Tisdall v Omeros & Anor [2019] QSC 220

[1] The plaintiff David Tisdall claims damages from the defendants, Michael Omeros and Brent Paddon, for the alleged breach of a warranty in a written share sale agreement. In the alternative, the plaintiff claims for the recovery of alleged loss or damage pursuant to section 236 of the Australian Consumer Law (ACL).[1] At the trial, the plaintiff valued his damages under either claim at $48,080,787.00.

[2] In June 2011, the plaintiff was involved in discussions with the defendants and with Jay Binks, who is not a party to the proceeding. All four were shareholders in companies operating businesses providing telecommunications and information technology services. In April 2001, Mr Omeros had founded Celentia Pty Ltd. In July 2005, Over The Wire Pty Ltd was incorporated with shareholders including Mr Omeros and Matthew McDonough. Ecohost Pty Ltd was incorporated in January 2007. In July 2008, Netsip had been founded with Mr Omeros, Mr Paddon, Mr Binks and Mr McDonough as shareholders. The plaintiff had his own business run through Spartan IT Pty Ltd and had acquired, or was about to acquire, shares held by Mr McDonough in Netsip and Over The Wire. The discussions were about the future of the various businesses.

[3] The outcome of the discussions was a decision to re-organise the structure of the businesses operated by all these companies so that they would become a group with a single holding company.

[4] By 1 July 2011, a new company, Impirical Pty Ltd, was incorporated with the plaintiff, the defendants and Mr Binks as shareholders. As its name changed over time, it is convenient to refer to Impirical as the Company. The Company became the holding company for Celentia, Ecohost, Netsip, Over The Wire and Spartan IT (the subsidiaries).

[5] The plaintiff exercised an option to acquire more shares in the Company from Mr Paddon. By the end of 2011, his total holding was 35,714 shares. Mr Omeros held the same number of shares as the plaintiff. Mr Paddon retained 23,810 shares. Mr Binks held 4,762 shares. As there were 100,000 issued shares, the plaintiff held a 35.714% interest in the Company.

[6] The plaintiff was a director of the Company from about 1 July 2011. He worked in the business from about that date until about 26 February 2013. On 22 March 2013, he retired from the board.

[7] From about June 2013, the plaintiff and the defendants were in negotiations for the defendants to acquire the plaintiff's shares in the Company.

[8] On 14 May 2015, the plaintiff, the defendants, the Company and the subsidiaries executed a share sale agreement (SSA).[2] It provided for the defendants (as the Buyers) to pay $2,385,000 to the plaintiff (as the Seller) for his shares (Shares) in the Company and for the mutual release of liabilities between the plaintiff and the defendants, the Company and the subsidiaries.

[9] The SSA included a clause 9(a), which is the basis of the plaintiff's damages claim. By that clause, the parties relevantly agreed:

"(i) The Buyers each warrant to and covenant with the Seller that:

A. There is no material information in relation to the Shares which has been withheld or not disclosed, including, but not limited to, the existence of any takeover offers from third parties for the Company, and

(ii) The Buyers give these warranties as at the date of this Agreement and continue to give these warranties up to and including the Completion Date."

[10] The transfer of shares was completed on 19 May 2015.

[11] On 19 August 2015, following a special resolution by the shareholders in July 2015, the Company lodged the necessary forms with the Australian Securities and Investments Commission to change its name to Over the Wire Holdings Limited and to notify its change of constitution to become a public company.

[12] On 28 July 2015 and 9 September 2015 respectively, the Company entered into contracts to acquire all the issued shares in Faktortel Holdings Pty Ltd and Sanity Holdings Pty Ltd.

[13] On 3 November 2015, the Company issued a prospectus offering 10 million new shares at $1.00 per share, in an initial public offering (IPO).

[14] On 2 December 2015, the Company's shares were listed on the Australian Stock Exchange (ASX).

[15] The plaintiff contends the defendants "withheld from or did not disclose" to him that they were "contemplating and/or had commenced initial preparation to list" the shares in the Company on the ASX. He says this was a breach of the warranty in cl 9(a)(i)(A) of the SSA. He also contends that this conduct was a contravention of s 18(1) of the ACL, which prohibits a person, in trade or commerce, from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive.

[16] On 10 April 2018, the defendants sought further and better particulars of what the plaintiff meant by his allegation that they were "contemplating" listing and the allegation that they had commenced the "initial preparation" to list.

[17] On 13 April 2018, the plaintiff responded. He relied on the fact and timing of five events alleged to have occurred between 4 December 2014 and 19 May 2015[3] and a number of events alleged to have occurred between 20 May 2015 and 2 December 2015,[4] as a basis for the court to infer the defendants had "contemplated or commenced initial preparation for listing" prior to 20 May 2015.

[18] In each iteration of his pleading, the plaintiff promised that "further particulars will be provided after disclosure." Although disclosure was completed,[5] no further particulars were provided.

[19] The trial was conducted on the pleadings. Absent further particulars, on the basis that "contemplating", "initial preparation" and "to list" bore their ordinary meanings, the plaintiff did not contend that a failure to disclose any of the particular alleged "events" was a breach of the warranty or the ACL prohibition, separate from the pleaded breach. For example, it was not the plaintiff's case that the defendants failed to disclose (or withheld) that they were "contemplating" any specific kind of listing or a listing on a particular date or in a particular date range. Nor did the plaintiff contend that the alleged breach of the warranty or the ACL consisted of the failure to disclose or the withholding of any particular act of "initial preparation".

[20] In the closing submissions, Counsel for the plaintiff sought to distinguish what was contemplated and done about an IPO and listing from December 2014 to May 2015 as "more concrete" and as "specific plans", in contrast to the approach adopted to listing prior to that time. However, the plaintiff had framed his pleaded case in a way that made such a distinction irrelevant. The plaintiff pursued his claims on the basis that the defendants withheld from him and did not disclose to him that as at 20 May 2015 they were contemplating listing and had commenced initial preparation for listing. It is on this basis that his claims were to be decided.

[21] The defendants denied the allegation that they withheld or failed to disclose to the plaintiff that they were contemplating and had commenced initial preparation to list the Company. They contended that they disclosed their contemplation of listing and the initial preparation for the same from a very early time. They said neither their thoughts about the matter nor their taking of initial preparatory steps was withheld, as the plaintiff alleged.

[22] Most of the factual matters relating to the events alleged by the plaintiff were not in issue. The defendants' contemplation of listing, and the steps they commenced in initial preparation for listing, were revealed by the contemporaneous documents passing between them and between each of them and others in the relevant period. Amongst such documents, those sent or copied to the plaintiff identified what was disclosed to him. Each of the defendants gave oral evidence at the trial and was cross-examined. Their evidence, to the extent it touched upon what was disclosed to (or withheld from) the plaintiff, also assisted in the resolution of the factual questions at the heart of the plaintiff's claims. Drawing on these sources, it was possible to sketch the following history.

[23] In June 2011, before the re-organisation of the group was effected and before the Company was incorporated, the plaintiff prepared a discussion paper, which he circulated to the defendants. In it, the plaintiff proposed that, after the re-organisation, the new group seek to grow by a series of acquisitions of other businesses in the telecommunications and information technology services sector and take a series of other steps to enable the holding company to make an IPO and list its shares on the ASX.

[24] The plaintiff's discussion paper proposed that five "target acquisitions" be made and included a "timeline" leading to an IPO in September 2012. In addition to the acquisitions, the steps in the timeline included the engagement of appropriate banks and brokers and hiring an external board. The plaintiff nominated potential board candidates.

[25] In the discussion paper, the plaintiff explained:

"The intention is for the group to IPO within approximately 18 months of initial proceedings. The IPO is intended to fund the growth of the business through additional acquisitions, network builds and the certainty of dealing with a publicly listed business. The IPO target is to issue shares, equating 20% of the company for approximately $15,000,000. This represents a market capitalisation of $75,000,000 and a price earnings ratio of 15 based on a target EBIT of $5,000,000 for FY2013."

[26] The plaintiff marked the discussion paper as "confidential for commercial purposes" and "not to be released under any condition to anyone not listed in the document control."

[27] In July 2011, fellow director Mr Binks made enquiries of Lance Milham, a financial planner, saying he was "looking to find a good accountants firm to audit our books & position us for an ASX listing." This led to a 10 August 2011 meeting with Michael Noon and Jason Croston of the firm SRJ. The meeting was organised by Mr Binks and attended by the plaintiff, Mr Omeros and Mr Milham.

[28] On 11 August 2011, the plaintiff and Mr Omeros attended a Company board meeting. The plaintiff opened a discussion about "the planned move to go IPO by September 2012." According to the minutes, circulated the following day, the plaintiff was concerned that "other tasks may affect the planned move". The meeting resolved "to work for this to eventuate as planned, but for other tasks to be considered as well." The plaintiff was given responsibility to "action" the resolution. Among the items placed on the agenda for the next board meeting was "Discuss financial progress towards IPO and review whether target is on schedule".

[29] On 14 November 2011, Mr Omeros sent an email to the plaintiff and Mr Paddon about an offer of employment he was intending to make to a candidate to work two days a week on identified activities. These activities included "Preliminary work for IPO in Sept 2013". From this it appears that by November 2011 Mr Omeros considered the timeline or schedule for an IPO to have moved out by 12 months. There was no evidence that the plaintiff reacted with any surprise to the IPO timeline mentioned by Mr Omeros. I infer that, due to his close involvement in the management of the group, the plaintiff accepted or was already aware of this change of expectation.

[30] On 29 November 2011, the plaintiff corresponded with Chris Harasty of Harvest Business Growth Partners. He copied his emails to the defendants. These communications produced a capital raising proposal dated 30 November 2011. It was marked "commercial-in-confidence" and titled "Over the Wire Proposal".

[31] Under the heading "Business Objectives", the proposal noted:

"The aim of the organisation is to develop and market high quality telecommunication solutions and to grow the business to over $50m per annum sales during the next 3-5 years and subsequently investigate an IPO on the ASX."

[32] On this timeline, the aim was for an IPO to occur between about December 2014 and December 2016. As the plaintiff was the main contact between the directors and Mr Harasty, I infer that he conveyed the adjusted timeline for an IPO that appears in the proposal or had some input into its inclusion.

[33] On 15 February 2012, Mr Omeros advised the plaintiff and Mr Paddon that a candidate had accepted an offer to join the group as chief financial officer (CFO), with a number of present duties and a future focus on "Working on IPO". Another member had also been added to the staff as the chief operating officer (COO) to strengthen management of the group. In the "Board Report Pack" for the March 2012 directors' meeting, the Human Resources report included the following by way of "commentary":

"Mike Stabb has commenced as Group CFO. He is initially working two days per week and we will ramp this up as we work towards M&A and IPO activities."

[34] In his evidence in chief, the plaintiff denied that Mr Stabb was brought in with a specific purpose of preparing the group to proceed to an IPO. However, when he was taken to the Board Report Pack, the plaintiff agreed that one of Mr Stabb's intended functions as CFO was working on possible mergers and acquisitions and an IPO.

[35] At the board meeting on 20 July 2012, attended by the plaintiff, Mr Paddon requested that the group "report various ratios as investors expect to see for publically listed companies." The CFO was assigned the task of adding ratios and KPIs to future board reporting. From that time, the board meetings were more formally conducted with the CFO calling for agenda items in advance, an agenda being circulated, and decisions being more formally minuted.

[36] Potential acquisition targets were discussed at the 20 July 2012 board meeting. The plaintiff was given the task of speaking with one such target and the CFO was given the task of summarising potential listed acquisition targets with "sub MktCap of say $3m." I infer that at this time the directors were open to considering a "backdoor" listing through the acquisition of a listed company.

[37] In the agenda for an offsite management meeting, circulated to the plaintiff on 18 September 2012, Mr Omeros proposed that the CFO lead a one hour session on "Achievement of Goal 4 - IPO" including "how the group intends to eventually IPO and what is required in the interim."

[38] On 27 September 2012, the plaintiff revisited the longer term goals of the group in a 2012-2013 strategy paper marked "for internal discussion" and "exposure of this document outside of the organisation is prohibited." His covering email noted:

"We have been deciding on a few changes that we wish to implement and attached is a document outlining some of these changes and a view to some of our longer term goals as a business. This is for internal discussion, there's a lot of work and some more decisions to be made but this gives us a starting point."

[39] By this time the three-letter acronym "OTW" was being used internally to refer to the group.[6] Among the "long term goals" the plaintiff identified for OTW was the following:

"As the business grows we will continue to shape with the right reporting methods, governance and leadership so that we are ready for IPO when the prevailing market conditions allow."

[40] The same day, Mr Omeros responded to the plaintiff's strategy paper, suggesting that the group's goals include:

To identify six "acquisition opportunities" that deliver an EBIT accretive outcome and strengthen current core offering or allow growth into areas identified as being on the OTW roadmap

To continue to shape the business to be ready for IPO when the prevailing market conditions allow."

[41] On 11 January 2013, the plaintiff had a discussion with Mr Omeros. According to the plaintiff, Mr Omeros said he was going to seek to become the managing director of the group and that the board would work out the role for the plaintiff at a later time. The plaintiff also recalled that Mr Omeros said he was frustrated by the failure of the group to achieve internal goals that had been set and he was going to put the IPO aside in the immediate future in order to focus on goals that were achievable.

[42] After the meeting, the plaintiff sent the following in an email to Mr Omeros and Mr Paddon:

"After discussing the future of the business with Michael this morning I have decided to put my shares on the table for sale. Whilst I respect Michael's ability and I have no doubt his plan will provide growth and value I feel there will be few opportunities for personal development under this approach. Given seeking out a new opportunity to learn would mean losing control of a high risk investment now seems like an appropriate time to move my money on as well.

For clarity I am offering to sell my entire shareholding and resign from both my positions as Director and Employee immediately upon settlement. I am not interested in remaining with the business or selling only part of my holding. ...

As a general figure I would be happy with $95.81 a share coming to a total of $3,421,758.34 for the holding of 35,714 shares. I don't have a preference as to who purchases these shares be it a combination of the three remaining shareholders in any form or a new party everyone sees fit to introduce."

[43] On 18 January 2013, Mr Omeros was appointed managing director of the group. The plaintiff abstained from voting at the directors' meeting. The written resolution, signed at the meeting, conferred on Mr Omeros as managing director all the powers of the board and directors other than certain listed powers, which were to remain powers of the board. The listed powers retained by the board included:

"The final decision in relation to the raising of new capital"

"The sale, acquisition or formation of any new business venture".

[44] On 29 January 2013, the plaintiff sent an email to the defendants, raising the prospect that he might "take a leave of absence" from his work with the group. The email concluded:

"I'm not certain if this is something I want to do quite yet but I don't think my presence in this business is going to be a positive one for the moment. I can survive on the $50k[7] until such a time as I can contribute once more or dispose of my shareholding and move on."

[45] Mr Omeros replied, copying Mr Paddon. He wrote that he personally did not have an issue with the plaintiff's proposal, but he would like to know by the end of the week whether the plaintiff wanted to do so, as "it does impact planning."

[46] On 20 February 2013, Mr Omeros circulated a "Delivery Plan", dated 15 February 2013, which had been presented to all staff at a meeting the previous week. It is not clear whether the plaintiff was present at the staff meeting. He did receive the Delivery Plan by email on 20 February 2013.

[47] The Delivery Plan included a list of "Goals", with Goals 2 and 3 in these terms:

To identify and explore six acquisition opportunities that deliver an EBIT accretive outcome and strengthen current core offering or allow growth into areas identified as being on the OTW product roadmap.

As the business grows we will continue to shape with the right reporting methods, governance and leadership so that we are ready for IPO when the prevailing market conditions allow."

[48] The Delivery Plan included a "Project Plan (dynamic)" in a table format that allocated named tasks to particular persons or groups ("resources"), including a number of tasks that were allocated to the plaintiff. Each named task had a "start" and "finish" date. The plaintiff's tasks had finish dates ranging from more immediate tasks to finish by 22 February, 28 February, 1 March, 8 March, 15 March and 29 March 2013 to those due to finish on 28 June and 31 December 2013. I infer from this document that the plaintiff had not by then indicated he had decided to take a leave of absence from the group.

[49] Item 47 on the Project Plan was "Governance, IPO". For the period starting 4 February 2013 and ending 28 June 2013, it was annotated in the "timeline" as "IPO is future goal, park for now". This was consistent with the timeline in the "Over The Wire" Proposal, organised by the plaintiff in November 2011 and with the plaintiff's strategy paper of September 2012. It was also consistent with the plaintiff's recollection of his discussion with Mr Omeros on 11 January 2013.

[50] On 25 February 2013, the plaintiff advised all staff in the group, by email, that from the next day he would be on an "extended period of leave to go pursue some other interests."

[51] On 18 March 2013, there was a discussion between the plaintiff and Mr Omeros. Mr Omeros said he intended to terminate the plaintiff's employment with the group for numerous breaches of the credit card policy. He offered the plaintiff the opportunity to resign, which the plaintiff took. It was not contended that the plaintiff's breaches involved any personal dishonesty, but merely a sustained failure to comply with the Company's policy.

[52] On 22 March 2013, at an extraordinary general meeting of the Company shareholders, the plaintiff and the defendants retired as directors. This step was endorsed by all the shareholders, including the plaintiff who was represented at the meeting by his then solicitor. Each director was eligible to seek re-election. The two defendants nominated. The plaintiff did not. In cross-examination, the plaintiff said he recognised he would not be acceptable as a director. He agreed that there was almost no ongoing relationship of trust and confidence left between him and the defendants at this time.

[53] The plaintiff nominated Lucas Tisdall, his brother, as a director. The defendants were elected as directors. The plaintiff's brother and Mr Binks, who was another nominee, were not elected.[8]

[54] Shortly after the meeting, the plaintiff sent an email to the defendants and the CFO, telling them he would be "informing ANZ of the situation and removing my guarantee from the undrawn remainder of the credit facility" and that he would be "returning to work Monday morning, ending my leave without pay early." The CFO responded, pointing out to the plaintiff that any release from his obligations as a guarantor would be up to the bank. Mr Omeros later reminded the plaintiff that he had resigned his employment (rather than be dismissed), so that he could not return to work.

[55] On 26 April 2013, the plaintiff had an exchange of messages with the COO, Mr Cornish. In the course of the exchange, Mr Cornish told the plaintiff he should be happy he had shares in "a massively growing company". The plaintiff responded he was not happy, noting "OTW doesn't pay dividends". Mr Cornish reminded the plaintiff that "at some stage" there would be an IPO or a "sell out or buy out" in which the plaintiff stood to make a lot of money. Mr Cornish suggested the plaintiff hold the shares "until they double". The plaintiff insisted he would be happy to sell his shares rather than hold them, as he was running out of the savings he was using for living expenses. He assessed he had a "huge" risk of becoming bankrupt. He said he was planning to "ditch" the shares, either in a single sale or in smaller portions.

[56] When Mr Cornish passed the exchange on to Mr Omeros, he responded to Mr Cornish and to Mr Paddon, noting "I don't want to see him bankrupted, he really has no idea..."

[57] On 13 June 2013, the plaintiff sent an email to Mr Omeros on the subject of "Sale of Shares". In it, he wrote:

"After a discussion with my accountant it seems that the sale of my shares is an option I should look into more closely. At this time I would be willing to negotiate for the sale of around 28,000 shares. This obviously means the first question is whether you are prepared to do a deal that involves a partial sale?

My next request is that in order to negotiate in good faith I require access to the most recent management accounts and sales report. I believe this to be a reasonable request given the only figures I have to work with are now tremendously out of date."

[58] There does not seem to have been any immediate response from Mr Omeros.

[59] On 9 July 2013, the plaintiff emailed Mr Omeros again:

"Just following this up to see if I can get some management accounts in order to continue the discussion?"

[60] Mr Omeros responded within minutes, apologising for missing the earlier email. He told the plaintiff a number of things: he was not opposed to a partial sale; he would need to speak with Mr Paddon; and he would provide the June management accounts when they were ready.

[61] On 23 July 2013, the plaintiff wrote again, "in the interests of keeping this moving", advising he would be "happy with the May financials and the current sales report".

[62] On 31 July 2013, Mr Omeros sent the plaintiff the June 2013 management accounts, asking the plaintiff to let him know when he had had time to assess the accounts and was ready to discuss a potential sale.

[63] In August 2013, the two arranged to meet a few times over coffee to discuss the share sale.

[64] On 24 September 2013, Mr Omeros sent an email to Mr Paddon which reveals something of his thinking at that time. He told Mr Paddon he was: "90+% certain now that I do not want to sell my shares". Mr Omeros continued:

"I have realised how mentally disengaged I have been over the last 6 months or so and how I have tried to take the path of least resistance just to survive. I want to seriously consider taking this business to IPO now. I think there are a number of cultural changes that need to occur here for this to happen.

I think that you are fairly keen to cash out / spend less time at work so we probably need to discuss what this all means. I'm sure that there are a few options here depending on what your thoughts are, have a think when you get a moment over the next couple of weeks and we can chat about it when you return."

[65] I infer that Mr Omeros had been contemplating selling his shares at some time before this date and that he was uncertain whether Mr Paddon was intending to remain a shareholder.

[66] Mr Omeros gave evidence at the trial in which he explained that, between about March and September 2013, he had been pre-occupied with the serious illness of a member of his family.

[67] Between August and December 2013, Mr Omeros provided some updated management accounts information to the plaintiff, as they, very slowly, progressed discussions about the plaintiff selling his shares.

[68] On 4 November 2013, the plaintiff sent an email to Mr Omeros asking "if there is still a serious chance of doing a deal?"

[69] From about 22 January 2014, the plaintiff, through his solicitors, began requesting copies of minutes of Company meetings under s 251B(2) of the Corporations Act and audited accounts.

[70] Between March and May 2014, the CFO provided copies of minutes of Company meetings to the plaintiff, through his solicitor. The request for audited accounts was withdrawn, after the CFO informed the plaintiff's solicitor of the likely cost of and time for providing them, and following a discussion with the plaintiff's father, Robert Tisdall, about the matter.

[71] On 20 June 2014, the defendants proposed to the plaintiff that they would acquire his entire shareholding in the Company for $2.5 million, by an initial $1 million payment and three annual instalments each of $500,000. There followed exchanges of correspondence about the terms for sale and purchase of the plaintiff's shares.

[72] On 21 July 2014, through his solicitors, the plaintiff set out the terms on which he would agree to sell his shares. The total purchase price would be $2.5 million. Of this amount, $100,000.00 would be paid on signing an agreement. $1 million would be paid on 1 November 2014 and the balance by three instalments on 1 November 2015, 2016 and 2017. The plaintiff would take a charge over the shares to secure payment of the instalments. A warranty and a release, each in generally the terms ultimately agreed, were also part of the proposal.

[73] On 31 July 2014, the defendants responded confirming "in principle acceptance" with their final acceptance "reliant upon, and subject to, sufficient finance to complete the purchase".

[74] On 13 November 2014, the CFO was invited by a colleague from an accounting firm to attend a seminar on "IPO and backdoor listing" to be run by a law firm. The CFO responded saying the group had "considered a backdoor listing at one point", but were "steered ... away from it" by the additional costs of due diligence and the preference of the ASX against backdoor listings "unless you are very close to the same business/industry" as the listed vehicle. The CFO indicated a general plan "hopefully" for an IPO in November 2015. I infer that this was the earliest date the CFO then thought was feasible for an IPO.

[75] On 27 November 2014, Mr Omeros asked his fellow directors to email him with a "top of mind" list for possible acquisition targets. Mr Binks replied the next day with six suggestions, including the voice business Faktortel.

[76] On 22 December 2014, Robert Tisdall sent an email to Mr Omeros. He advised he held the plaintiff's power of attorney and accepted a proposal by Mr Omeros to place $100,000 in the trust account of the plaintiff's solicitor as an "offer of good faith" towards an agreement to settle the sale of the plaintiff's shares.

[77] On 24 December 2014, Mr Omeros responded to Robert Tisdall confirming that $100,000 had been transferred to the trust account. He copied the email to the plaintiff and his solicitor.

[78] On 19 January 2015, Mr Paddon and the CFO exchanged emails, which were copied to Mr Omeros. In these, the CFO explained that under the then draft agreement for the purchase of the plaintiff's shares, it would be necessary to obtain the plaintiff's approval or consent to any dealing with the shares until he had been paid the purchase price in full. The CFO explained that this would give the plaintiff a veto over an IPO, because offering new shares to investors might be thought to "dilute" or "disadvantage" the existing shareholders.

[79] In the course of the exchange, Mr Paddon wrote:

"It's very clear cut to me that there is NO way an IPO is going to happen until we tidy this shareholding up, so there is no disadvantaging them, and they are clearly a willing seller at the price that we've negotiated. From here, they are just ensuring that we can pay the amounts owing as and when the contract says we must."

[80] Mr Paddon gave evidence at the trial about his view at this time. He was not prepared to pursue an IPO while the plaintiff remained a significant shareholder. He explained that the relationship between the plaintiff and the continuing directors had been difficult, leading to the plaintiff's exit from employment and management of the business. Since then, the sale negotiations had been protracted and had been punctuated by the plaintiff's demands for the production of information. I accept his evidence. I find that Mr Paddon had no inclination to deal with the plaintiff about the conduct of the business, let alone about an IPO. He opposed an IPO while the plaintiff remained a substantial shareholder.

[81] Mr Omeros gave evidence to the same effect as Mr Paddon. He explained his personal view that one had to believe completely in the business as a proposition to which external investors should subscribe, in order to present a company to the market through the ASX. In his view, the presence of the plaintiff on the share register, with a significant number of shares, would have been of sufficient concern to him that he would not have endorsed the Company proceeding to an IPO.

[82] Mr Omeros was strongly tested about this topic during cross-examination. He remained clear and consistent as to his view. He was frank and open in his evidence, making appropriate concessions as to his recollection of particular events where there was doubt, but resisting contentions that were contrary to his specific memories. I accept him as an honest witness who sincerely believed at the time that he should not seek to list the Company on the ASX until the plaintiff's shares, or a substantial majority of them, had been purchased by persons committed to the success of the business, as he and Mr Paddon then were.

[83] As the CFO put it in one of the January 2015 emails to the defendants, it was "very hard to do anything IPO related" without affecting the rights attaching to the shares, which would require the plaintiff's approval or consent. At the time, the sale terms under discussion provided for payment by instalments over a period ending in about November 2017. This would push an IPO date out beyond the range identified in the "Over The Wire Proposal". So the CFO was right to raise it with the directors.

[84] Mr Stabb gave evidence at the trial. I accept his recollection, given during cross-examination, that with respect to proceeding to an IPO:

"All we'd done is start to read a few things by that stage, and the negotiations for David [Tisdall] to sell his shares had started, which was the impediment to it ever happening. Other than that, we'd done nothing. I think, probably, at that stage I might have thought we'd done some work towards it, but in the benefit of hindsight, having gone through the IPO, I can now say that we'd done essentially nothing meaningful."

[85] In cross-examination, the plaintiff accepted that he was aware his father shared the view that the risk presented by the lack of cooperation between significant shareholders in the Company was not good. Robert Tisdall thought the way to reduce the risk (which affected the plaintiff as well as the other shareholders in the Company) was for the plaintiff to sell his shares to the defendants. It was in this context that the plaintiff said his father had taken direct control of the negotiations with the defendants - speaking directly to Mr Omeros and not even through lawyers - about the sale of the shares.

[86] By 27 February 2015, discussions between the defendants and the plaintiff's father had progressed. There had been some difficulty about granting the plaintiff a charge over the shares in priority to ANZ, which was to lend the purchase price. The defendants sought to overcome this issue by bringing forward the payment of the consideration. They proposed "$2.25 million up front with $135k paid within 6 months."

[87] On 2 March 2015, Robert Tisdall advised he would "get a new agreement drawn up with much less onerous guarantees." On 6 March 2015, he did so.

[88] On 17 March 2015, Mr Omeros sent the draft agreement back with comments and some changes. On 26 March 2015, Robert Tisdall sent Mr Omeros a further revised draft. Further changes were the subject of exchanges on 30 March, 14 April and 20 April 2015.

[89] By about 22 April 2015, the terms of the draft SSA were in what would become the final form. The draft included two "conditions precedent to agreement". The first was the defendants providing the plaintiff with a copy of the Company's most recent books of account, annual statements, trading and financial statements and any other document of a financial nature that the plaintiff required (in his absolute discretion) certified by its internal accountant as being materially true and correct, to the absolute satisfaction of the plaintiff. The second was, to the extent necessary, ANZ providing confirmation that it approved the SSA.

[90] On 30 April 2015, a general meeting of the Company was held, with the consent of all shareholders, including the plaintiff. All the shareholders voted in favour of a resolution that the Company provide financial assistance to the defendants for the purchase of the plaintiff's shares.

[91] On 4 May 2015, someone from the firm Integra Advisory called for the CFO. The telephone message caused the CFO to enquire of the defendants about the extent to which the idea of an IPO was known to or had been discussed with staff - as a possible explanation for this "cold call". The conversation concluded that one of the staff knew about the idea, likely having drawn the inference from speaking with a director.

[92] On 14 May 2015, the Company received written confirmation of ANZ's acceptance of the terms of the SSA. The defendants, the Company and the subsidiaries signed the SSA that day and sent it to the plaintiff's father, who was still acting as his attorney. The defendants advised that ANZ's approval had been received. They also advised that they intended to pay the entire balance of the purchase price at settlement, rather than retain $135,000 to be paid six months after completion. The plaintiff's father responded, "The proposed arrangement is satisfactory (an obvious understatement)."

[93] The SSA was signed by all parties and dated 14 May 2015. It provided for the $100,000 "good faith" deposit in the plaintiff's solicitors' trust account to be released to him on signing. The balance of the purchase price was to be paid within three business days.

[94] On 15 May 2015, in a private communication with a friend, the plaintiff expressed the view that he needed "to put OTW behind me, forever".

[95] On 18 May 2015, the plaintiff gave instructions to his solicitors to transfer $1,889,774.39 of the share sale proceeds to a bank account in his parents' names. This was to repay the loan his father had arranged for him to buy the shares in 2011. The remainder of the funds were to be transferred to the plaintiff's bank account.

[96] On 19 May 2015, completion of the SSA occurred. The defendants paid the balance of the purchase price, $2,285,000.00, and the plaintiff was released and discharged from all liabilities (including personal guarantees) in respect of the shares, the Company and any related company.

Whether the defendants' contemplation of an IPO was not disclosed to or was withheld from the plaintiff before 20 May 2015

[97] From the discussions about re-organisation of the group in mid-2011, the plaintiff knew that Mr Omeros and Mr Paddon were contemplating listing the Company's shares on the ASX. Indeed the plaintiff took the credit for proposing the group proceed to an IPO. The target date for an IPO changed over time, but the goal remained. Long before the plaintiff departed from an active role in the group, he was involved in organising the "Over The Wire Proposal" about capital raising, which set the time range of December 2014 to December 2016 for an IPO.

[98] The plaintiff and the defendants shared the goal of listing the group with all the staff in February 2013, shortly before he exited his roles as director and employee.

[99] Under cross-examination, the plaintiff admitted that from February 2013 he knew the defendants' position was that the Company would proceed to an IPO when market conditions allowed. He accepted that Mr Omeros did not say to him an IPO would never happen. Like all staff in the group, he knew that making an IPO was "parked" for the first half of calendar 2013. He conceded he was not told it had been abandoned, contrary to his pleaded case.[9]

[100] In April 2013, the COO Mr Cornish confirmed to the plaintiff that an IPO was still contemplated. The main attraction to the defendants of an acquisition of the plaintiff's shares was that it would simplify the process and increase the benefit they might obtain from a listing of the Company on the ASX. As the defendant noted, the Company did not pay dividends.

[101] For any faults attributed to him, the plaintiff was not so stupid as to overlook these highly relevant matters. He renewed his dialogue with the defendants about a possible sale of his shares two months after the exchange with the COO and at about the time the move to an IPO would likely be under further consideration by the defendants.

[102] On 9 November 2015, in an exchange with a friend about the prospectus and the IPO, the plaintiff described the steps taken by the Company in acquiring Sanity and Faktortel and issuing the prospectus as "play for play" Mr Paddon's plan from 2011 onwards, writing, "Brent finally gets his wish". He explained:

"he always wanted to go find some companies to buy, and do so by deffered [sic] payments, then make a rapid listing

had brokers/finance people discuss it with us and so forth".

[103] I conclude that the fact the defendants were contemplating an IPO of the Company's shares to be listed on the ASX was disclosed to the plaintiff before he entered into the SSA. That information was not withheld from him. He knew of the defendants' intention well in advance of 14 May 2015. There was no breach of the warranty in cl 9 of the SSA in that respect.

Whether the defendants' initial preparation for an IPO was not disclosed to or was withheld from the plaintiff before 20 May 2015

[104] By early 2012, the plaintiff knew that the defendants were making initial preparations for an IPO. He knew and participated in such initial preparation, including the recruitment of a COO and a CFO. By mid-2012, the plaintiff and the defendants were involved with changes to make the Company operate more like a listed public company, most particularly the more formal conduct of directors' meetings and the monthly reporting associated with them. As one of the directors, the defendant was also tasked with identifying possible acquisitions, in accordance with the general plan to grow the Company's business ahead of an IPO.

[105] Between September 2012 and February 2013, all three directors had settled on a process of identifying acquisition opportunities and growing the business to be ready for an IPO when the market conditions were appropriate.

[106] All these things may fairly be described as initial preparation for an IPO. They were consistent with the various plans to grow the business and take it to the point of listing on the ASX, which had been formulated since the reorganisation of the group. The plaintiff knew of these things from his time as an investor, a director and an employee.

[107] I am satisfied the plaintiff was aware the defendants had commenced initial preparation for an IPO well before the SSA was executed and completed. The defendants did not withhold from him the fact that they had made initial preparation for listing of the Company on the ASX. There was no breach of the SSA warranty in this respect.

Inferences sought to be drawn from events before 20 May 2015

[108] As noted above, the plaintiff did not provide further particulars of the allegedly undisclosed or withheld "initial preparation". He did refer to five events that occurred before 20 May 2015[10] as included in the "information that was withheld from or not disclosed" to him,[11] from which the court should infer that by that date the defendants "had commenced initial preparation to list the Company on the ASX".[12] The plaintiff did not allege that the failure to disclose any of these five events was itself a breach of the warranty; rather, he contended that from these events the court should infer that the defendants were contemplating a listing and that they had undertaken initial preparation for it.

[109] The steps referred to in paragraphs [104] and [105] above were initial preparation for an IPO. Those matters were disclosed to the plaintiff and so were not withheld from him. That is sufficient to dispose of the plaintiff's breach of warranty claim. However, the five events identified by the plaintiff may assist to more clearly understand the plaintiff's case.

[110] The first in time of the five events is an alleged "agreement" between the defendants and the CFO in December 2014 to proceed to an IPO. The plaintiff alleged this agreement was evidenced by a 4 December 2014 email from the CFO to the directors, advising them that he would start using some available cash-flow from the business to pay down the directors' loans, with a view to them being repaid by 30 June 2015. The CFO explained this was "so they don't appear on what will be our most recent statutory financials prior to an IPO". The CFO also told the directors he would use "Project OTW" to refer to an IPO, so as to "retain secrecy for now."

[111] The CFO's advice about paying down the directors' loans may indicate the CFO had in mind a listing date in late 2016. If the directors' loans were paid out by 30 June 2015, the repayment would appear on the financial statements for the financial year ending that date. These would be the "most recent statutory financials" if the Company listed any date before 30 June 2016. If the IPO was in the second half of 2016, then the most recent financial statements would likely be those for the year ended 30 June 2016, in which neither the directors' loans nor their repayment would appear.

[112] The CFO's use of a "code name" for the work towards an IPO was consistent with the plaintiff's approach to confidentiality in his early communications with the defendants on this topic. A sense of the significance of the name was conveyed by Mr Paddon, who described the "Project OTW" name as "a bit of a joke, actually." As Mr Paddon noted:

"Well, we'd told the staff in 2012 that we were going to do one in 2013, and that didn't happen."

"We didn't want our staff and/or competitors knowing that we may look to do it because there would be significant embarrassment if we didn't actually get there into the future.

Because, as I said earlier, if it got out into, say, our competitors, and then we didn't proceed with something, it would be rather embarrassing."

[114] I accept Mr Paddon's explanation as the position taken by the Company's directors and CFO at that time.

[115] The state of any "agreement" about proceeding to an IPO by the time of the 4 December 2014 email may be readily gauged by what occurred shortly after Christmas 2014. Mr Omeros asked the CFO to do some work on the possible IPO in any available time, after his other tasks were completed, telling him he had a November target. The CFO told Mr Omeros that he needed to get board approval to do the IPO project, as it would be a "huge amount of work." It does not appear that the IPO project was put to a board meeting at that time.

[116] I do not infer from the 4 December 2014 email that the defendants had agreed to proceed to a listing in any relevant sense.

[117] The second in time of the events the plaintiff relies upon was a 22 December 2014 email from Mr Omeros urging his fellow directors to complete the AICD Company Director Course in April, May or June 2015.

[118] This email is of much less significance than the earlier steps of appointing the CFO and COO, formalising the reporting for directors' meetings and pursuing a process to identify potential acquisitions. If it were of importance, I would not accept that, by urging his fellow directors to do an AICD course, Mr Omeros was undertaking an act of "initial preparation" for a listing. I regard it as a sensible measure for directors of a company running an increasingly large business enterprise.

[119] The third event relied upon was the preparation of a draft "Project Plan", which the CFO sent to Mr Omeros on 14 January 2015.

[120] This was a Gantt chart for the "OTW Project". It listed over 180 "activities" the CFO had downloaded from an on-line guide to listing on the ASX. Of these activities, the chart noted dates for only 11. Six were for planning acquisitions of other businesses; three were audited financial statements, profit statement and directors' statement; and the remaining two were "Start acting as a public company as long as possible before listing" and "Are all statutory records up to date". The plaintiff was aware that activities of this kind were underway, as they were adopted or approved by the Company board during the period when he was a director.

[121] The draft 2015 Project Plan was a very preliminary attempt to identify all the things that may have to be attended to before the Company offered its shares to the public. It was downloaded from the ASX website, without consideration of the Company's specific situation. It was the electronic equivalent of a general guidebook on a topic. Each of the eleven dated activities was noted as "0%" complete.

[122] I do not infer from the draft Project Plan anything more substantial by way of initial preparation for an IPO than was evident from the plaintiff's initial discussion paper in June 2011, the Harvest capital raising proposal in November 2011, the formalising of reporting to the board in July 2012, the appointment of the CFO and COO in 2012, the discussion of potential acquisition targets in 2012 and the plaintiff's strategy paper in September 2012.

[123] The fourth event relied upon was the circulation of a Project Task List. On 30 January 2015, the CFO sent Mr Omeros a document, which he described as "February 2015 - Project OTW Task List". It allocated six tasks to Mr Omeros and four to the CFO. Each task had the "Due By" date of 28 February 2015.

"Review all 29 ASX governance framework recommendations, determine which are 'why not' ones, draft basis for 'why not' and identify alternative governance to be in place."

[125] Another was to determine or approve if an employee share plan or an employee share option plan was to be introduced after the "buy-out" of the plaintiff.

[126] Mr Omeros sent the task list to his fellow directors, explaining he and the CFO "have a project plan and have started to put timings around tasks." He told them:

"I will require your input as I work through some of these, nothing to do for now for you but I will [be] hitting you up for input.

In short, we have a shitload to do in order to make November ☺".

[127] Mr Omeros' email of 30 January 2015, circulating the Project Task List, indicated he had in mind that the group could proceed to an IPO in November 2015. His tone reflects an appreciation of the magnitude of the decision then approaching for the Company and its small band of directors and senior officers. Of the 180 activities downloaded from the ASX into the Project Plan, only 10 were included in the Project Task List. As the CFO frankly admitted in his evidence, "nothing we'd done was meaningful. We really just started to read about it and build a bit of a project plan, but it was - it was never used." There was no evidence that the CFO or Mr Omeros completed any of the tasks on the Project Task List by 28 February 2015 (or by 20 May 2015).

[128] As the plaintiff knew from his earlier work on the discussion paper, the strategy document, and the "Over The Wire Proposal", there were a number of necessary steps in the process for an IPO. Some steps had been taken. Other necessary steps had not occurred by this time. Acquisition targets had to be identified and then acquired in order for the group to be of a size to make an IPO feasible. The key advisers had to be selected and appointed, including an underwriter.

[129] In the circumstances, I do not infer from the Project Task List anything more substantial by way of initial preparation for an IPO than the matters that had been disclosed to the plaintiff before that time.

[130] The fifth and final act was the exchange of messages between Mr Omeros and Mr Paddon on 15 May 2015. This was the day after the SSA was executed. The exchange was as follows:

"Mr Omeros: hey, re: listing, are you still keen for this year?

now we can get onto it, I see no reason to delay it

Mr Omeros: I am and ASX listing process suggest roughly a 20 [week] indicative schedule

so basically we need to look at appointing advisors early June for a November IPO

Mr Paddon: I have a feeling we can do it faster ...

There is a lot of background work we will also have to do so I think that would be a push but if not great

what we have to decide is are we pressing the go button and if so get on and appoint the advisors

I reckon we should in early June if you are comfortable with that

[131] The plaintiff's case is that, by this exchange, Mr Omeros and Mr Paddon "agreed that they would aim to list the Company on the ASX by November 2015." The plaintiff instructed his expert witness, Mr Lytras, to the same effect and described this as "the key event" for the purpose of valuing the plaintiff's shares.

[132] As noted above, in the view of Mr Omeros and Mr Paddon, the principle impediment to proceeding to an IPO was the plaintiff's large shareholding. The defendants had discussed this in their exchange on 19 January 2015. The CFO was aware of their views. The execution of the SSA presented the prospect that this impediment would soon be removed. That was the context for the 15 May 2015 exchange.

[133] The 15 May 2015 exchange between the defendants did not result in any binding "agreement".[13] It did indicate that, in advance of any discussion at a board meeting, both the defendants were in favour of proceeding to a listing in late 2015. It also indicated they both accepted that, to meet such a timeframe, the Company would have to decide to appoint advisers in early June 2015. The fact that Mr Omeros was asking the question of Mr Paddon betrays that no such common position was clear before the exchange. I do not infer from the exchange that anything more substantial by way of initial preparation had occurred than had been already disclosed to the plaintiff.

[134] Rightly, the plaintiff's case was not pleaded on the basis that the defendants failed to disclose to him a decision by the Company to proceed to an IPO. I reject the submission put on behalf of the plaintiff that the 15 May 2015 exchange was itself a decision that the Company would proceed to an IPO in November 2015, or that it would appoint advisers for that purpose in June 2015. No such decision was made or could have been made until the later board meeting, on notice to the other director or with his concurrence. The views in the minds of individual directors, which have not been the subject of a board decision, cannot be taken as the plans of the Company. A company's intentions can only be judged by reference to the intentions of the directors acting as a board.[14]

[135] The plaintiff submitted that it was "clear" the defendants together with the CFO "had put in place a plan to list the company on the ASX" from "at least November 2014".

[136] From the evidence of the events identified by the plaintiff, it is not reasonable to infer there was an agreement in any relevant sense between the defendants and the CFO to proceed to an IPO until such time as the plaintiff had disposed of his shares. Prior to that time, there was a further pursuit of the general goal to position the group for an IPO, if and when the circumstances proved appropriate, including the prevailing market conditions. The emails identified by the plaintiff (and the things mentioned in them) were exchanges at a stage before a decision was made to proceed to an IPO.

[137] The evidence of Mr Omeros, Mr Paddon and Mr Stabb as to those matters does not advance the plaintiff's contention. Their recollections are consistent with the contemporaneous documents. From July 2011 onwards, in each year of the group's existence, the general desire to proceed to an IPO persisted. As the plaintiff accepted in cross-examination, the timing for an IPO "was pushed out multiple times." The defendants did not commit themselves or the Company to take all the necessary steps for a listing until after the plaintiff's shares were acquired. No specific agreement or plan was made in November 2014 to proceed to an IPO in November 2015.

[138] Each of the plaintiff's nominated events individually is (and all of them together are) further confirmation that an IPO was in contemplation. However, the events took matters no further in that respect relevantly than was disclosed to and known by the plaintiff.

[139] The warranty about disclosure was limited to "material information in relation to the Shares".

[140] What the defendants contemplated in terms of listing was something widely known to be a characteristic of such companies. It was a use to which the shares could be put. It was long planned to be carried out.

[141] The warranty expressly looks to external matters, such as a takeover offer for the Company by a third party. This express inclusion may be understood in the context of the commercial object or transaction itself, which might be described as a takeover of the Company by the defendants, acting jointly, so as to acquire a further 35% of the issued shares, taking their collective holdings to over 95%.

[142] The sale of the plaintiff's shares to the defendants would give the defendants an almost unlimited ability to steer the future course of the Company. The plaintiff must have been aware that those holding more than 95% of the shares in a private company would be free to proceed with such acquisitions as they wished and so prepare the Company for an IPO in accordance with their own timetable, subject only to prevailing market conditions and the requirement to act justly and equitably.

[143] In the circumstances, I would not interpret the warranty to extend what is "material information in relation to the Shares" to include any of the initial preparation identified in the plaintiff's pleading and particulars, which the defendants were doing in pursuit of the long-standing and disclosed goal of an IPO.

[144] Whether considered separately or in combination, against the background of the plaintiff's knowledge of the defendants' plans to list the Company's shares "when the prevailing market conditions allow", the five events identified by the plaintiff were not of such a nature as would tend to deter a person in the plaintiff's position from entering into or completing the SSA. If the plaintiff had alleged that any or all of these specific events ought to have been disclosed, he would have failed, as they were not material information in relation to the shares.

[145] There was no breach by the defendants of the warranty in cl 9 of the SSA in these respects.

Inferences sought to be drawn from events after 20 May 2015

[146] In addition to the things that occurred before the SSA warranty ended, the plaintiff also relied on "the fact" and "the timing" of events that occurred after 20 May 2015[15] as a basis to infer that as at 20 May 2015 "the defendants were contemplating and/or had commenced initial preparation to list the Company on the ASX."[16]

[147] There is no issue that the defendants were contemplating listing the Company on the ASX as at 19 May 2015 or that they had engaged in initial preparation for listing by that date. This was known to the plaintiff, having been disclosed to him well in advance of the SSA. It is not necessary to infer these matters.

[148] To the extent it may be necessary to determine whether the post-completion conduct is a proper basis to infer that any material information in relation to the plaintiff's shares was withheld or not disclosed, in addition to that considered above, the evidence the plaintiff relied upon and the inferences he asked the court to draw are considered below.

[149] The earliest in time of the post-20 May 2015 events the plaintiff relied upon concern the selection and appointment of advisers for the IPO.

[150] On 21 May 2015, Mr Omeros sent an email to Chris Burrell from Burrell Stockbroking asking what experience the firm had in advising on a listing "and whether there would be interest in being involved?" This was plainly an initial enquiry. No explanation of the current position of the Company's business or of the amount of capital sought to be raised was provided by Mr Omeros. Mr Burrell's response, indicating general interest, explained "It's a couple of years since we last spoke on this." The email exchange does not form any sound basis to infer that there was any earlier undisclosed "preparation" for it.

[151] Between 22 and 28 May 2015, Mr Paddon met with Steve Baxter to discuss the possible listing of the Company and to ask about his recommendations for advisers. Mr Baxter was known to Mr Paddon, who had worked with him in other ventures. Mr Baxter was something of a celebrity in the start-up space, who appeared on the television program Shark Tank and had been a founder of leading telecommunications company Pipe Networks Pty Ltd. This meeting resulted in Mr Baxter introducing Mr Paddon, by email, to Malcolm McBratney and Reece Walker of McCullough Robertson.

[152] On 12 June 2015, Mr Omeros and Mr Stabb met with McCullough Robertson to discuss whether the firm could advise on an IPO. On 15 June 2015, the firm sent them a "Statement of Credentials". After the board decision to proceed to an IPO, taken on 23 June 2015, McCullough Robertson was engaged to be the legal adviser to the Company in respect of the float.

[153] The contemporaneous notes of Mr Paddon's 28 May 2015 meeting with Mr Baxter indicate the broad, general and very preliminary nature of the discussion. These interactions do not ground any inference that Mr Paddon or Mr Baxter engaged in any undisclosed initial preparation for the listing prior to 20 May 2015. In fact, the exploratory nature of the enquiries by Mr Paddon are a basis to infer that there was no earlier initial preparation with respect to his dealings with Mr Baxter and the firm before the last week of May 2015.

[154] It was Mr Baxter who introduced the defendants to McCullough Robertson. It follows that no relevant inference about initial preparation may be drawn from the later dealings between the defendants and McCullough Robertson.

[155] The next events raised by the plaintiff concern the acquisitions of Sanity Holdings and Faktortel Holdings.

[156] On 28 May 2015, Mr Paddon initiated contact with Andrew Mcleod of Sanity Holdings. In the first week of June 2015, Mr Paddon and Mr Mcleod had a discussion over coffee. It was a general meeting in which Mr Mcleod told Mr Paddon "a little bit about his business".

[157] On 10 June 2015, in an email to Mr Paddon, Mr Mcleod raised the question of "whether OTW has an appetite for acquisitions and what value you see in Sanity's business." Mr Paddon responded that the topic was "Definitely worth a chat and catchup." The two met the following day, 11 June 2015. That evening, Mr Mcleod sent Mr Paddon by email some figures and analysis of the Sanity business, and the outline of a proposal for the Company to purchase it. Mr Mcleod stressed that he was under pressure to commit to a new building, "so if you don't feel the above (or very similar) can work then please let me know ASAP." Mr Paddon sent the email on to Mr Omeros and Mr Stabb "to discuss".

[158] On 9 September 2015, the Company entered into a contract to purchase all the issued shares in Sanity Holdings for a consideration to be calculated, but of the order of $3.5 million.

[159] I accept Mr Paddon's evidence that the early June 2015 meeting with Mr Mcleod was an initial discussion. I do not infer from this conduct that Mr Paddon or Mr Mcleod had taken any initial preparatory steps towards the acquisition of Sanity Holdings prior to 20 May 2015.

[160] On or about 3 June 2015, Mr Paddon met over lunch with Ellen and Christopher Cowling, who were the founders and shareholders in Faktortel Holdings. Their business was a customer of the group. They discussed the state of the industry, including the "voice-over-IP space" in which both Faktortel and the Company operated. In the course of the discussion, the Cowlings revealed that they were in discussions with another party to sell down their interest in the Faktortel business. This led to a discussion about whether they would be interested in selling Faktortel to the Company in the lead up to an IPO. There was interest. The discussions progressed.

[161] On 28 July 2015, the Company entered into a contract to acquire all the issued shares in Faktortel Holdings for a total consideration of about $5.3 million. The transaction was completed that same day with $1.3 million of the consideration being paid. An additional $2.6 million was to be paid within seven days of the Company listing on the ASX and a further amount of about $1.4 million was to be paid in the form of shares in the Company to be issued under a prospectus to be prepared for listing the Company on the ASX.

[162] I do not infer from the discussion on about 3 June 2015 that Mr Paddon or the Cowlings engaged in "initial preparation" for the acquisition of Faktortel by the Company prior to 20 May 2015. Mr Binks had identified Faktortel as a possible acquisition in December 2014. However, I accept the evidence of Mr Paddon that the discussions began, somewhat fortuitously, over lunch on about 3 June 2015.

[163] The plaintiff also relied on the 19 July 2015 decision of the shareholders in the Company, by special resolution, to change its constitution to enable it to be a listed public company, as a basis to infer that other initial preparation occurred before 20 May 2015.

[164] The special resolution followed the board decision to proceed to an IPO, taken on 23 June 2015, about a month after the plaintiff's shares were acquired. Although the defendants were a majority of the directors of the Company, the decision to recommend that the Company proceed to list had to be made by the board - either in a meeting, as occurred, or by a written resolution. The plaintiff rightly limited his case to the contemplation of an IPO and initial preparation for the same. Some submissions put on behalf of the plaintiff were to the effect that the defendants made decisions or agreements to proceed to an IPO at earlier times. I reject those submissions. I am satisfied there was no decision to proceed to a listing until the 23 June 2015 board meeting and such a process could not proceed until the shareholders' special resolution of 19 July 2015.

[165] It is common ground that on 19 August 2015, the Company lodged the necessary forms with ASIC to notify its change of constitution and to change its name to Over The Wire Holdings Limited.

[166] In the circumstances, I am not satisfied that it is appropriate to infer from the 19 July 2015 special resolution that any undisclosed "initial preparation" was undertaken by the defendants prior to 20 May 2015.

[167] Finally, the plaintiff relied on the issue of a prospectus on 3 November 2015 and the listing of the Company's shares on the ASX on 2 December 2015, as bases to infer that other initial preparation for an IPO occurred prior to 20 May 2015.

[168] The prospectus was prepared with the assistance of Integra Advisory Partners Pty Ltd, as lead manager and underwriter, and McCullough Robertson, as legal advisor. Neither firm was engaged by the Company before the decision to proceed was taken by the board on 23 June 2015. The early interactions with McCullough Robertson have been considered above. The initial contact with McCullough Robertson about an IPO was the meeting on 12 June 2015. There is no basis to infer from this meeting and its consequences that there was any other "initial preparation" before 20 May 2015.

[169] Mr Groth of Integra gave evidence at the trial. He recalled he first became involved with the Company in around about June 2015. He was introduced by a consultant, Adam Cowan, who knew the CFO. This led, in July 2015, to Integra submitting a proposal to act as lead manager to the IPO. Mr Groth was not cross-examined about this evidence.

[170] Having considered the evidence summarised above, I decline to draw an inference that anything more by way of initial preparation for listing occurred before 20 May 2015 that was material information in relation to the shares sold by the plaintiff and was not disclosed to the plaintiff. It follows that I do not infer there was a breach by the defendants of the warranty in cl 9(a)(i)(A) of the SSA.

[171] The plaintiff's claims against the defendants for breach of warranty therefore fail.

[172] The plaintiff's case that there was a contravention of s 18 of the ACL was put in this way:

(a) By 20 May 2015, the defendants were contemplating and/or had commenced initial preparation to list the Company on the ASX.

(b) The fact of that contemplation and initial preparation would have been material to the plaintiff's decision to enter into the SSA.

(c) Owing to the warranty in the SSA and the events that had occurred, the defendants were obliged to disclose to the plaintiff, before the SSA or before it was completed, that they were contemplating and had commenced initial preparation for a listing.

(d) The defendants withheld from or did not disclose to the plaintiff that as at 20 May 2015 they were contemplating or had commenced initial preparation to list.

(e) The withholding or non-disclosure was misleading or deceptive conduct, in contravention of s 18.

(f) If the defendants had disclosed or not withheld this information from the plaintiff, then the plaintiff would not have entered into or completed the SSA and would have retained his shares.

(g) As a consequence of the misleading conduct, the plaintiff suffered loss and damage.

[173] For the reasons set out above, I have found that the defendants did not withhold from the plaintiff that they were contemplating listing the Company on the ASX and had engaged in initial preparation for that to occur. It follows that the defendants did not engage in the conduct the plaintiff alleged was misleading or deceptive in contravention of s 18 of the ACL.

[174] The plaintiff's ACL claim fails because he has failed to prove the factual basis of his claim.

[175] If he had established that the defendants contravened s 18 of the ACL by failing to disclose (or by withholding) the state of their contemplation of an IPO or any particular acts of initial preparation for listing, the plaintiff's ACL claim would have failed in any event for two further reasons.

[176] The first of these reasons is that I am not persuaded that, if any (or all) of the specific events identified by the plaintiff had been disclosed to him before 20 May 2015, he would have terminated the SSA and retained his shares. The disclosure would not have altered the plaintiff's conduct. He could not have suffered any loss or damage by reason of the non-disclosure.

[177] This conclusion is based on the evidence of the plaintiff's relatively consistent view about continuing to be a shareholder over the period from 11 January 2013 through to 9 November 2015.

[178] On 11 January 2013, the plaintiff told the defendants he regarded his shareholding as "a high risk investment" and had "decided to put my shares on the table for sale" and seek "a new opportunity".

[179] On 26 April 2013, he told Mr Cornish he regarded his shareholding as a high risk investment. He rebuffed Mr Cornish's advice that he should hold the shares in a "massively growing company" until an IPO or a takeover when they would be worth "double". The plaintiff said he had formed the view that he should "ditch" the shares.

[180] About six weeks later, when the "parked for now" IPO was due to be revisited, the plaintiff told Mr Omeros that his accountant had advised him to sell his shares. When Mr Omeros did not respond, the plaintiff renewed his communication.

[181] On 4 November 2013, when the discussions about a sale had languished, the plaintiff sought to revive them.

[182] In retrospect, it is clear that the plaintiff's requests for minutes and accounts in the first months of 2014 were also directed at encouraging the defendants to purchase his shares.

[183] Once an acceptable price range was made explicit, on 20 June 2014, the plaintiff pursued the sale, even being prepared to allow the defendants up to three years to pay him the balance of the purchase price.

[184] On 30 June 2014, the plaintiff told a friend, the Company was "destined for mediocrity". He had examined the financial statements. He assessed the net present value of the business. On this basis, he described the price he was prepared to accept for the shares as "a decent deal". He was so assured in his assessment of the sale price that he said, if the defendants did not commit to purchase at the price, he would "send a second counter [offer] that says fine you sell on the same price".

[185] On 8 November 2014, he told a friend he was keen to take the Company to court over the production of more recent financial records he had demanded, but his father was "holding up the whole thing" because "he doesn't want to be too aggressive". The plaintiff thought his father would "rather have the money to move than risk starting a fight on less than strong footing". It was common ground at the trial that Robert Tisdall had arranged the loan of money to the plaintiff to enable him to purchase the shares in the Company.

[186] In late 2014, the plaintiff had his father enter the negotiations on his behalf to progress matters to a conclusion.

[187] On 27 March 2015, the plaintiff told a group of friends that he was contemplating setting up a company outside Australia "because the compliance pains here are frustrating".

[188] On 15 April 2015, a month before the SSA was signed, the plaintiff told a group of friends he thought he was "almost ready to lead again". He explained that the reason he was only "almost ready" was because "I need to put OTW behind me, forever".

[189] On 5 June 2015, about two weeks after the SSA was completed, he told the same group of friends that "Things are looking up for me", the reason being "The large sum of money I got from selling OTW". He said he was "putting all of it into a new company ... that shall one day rule the enterprise software world".

[190] On 3 November 2015, a friend sent the plaintiff a link to the Company's prospectus. His immediate response was, "I somewhat knew that was coming". He explained:

"Brent [Paddon] hasn't done a great job of keeping it secret

I've never been so convinced that I am unwilling to be involved with mediocrity in my life

[191] Consistent with the views he had consistently expressed, the plaintiff did not subscribe for any shares in the IPO. He expressed no surprise or outrage at the listing. He did not communicate with the defendants about it. He did not instruct his lawyers to do so. These proceedings were not commenced until more than two years later.

[192] The plaintiff gave evidence at the trial. He presented as a very confident individual. He had much lower levels of confidence in the abilities of others. He had strong opinions on many things, including each of the defendants and the others with whom he worked at the Company.

[193] The strength of his opinions was not matched by a similar commitment to accuracy or even honesty in his evidence. In chief, he said it was in approximately November 2015 that he first found out that the defendants intended to list the Company on the ASX. That was a lie. He denied in cross-examination that he was aware before 3 November 2015 that it was intended to issue a prospectus for an IPO. That was a lie. He denied that he received a copy of the prospectus on 3 November 2015. That also was a lie. He said he obtained a copy of the prospectus from the ASX website a week or two after it was announced to the market and perhaps after the float closed. That was another lie. He said he was disappointed he was not able to participate in the IPO. That was also a lie.

[194] The plaintiff's evidence in these respects was contradicted by his own contemporaneous communications noted above. The only purpose for offering this false evidence was to support his claim that he was unaware the defendants were intending to pursue an IPO at any time before the prospectus was issued. To justify his decision not to invest in the IPO, he falsely testified about receiving the prospectus only shortly before or even after the float had closed. In fact, the prospectus was sent to him electronically on the day it was issued. The plaintiff read it with some care and commented on it within a week. He expressed his clear view that he was happy not to be on "this particular train".

[195] When pressed about the contemporaneous views he expressed to friends, the plaintiff retreated from the definite positions he had adopted earlier in his evidence. He said "I actually don't recall my state [of mind] at the time" and "I don't recall."

[196] At a later point, he appeared to become concerned that a lack of recollection might be damaging to his case. He then adopted the position that he had not been serious or frank in these communications with his friends, responding, "Yes" to the question, "Do you generally make statements that don't reflect your state of mind?"

[197] The turns of his evidence may be illustrated by the following exchange with Mr Thompson QC about his comments to Mr Jacko on the "Telegram" app:

"MR THOMPSON: ... Were you lying to Mr Jacko when you said those things or are you lying to his Honour now?

MR TISDALL: I honestly believe I was yarning with a friend.

MR THOMPSON: Well, does that make any difference in terms of the truth?

MR TISDALL: I believe there is a - there is a way that I was talking to my friends about the time about these transactions and there was a commercial and rational view that was taken.

MR TISDALL: And sometimes it is hard to split up the emotional view and the rational view.

MR THOMPSON: So you just think you can say anything in these conversations, whether it's true or not?

MR TISDALL: I'm not under oath in a - in a telegram conversation.

MR THOMPSON: Do you need to be under oath to tell the truth, Mr Tisdall?

[198] In re-examination, the plaintiff offered another approach, apparently remembering things he did not recall in chief or under cross-examination. He sought to excuse the admission to Mr Jacko that he was aware of the IPO. He said he "overheard a conversation" at "a pub drinks a week or two prior saying there might be an IPO on the way." I reject this evidence as a dishonest invention by a witness struggling to recover from the exposure of his earlier false evidence.

[199] The plaintiff eagerly grasped the proposition offered to him in re-examination that 9 November 2015 was "the first occasion" he had "been able to read [the prospectus] in detail". In fact, the plaintiff had access to the entire prospectus from 3 November 2015, when Mr Jacko sent it to him electronically.

[200] It is not necessary to reach the kind of clinical conclusion Mr Omeros offered in cross-examination, describing the plaintiff as "a narcissist and a compulsive liar". By the end of his testimony, it was clear that the plaintiff's evidence of what he did or knew at any of the material points in time was not reliable. It follows, save where it is corroborated by another witness or is consistent with undisputed facts or a contemporaneous document, his evidence is rejected.

[201] I prefer the evidence in the plaintiff's near contemporaneous exchanges to his later attempts to construct or reconstruct his views.

[202] At the time the plaintiff executed the SSA, he knew that the defendants were contemplating listing the Company's shares on the ASX when the prevailing market conditions allowed. He also knew that initial preparation to list had been underway for some years. He had worked in the business for a time, including as a director. He had founded one of the businesses operated by the group. He continued to have an interest in and knowledge of the market in which the Company was operating. He remained in contact with friends who worked in the business, including with the COO. He had access to the current financial statements of the business and had kept up to date with the financial position of the group since his departure as a director.

[203] The plaintiff had actively sought to sell his shares since January 2013. The defendants were the logical buyers. He pursued a sale to them. By June 2014, he had nominated the price at which he was prepared to sell. Over the following 11 months, with little movement in that price but with delays in obtaining terms acceptable to ANZ, he had finalised the sale. The plaintiff knew he was treating with purchasers who were the continuing directors and substantial shareholders. He knew the Company was assisting the defendants to purchase his shares. He knew it would give the defendants control over 95% of the issued shares. He knew it had always been the intention of the defendants to proceed to an IPO when the prevailing market conditions allowed. He was in all relevant respects an informed seller.

[204] In the circumstances, had he known of the specific events he identified as further indications of the defendants' contemplation and initial preparation to list on the ASX, I am not persuaded that the plaintiff would have retained his shares rather than sell them to the defendants at the SSA price. On the contrary, given the views he was expressing over the relevant period, including after the prospectus was issued, I am satisfied the plaintiff would have disposed of his shares pursuant to the SSA.

[205] I am reinforced in this view by the fact that not signing or terminating the SSA, and retaining the shares pending a later IPO, would have entailed three additional complications and delays.

[206] Firstly, the defendants were unlikely to agree to proceed with an IPO while the plaintiff remained a substantial shareholder. Although by May 2015 both defendants were keen to proceed to an IPO, neither was interested in doing so while the plaintiff remained a substantial shareholder. Accepting the evidence of Mr Omeros and Mr Paddon, I assess the chance of the Company proceeding to an IPO in November 2015 with the plaintiff remaining the holder of his shares as no higher than 20%.

[207] Secondly, if the defendants did resolve to proceed to an IPO with the plaintiff as a shareholder, then the plaintiff, like the defendants, may have had to enter into an escrow agreement, binding him to hold his shares for many months after the listing.

[208] Thirdly, even after the end of the escrow period, the plaintiff would face an impediment to liquidating his shareholding, due to its significant size. If the plaintiff, once out of escrow, sought to sell his shares, the supply would likely greatly exceed the demand. The price at which the plaintiff's shares would be traded would be lower than the prior trading prices, discounting the value of his shares. In order to dispose of his shares, it is likely that the plaintiff would have had to sell them over a lengthy period, perhaps many months. Even at a reduced sale rate, the volume of shares for sale would hang over the market and reduce the share price he might be paid.

[209] These factors would mean, as the most likely outcome, that the plaintiff would have no access to the funds he sought to realise from the sale of the shares to the defendants for a further lengthy period. Early in his pursuit of a sale, the plaintiff was seeking funds to forestall bankruptcy. Shortly after settling the SSA, the plaintiff told his friends that he had in mind to apply the proceeds of the sale of his shares to invest in another business.

[210] In the circumstances, I am not persuaded that if the plaintiff had the further specific event knowledge, weighing the matter rationally, he would have declined to sell his shares to the defendants under the SSA.

[211] The second further reason the plaintiff's ACL claim would have failed, in any event, is that, if there had been a contravention of s 18 of the ACL, what the plaintiff "lost" by completing the SSA transaction was the chance of retaining his shares and participating in the IPO. The value of that lost chance was less than the consideration he received under the SSA for transferring his shares.

[212] Accepting the evidence of Mr Omeros, Mr Paddon and Mr Stabb, I assess the chance of the Company proceeding to an IPO in November 2015 with the plaintiff remaining the holder of his shares as no higher than 20%. The inclusion of the plaintiff as a substantial shareholder may have adversely affected the share price or even foiled the float entirely. Those contingencies have been included in my assessment that there was no more than a 20% chance of the IPO proceeding with the plaintiff remaining a substantial shareholder.

[213] The experts retained by the parties, Elia Lytras of Lytras & Company and Julie Planinic of Lonergan Edwards, agreed that if the plaintiff had not sold his shares in May 2015 and, notwithstanding him remaining a significant shareholder, the Company had proceeded with the same steps taken to list on the ASX, then the plaintiff would have held 11,330,257 shares at the date of listing, 2 December 2015. If it were necessary to determine the plaintiff's notional holding at that time on that scenario, for any reason, I would accept that agreed figure.

[214] Given the plaintiff's disinclination to remain a shareholder - evidenced by his frank communications over a long period, including at the time of the IPO - I conclude that, if the plaintiff still held those shares at the time of the IPO, he would have disposed of them in the IPO process, either by offering them to investors in the IPO at the float price or by selling them on the ASX over a period of time after the listing.[17]

[215] Most of the "loss" calculated by Mr Lytras (and considered by Ms Planinic) on the assumption that the plaintiff would have continued to hold his shares, was attributed to the increase in the share price between the issue price on 2 December 2015 ($1.00) and the closing share price on 25 January 2019 ($4.75). The plaintiff could only have obtained a benefit of that order if he had retained his shares through the intervening period. That was not his inclination, as demonstrated by his pursuit of a sale from about January 2013 to May 2015 and his frank comments to his friends over that period and at the time of the IPO. The plaintiff sought to justify this part of his claim on the basis that he had not been aware of the IPO until shortly before or after the subscription period had ended. He sought to infer that, had he been aware of the IPO earlier, he would have invested in it. His evidence in this respect was false.

[216] I am satisfied that the plaintiff had the opportunity to subscribe for shares at $1.00 when he received the prospectus. By then he knew that the IPO was proceeding and that the shares would be listed on the ASX. He did not subscribe for any shares. He told Mr Jacko on the day, "I've never been so convinced that I am unwilling to be involved with mediocrity in my life ... And I'm glad I'm not on this particular train". On 9 November 2015, after he had read the prospectus and when the opportunity to subscribe still existed, he was dismissive of the float. He told Mr Jacko he thought the underwriter's fee of 8% was "extreme" and remarked, "the lions share of the rest going to sanity and faktortel ... I don't get it?"

[217] If, contrary to my conclusions above, I had found that the defendants had breached the warranty or contravened s 18 of the ACL, then I would have assessed the value of the plaintiff's loss as no more than $2,266,051.40. This represents the loss of a 20% chance that he could have retained what would have become 11,330,257 shares and included them in the float at $1.00 per share on 2 December 2015.

[218] The value of the notional loss of chance is less than the $2,385,000 the plaintiff was paid for his shares by 19 May 2015, without considering the effect of the delay between May and December in receiving payment. It follows that the plaintiff would have suffered no loss or damage as a result of any contravention of s 18 of the ACL. Although he may have been entitled to nominal damages for a breach of warranty, his ACL claim would fail.

[219] The defendants had been patient and unrushed in their negotiations with the plaintiff between January 2013 and May 2015. Over that period it was the plaintiff who had chased a sale of his shares. There is no reason to suppose the defendants would have rewarded the plaintiff for continuing to be an impediment to their general plan by agreeing to pay him more for his shares in May 2015. In any event, the plaintiff does not make a claim for any possible additional consideration that he might have received from the defendants for the sale of his shares in May 2015 on this basis.

[220] The parties tendered the expert reports by Mr Lytras and Ms Planinic as well as a joint statement and further joint statement by both experts prepared pursuant to directions made by the court. The reports and the joint statements addressed the value of the shares at various dates. Mr Lytras and Ms Planinic gave oral evidence at the trial.

[221] The plaintiff instructed Mr Lytras that, if not for the alleged non-disclosure of the defendants, he would not have entered into the SSA and would not have sold his shares, but rather would have retained them, and would have still owned them at the time of Mr Lytras' report, and even at the date of the trial, subject only to one qualification. The qualification was that Mr Lytras was instructed to assume that the plaintiff would have participated in a sale of shares on 23 November 2017 (the "Founders' Share Sale") in which the defendants sold about 10% of their shares to institutional investors.

[222] Ms Planinic, in her reports, considered the opinions of Mr Lytras and, where her views differed, explained her different opinions.

[223] Given the conclusions I have reached as to the plaintiff's claims, the judgment of the court does not require findings leading to the value of a notional shareholding at any date. I am not persuaded the plaintiff would have continued to hold his shares, rather than sell them pursuant to the SSA. Were it necessary to do so, having considered the reports, the joint statements and the oral evidence of Mr Lytras and Ms Planinic, I would adopt the agreed position of the experts, as set out in their joint statements. Where the experts' opinions differ, I would reach the following conclusions.

[224] If it were necessary to value the shares held by the plaintiff as at 14 May 2015, I would do so adopting the Company's historical earnings for the 12 months to 30 April 2015, viz $2.9 million, being the figure ascertainable from information available at that time. I would do so because this would be consistent with adopting a historical earnings multiple, which is the method adopted by the experts. I would not adopt a hybrid of historical and forecast earnings.

[225] In determining a value at that time, I would apply a 15% discount to take account of the minority nature of the plaintiff's shareholding, adopting the opinion of Ms Planinic. I would not apply a further discount for the lack of marketability of the shares in May 2015, as such a further discount is not necessary for the reasons identified by Mr Lytras.

[226] If it were necessary to value the shares at any date between 14 and 20 May 2015, it would not be appropriate to value them as if the process from that date to the ASX listing on 2 December 2015 was risk-free, as Mr Lytras was instructed to do. As noted above, after the SSA was completed, the defendants embarked upon the process to an IPO and listing. In order to achieve that outcome, the defendants had to successfully negotiate two major acquisitions (Sanity and Faktortel), secure an underwriter and comply with all of the numerous requirements of the ASX, with the assistance of their professional advisers. The process had obvious risks. There were also risks associated with the capital structure of the Company, the risk that listing may take longer than the period to November 2015, and the risk that the targeted IPO multiple and implied share price might not be achieved. There was also a risk of changes in the external market conditions that might prevent an IPO proceeding. The appropriate discount to any "uplift" in share value at any time between 14 and 20 May 2015 to take account of these risks would be of the order of 50%.

[227] I would not adjust the EBITDA multiple to reflect the costs of operating as a listed Company for any valuation as at a date before the entry into the agreement to acquire the shares in Faktortel. By the time of that transaction, the Company and its directors were committed to proceed with an IPO, having taken on obligations to the Faktortel vendors. For any valuation after that date, I would adjust the EBITDA accordingly, and I would include an allowance for the estimated costs associated with listing, viz $800,000.

[228] If it were necessary to assess any loss or damage allegedly suffered by the plaintiff after the listing on 2 December 2015, I would do so on the following basis.

[229] I would have proceeded according to Ms Planinic's opinion that it is appropriate to adopt the volume-weighted average price (VWAP) over the month prior to the valuation date to value a thinly traded stock like the Company's shares at any time after the shares were listed on the ASX.

[230] If the plaintiff had retained the shares and had accepted an obligation to hold them under an escrow agreement, equivalent to that to which the defendants agreed, then the value of his notional shareholding as at 2 December 2015 ought to be reduced to take account of the escrow conditions. The experts referred to this as an escrow discount.

[231] In addition to the escrow discount, in this scenario it would be necessary to consider the effect of the difficulty of liquidating such a large holding in a low capitalised and thinly traded stock after the escrow period ended. Both these factors justify a discount of the value of the shares the plaintiff would have notionally held. In these respects, I prefer the opinion offered by Ms Planinic. Had it been necessary for the purpose of assessing the value of the shares that the plaintiff might notionally have retained, I would have applied both the 14% escrow discount used by Ms Planinic and a 10% blockage discount, which is at the lower end of her range.

[232] Had it been necessary to assess any loss or damage by reference to a notional shareholding by the plaintiff at any time after the Founders' Share Sale on 23 November 2017, then I would have adopted the estimate made by Mr Lytras, on the assumption that the plaintiff would have participated in that sale on a pro rata basis with the defendants. It follows that I would have concluded that the plaintiff would have received as consideration $3,089,531 in the Founders' Share Sale. The estimate of the dividends that the plaintiff might have earned on any shares held from that time should be calculated on the basis of the residual shares Mr Lytras estimated the plaintiff would have retained.

[233] For the reasons noted above, the plaintiff's claim should be dismissed and judgment should be entered for the defendants.

[234] I will hear the parties on any further orders that ought to be made.

[1] The ACL is Schedule 2 of the Competition and Consumer Act 2010 (Cth) (CCA).

[2] No point was taken that the Company and the subsidiaries are not parties to the proceeding. No claim or counterclaim is made against any of them.

[5] At the commencement of the trial, each party tendered a document dated 8 May 2019, signed by the respective solicitors, who certified that they had explained to their clients the duty of disclosure.

[6] This practice may be dated back to the Harvest capital raising proposal organised by the plaintiff in November 2011.

[7] Although it is not completely clear, this seems to be a reference to the director's fees paid by the Company.

[8] It appears from the votes recorded in the EGM minutes that the plaintiff and the defendants voted against the appointment of Mr Binks as a director and that Mr Binks and the defendants voted against the appointment of the plaintiff's brother.

[9] The plaintiff's pleaded case was that his discussions with the defendants between 2010 and 2013 had "concluded on the basis that the Company would not proceed to an IPO" and in his last discussion of the matter with the defendants in 2013 "it was decided that an IPO would not occur."

[10] Second Further Amended Statement of Claim, [5AA]-[5AF].

[12] Second Further Amended Statement of Claim, [15], [16](a) and (b).

[13] The plaintiff's pleading may not have intended to convey such a legal effect.

[14] R v Byrnes [1995] HCA 1; (1995) 183 CLR 501 at 516; R v Byrnes; R v Hopwood (1996) 20 ACSR 260 at 270.

[15] Second Further Amended Statement of Claim, [5AG]-[14].

[16] Second Further Amended Statement of Claim, [15], [16](a) and (b).

[17] If it were assumed that the plaintiff adopted the latter course, then it would be necessary to consider the difficulty of liquidating such a large holding in a thinly traded stock, as identified by the experts. In that respect, I would apply the "blockage discount" of 10%, which is at the lower end of the range Ms Planinic considered appropriate. This would reduce the value of the plaintiff's notional loss of chance to $2,039,446.26.