mr Spence on the affairs of RRQLD and RRNSW and not taken as leave 233 The Company seeks an order that Mr Spence compensate it by reimbursing the remuneration attributable to the days not worked in the Company's business. Mr McGillivray has identified a total of 71 business days when Mr Spence claimed to be engaged in the business of the Company but, according to Mr McGillivray, was actually travelling on trips which related primarily to the establishment or business of RRQLD or RRNSW. This is mere assertion on Mr McGillivray's part and in the most general of terms. 234 As I have already explained, Mr Spence said at the 30 July meeting that he had taken leave for trips taken in connection with the "establishment" of RRQLD, as opposed to trips undertaken to conduct business between the Company and RRQLD. I do not accept that merely by asserting it to be so that Mr McGillivray's evidence contradicts this. 235 Moreover, Mr Spence has given evidence that all of the work and travel during those days was related to the business of the Company. I see no basis to reject this evidence. Travel and expenses related to RRQLD and RRNSW was for the actual and potential benefit of the Company in earning business income.

RELIEF ON CROSS-CLAIM 236 Accordingly, the cross-claim succeeds to the extent of $3,427.18 in respect of the unpaid loan account and $8,500 in respect of expenses incurred which were not related to the business of the Company, being $11,927.18 in total. 237 I will hear the parties as to the costs of the cross-claim.

Orders 238 On the question of costs of Mr Spence's claim, as there are orders against the Company in one respect and the majority in other respects, the appropriate order will be to hear the parties on the question of costs. Accordingly, I will make the following orders:

1. The second and third defendants, within 28 days of judgment, each pay the plaintiff $300,000 in consideration of the delivery of written share transfer documents, to each of them, of five shares in the first defendant.
2. There be liberty to the parties to apply, on 48 hours' notice, on any issue concerning Order 1.
3. The first defendant pay to the plaintiff the sum of $36,740.
4. The plaintiff pay to the first defendant the sum of $11,927.18.
5. The parties confer on the questions of costs of the claim and the cross-claim with a view to providing the Court with a minute of consent orders as to these costs by 4:00pm (WST) on Friday, 13 November 2015.
6. There be liberty to the parties to apply as to the orders to be made on the questions of costs on 48 hours' notice, in the event that these, in whole or in part, cannot be agreed. I certify that the preceding two hundred and thirty-eight (238) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.