Tomanovic v Argyle HQ Pty Ltd; Tomanovic v Global Mortgage Equity Corporation Pty Ltd; Sayer v Tomanovic

JURISDICTION : Equity Common Law

DECISION : Proceedings for relief on statutory oppression grounds dismissed. Judgment for plaintiffs in Common Law proceedings, cross-claim dismissed.

CATCHWORDS : CORPORATIONS - oppression proceedings - alleged failure to carry out arrangements for separation of businesses - no grounds under Part 2F.1 shown - just and equitable ground of winding up - where company is commercially viable

LEGISLATION CITED : Corporations Act 2001 (Cth), ss 232, 233, 461

Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 325 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359; [2008] NSWCA 95 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Carpenter v Carpenter Grazing Co Pty Ltd (1987) BC8701391 Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688; [1998] NSWSC 413 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; NSWCA 97 Fifteenth Eestin Nominees Pty Ltd v Rosenberg (as executor to the estate of Rosenberg, (dec'd)) [2009] VSCA 112 Galaxidis v Galaxidis [2004] NSWCA 111 Giumelli v Giumelli (1999) 196 CLR 101 Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 Holt v Burnside & Hollen Australia Pty Ltd [2009] VSC 95 Jankar v Dellmain & Ors [2009] NSWSC 766 John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63 Johnny Oceans Restaurant Pty Ltd v Page [2003] NSWSC 952 Khamo v XL Cleaning Services Pty Ltd (2004) 51 ACSR 397; [2004] NSWSC 1134 Loch v John Blackwood [1924] AC 783 Lucy v Lomas [2002] NSWSC 448 CASES CITED : Malandris v Palmreef Pty Ltd (Unreported, FCA, Mansfield J, 12/3/1997, BC9701374) Malos v Malos (2003) 44 ACSR 511; [2003] NSWSC 118 Masters v Cameron (1954) 91 CLR 353 McMillan v Toledo Enterprises International Pty Ltd (1995) 18 ASCR 603, at 619; [1995] FCA 1664 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 O'Neill v Phillips [1999] 1 WLR 1092 Parker v NRMA (1993) 11 ACSR 370 Re a Company (No 00709 of 1992); O'Neil v Phillips [1999] 1 WLR 1092 Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247 Re G Jeffrey (Mens Store) Pty Ltd (1984) 9 ACLR 193 Re JE Cade & Son Ltd [1992] BCLC 213 Re Spargos Mining NL (1990) 3 ACSR 1 Re Yenidje Tobacco Co Ltd [1916] 2 Ch 426 Ruut v Head (1996) 20 ACSR 160 Ryder v Frohlich [2004] NSWCA 472 Short v Crawley (No 30) [2007] NSWSC 1322 Stapp v Surge Holdings Pty Ltd [1999] FCA 545 Sullivan v Sullivan [2006] NSWCA 312 Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248 Thorby v Goldberg (1964) 112 CLR 597 United Group Rail Services Ltd v Rail Corporation New South Wales [2009] NSWCA 177 Wayde v NSW Rugby League Ltd (1985) 61 ALR 225

2008/00282201 Zoltan Tomanovic (First Plaintiff) Australian Financial Services Corporation Pty Ltd (Second Plaintiff) Argyle HQ Pty Ltd (Defendant)

2008/00282203 Zoltan Tomanovic (First Plaintiff) Australian Financial Services Corporation Pty Ltd (Second Plaintiff) PARTIES : Global Mortgage Equity Corporation Pty Ltd (First Defendant) One Australia Pty Ltd (Second Defendant)

2009/00297497 Kenneth James Sayer (First Plaintiff/First Cross-Defendant) Ken Sayer Investments Pty Ltd (Second Plaintiff/Second Cross-Defendant) Mortgage House of Australia Pty Ltd (Third Plaintiff) Zoltan Tomanovic (First Defendant/First Cross-Claimant) Australian Financial Services Corporation Pty Ltd (Second Defendant/Second Cross-Claimant)

FILE NUMBER(S) : SC 2008/00282201, 2008/00282203, 2009/00297497

2008/00282201, 2008282203 J Baird (Plaintiffs) D Higgs SC with H Stowe (Defendants) COUNSEL : 2009/00297497 D Higgs SC with H Stowe (Plaintiffs/Cross-Defendants) J Baird (Defendants/Cross-Claimants)

2008/00282201, 2008282203 ERA Legal (Plaintiffs) Brown Wright Stein Lawyers (Defendants) SOLICITORS : 2009/00297497 Brown Wright Stein Lawyers (Plaintiffs/Cross-Defendants) ERA Legal (Defendants/Cross-Claimants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2008/00282201 IN THE MATTER OF ARGYLE HQ PTY LTD (FORMERLY KNOWN AS MORTGAGE HOUSE CORPORATION PTY LTD) 2008/00282201 ZOLTAN TOMANOVIC V GLOBAL MORTGAGE EQUITY CORPORATION PTY LTD 2009/00297497 KENNETH JAMES SAYER V ZOLTAN TOMANOVIC JUDGMENT

HIS HONOUR: The proceedings 1 This is the judgment on the final hearing of three proceedings, which were heard together pursuant to orders made by White J on 29 October 2009: (i) Equity Division proceedings No 2008/282203 (legacy No 6280/08), in which the plaintiffs, Mr Tomanovic and Australian Financial Services Corporation Pty Ltd ("AFSC") seek the winding up of Global Mortgage Equity Corporation Pty Ltd ("GMEC") on either the oppression ground or the just and equitable ground (Corporations Act 2001 (Cth), s 461(1)(f) and (k)), or alternatively the making of a buy-out order under Part 2F.1, ss 232 and 233; (ii) Equity Division proceedings No 2008/282201 (legacy No 6278/08), in which the same plaintiffs seek the same relief in relation to Argyle HQ Pty Ltd ("Argyle HQ"); (iii) Common Law proceedings No 2009/297497 (legacy No 20107/09), in which Mr Sayer (the second defendant in No 2008/282201), Ken Sayer Investments Pty Ltd ("KSIPL") and Mortgage House of Australia Pty Ltd ("MHA") seek recovery from Mr Tomanovic and AFSC of money totalling $1,341,750. 2 Broadly speaking, the two equity proceedings had been initiated by the Tomanovic interests against the Sayer interests, while the Common Law proceedings have been initiated by the Sayer interests against the Tomanovic interests. Mr Tomanovic and Mr Sayer are the protagonists. 3 The sum claimed in the Common Law proceedings is alleged to have been paid by Mr Sayer and MHA to Mr Tomanovic and AFSC pursuant to arrangements reflected in a document entitled "Heads of Agreement" ("the First Heads of Agreement") executed on 31 March 2005, which provided for the separation of the Tomanovic and Sayer interests, and a later amending document ("the Second Heads of Agreement") entered into in about November 2006. 4 Mr Tomanovic and AFSC have filed a Defence and Amended Notice of Cross Claim in the Common Law proceedings seeking, inter alia, orders for specific performance of the First Heads of Agreement as amended by the Second Heads of Agreement, and payment of the balance of money alleged to be owing under those arrangements. The plaintiffs in the Common Law proceedings deny the efficacy or enforceability of both the First Heads of Agreement and the Second Heads of Agreement. A central dispute in this case is whether those "agreements" gave rise to any legally binding rights and obligations. Overview 5 Mr Tomanovic and Mr Sayer were in a kind of business marriage from about 1999 to December 2004, and it was a successful marriage. From late 2004 they made a general agreement to go their separate ways, but on friendly terms. The relationship became very sour when differences emerged between them as to the separation arrangements, and frustration mounted upon frustration as attempts to finalise a concrete separation agreement did not bear fruit. 6 One would have thought that, being experienced businessmen, they could have faced up to some tough negotiations to arrive at a way to move forward in their separate careers and to leave the past behind them. But for reasons that only partially emerged from the evidence, and may have to do with glimpses of stubbornness that emerged during the cross-examination of both men, no reconciliation has been achieved, and tragically, they have fought out their disputes in an eight-day hearing. 7 When, as occurs too often, the Court is confronted with this kind of spectacle in a failed business relationship, there is a judicial temptation to use the powers under the Corporations Act to find the solution that the parties have been unable to reach by negotiation. During the hearing I went so far as to issue a warning that after a contested eight-day trial, there was at least a non-negligible prospect that the Court would take the view that some kind of orders would be better than nothing at all, and in the absence of any other solution, winding up on the just and equitable ground might be given serious consideration. The parties listened carefully to what I had to say but they soldiered on. 8 Even in exercising the broad discretions conferred by Part 2F.1 of the Corporations Act, the Court is required to act strictly on the evidence that has been presented. Now that I have had the chance to consider the evidence as a whole, I have reached the conclusion that there are no sufficient grounds under Part 2F.1 for any of the relief that the Tomanovic interests have sought. The accumulated evidence has persuaded me that they are unsuccessful on all counts. I have also decided, for reasons elaborated more fully at the end of my judgment, that a winding up order should not be made of commercially viable business companies. 9 My findings are generally in accordance with the submissions on behalf of the Sayer interests, and I agree with their overview submission is that: (a) the Heads of Agreement upon which the proposed separation of interests was based were never legally binding, whether by contract estoppel or otherwise, and the proposal was subject to legal and accountancy advice; (b) the Sayer Interests generally acted in good faith in relation to the negotiations of the Heads of Agreement; (c) there is no basis for the invocation of the oppression remedy to impose on the Sayer Interests a compulsory buy-out, by reason only of the failure to consummate the separation of interests; (d) there is no basis for a finding of oppression in relation to the other miscellaneous allegations that were pressed at the trial; (e) there is also no basis for winding up on the just and equitable grounds arising merely from the failure to consummate the separation of interests, and no basis for a finding that there is a justified lack of confidence in Mr Sayer's management of the business; (f) another factor weighing against the making of a winding up order is that the relief would likely compromise the business as a going concern and cause a very substantial loss of shareholder value. 10 Consequently, for the reasons explained in detail below, I have decided to dismiss the two equity proceedings and the cross-claim in the Common Law proceedings, and enter judgment for the plaintiffs in the Common Law proceedings. Background facts 11 Mr Sayer claims that he conceived the name "Mortgage House" and designed the first logo, and that he conducted a finance business under the name "Mortgage House" through his own company, One Australia Pty Ltd and a number of other business partnerships, prior to commencing any business relationship with Mr Tomanovic. There was a contest at the hearing as to the ownership of intellectual property rights concerning Mortgage House, and I shall return to this issue. 12 Mr Tomanovic and Mr Sayer established some form of commercial relationship in 1994, and from some time later, a loose "partnership" commenced, and they came to operate together what became a large multi-service mortgage business under the umbrella name "Mortgage House of Australia" ("MHA"). 13 Mr Sayer's evidence is that the "partnership" regarding MHA began in 1999; whereas Mr Tomanovic says it began in 1996. The issue is of significance because of another disputed matter that I have noted above, relating to Mr Sayer's evidence that he believed that the rights to the "Mortgage House" name vested in him personally, on the ground that he had previously conducted business under that name before commencing the "partnership" with Mr Tomanovic. 14 Mr Tomanovic strongly maintained in his affidavit evidence and in the witness box that his relationship with Mr Sayer concerning the MHA business began substantially earlier than 1999, but it was submitted on behalf of Mr Sayer that Mr Tomanovic's own records corroborated Mr Sayer's evidence that the loose partnership arrangement only commenced in 1999. I find this submission to be correct: (a) in his e-mail dated 2 March 2005, copied to Mr Sayer, Mr Tomanovic set out what he calls some "historical facts", and as to the period 1996-1999, he said "we have worked together, but we were running an individually owned and controlled business, but equally dividing the incomes from our common effort and still any income individually from other non-common efforts/bus" (TB6.2590); (b) in his affidavit sworn on 29 March 2004 in trademark proceedings in the Federal Court, para 4, he said he and Mr Sayer entered into an oral agreement "under which we agreed that all profits, from the loans processed by MHA for persons I introduced to that business, were to be shared equally between Mr Sayer and myself", and he said that the agreement stayed in place until MHA was incorporated in early 1998 (Exhibit D4); (c) he made a diary note on 5 December 2004 which indicated that between 1994 and 1999 there was a "loose relationship of two entities" (TB6.2425, ZT2 at [20]); (d) Recital 2(c) of the First Heads of Agreement dated 31.3.05 says that Mr Tomanovic and Mr Sayer "have been in business for approximately the last 5 years". 15 There is no dispute that it was agreed, from about 1999, that Mr Sayer would be the "top boss and ultimate decision maker in control of the money side of business": Tomanovic, at T196.21; KS1 at [84]. Mr Sayer gave affidavit evidence, not contested by Mr Tomanovic, that his general practice was not to seek Mr Tomanovic's prior agreement to business proposals for the MHA Finance Business: KS1 at [149(c)]. 16 From 1999 the finance arm of the business has pursued a strategy of rapid growth, which has involved both the reinvestment of profits and the need to raise substantial additional capital and finance. According to Mr Sayer's evidence, the Sayer interests have born the overwhelming financial burden of supporting the operations and growth of the finance business (and see Mr Tomanovic in cross-examination at T 214). From 1999 the Sayer interests have advanced very substantial sums to the business and the Tomanovic interests have not made corresponding contributions. Mr Sayer asserts that the net level of funding provided by the Sayer interests was $3,035,764 in 2003, and as at 30 June 2009 the Sayer interests were owed over $4 million. That is generally supported by Mr Gunderson-Briggs' affidavit, at [43], and the audited GMEC accounts at 30 June 2008 (TB.13.5812). Mr Sayer says that in addition to bearing the burden of direct funding, the Sayer interests have provided numerous guarantees to support financing and business operations, in circumstances where no corresponding guarantees were provided by the Tomanovic interests (KS1 at [136)-[138], [225]-[228]). 17 From at least 1999, there was a division within the Mortgage House business between the finance and non-finance sides of the business. In his second affidavit Mr Tomanovic refers (at [78]) to the "MHA Mortgage Management System Business", which he describes as a financial strategy business that, among other things, assisted clients in acquiring assets and eliminating debt. In around 2004, the Multi-own group of companies was established, in part to take over the running of the non-finance side of the MHA business. Mr Tomanovic described this development in his first affidavit (at [44]). Multi-own was to provide specialised mortgage strategies, loans and investments to clients. It was initially established as an equal partnership between Mr Tomanovic, Mr Sayer, and Gabriel Baca. According to Mr Sayer's second affidavit, at [158], from late 2003 until early 2004, Mr Tomanovic was devoted to developing and establishing the multi-own business. Mr Sayer has subsequently resigned his directorships in Multi-own and transferred almost all of his shares, and he says he has never received any profit share or dividend from the Multi-own entities (KS1 at [281]). Mr Tomanovic says that Mr Sayer did not invest any money in Multi-own. All of this evidence may well be true. 18 There was a reorganisation of the corporate structure of the financial and non-financial arms of the Mortgage House businesses in about June 2003, in anticipation of the investment in the financial businesses by Macquarie Bank. 19 As to the finance group structure, since July 2003 GMEC has been the holding company of the finance group, with shareholdings in various subsidiaries including MHA, Mortgage House Broker Services, Pr1me, Mortgage Loan Company, Direct Mortgage Solutions and National Mortgage Group. The shareholders of GMEC after 4 July 2003 and until November 2008 were One Australia for 45%, AFSC for 45% and Macquarie Bank Ltd for 10%. Macquarie Bank disposed of its 10% holding to One Australia on 11 November 2008 so that One Australia now holds 55% of GMEC. 20 As to the non-finance group, AFSC and One Australia each held shares in Mortgage House & Land Pty Ltd, Multi-Own Pty Ltd and 9 Argyle St Unit Trust. The principal member of the non-finance group is Argyle HQ in its capacity as trustee of the 9 Argyle St Unit Trust. The Trust owns two properties in Parramatta in which there is substantial equity. The Tomanovic interests hold 50% of Argyle HQ while the Sayer interests effectively hold the other 50%. Mr Tomanovic and Mr Sayer were the sole directors of Argyle HQ from 9 December 1998 to 20 January 2005, when Mr Tomanovic resigned as director pursuant, he says, to the First Heads of Agreement. Since 20 January 2005 Mr Sayer has been the sole director of Argyle HQ, except for the period from 9 June 2005 to 5 October 2006, when Derek Angel was an additional director. 21 Mr Tomanovic and his wife are the sole shareholders of AFSC, and Mr Sayer holds 100% of the shares in One Australia. Mr Tomanovic and Mr Sayer were the main directors of the MHA Group until the incorporation of GMEC in June 2003, as part of the restructure to accommodate the entry of Macquarie Bank as 10% shareholder and capital provider. Mr Tomanovic and Mr Sayer were the sole directors of GMEC from 16 June 2003 until 27 June 2003, when Mr Tomanovic resigned as part of the Macquarie Bank entry arrangements. 22 Since 27 June 2003, Mr Sayer has been sole director of GMEC, save for the period from 20 May 2005 to 5 October 2006 when Derek Angel was also a director. Mr Tomanovic has not played an active part in the finance group business since at least about December 2004, in consequence of the separation of interests envisaged under the First Heads of Agreement, and the finance group business has since been under the sole management and control of Mr Sayer. Relevant facts 23 From about mid-2004, negotiations commenced for the Sayer interests to buy out the Tomanovic interests in the finance group companies. Mr Tomanovic says that the negotiations were instigated by Mr Sayer, but Mr Sayer claims that they arose out of the fact that in 2004 Macquarie Bank was interested in buying more shares in GMEC and Mr Tomanovic asked Mr Sayer to make inquiries with Macquarie Bank, and subsequently this developed into a proposal for the Sayer interests to acquire the Tomanovic interests in GMEC. Nothing turns on this issue. 24 According to Mr Sayer, from late 2003 or early 2004 there have been protracted negotiations with the separation of interest between the Sayer and Tomanovic interests, but those negotiations have never produced a binding contract. 25 Mr Tomanovic claims that the negotiations led to an agreement in principle, reached in December 2004, for a complete separation of the Sayer interests on the one hand and the Tomanovic interests on the other. He claims that the agreement in principle was recorded in the First Heads of Agreement, which was executed by Mr Tomanovic on 31 March 2005. That agreement provided for the Sayer interests to acquire the Tomanovic shareholding in AFSC for the price of $6 million and for the Tomanovic interests to retain that part of the non-finance group known as the "Multi-own" companies". 26 The First Heads of Agreement contemplated the preparation and execution of formal documentation embodying the terms of the agreement, but no formal documentation was ever finalised. Mr Tomanovic says, however, that in various ways both parties acted in conformity with the obligations imposed by the First Heads of Agreement. 27 Mr Tomanovic alleges the following acts of performance of the First Heads of Agreement: (i) Mr Tomanovic has been paid 69 individual payments of various amounts, to a total of $1,241,750 in the period from December 2004 to June 2006; (ii) Mr Tomanovic resigned as a director of all Mortgage House Group entities in January 2005; (iii) Mr Sayer indemnified Mr and Mrs Tomanovic and AFSC in respect of guarantees they had provided for Mortgage House entities; (iv) the sale of Mortgage House Realty was finalised in late 2005; (v) a commercial building in Fairfield was sold in late 2005; (vi) Mr Tomanovic and Multi-own continued to service Mortgage House clients; (vii) "hedging" deals were serviced; (viii) Mr Tomanovic made steps to restructure AFSC in preparation for change of ownership; (ix) an extension of the deadline to implement a formal agreement was organised by Mr Gunderson-Briggs of Grant Thornton in June 2005. 28 Mr Sayer denies that any actions of the parties after the making of the First Heads of Agreement could be described as "part performance". The nature and legal effect of the First Heads of Agreement will be addressed separately below. 29 In November 2006, agreement in principle was reached to vary the First Heads Agreement, notwithstanding that the time for execution of formal documentation had elapsed. A second document, also entitled "Heads of Agreement" ("the Second Heads of Agreement"), was prepared and executed by Mr Tomanovic on 24 November 2006. This document also contemplated the preparation and execution of formal documentation, which again did not occur, by reason of ongoing disputes between the parties. The principal difference between the First Heads of Agreement and the Second Heads of Agreement was a reduction in the purchase price payable to the Tomanovic interests from $6 million to $5 million, evidently in return for bringing forward the time for payment of the last instalment of the purchase price from 15 October 2010 until December 2008. $250,000 out of the $5 million price was payable only if Mr Tomanovic achieved a certain performance hurdle. 30 Mr Tomanovic points to various acts by the parties that, he says, are referable to and in conformity with the Second Heads of Agreement. He lists the following items as constituting "part performance" of the Second Heads of Agreement: (i) payment to Mr Tomanovic of $100,000 upon his signing the document; (ii) in April/May 2007 Mr Tomanovic's solicitor sent draft documentation to Mr Sayer's solicitors; (iii) Mr Sayer resigned as a director of Multi-own Loans (July 2007) and Grant Thornton made preparations for the relevant change of ownership of Multi-own; (iv) Mortgage House provided a database for some Mortgage House clients for reviews and servicing; (v) Mr Tomanovic finalised the restructuring of AFSC in preparation for change of ownership; (vi) "hedging" deals clients were serviced; (vii) Mr Sayer indemnified Mr Tomanovic and AFSC in respect of guarantees provided by them to Mortgage House entities. 31 Once again, Mr Sayer denies that any of this could be treated as "part performance" of the Second Heads of Agreement. The nature and effect of the Second Heads of Agreement is dealt with separately below. 32 In the period from December 2004 to November 2006 Sayer interests paid to the Tomanovic interests a total of $1,241,750 under the First Heads of Agreement. On 27 November 2006 payment of $100,000 was made by the Sayer interests to the Tomanovic interests under the Second Heads of Agreement. The Second Heads of Agreement contemplated further payments by the Sayer interests to the Tomanovic interests: $1,404,250 on completion of the sale under a formal documentation that was in contemplation; a further $1 million on the first anniversary of completion, a further $1 million on the second anniversary of completion; and a final payment of $250,000 on the achievement of a performance hurdle. According to Mr Tomanovic, the amounts totalling $1,241,750 paid under the First Heads of Agreement were brought into account as part of the reduced purchase price of $5 million, and any entitlement to characterise that amount as a loan under the First Heads of Agreement was forgiven. Apart from the first payment of $100,000, the payments contemplated by the Second Heads of Agreement totalling $3,654,250 have not been made. 33 Macquarie Bank disposed of its 10% shareholding in GMEC to One Australia in November 2008, thereby making One Australia the majority shareholder in GMEC. In December 2008 the two Equity Division proceedings were commenced by the Tomanovic interests. In March 2009 Common Law proceedings were commenced by the Sayer interests claiming repayment of the $1,341,750 paid under the First and Second Heads of Agreement. Mr Tomanovic and AFSC have cross-claimed for specific performance of those agreements, or alternatively they assert that the Sayer interests are estopped from denying them. Allegations of oppression by the Tomanovic interests 34 In the written outline submissions made on behalf of the Tomanovic interests and dated 25 January 2010, counsel grouped the oppression claims into four categories: (a) failure of the Sayer interests to complete the separation of interests envisaged by the First Heads of Agreement (as amended by the Second Heads of Agreement) and the buy-out of the Tomanovic interests by the Sayer interests while excluding Mr Tomanovic from management; (b) diversion of money and assets of GMEC for the benefit of the Sayer interests; (c) reduction in equity in Argyle HQ assets for the benefit of the Sayer interests, without the consent of Mr Tomanovic, and unauthorised assumption voting control of Argyle HQ; (d) oppressive conduct generally, including failure to make books and records available, failure to provide information, failure to maintain books and records, failure to convene annual general meetings, failure to pay dividends to AFSC since December 2004, failure to reinstate Mr Tomanovic as a director, attempts to dilute the shareholdings of the Tomanovic interests, and a complete breakdown in the relationship between Mr Sayer and Mr Tomanovic. 35 In the written outline submissions, counsel for the Tomanovic interests provided some brief particulars of each of these four categories of oppression claims. At the conclusion of the hearing, in final submissions, he handed up an "evidence table" which provided references to affidavits and documentary evidence, tender bundle references and transcripts. Counsel for the Sayer interests provided the court with lengthier and more discursive submissions, principally concentrating on a detailed analysis of the evidence, but fortunately adopting the framework of the particulars of oppression of the Tomanovic interests. 36 I intend to proceed by first setting out some relevant legal principles concerning the oppression remedy, and the remedy of winding up on the just and equitable ground. I shall then consider whether the First or Second Heads of Agreement or either of them is legally binding, because that is a large issue that needs to be resolved as a matter preliminary to the oppression claims, in the interests of clarity. Having dealt with the contractual issues, I shall then work through the four categories of oppression claims, making findings on each of them. Finally, I shall address winding up on the just and equitable ground. Legal principles - oppression remedy 37 Section 232 of the Corporations Act 2001 (Cth) empowers the Court to make an order under s 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of the company; or (c) a resolution or proposed resolution, of members or a class of members of the company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. 38 The resolution of the present case turns largely on the facts and it is unnecessary to embark upon a general exposition of the scope of the concepts in s 232 or of the remedies in s 233. It is sufficient to make a few points that are germane to a case such as the present one. 39 Thus, as to the grounds in s 232: (a) consistent with the principle that the purpose of relief is to terminate the effects of oppression, relief will generally be inappropriate as a matter of discretion if there is no continuing oppression: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, at [182]; [2009] HCA 25. (b) unfairness is assessed by reference to whether "objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair": eg, Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359 , per Basten JA at [181]; [2008] NSWCA 95. (c) while it is recognised that conduct may be oppressive if inconsistent with the "legitimate expectations" of shareholders, expectations are not immutable. The non-fulfilment of expectations will not establish oppression, if there has been some good reason for the extinguishment of the expectation: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, at [85], [86], [175]; [2001] NSWCA 97; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343, at [96]; [2009] NSWSC 342 per Barrett J; (d) "it is important when assessing corporate activities to see if there has been oppression that judges do not remain in their ivory tower": Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd And Others (1998) 28 ACSR 688, Young J at 739; [1998] NSWSC 413; (e) a particular matter which will be taken in account in assessing the gravity of any allegation of oppression, is the extent to which the minority shareholder has "baited" the majority shareholder to act in an oppressive manner: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688, at 741; [1998] NSWSC 413; (f) there is no basis for an oppression claim in relation to conduct undertaken with the "acquiescence, or consent" of the applicant John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63, at 66 per Young J at 66.

Particular grounds for oppression 40 Inability to sell shares "The mere fact a person is unable to regain capital or dispose of his or her shares is not a matter of oppression": Lucy v Lomas [2002] NSWSC 448, at [43], citing Re G Jeffrey (Mens Store) Pty Ltd (1984) 9 ACLR 193, at 199. The oppression remedy is therefore not construed as providing a way in which a member of a proprietary company can force a buy-out by a manner not prescribed in the constitution (Re G Jeffrey (Mens Store) Pty Ltd (1984) 9 ACLR 193, at 199); it does not provide for "no-fault divorce" (O'Neill v Phillips [1999] 1 WLR 1092 at 1104). 41 Mismanagement Consistent with the general reluctance of courts to review the merits of management decision, in the context of oppression actions: "Courts must be slow to interfere with the responsibility of management of a company committed to its board of directors. The mere fact that decisions made adversely affect the applicant is insufficient. It should normally be shown that there is a lack of good faith or that no reasonable board could have come to the decision reached": John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63, per Young J at 66; Wayde v NSW Rugby League Ltd (1985) 61 ALR 225. 42 Exclusion from management "Improper exclusion from a legitimate expectation to participate in the management of the company may be oppressive": Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359, at [401]; [2008] NSWCA 95, per Young CJ in Eq. However, unfairness does not lie in the exclusion alone, but in exclusion without a reasonable offer to buy the plaintiff's shares. Consequently, there will be no oppression, if the applicant has refused a reasonable offer to acquire the applicant's shares: O'Neill v Phillips [1999] 1 WLR 1092 at 1104; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342.

Remedies 43 The Court has an extremely broad discretion with respect to relief. 44 Although a compulsory buy-out is often ordered, the granting of such relief is properly subject to the broader principle that the Court will seek to craft orders which are the least intrusive to the management of the affairs of the company, consistent with the termination of the oppression: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688, at 742 per Young J; [1998] NSWSC 413; John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63. Consequently, a compulsory buy-out should not be ordered, if less drastic remedies are consistent with the termination of oppression. Further, there will ordinarily be no occasion for a buy-out, if the oppression has otherwise been brought to an end: Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359, per Giles JA, at [123]; [2008] NSWCA 95; see also Young CJ in Eq at [382]; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, at [182]; [2009] HCA 25. 45 With respect to orders for the regulation of the future conduct of the company, orders that have been made include an order requiring investigation of various transactions in relation to moneys expended: Parker v NRMA (1993) 11 ACSR 370; Re Spargos Mining NL (1990) 3 ACSR 1 at 50. 46 Winding up is to be regarded as a remedy of last resort, and one which ought not be granted if some other less drastic form of relief is available and appropriate: Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247, at 252; Fexuto v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688, at 742; [1998] NSWSC 413; Short v Crawley (No 30) [2007] NSWSC 1322, at [1222] per White J; Holt v Burnside & Hollen Australia Pty Ltd [2009] VSC 95, at [78]-[81] per Robson J. Legal principles - winding up on the just and equitable ground 47 Although the Court has a very wide discretion under section 461(1)(k) to wind up on the "just and equitable" ground, the Court "does not sit under a palm tree": Re JE Cade & Son Ltd [1992] BCLC 213, at 227; quoted with approval in Re a Company (No 00709 of 1992); O'Neil v Phillips [1999] 1 WLR 1092, at 1098-9. 48 In the leading case of Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, the House of Lords held that "equitable considerations" justifying the winding up of company may arise when "typically...one, or probably more, of the following elements" are present: "(i) an association formed or continued on the basis of a personal relationship, involving mutual confidence…; (ii) an agreement, or understanding, that all, or some….of the shareholders shall participate in the conduct of the business; (iii) the restriction upon the transfer of the member's interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere." 49 Counsel for the Sayer interests submitted, correctly in my view, that Ebrahimi is not authority for the proposition that any "breakdown" or loss of "confidence" between incorporators necessarily provides a sufficient foundation for the winding up on the just and equitable ground. There are two additional elements that must generally be satisfied. 50 First, the "breakdown" must be of a nature and degree that materially frustrates the commercially viable and sensible operations of the company in accordance with the incorporators' expectations; and any "loss of confidence" must be justified. Thus, it has been held that winding up on the just and equitable ground may be appropriate: (a) "where a working relationship predicated on mutual co-operation, trust and confidence has broken down", such that the "continuation of such an association would be a futility": Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 325; quoted with approval in Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ASCR 343, at [322]; [2009] NSWSC 342; Jankar v Dellmain & Ors [2009] NSWSC 766 at [81]-[85]; (b) where there is "no real prospect that the parties can work together sensibly to reach the necessary agreement to be able to conduct the company's business in the future", such that "the company's operations in the future will not be able to be conducted in any commercially viable and sensible way ": Johnny Oceans Restaurant Pty Ltd v Page [2003] NSWSC 952, at [32]; (c) there is a "serious and operative state of mistrust and disharmony" between incorporators: McMillan v Toledo Enterprises International Pty Ltd (1995) 18 ASCR 603, at 619; [1995] FCA 1664; (d) where the relationship between incorporators "has completely broken down", such that the company "could not continue to function meaningfully ": Malandris v Palmreef Pty Ltd (Unreported, FCA, Mansfield J, 12/3/1997, BC9701374) at 5; (e) where "the foundation of the whole agreement that was made, that the [incorporators] would act as reasonable men with reasonable courtesy and reasonable conduct in every way towards each other", and there has been a breakdown in communication: Re Yenidje Tobacco Co Ltd [1916] 2 Ch 426; quoted with approval in Khamo v XL Cleaning Services Pty Ltd (2004) 51 ACSR 397; [2004] NSWSC 1134, at [26]-[27]; Malos v Malos (2003) 44 ACSR 511; [2003] NSWSC 118, at [24]; (f) there is a " justifiable lack of confidence in the conduct and management of the company's affairs" ( Loch v John Blackwood [1924] AC 783, at 788; quoted with approval in Stapp v Surge Holdings Pty Ltd [1999] FCA 545, at [49]) or (expressed another way) "it is impossible for the partners to place that confidence in each other which each has the right to expect, and that such impossibility has not been caused by the person seeking to take advantage of it" ( Re Yenidje Tobacco Co Ltd [1916] 2 Ch 426; quoted with approval in Ruut v Head (1996) 20 ACSR 160, at 162). Consequently, unfounded lack of confidence should not of itself support a winding up. (g) mere disagreement is insufficient to ground a winding up order: See Carpenter v Carpenter Grazing Co Pty Ltd (1987) BC8701391 at 23-27. 51 Secondly, there must generally be a restriction upon the transfer of the member's interest. In circumstances where there are no restrictions on transfer, and there is no evidence that the "board would refuse to register a transfer in favour of a respectable transferee", "this factor alone makes it extremely difficult for the plaintiff to succeed in the application" for wind-up on the just and equitable ground in the absence of oppression: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692, at 708; see also Ruut v Head (1996) 20 ACSR 160, at 163. 52 An "important factor" in the exercise of the Court's discretion is the extent to which the applicant is responsible for any breakdown of the relationship Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692, at 708; see also Ruut v Head (1996) 20 ACSR 160, at 162. 53 In circumstances where the Court may be otherwise minded to wind up the company on just and equitable grounds, but the company is not deadlocked and is otherwise profitably functioning, there is a custom to postpone the dissolution order until the parties have had an opportunity to negotiate a buy-out: Ruut v Head (1996) 20 ACSR 160, at 163. A legally binding contract? 54 The issue to be addressed under this heading is whether any one or more of four "transactions" have given rise to a legally binding contract. The four "transactions" upon which the Tomanovic interests place emphasis in the particulars of oppression are: (a) the Kirribilli Heads of Agreement, signed 21/12/2004; (b) the First Heads of Agreement, signed 31/3/2005; (c) the Memorandum of Understanding, signed 6/11/2006; and (d) the Second Heads of Agreement, signed 24/11/2006. 55 I shall first set out briefly some relevant legal principles, and then deal with the facts and the application of the law to each of the four "transactions".

Intention to enter legal relations 56 There will be no legally binding contract unless the parties intend to enter into legal relations. Several points should be made about this requirement: (a) the intention to enter legal relations is a distinct and necessary condition for the existence of a binding contract : Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95, per Gaudron, McHugh, Hayne and Callinan JJ; (b) this requirement for contract formation is distinct from (but related to) the condition that contracts be sufficiently "certain": Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235, per Young CJ in Eq at [54]; (c) the "intention" that is required, as in other contractual contexts, is the intention that would objectively be conveyed by what was said or done, having regard to the circumstances: Ermogenous , at [25 ]; (d) thus, the determination of whether there is an intention "may take account of the subject-matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances": Ermogenous , at [25 ] ; (e) the "use of particular words in the written documents, such as "subject to contract", while not completely determinative, will usually give rise to a strong prima facie presumption of an intention not to be bound until a formal document is drawn up": Helmos Enterprises , at [73]; (f) "[i]n the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention"; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, at 547-8 per Gleeson CJ. 57 In the leading case of Masters v Cameron (1954) 91 CLR 353, 360, Dixon CJ, McTiernan and Kitto JJ identified and described three classes of cases in which the contracting parties have reached some agreement, but have evinced an intention to execute further contractual documentation: (a) the first category is where the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but propose to have the terms restated in a formal document; (b) the second category is where the parties have reached finality in regard to all aspects of their agreement and intend no departure from this agreement, but have agreed that the performance of one or more of the terms is conditional upon the execution of a formal document; (c) the third category is where the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.. 58 A fourth category is now recognised, namely, ' … one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms" Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, at 628. 59 In the first, second and fourth categories a binding contract is likely to have arisen, but there is no binding contract in the third category.

Incompleteness 60 There can be no binding and enforceable contractual obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon: Thorby v Goldberg (1964) 112 CLR 597 at 607. The question, accordingly, is whether a term is so "important" or "essential" that its omission renders a contract incomplete. That is a question of degree, which will depend on the nature of the circumstances surrounding the pre-contract negotiations and the nature of the contract: Helmos Enterprises, at [95]. The essential terms of a sale agreement will generally include parties, property and price: Helmos Enterprises, at [87] and [94]. 61 An agreement to agree does not create a contract because it is incomplete and lacking essential terms: United Group Rail Services Ltd v Rail Corporation New South Wales [2009] NSWCA 177, at [56] per Allsop JA.

Uncertainty 62 For there to be a valid and enforceable contract, the Court must be able to attribute to it a sufficiently precise and clear meaning to identify the scope of the rights and obligations to which the parties had agreed. The use of ambiguous language is not fatal: "The fact that a contract is susceptible of more than one possible meaning, or may produce in its application more than one result is not therefore void for uncertainty": Halsbury's Laws of Australia , at [119-75]. However, "if the language employed is so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention, the agreement will not be enforceable": ibid . 63 Sometimes incompleteness and uncertainty will contribute to the Court's finding that the parties to a negotiation did not reach a concluded intention to enter into legal relations, even if the elements of uncertainty or incompleteness would not of themselves vitiate the contract. Conversely, if the Court concludes that the parties intended to enter into legal relations, it will endeavour to cure any problems posed by uncertainty and incompleteness. In Tasman Capital Pty Ltd v Sinclair [2008] NSWCA 248, Giles JA said: "Uncertainty and incompleteness in what has been agreed and the prospect of refinement and future agreement are material to whether the parties intended to make a concluded bargain, but once the intention be found the Court will seek to uphold the bargain by resolving the uncertainty and fulfilling the incompleteness; although if that cannot be done by accepted principles of construction and implication, the intention as found may fail." 64 In the present case the incompleteness and the uncertainty that stand in the way of the conclusion that the parties became contractually bound to one another are quite fundamental: absence of a price for the sale of assets in the case of the Kirribilli heads of agreement; and in all cases, lack of certainty about the subject matter of the transaction. In my view the present case offers little scope for the Court to "resolve the uncertainty" and to fulfil the incompleteness. 65 Counsel for the Tomanovic interests referred to some authorities on the proper construction of commercial contracts. It seems to me, however, that those cases are beside the point. Here the issue is not about construction of contractual terms but about contract formation.

Kirribilli Agreement, 22/12/2004 66 By December 2004 there had been lengthy and protracted negotiations between the Sayer and Tomanovic interests to settle the terms of a detailed heads of agreement. Mr Tomanovic acknowledged that the negotiations had been "protracted and difficult": ZT1 at [56]. There had been six versions previously prepared, circulated, and laboriously negotiated: Version 1 at T6.2321; Version 2 at T6.2325; Version 3 at T6.2400; Version 4 at T6.2415; Version 5 at T6.2466; Version 6 at T6.2520; Mr Gunderson-Briggs gives evidence of the negotiations in his affidavit at [100] to [123]. None of those drafts had been signed and they each bore the preamble "not intended to be a binding contract". In that context, it would be startling if the parties formed an intention to be contractually bound by what was handwritten on a small piece of paper. 67 The so-called "Kirribilli agreement" was written out, somewhat untidily, by Mr Tomanovic and signed by both Mr Sayer and Mr Tomanovic. It purports to record that "MH bus" had been sold and apparently a date was to be agreed, perhaps for settlement, after the parties returned from overseas. It was said to be "subject to contract" and the purchase price of $6 million net of taxes was crossed out and the words "price to be determined amount" were inserted instead. 68 Mr Tomanovic said in his second affidavit that when he put the price of $6 million net of taxes in the document, Mr Sayers said to him: "Just cross out the words '$6 mil net of taxes'. We will get Ken Gunderson-Briggs to consider the tax implications of the agreement before we finalise the details but it will be 6 million as agreed." 69 I find this evidence to be internally inconsistent and inherently unlikely. The evidence of Sayer is more plausible. His evidence was that at the time the price was crossed out, he said: "We will leave the dollar value up to GT": T441. It seems to me obvious that this document did not create any contractual rights and obligations. 70 The absence of agreement on price means that the agreement was incomplete, for the case law cited above shows that price is an essential term in a contract for the sale of a business. Mr Tomanovic's evidence is inherently implausible and should be rejected: ZT2, [24]. 71 Moreover the subject matter of the sale was profoundly uncertain. The handwritten note said what was sold was the "MH Group Business". It might be possible to piece together from the course of negotiation to that time which entities were contemplated by that description, but even so, there was irresolvable uncertainty at the time as to the structure of the deal. There was much evidence given at the hearing as to whether, in particular, the parties intended that Mr Tomanovic cause the disposal of AFSC shares in the Mortgage House businesses, or his shares in AFSC. 72 There is no basis for attributing some certain intention on this essential question by reference to preceding negotiations, because those negotiations were themselves very uncertain. The Kirribilli agreement was signed against the backdrop of Version 6 of the draft Heads of Agreement, which left the structure up to the accountants and lawyers: clause 5(a). There is no evidence of any dealings between the parties before the signing of the Kirribilli agreement that might have clarified the question of structure of the deal. 73 The lack of purchase price, profound uncertainty as to subject matter of the sale, and informal nature of the document compared with the elaborate drafts that had been in circulation, all point to the same conclusion: there was no intention to be contractually bound and no binding contract arose. That conclusion is confirmed by the fact that the parties continued thereafter to negotiate actively on the essential terms of the contract. Before the First Heads of Agreement was finally executed on 31 March 2005, there were three more versions of detailed Heads of Agreement prepared, circulated and negotiated: affidavit of Mr Gunderson-Briggs at [127]-[161]. On 21 February 2005 Mr Tomanovic provided comments on a draft heads of agreement and stated that he "cannot afford to do it under the basis of any of the suggestions in the heads of agreement so far": T7.2654. He did not claim that there was a binding agreement in place.

First Heads of Agreement, signed 31/3/05 74 The First Heads of Agreement seems much more like a binding agreement than the Kirribilli document. It could be regarded as an example of the fourth Masters v Cameron category. But there seem to me to be some weighty considerations working against the proposition that any immediately binding contract arose when the First Heads of Agreement was signed. 75 First, as to whether there was an intention to enter legal relations, the terminology of the agreement is significant. The first words of the document state: "Except paragraphs 8 and 9, this document is not intended to be a binding contract or give rise to legal rights and obligations (except as set out in the document). The document has been prepared in order to provide instructions to lawyers, accountant and other advisers in relation to the preparation of formal documents to give effect to the transactions contemplated by this heads of agreement" (TB.7.2784). 76 In my opinion these words convey reasonably clearly the absence of an intention to be bound. The words "(except as set out in the document)" are a little puzzling but they cannot mean that every clause of the document is intended to be binding, for that meaning would be inconsistent with the rest of the clause. 77 Second, there are other textual considerations suggesting the absence of intention to create legal relations. For example: the amounts to be paid under Heads of Agreement on account of purchase price were characterised as loans: clause 9(c); the loans were deemed to be immediately repayable, in the event that formal documents were not executed by an agreed date: clause 9(c); clause 9(b) refers to the fact that the "parties intend to procure the parties to …enter into formal documents to give effect to the transactions". 78 The mere fact that the First Heads of Agreement contained clauses ostensibly prescribing actions for each party does establish an intention to be bound by the main provisions of the document. On one view of the document, particular documents were prescribed in order to establish the framework for resolving the structure of the transaction and the drafting and execution of the contemplated "formal documents" that were intended to give effect to the deal. 79 Additionally, the mere fact that the parties subsequently took some steps in accordance with the non-binding aspects of the agreement does not support the objective inference that they intended immediately to be bound. As counsel for the Sayer interests submitted, such steps are consistent with the (dashed) mutual hope and expectation that the structure of the transaction would be formulated and formal documents would be drafted and executed in due course to effect the separation of interests. 80 Third, the evidence indicates that at the time, there was no agreement as to the structure of the deal and specifically, no identification of the subject matter to be sold. Clause 3(e) says that: "ZT will procure Zoltan Entities to progressively transfer all of the interests of Zoltan Entities in the Remaining Enterprises to Ken Entities and ZT will resign as an office holder of any of the Remaining Enterprises". The central ambiguity is, of course, in the word "interests", but additionally the structure of the clause is strange. It envisages that the seller will be Zoltan Entities disposing of their interest in something else, rather than the shareholder of a Zoltan Entity disposing of the Zoltan Entity, and yet the latter form of transaction was under discussion. Further, clause 5(e) makes it clear that the structure of the transaction was still unresolved, for it requires Mr Tomanovic to obtain independent advice and co-operate with the accountants and solicitors in the structuring of the transactions, amongst other things. 81 Fourth, Mr Gunderson-Briggs had carriage of the negotiations on behalf of Sayer. In cross-examination he repudiated the suggestion that any agreement had been reached at about March 2005 that the deal should be structured as a sale of the shares in AFSC. He said that the structuring of the deal by way of a sale of AFSC shares was merely a possibility, and that Grant Thornton had simply not gone into the detail of structuring at the time of First Heads of Agreement. He said that Grant Thornton had not formulated a structure proposal, and that no agreement had been reached with Tomanovic. His evidence on these matters is at T338, T339, T341.41, T349, T351.55, T354.1, T355.39. He said the sale of shares in AFSC was never the preferred option, but was merely one option under consideration (T354.22) and that no final decision with respect to structuring had been made even by June 2005: T361. 82 Fifth, even if First Heads of Agreement at any stage constituted a binding contract, the evidence on the whole indicates that there was subsequently an agreement to abandon that contract or allow it to lapse. In particular, Mr Gunderson-Briggs gave evidence to the effect that there was express agreement that the First Heads of Agreement had "lapsed". The idea that the first agreement had lapsed was the foundation for subsequent negotiations in relation to the Second Heads of Agreement, according to Mr Gunderson-Briggs, at [213], [220]. 83 An agreement to "abandon" the First Heads of Agreement or cause it to "lapse" would have been supported by consideration, since (as Tomanovic observed in his oral evidence: T 107), the entry into the second Heads of Agreement would provide mutual advantages, because one the one hand, it decreased the price, and on the other hand, it expedited the time for payment. 84 I find the evidence of Mr Gunderson-Briggs on this subject to be inherently plausible. His view (affidavit, at [220]) was that the parties should make an express agreement that First Heads of Agreement had lapsed because there was "no realistic prospect of negotiations moving forward, unless everyone agreed that the First Heads of Agreement had lapsed". 85 Mr Tomanovic strongly disagreed with the proposition that the First Heads of Agreement had lapsed. But Mr Tomanovic's first affidavit is consistent with an express agreement acknowledging the lapsing of First Heads of Agreement. He acknowledged that Mr Gunderson-Briggs informed him that the First Heads of Agreement had lapsed (ZT1 at [95]), and expressed the view that the "Second Heads of Agreement was intended to replace the First Heads of Agreement" (ZT1 at [97]). 86 If as Mr Tomanovic now contends, the earlier agreement had not lapsed, what became of it when the Second Heads of Agreement were entered into? It seems unlikely that parties would have intended to incorporate the terms of the First into the Second Heads of Agreement, because of the complexity of the result. Simplicity seems to have been a goal for everyone. Thus, Mr Tomanovic himself gave evidence that when he was discussing the Second Heads of Agreement with Mr Gunderson-Briggs, he "raised the issue why the Memorandum is so much smaller comparing to previous Heads of Agreement", to which Mr Gunderson-Briggs replied that he "wanted to keep it very, very simple so we don't go through the same saga like we've done with 11 versions in six months of the First Heads of Agreement": T84. Mr Tomanovic stated that he "agreed with him": T84. 87 It seems to me most likely that the First Heads of Agreement was not contractually binding at any time, and it "lapsed" in the sense that it was no longer to be regarded as a framework for progressing the transaction. If, contrary to my view, the First Heads of Agreement was contractually binding, those obligations and rights were extinguished when it lapsed.

Memorandum of Understanding ("MOU") dated 6/11/06 88 This is a single page document on Grant Thornton notepaper, written out in hand by Mr Gunderson-Briggs. It is dated 6 November 2006 and is signed by Mr Tomanovic but not Mr Sayer. It is headed "Memorandum of Understanding" and purports to record an agreement by Mr Sayer to purchase the assets that are jointly owned with Mr Tomanovic the price $5 million, which includes $250,000 that is only to be paid in the event that Mr Tomanovic completes 20 loans in any given month. The transaction is said to exclude any of the Multi-own enterprises. 89 The Tomanovic interests apparently submit that the MOU gave rise to legally enforceable obligations. 90 Mr Gunderson-Briggs gave evidence in his affidavit (at [222]) of a conversation he had with Mr Tomanovic immediately before the latter signed the MOU. In his second affidavit (at [294]), Mr Tomanovic said that the evidence of Mr Gunderson-Briggs is substantially correct. 91 According to Mr Gunderson-Briggs, the conversation was as follows: Mr Gunderson-Briggs: "This document is an agreement to agree. It will need to be typed and put into a proper heads of agreement form in due course. There are quite a lot of things still to be done and agreed to get this matter finally over the line, once and for all. From a Grant Thornton point of view, Mark Sellars will have carriage of this with me." Mr Tomanovic: "I want to get this done as soon as possible. I do not want to have the delays of the previous heads of agreement. I think it should be done by Christmas." Mr Gunderson-Briggs: "We want to get it done as soon as possible. No one wants to get this completed more than me. However, there are a lot of things to do and if we work together, and you provide the information to structure this thing properly then we can get there. But you Zoltan, can't go changing your mind on things like you did before, discuss things that have been agreed so as to try to agree on something different, and start adding new things as we move towards the end." Mr Tomanovic: "Ask me for whatever you want and I will provide it." 92 Given the text of the document and this conversation in immediately preceding the signature, there was no intention to enter legal relations by virtue of the signature of the MOU.

Second Heads of Agreement, signed 24/11/06 93 The Second Heads of Agreement is a very much shorter document than the First (one typed page compared with 8). The transaction records a purchase of assets by the Ken Entities from the Zoltan Entities for $5 million, to be paid as follows: (i) forgiving the loan to Zoltan Entities that was said to be presently outstanding in the amount of $1,245,750; (ii) by payment of $100,000 on the execution of the document; (iii) payment of $1,404,250 on completion of the sale "under the formal documents"; (iv) payment of $1 million on the first anniversary of completion of the sale under the formal documents; (v) payment of $1 million on the second anniversary of completion of the sale under the formal documents; (vi) payment of $250,000 on achievement of the 20 sales per month performance hurdle. 94 It was submitted on behalf of the Sayer interests that this document was not legally binding, for three reasons: it did not identify specific assets to be sold by Mr Tomanovic, and therefore it was uncertain and incomplete; there was no intention to be bound; even if the Second Heads of Agreement had initially given rise to a contract, any such contract must long since been abandoned. I shall consider these three points in turn. 95 As to failure to identify the assets to be sold, I note first that there is a textual ambiguity in the document. Clause 2(a) literally says that the Ken Entities will purchase the assets which the Ken Entities own on the one hand and the Zoltan Entities on the other hand own, for the price of $5 million. It appears that the Ken Entities are buying, inter alia, their own assets. 96 Disregarding that problem as a drafting slip, the next difficulty is that the assets to be sold by the Zoltan entities are described as assets that the Zoltan Entities own. AFSC is a Zoltan entity. It seems to me obscure whether the Zoltan Entities were to cause the transfer of the Tomanovic shares in AFSC or AFSC's holding in GMEC. 97 The MOU was a contemporaneous document but it cannot be used to clear up the ambiguity because it is also uncertain. The state of negotiations prior to the signing of the Second Heads of agreement confirms, if anything, a central uncertainty about how the sale would be structured. According to Mr Gunderson-Briggs' evidence, and extracted above, in his conversation with Mr Tomanovic just before the latter signed the MOU, Mr Gunderson-Briggs said he needed information from Mr Tomanovic "to structure this thing properly". 98 Mark Sellars of Grant Thornton had the carriage of the negotiations after the execution of the Second Heads of Agreement. On 29 November 2006 he sent an e-mail to Mr Gunderson-Briggs in which he said that the structure that "appears to work best" was one in which "One Australia purchases Zoltan's shares in [AFSC]" (T 10.4308). However, in cross-examination Mr Sellars insisted that there was doubt as to the best structure at that time (T 418), and he repeatedly asserted that no agreement had been reached with respect to the structure (T 419, T 429). He said he did not understand that the sale of shares in AFSC was the most advantageous structure for Mr Tomanovic (T 420) and he was ambivalent about which structure would be in the best interests of Mr Sayer (T 436). I found the evidence of Mr Gunderson-Briggs persuasive on this subject. In my view there is no common understanding between Mr Sayer and Mr Tomanovic in November 2006 about how to structure the transaction, and that reinforces the other evidence I have noted, which all points to the conclusion that the Second Heads of Agreement failed to identify the subject matter of the transaction and was therefore incomplete and uncertain. 99 On 22 December 2004 Mr Sayer sent an e-mail to Noel Dona, copied to Mr Tomanovic, headed "Sale of MHA group" and saying that he and Mr Tomanovic had come to an agreement (TB6.2513). He asked Mr Dona to arrange for several things including for "transfer of AFS shares". I do not take this e-mail to have any significance on the question whether, in December 2004 or at any later date, the structure of the transaction had been settled. One problem is that Mr Sayer's request is ambiguous as to whether he is talking about shares held by AFSC in GMEC or shares held by Mr Tomanovic in AFSC. In any event, it is plain that after the e-mail, very great uncertainty developed as to the form of the transaction. 100 Dealings after the signing of the Second Heads of Agreement strongly support the conclusion that no agreement had been reached in relation to the structure of the deal. At the hearing there was extensive exploration of evidence indicating that between November 2006 and April 2007, there were two verbal and 9 written requests by Grant Thornton to Mr Tomanovic for information about his proposal for the structure of the sale. Time and again Grant Thornton made plain to Mr Tomanovic that they were not able to "transform the deal into an executable legal document" and therefore pay him the money he would get upon signature, until they heard from him about the question of structuring (e-mail of 31 January 2007), and on another occasion they told him they were happy to consider any proposal that he may make (e-mail of 24 January 2007). 101 The second submission for the Sayer interests is that there was no intention to enter into legal relations at the time of execution of the Second Heads of Agreement. In my opinion this submission is supported by the following considerations, put forward by counsel for the Sayer interests: (a) As with the First Heads of Agreement, the opening words of the Second Heads of Agreement were: "This document is not intended to be a binding contract or give rise to legal rights and obligations (except as set out in the document)….". Again, these words objectively evince an intention not to be bound, pending formal documents being executed; (b) The fact that no agreement had been reached in relation to: (i) the structuring of the sale (in relation to the identification of the specific assets to be sold, as discussed above); (ii) the date and terms upon which the assets to be sold by Mr Tomanovic (whatever they might be) were to be transferred. 102 The Second Heads of Agreement contemplated the immediate payment of $100,000, and that money was in fact paid. But that fact does not establish that the parties intended immediately to be bound to the entire sale transaction (whatever precisely the transaction might have been). On 27 November 2006 (TB 10.4304) Derek Angel from Mortgage House wrote to Mr Tomanovic about the payments that were to be made under the Second Heads of Agreement, and he said that all such payments were by way of loan which would become immediately due and payable as a debt in the absence of execution of formal documents. That letter suggests that the payment was made under a collateral arrangement and not by way of performance of a binding obligation under the Second Heads of Agreement. 103 The third submission for the Sayer interests is that, even if the Second Heads of Agreement were ever binding, any contract has long since been abandoned. Parties to a contract will be regarded as having abandoned or abrogated it where it is plain from their conduct that neither of them intends that the contract should be further performed: Ryder v Frohlich [2004] NSWCA 472, at [135] per McColl JA. 104 There is fairly strong evidence that this stage was reached during the period September-November 2007. There are solicitors' letters indicating that the parties were negotiating rather than treating themselves as under existing obligations (TB 11.5012; TB 12.5279). On 15 November 2007 Mr Tomanovic wrote to Mr Sayer (TB 12.5312), beginning his letter as follows: "As you are aware, we have now over a number years been discussing the terms and conditions upon which you or entities on your behalf would purchase my shareholdings in the companies identified in the Heads of Agreement documents entered into between us. Those discussions have not concluded nor resulted in any legally binding agreement on my part to sell my shareholdings or on your part to purchase that shareholding." 105 In light of the evidence it seems to me plausible to say that if the Second Heads of Agreement had been a legally binding agreement, the agreement was abandoned by 15 November 2007, and probably (in view of the solicitors' correspondence) rather earlier than that. 106 In his final written submissions, counsel for the Tomanovic interests said (para 9): "It is admitted that, objectively, by 24 September 2007 there existed in documentary form formal agreements reflecting and recording in their entirety the commercial arrangements between the Sayer interests on the one hand and the Tomanovic interests on the other, which Mr Sayer and his entities were prepared at that time to sign and exchange. There thus existed at least by that time sufficient certainty as to the agreement between the parties." 107 The evidence to which I have just referred seems inconsistent with that submission. Brown Wright Stein's letter of 24 September 2007 enclosed a series of marked up documents and also responses to requests by James Tuite and Associates for extensive amendments, many of which were not accepted. The reply by James Tuite and Associates on 24 October 2007 referred to protracted and costly negotiations and said that "paper negotiations" had been unsuccessful, and so a conference was proposed. That correspondence seems to be at odds with counsel's submissions. The letter of 24 September 2007 shows that there was still a substantial level of disagreement between the parties. 108 My conclusions are that the Second Heads Agreement was not a binding contract of even if it were, it had been abandoned by September-November 2007. First oppression category: failure to complete agreement for separation of interests 109 In their final written submissions, counsel for the Sayer interests subdivided the allegations by the Tomanovic interests under the present heading into four sub-groupings: (a) First, that various documents gave rise to immediately binding contracts for the separation of interests; (b) Secondly, that an agreement for the separation of interests became binding by reason of part performance; (c) Thirdly, the Sayer interests are estopped from denying that agreements for the separation of interests were binding; (d) Finally, that the failure of the Sayer interests to "buy-out" Tomanovic is nevertheless oppressive, irrespective of whether the Sayer interests are legally bound by the terms of any heads of agreement. 110 I think it is appropriate to adopt that structure. I reject the contention in (a) that there are documents giving rise to immediately binding contracts. I shall deal with (b) ("part performance"), (c) (estoppel) and (d) (oppression by failure to buy out). Part performance and acceptance by conduct 111 Mr Tomanovic has placed emphasis in his evidence on the fact that after each of the two Heads of Agreement were entered into, the Sayer interests and the Tomanovic interests acted as if they were bound by the relevant Heads of Agreement. Thus, in the period from December 2004 to June 2006 Mr Tomanovic received 69 individual payments totalling $1,241,750. There is a list of other acts of "part performance" of the two Heads of Agreement in attachment B to the outline of submissions to the Tomanovic interests that was provided at the beginning of the trial. It is dealt with more fully under the heading "Estoppel" below. 112 The doctrine of "part performance", strictly so-called, is irrelevant. It is an equitable doctrine that applies only to contracts which are required at law to be evidenced in writing, but which are rendered specifically enforceable in equity by part performance notwithstanding the absence of writing. I think the real point being made by counsel when he invoked part performance was that by acting in accordance with the terms of the First Heads of agreement and later, the Second Heads of Agreement, Mr Sayer has accepted the terms of those instruments and is bound by them. 113 It is not uncommon for parties to choose not to enter into a formal written agreement but then to act as if they were bound by it, by carrying out the obligations that it contains. Depending on the circumstances, that conduct can give rise to a contract. But the conduct in question must clearly demonstrate an intention to be legally bound to the terms of the agreement and there will need to be bilaterality. 114 As to the payments totalling $1.24 million, the Sayer interests drew attention to clause 9 of the First Heads of Agreement, according to which any payments made under clause 5 would become "immediately due and payable as a debt owing by Mr Tomanovic, in the event that formal documents are not executed by 30 June or such later date [as is agreed]". The existence of that provision implies that Mr Sayer was treating the payments as debts, at least up to 30 June 2005. There is no basis the contending that by making the payments must Sayer was rendering himself subject to a liability to achieve the separation of interests for which the Heads of Agreement provided. 115 It seems to me that the matters mentioned in Attachment B to the outline submissions for the Tomanovic interests are all quite ambiguous and do not imply an intention to become subject to the principal old creations of the Heads of Agreement. For example, Mr Sayer's indemnities to Mr Tomanovic and AFSCs in respect of Mortgage House borrowings may simply reflect the fact that Mr Sayer eventually supported the finance businesses while generally Mr Tomanovic did not. 116 In my view there was nothing in Mr Sayer's conduct, or in his acceptance of conduct undertaken by Mr Tomanovic, that could be taken to imply a contractual obligation in terms of the Heads of Agreement. Estoppel 117 In outline submissions prior to the commencement of the hearing, counsel for the Tomanovic interests submitted, as an alternative to a claim for specific performance, that the Sayer interests are either estopped from denying the efficacy and enforceability of the First and Second Heads of Agreement, upon which the Tomanovic interests had relied to their detriment, or alternatively it would be unconscionable to allow the Sayer interests resile from the First Heads of Agreement/Second Heads of Agreement or to rely upon their strict terms or the failure of the parties formally to document them. 118 In final written submissions, counsel for Mr Tomanovic complained, in this context, that the Sayer interests had not done everything reasonably necessary to secure performance of the contract, by instructing Grant Thornton in August-September 2005 not to proceed with preparation of formal documentation under the First Heads of Agreement; and in October 2007 terminating instructions to Grant Thornton, at a time when final draft documentation of the Second Heads of Agreement had been prepared and was ready for execution. 119 These allegations are denied in the final submissions of the Sayer interests. It is appropriate to deal first with legal principles that are invoked, and then the application of those principles to the facts.

Legal principles 120 For estoppel based on representation, five elements must be established: (a) it must be shown that the plaintiff made an assumption based on the representation; (b) the representation must be clear and unambiguous. The "representation is sufficiently clear and unambiguous if it is reasonable for the representee to have interpreted the representation in a particular way, being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely": Galaxidis v Galaxidis [2004] NSWCA 111, at [93] per Tobias JA; see Sullivan v Sullivan [2006] NSWCA 312, at [84]-[85] per Hodgson JA; (c) there must be reasonable reliance on the representation: Galaxidis v Galaxidis [2004] NSWCA 111, at [93] per Tobias JA; (d) detriment must flow to the representee in reliance on the assumption: Verwayen , CJ at 415.5; see also Brennan J at 429.4, and Deane J at 444.5. "The relevant detriment does not consist in a loss attributable merely to non-fulfilment of the promise": Verwayen, per Brennan J at 429.5; (e) it must be unconscionable for the defendant to resile from the representation. 121 If those elements are satisfied, the remedy for estoppel is not necessarily to make good the promise/representation. Rather, the remedy is moulded to avoid the detriment suffered by reason of the reasonable reliance: Giumelli v Giumelli (1999) 196 CLR 101, [34]-[50]; see also Fifteenth Eestin Nominees Pty Ltd v Rosenberg (as executor to the estate of Rosenberg, (dec'd)) [2009] VSCA 112, [266]ff. Although there is some uncertainty about when estoppel should operate to cause the representor to "make good" the representation, it is uncontroversial that (at the least) equitable estoppel will not operate to effectively enforce the representation when such a result would "exceed what could be justified by the requirements of conscientious conduct and would be unjust to the estopped party": see discussion in Giumelli, at [42].

Application to the facts 122 The Tomanovic interests plead that the Sayer interests are estopped from denying the first and Second Heads Agreement are "enforceable agreements": Common Law proceedings No 2009/297497, para [14A] of the Further Amended Cross-Claim. 123 The foundation of the estoppel is alleged to be that "acts performed by" the Sayer Interests pursuant to the First and Second Heads of Agreement constituted "representations to enter into and an implied acceptance of the terms of [the First and Second Heads of Agreement] as a legally binding document": Common Law Proceedings, Further Amended Cross-Claim, paras [5], (c)-(d), [13]. 124 The Sayer interests submit that there is no basis for an estoppel to arise, for two reasons. 125 First, they submit that the alleged acts of part-performance by the Sayer interests do not give rise to a clear and unambiguous representation that the Sayer Interests accepted that either Heads of Agreement was legally binding. 126 In my view this submission is correct. The acts "part performance" alleged against Mr Sayer are entirely consistent with the parties' mutual hope and expectation that the separation of interests would proceed (notwithstanding the absence of presently binding legal obligations to that effect), and no doubt to encourage each other to proceed to binding separation by displaying good faith in the performance of non-binding provisions in either Heads of Agreement. 127 Secondly, in relation to the alleged detrimental acts of reliance, one or both of the following submissions applies: (a) the action was not taken in reliance on the assumption that either Heads of Agreement was legally binding; (b) even if the action was taken in reliance on that assumption, the action is not a source of detriment sufficient to justify equity effectively compelling performance of either Heads of Agreement. 128 By way of general submission with respect to the alleged acts of reliance, the Sayer Interests submitted that the Court should find that Mr Tomanovic never believed that either Heads of Agreement comprised a legally binding contract, notwithstanding his testimony to the contrary. The considerations supporting such a finding are that: (a) From his evidence before the Court, it was clear that Mr Tomanovic was an intelligent man, with considerable business experience. In light of the weight of considerations militating against the binding nature of the Heads of Agreement, it is inherently implausible that Mr Tomanovic believed that the Heads of Agreement were contractually binding; (b) There are numerous items of correspondence which convey that Mr Tomanovic did not believe that the Heads of Agreement were contractually binding: (i) On 15 November 2007, Mr Tomanovic states by letter: "As you are aware, we have now, over a number of years, been discussing the terms and conditions upon which you, or entities on your behalf, would purchase my shareholding s in the companies identified in the Heads of Agreement documents entered into between us. Those discussions have not concluded and/or resulted in any legally binding agreement on my part to sell my shareholding or on your part to purchase that shareholding" [TB.12.5312 - 5313]; (ii) In the course of negotiations of the Second Heads of Agreement, on a number of occasions Mr Tomanovic asserted (expressly or implication) a liberty to walk away from negotiations (in a manner inconsistent with the belief that there existed a binding contract): see Sayer Chronology, 5/2/2007, 19/2/2007. 129 The Sayer interests have made further submissions in relation to the particular matters identified in Attachment B to the Plaintiff's opening "Outline of Submissions". 130 The items in Attachment B identified as having been performed by the Sayer interests cannot be a source of detriment to the Tomanovic interests, and the Sayer interests say no more about them.

"(2) ZT resigns as Director from all Mortgage House entities (January 2005) 131 The Sayer interests point out that (a) The resignations were from Argyle HQ, Mortgage House Strategies Pty Ltd, Mortgage House & Land, and PDA; (b) The resignation took place over two months prior to the execution of the First Heads of Agreement. Therefore it cannot have been done in reliance on an assumption that the First Heads of Agreement was contractually binding. The only "agreement" in place at the time comprised the Kirribilli Heads of Agreement dated 22/12/2004. I agree with counsel for the Sayer interests that it is implausible that a man of Mr Tomanovic's intelligence and experience could have believed that there was a binding agreement arising from the Kirribilli Heads of Agreement. (c) In any event, as counsel for the Sayer interest points out, the resignation was not a material source of detriment, in that it did not have any practical effect on the operations of the Mortgage House group (or Mr Tomanovic's role within it). It is common ground that prior to these resignations in January 2005, Mr Tomanovic had already resigned his directorships in the finance companies in June 2003, there were no directors' meetings, Mr Sayer had the final say, and it was not Mr Sayer's practice to advise Mr Tomanovic in advance of proposed courses of action.

"(4) Sale of Mortgage House Realty". 132 The Sayer interests point out, correctly, that: (a) There is reference to the sale of Mortgage House Realty in clause 4(i) of First Heads of agreement; (b) The only case pressed by the Tomanovic interests in relation to Mortgage House Realty is that the causing of the sale comprises an alleged act of detrimental reliance. (c) There is no basis for the finding that Mr Tomanovic took any steps in relation to Mortgage House Realty in reliance upon the belief that the first Heads Agreement was binding. He said that he "was not involved in negotiating the actual terms of the sale of Mortgage House Realty": ZT, 19/1/10, at [9]. There is no basis for a finding that the sale was a source of detriment to Mr Tomanovic. Substantial difficulties had arisen in relation to the business, and timing and terms of its disposal was consistent with the ordinary course of the Mortgage House business: see generally, Sayer2, [60]-[61]; Angel1, [91]-[96]; KGB, at T363-4. The sale was a "loss stemming" move: T364.26.

"(5) Sale of commercial building in Fairfield (late 2005)". 133 The Sayer interests point out, in my view correctly, that: (a) Clause 4(g) of the First Heads of Agreement provides that "Zoltan will procure Zoltan Entities to endeavour, as instructed from time to time, to sell the properties held by the Ken Entities at Baulkham Hills, Rouse Hill and …..There shall be no sales commission or other remuneration payable on the sale of these properties". (b) There is no evidence of instructions given by the Ken Entities, or action taken by Mr Tomanovic in relation on those instructions, with respect to the alleged sale of a commercial building in Fairfield (late 2005). There is no evidence that whatever steps were taken, would not have been taken but for assumption that the First Heads of Agreement were contractually binding. There is no evidence that any such steps were a source of detriment.

"(8) Hedging deals were serviced". 134 The Sayer interests say, in my view correctly: (a) It is common ground that Mr Tomanovic was for several years prior to the First Heads of Agreement procuring hedging loans and that he continued to procure hedging loans for the benefit of Mortgage House business, after entry into the First Heads of Agreement. (b) However, there is no basis for finding that Mr Tomanovic procured the hedging in reliance on the assumption that the Heads of Agreement was binding, in the sense that he would not have procured the hedging but for that assumption. (c) Further, even if Mr Tomanovic did procure hedging loans in reliance on an assumption that the First Heads of Agreement were contractually binding, such conduct is not relevantly a source of detriment. Mr Tomanovic had no personal liability in relation to the hedging loans, and there is no basis for a finding that he otherwise suffered prejudice by reason of their procurement. 135 The Sayer interests submit that the Court should find that Mr Tomanovic would have used his best endeavours to procure the hedging funds, whether or not he believed that the HOA were contractually binding. In my view the submission is plausible and I accept it. The evidence indicates that Mr Tomanovic was aware that Mr Sayer's financial capacity to effect the buy-out was contingent on hedging funds being raised (and he therefore had a very substantial commercial self-interest to raise hedging, whether or not the Heads of Agreement were contractually binding). There is some evidence confirming this commercial self-interest: (i) TB6.2570: email from Mr Tomanovic: "what we are putting in the agreement as the source of funds for me seems to be all primarily based on me and my effort (hedging)"; (ii) TB.3484: email from Mr Angel to Mr Tomanovic: "Part of the current deal was for you to raise hedging funds to assist in payments to you"; (iii) in his affidavit (at [70]) Mr Gunderson-Briggs explained to Mr Tomanovic in the course of negotiations for the First Heads of Agreement: "Ken can only afford to pay you from cashflow and profits and asset sales….The hedging loans need to be at least maintained to enable there to be sufficient cashflow to be able to pay you". 136 Mr Tomanovic said in cross-examination that it was never conveyed to him that keeping up a level of hedging loans was essential for the proposed purchase of his interests to proceed: T230.21. That evidence is out of step with the other evidence have mentioned, and so I do not accept it.

"(9) Zoltan have made steps to restructure Australian Financial Services Corp P/L in preparation for change in ownership". 137 The Sayer interests submit, correctly: (a) There is no basis for finding that this constituted a reasonable act of reliance on an assumption that the First Heads of Agreement was contractually binding, because there was no basis for Mr Tomanovic reasonably to believe that the transfer of interests would involve a sale of his shares in AFSC; (b) Furthermore, there is no basis for a finding that "steps to restructure" AFSC would be a relevant source of detriment. Mr Tomanovic was expressly invited to describe the manner in which he had been prejudiced by incorporating an alternative trading company: T227.40. He did not identify any material prejudice. 138 My conclusion is that the Sayer interests have demonstrated that none of the steps taken by Mr Tomanovic allegedly in relation to the First Heads of Agreement and listed in Attachment B to the outline submissions can be regarded as detriment flowing from reliance on the assumption that the First Heads of Agreement were binding. 139 In paragraph 1B of the "Summary of Particulars of Oppression" annexed to the 3 opening Outline of Submissions for the Tomanovic interests, two further sources of alleged detriment are identified, said to be incurred "on faith of agreement to enter the Heads of Agreement". (a) "ZT's salary of $3,602.50 per week is stopped mid December 2004". The Sayer interests make the following points, which appear to me to be correct: (i) the discontinuance of salary did not relevantly constitute an act of reliance by Mr Tomanovic: rather, it was a decision taken by Mr Sayer; (ii) the discontinuance preceded the execution of the First Heads of Agreement, and logically could not be consequential upon any mutual assumption that the First Heads of Agreement (entered into in late March 2005) was contractually binding; Mr Tomanovic conceded (outline submissions for Tomanovic interests, at [8]) that he "played no active part in the finance group business since December 2004", and so the discontinuance of salary is consistent with the discontinuance of the provision of any service by Mr Tomanovic to the business. Moreover, it is common ground that Mr Tomanovic thereafter dedicated his efforts to the Multi-own business, and there is no obvious basis for the inference that he suffered financial detriment by dedicating his time to Multi-own.

(b) "ZT foregoes dividend rights as a shareholder". 140 The Sayer interests challenge the proposition that Mr Tomanovic forewent dividend rights. He remained a shareholder, and was therefore entitled to any dividends that were paid. Clause 3(g)a. of First Heads of Agreement provided that Zoltan Entities would assign their rights to dividends to Ken Entities on execution of formal documents, something that evidently did not occur. However, consistent with the practice from 1999, there were no dividends paid from 2004 to 2010. 141 My conclusion is that the category of oppression alleged by the Tomanovic interests as "GMEC and Argyle HQ - failure to complete agreement for separation of interests reached in December 2004" is not assisted by appealing to any estoppel. Oppression by failure to buy out 142 Counsel for the Tomanovic interests invited the Court to find a ground of intervention under Part 2F.1 even if the Court did not accept the Tomanovic submissions about the binding force of the Heads of Agreement, or the estoppel that was said to arise from detrimental reliance on an assumption that the Heads of Agreement were binding. I took the submission to be that even if the Heads of Agreement gave rise to no binding obligations at law, it was nonetheless "oppressive" for the Sayer interests not to buy out Tomanovic on the terms of the Heads of Agreement. 143 In my view, it is sufficient to dispose of the contention by noting that: (a) the statutory grounds for intervention under Part 2F.1 generally concern some element of unfairness in the conduct complained of; (b) if the Sayer Interests were neither contractually bound to acquire Mr Tomanovic's interests, nor estopped from denying they were so bound, there can be no basis for the Court to find any unfairness arising out of the failure to consummate the separation of interests. As counsel for the Sayer interests submitted, the Sayer interests are free to walk away from negotiations, or modify their position, at any time; and Mr Tomanovic may be bitterly disappointed that his ambitions for a sale were not realised, but such frustration does not equate with oppression. It is well established that the oppression remedy is not simply a "free ticket" for a forced sale of an interest. 144 To the extent that counsel for the Tomanovic interests might have had in mind the defeating of "legitimate expectations, I agree with counsel for the Sayer interests that: (a) there is no basis for the finding that there was a "legitimate expectation" at the time of the formation of their business arrangement in 1999, or the incorporation of GMEC that Sayer would buy-out Mr Tomanovic from the Mortgage House group (let alone buy him out on particular terms); and (b) there is no basis for the Court to make any finding to the effect that the mere fact of protracted negotiations generated a "legitimate expectation" that the Sayer Interests would buy-out Mr Tomanovic on the particular terms of the Heads of Agreement (indeed, such a finding would be inconsistent with the findings that the Heads of Agreement were not legally binding). 145 In their final written submissions, counsel for the Sayer interests dealt extensively with the conduct of the parties leading up to and beyond the Second Heads of Agreement. As far as I can see, the only reason for these elaborate submissions (paras 64-85 of the final written submissions) was to persuade the Court that if (contrary to their primary submission) there was a legitimate expectation that the Sayer interests would exercise good faith in the negotiations for the separation of interests, that Mr Sayer had in fact acted entirely consistently with that expectation. Since I have concluded, for the reasons just given, that there is no basis for finding any legitimate expectation of a kind that might ground an oppression suit if the expectation were not met, it is unnecessary to me to deal with these submissions, I shall not do so. 146 The Tomanovic interests have failed to make out any Part 2F.1 ground with respect to the Heads of Agreement. Second oppression category: Diversion of monies and assets from GMEC for the benefit of the Sayer interests 147 This broad category of alleged oppression by the diversion of money and assets has been subdivided by the evidence at the hearing into four categories, which will be dealt with separately: applications for the registration of two trademarks in the name of Mr Sayer; repayment of borrowers' funds to One Australia; cash taken from MHA businesses by Mr Sayer; the B class share in some GMEC subsidiaries.

Applications for the registration of two trademarks in the name of Mr Sayer

Relevant facts 148 The evidence addresses two trademarks, namely Registered Trade Mark No 885894 and Registered Trade Mark No 1044478, both in the name of Mr Sayer. My account of the facts relies heavily on the useful final submissions of counsel for the Sayer interests. 149 The evidence indicates that Mr Sayer conceived of the name "Mortgage House", and created the original logo. Mr Sayer said so (second affidavit, para 49(h)) and there is no evidence contradicting his claim. From 1994 to 1998, Mr Sayer (through his private company, One Australia) conducted business under the name "Mortgage House", through a number of partnerships. 150 On 30 March 1994, One Australia and Mr Sayer's partner at the time registered the business name "Mortgage House of Australia". On 14 August 1994, One Australia became the sole registered owner of the business name "Mortgage House of Australia". 151 On 4 February 1998, Mortgage House of Australia Pty Ltd ("MHA") was incorporated. On 1 April 1998, One Australia transferred the registration of the business name "Mortgage House of Australia" to MHA, and business under the name was thereafter conducted through MHA. 152 In 1997 or 1998, Sayer entered into partnership with Lee Boueri ("Ms Boueri"), Phil De Prima ("Mr De Prima") and Kevin Hurley ("Mr Hurley"). At that time, there was an arrangement between Mr Sayer and Mr Tomanovic for the sharing of certain commissions, but there was no broader partnership arrangement between them. At around that time, Mr Sayer had a conversation with Mr Tomanovic to the following effect: Mr Sayer: "Tomanovic, as I have discussed with you before, I am going into partnership with Boueri, De Prima and Hurley under the Mortgage House banner. " Mr Tomanovic: "What happens to me and our business relationship?" Mr Sayer: "It won't affect it. The commission split will remain the same. Further I made it clear to Lee, Phil and Kevin [Boueri, De Prima and Hurley] that if there is later a falling out or separation between the partners, Mortgage House comes back to me. Mortgage House is mine." Mr Tomanovic: "That's good." 153 In around mid-1999, there was discussion between Mr Sayer and Mr Tomanovic in relation to the formation of a "partnership". There was no discussion in relation to the legal nature of the partnership, but there were discussions in relation to the management of the business, and the distribution of income. The relationship was not formally documented, it was loosely formed. It evolved over time. On 1 July 2000, MHA issued 50,000 shares to AFSC. Neither Mr Sayer nor Mr Tomanovic recalls any explicit discussion in relation to the ownership of the rights to the trademark, either at the time of the formation of the partnership in 1999 or at any time thereafter. 154 On 16 August 2001, Mr Sayer caused the registration in his name of the trademark for "Mortgage House of Australia. The banking alternative" (with associated logo) ("First Trade Mark"). He did so when he became conscious that there were competitors infringing the mark, and he thought it was appropriate to procure the additional protection of registration. At the same time, Mr Sayer also became aware that other competitors in the market place (namely, Wizard and Aussie Home Loans) had also registered their marks. 155 On 2 July 2003, Mr Tomanovic executed the Subscription and Participation Agreement ("SPA"). As to this: (a) clause 1.1 refers to the Deed of Licence of Trademark as a "Transaction Document"; (b) clause 3.1 (a) provides that a condition precedent to the transaction was execution of the Transaction Documents; (c) Clause 4.4 of Schedule 3 (participation terms) of the SPA provides that " The Investor acknowledges Mr Sayer may grant a licence of the trademark 'The Mortgage House of Australia. The Banking alternative' to a nominated Associate of Founding Shareholder 1" - Founding shareholder 1 is Mr Sayer's company One Australia Pty Limited; (d) Schedule 3 is a core part of the SPA as it sets out the terms governing the running of the GMEC group; (e) Schedule 7 is the Deed of Licence of Trademark. It states in Recital A that "The Owner [i.e. Mr Sayer] is the legal and beneficial owner of the Mark" . (f) Schedule 7 is the Deed of Licence of Trademark. It states in Recital B that "The Licensee [i.e. GMEC] does not own the right, title and interest and goodwill attributable to the Mark and the Licensed Name." 156 There is an issue as to whether Mr Tomanovic viewed the Trade Mark Licence Deed at the time of execution of the SPA, and was aware that it recorded Mr Sayer as the legal and beneficial owner of the trademark. When he was asked about it in cross-examination he initially expressly denied reading the document: T181.32. When then asked whether he went through it, he said: "no, not really": T181.42. He then affirmed that he "didn't read it at all"(T181.50). In answer to the question "Didn't even begin to read it?", he again stated "not really": T182.2. 157 However, when he was pressed about the manner further, he ultimately conceded that he both saw the Deed and was aware that it recorded Ken Sayer as the owner of the trademark. He stated that "I am not going to deny" that he saw in the agreement "the various parts of the document that describe Mr Sayer as the owner of the trademark": T185.26, and that "he had seen that part when we were signing": T185.26. He said further: "I'd seen those documents and, if Ken was there put as a person in the document in relation to giving the trademark I didn't put any consideration to it": T186.8. This exchange occurred: Counsel: "I just want to know this specifically. Did you see that Mr Sayer was described as the owner of the trademark?" Mr Tomanovic: "I am not going to deny and I didn't put any emphasis if it was him": T186.29. His ultimate position appeared to be that he was aware that the Deed recorded Mr Sayer as the owner of the trademark, but that he didn't put emphasis on it because he believed it was a "Mortgage House asset": T186.9, T186.46. 158 Counsel for the Sayer interests invited the Court to find that Mr Tomanovic was aware that the document conveyed Mr Sayer's assertion that he was beneficially entitled to the Trademark. On the basis the evidence I have set out reveals a shifting of position by Mr Tomanovic and quite an unsatisfactory final position, it seems to me likely that he viewed the Trade Mark Licence Deed at the time when he executed the SPA and was aware that it recorded Mr Sayer as the legal and beneficial owner of the trademark. 159 On 17 July 2003, MHA commenced proceedings for passing off and breach of s 52 of the Trade Practices Act 1974 (Cth), in relation to the use by the defendant of the mark "Mortgage House". Mr Tomanovic provided an affidavit in those proceedings. It is noted in the judgment that "Mr Sayer has, since 16 August 2001, been the registered proprietor of the First Trade Mark." 160 On 4 March 2005, Mr Sayer caused the registration in his name of the trademark "Mortgage House" ("Second Trade Mark"). Mr Sayer's affidavit evidence (at [50(h)]) is as follows: "It literally did not cross my mind at the time of registration of the trademark, that Tomanovic or MHA could assert any interest in the trademark. I conceived of the name "Mortgage House" and created the logo. I believed that substantial good will had been developed around the trademark long before Tomanovic's involvement in the Mortgage House business. I had continued to conduct business under the mark through a number of partnerships before Tomanovic's involvement in the business. I regarded the Mortgage House trademark as my baby. Although there was no formal documentation to this effect, when I caused One Australia to transfer to MHA the "Mortgage House of Australia" business name on 1 April 1998 (see paragraph 44 of My First Affidavit), I understood that I was effectively licensing MHA to use the Mortgage House name. Although I had no intention of doing so, I considered that I was at liberty to withdraw that licence if I chose to do so (until the Share Participation Agreement with MBL in 2003). It was not my intention or understanding that my business arrangement with Tomanovic in any way affected my ownership of the rights to the trademark. There was no discussion in which it was agreed that MHA or Tomanovic should have an interest in the trademark. It was not until a mediation in relation to this matter in November this year that Tomanovic made any challenge to my ownership of the trademark. Up until then, no issue had been raised. I was genuinely stunned when he raised the challenge."

Analysis 161 It seems to me reasonably clear that Mr Sayer's dealings in relation to the Trademarks did not constitute oppression. First, the evidence indicates that Mr Tomanovic has acquiesced in the assertion by Mr Sayer of the legal and beneficial ownership of the Trademarks, and is probably now estopped from denying that ownership, by reason of having executed of the SPA. Mr Sayer had good reason to believe that Tomanovic acquiesced in his assertion of ownership, because he believed that Tomanovic had read the whole of the SPA before signing it, the entire document was available during the "three day bunker session" (T443.47), and he had had personally provided a copy of the full SPA to Mr Tomanovic (T443.50). He never received any objection from Mr Tomanovic with respect to what was recorded in the trade mark licence agreement (T444.47). 162 There is evidence that Mr Sayer relied on his assumption that Tomanovic acquiesced in the assertion of ownership, in that he would have "hit the brakes" in relation to the SPA, if Tomanovic had challenged his title (T445.10). 163 Second, I see no reason to disbelieve Mr Sayer's evidence as to his genuine belief in his entitlement to the intellectual property in the Mortgage House trade name. The genuineness of that belief is corroborated by the absence of concealment in relation to the registration of the Trade Marks in his name. Both the Trade Mark Licence Deed, and the evidence and judgment in the passing off proceedings conveyed to Mr Tomanovic the assertion by Sayer of a beneficial interest in the "Mortgage House" tradename.

Repayment of borrowers' funds to One Australia 164 This allegation relates to procedures associated with the business conducted by Mortgage House & Land, involving the arrangement of house and land packages for purchasers. The arrangements involved: (a) liaising with developers in relation to the design of house and land packages; (b) procuring customers for those packages; (c) procuring finance for customers; (d) with respect to the procuring of finance, Mortgage House & Land promoted its business on the basis of providing 100% finance; (e) the shortfall advances were secured by second mortgages. 165 As to (d), there were typically two dimensions to the funding: (i) firstly, assisting the customer to make an application for finance from a financial institution; (ii) secondly, where the customer required, Mortgage House & Land would arrange additional finance for that shortfall. This occurred in the great majority of cases. Consequently, the purchasers would then be receiving a 100% loan for the purchase of a house and land packages. 166 It is alleged that Sayer improperly caused the diversion of funds from Mortgage House & Land to One Australia. Mr Sayer addresses the allegation in paragraphs [96] to [98] of his second affidavit. 167 There appears to be no dispute that: (a) One Australia was a substantial provider of funds to Mortgage House & Land; (b) Mr Sayer gave directions to an employee to cause funds received in relation to the business of the Mortgage House & Land to be paid to One Australia; (c) in accordance with those instructions, the employee made payments to One Australia; (d) those payments were made by way of advance; (e) the employee caused Mortgage House & Land to advance to Sayer interests amounts which exceeded what had been advanced by the Sayer interests to Mortgage House & Land. 168 The Sayer interests submit that there was no oppression associated with the conduct, for three reasons. First, they say that Mortgage House & Land is not, and never was, a subsidiary of GMEC, and any conduct in relation to Mortgage House & Land do not comprise part of the "affairs" of GMEC. Consequently, it is irrelevant to the oppression action. 169 Second, the Sayer interests alleged that Mr Tomanovic consented to the arrangement in relation to the making of advances by Mortgage House & Land to the Sayer interests, and therefore it cannot be the subject of complaint in an oppression action. The evidence on which they rely is an e-mail from Mr Tomanovic to Mr Sayer dated 20 June 2003. The e-mail refers to "u now using some of the settlements money coming from mhl to one australia, which u than loan to mha and other entities as loans to help with the immediate cash flow". Mr Tomanovic make some suggestions including the suggestion that he be compensated. As to the practice as such, he says "principally I have no problem". Mr Sayer responded by saying "Let's discuss". There is no evidence of any subsequent follow-up. 170 Third, the Sayer interests contend that there is otherwise no finding that Sayer's conduct was oppressive. They point out that the amounts were paid by way of advance, and recorded as loans to the Sayer Interests. There is no allegation there was improper recording of the amounts in fact advanced. One Australia did in fact advance substantial funds to the Mortgage House & Land business. I accept that these matters are correct but it is of concern that, even if Mr Sayer's directions to the employee were intended to be about the repayment of those advances, the employee in fact caused Mortgage House & Land to advance to Sayer Interests amounts which exceeded what had been advanced by the Sayer interests to Mortgage House & Land. 171 It seems to me that the first two grounds advanced on behalf of Mr Sayer are solid and I should based my decision on them. My finding is that in respect of the mortgage transactions involving MH & L and One Australia, there was no conduct of the affairs of GMEC or act or proposed act or omission by on behalf of GMEC that would attract s 232. If there were, it would not be conduct oppressive to or unfairly prejudicial to all unfairly discriminatory against Mr Tomanovic in view of his knowledge of 30 conduct.

Cash taken from MHA businesses by Mr Sayer 172 This relates to the allegation that Mr Sayer caused cash received by the MHA business in relation to loan application fees to be provided to him for his personal benefit. The matter was addressed by Mr Sayer in his second and third affidavits and by Angela Dye in her two affidavits, and also in their oral evidence. 173 There is no dispute that: (a) In the ordinary course of its business, the MHA Finance Business received cash from time to time, relating to application fees for home loans; (b) There was a practice by which Ms Dye (on instructions from Mr Sayer) provided such cash to him; (c) There was no accounting by the MHA Finance Business for the cash paid to Mr Sayer in that manner. 174 The evidence relating to this practice appears to be in the period before the incorporation of GMEC. Ms Dye gave oral evidence that the practice only occurred when she was in charge of accounts (T254.22), and that this was "before July 2003 when GMEC became the holding company": T254.29.. Mr Angel came to be in charge of accounts "in or around 2004", according to his second affidavit, at [7]. He was not aware of the making of cash payments to Sayer from that time (or at any time): at [28]. The accounting systems were such that it is reasonable to infer that any cash payments to Sayer would have come to his attention. Charles King was employed as CFO of MHA from December 2006 to December 2007. His affidavit evidence is that from May 2007, the business did not receive cash: third affidavit, at, [9(a)]. 175 There is a contest in relation to the amounts of cash in question. Mr Sayer said that the number of loan applications involving the payment of cash was very limited, and that (to the best of his recollection) the total amount of cash he received pursuant to the arrangement was approximately $1,800 to $3,600 per annum: second affidavit, at [89(e)], [91]. But Ms Dye said that significantly more cash was involved. In her first affidavit sworn on 24 November 2009, she stated (at [12]) that the amount of cash was approximately $10,000 to $18,000 per month. In her third affidavit, she stated that business "increased dramatically" by early 2004, and that the number of applications per month had risen to "about 200 and sometimes even more", in respect of which 50% paid the $300 first payment by cash. This would imply a figure of $30,000 cash per month by early 2004. However by this time she was no longer in charge of accounts and thus could give no evidence about whether this practice continued. 176 The Sayer interests submitted that: no evidence had been led which conclusively established the quantum of cash received; no inference should be drawn against either party in relation to this matter; while it was of course open to the Sayer interests to lead evidence on this question, it was equally open to Mr Tomanovic to seek discovery in relation to records relating to the quantification of cash payments; Mr Tomanovic bears the burden of proof in relation to this question; while the parties agreed that no admissibility objections be taken to affidavits filed in these proceedings, the evidence of Ms Dye in relation to the quantum of cash received is of extremely low probative value on the question of quantum. 177 I did not find those submissions to be compelling, but there are a couple of matters that would make me hesitate before making an adverse finding against Mr Sayer. One is that Ms Dye gave evidence that she did not think there was anything unusual at the time about Mr Sayer's receipt of cash. That suggests to me that the amounts received by Mr Sayer were not particularly large and that her present recollection may be faulty. The other consideration I have in mind is that the difference between the witnesses is probably narrower than it first appears. Ms Dye's evidence in cross-examination was that "When the cash came in, all of it was taken to Sayer then he would either take it from me or ask me to bank it": TS.258.31. Hearing that evidence in court refreshed a recollection of Mr Sayer to similar effect: T441.21. When that evidence is put together, even if Ms Dye's evidence were accepted as to the total quantum of cash received, her evidence is consistent with Sayer's assertion that he only received $1,800 to $3,600 per annum. 178 There is also conflicting evidence as to what was done with the cash when Mr Sayer received it. Mr Sayer gave affidavit evidence that occasionally, he applied the cash to any outstanding costs of the MHA Finance Business; but on the majority of occasions, he split the cash with Mr Tomanovic. Mr Tomanovic denies receipt of any of the cash. There are some very elaborate written submissions on behalf of the Sayer interests (para 123) designed to persuade the Court to prefer Mr Sayer's evidence, principally on the basis of a single e-mail (Ex D 2). I find the e-mail and the other matters referred to in the submissions to be inconclusive. 179 My conclusion is that state of the evidence does not permit me to resolve the question whether the money was shared with Mr Tomanovic. Plainly there was a practice of Mr Sayer taking cash deposits during a period up to some time in 2004, but it has not been established to my satisfaction that the amounts involved were large. The Sayer interests submitted that the practice of receiving and sharing cash payments without making appropriate accounting entries is irregular and improper. But at the question before me is not whether Mr Sayer has contravened the law, but rather whether he has caused the relevant companies to act unfairly or oppressively. Given the evidence I have accepted as to the state of accounts between Mr Sayer and be companies, indicating the extent to which he has funded them over the years, I would not regard the siphoning of relatively small amounts of cash as establishing an oppressive or unfairly prejudicial course of conduct is sufficient of itself to ground remedial orders.

The B class share in some GMEC subsidiaries 180 It is common ground that a B class share was issued to One Australia in a number of companies in the MHA Business. 181 The Sayer interests submit that there is no oppression because: (a) the issue of the B class share to One Australia was in accordance with an express arrangement between Mr Tomanovic and Mr Sayer, according to Mr Sayer in his second affidavit, para [65]; (b) Further, the effect of the issue of the B class share was simply to give Mr Sayer the final say in the event of shareholder deadlock. Mr Tomanovic accepts that from the inception the arrangement between the parties was that Mr Sayer "had the final say". The issue of the "B" class share is entirely consistent with that arrangement, and does not involve an attempt to procure some substantive advantage beyond what was originally contemplated by Mr Sayer and Mr Tomanovic. (c) Although the minuting of meetings without the attendance of Mr Tomanovic was irregular, it is not an irregularity which was done with the purpose or effect of prejudicing Mr Tomanovic. Against the backdrop of the informality of the conduct of the affairs of the group, the Court should not find such irregularities were sufficiently serious to constitute oppression. 182 I accept ground (b), and therefore do not regard the issue of the B class share without Mr Tomanovic knowing as a matter that would have any influence on the assessment grounds in s 232. I regard the absence of compliance with proper procedures (ground (c)) as more serious and a failing of that kind would reinforce other evidence though probably not justifying an order of itself. Oppression allegations affecting Argyle HQ

Increase in the St George Bank facility 183 The particulars of the first oppression claim against Argyle HQ, as alleged in the Tomanovic outline submissions, are as follows: A. In September/October 2007 mortgages over properties 9 and 15 Argyle Street (registered proprietor Argyle HQ as trustee of 9 Argyle Street Unit Trust, Sayer = sole director) with St George Bank are increased by $900,000.00 without Tomanovic's consent (Tomanovic, VT and AFSC = guarantors): (i) Tomanovic is requested to consent to increase and to sign documentation but refuses; (ii) increase proceeds anyway without Tomanovic's consent; (iii) $900,000.00 is advanced by St George Bank to Argyle HQ, then transferred to MHA; (iv) ultimately bulk of funds ($750,000.00) are used one year later in November 2008 to fund acquisition by One Australia of MBL's 10% shareholding in GMEC without Tomanovic's knowledge (also is breach of clause 3(g)(c)(ii) FHA). 184 The Sayer interests have informed the Court that those particulars are not in dispute, but they say there are some material matters to take into account: (a) the Argyle Street Trust owned the Mortgage House business premises; (b) the 9 Argyle Street Trust procured a facility from St George Bank on 28 August 2003 for $4.9 million; (c) in October 2007, there was an extension of the facility to $5,749,000 (i.e., an increase of $849,000); (d) at around the time of the increase in the facility, MHA had a critical shortage of working capital; (e) Mr Sayer first negotiated draft terms for an extension of the St George facility, on the basis that each of Mr Tomanovic and Mr Sayer would be co-guarantors; (f) Mr Sayer sought the agreement of Mr Tomanovic to the extension of the facility, explaining the criticality of obtaining additional funding; (g) in the course of cross-examination, Mr Tomanovic candidly acknowledged the business' need for cash, and the need to increase the facility (T242.41). Indeed, his recollection was that when Mr Tomanovic inquired of the CFO (Mr King) whether the increase in the facility was needed, King stated: "MHA needs money to pay many bills and to avoid trading while insolvent" (although King denies saying that). Notwithstanding the needs of the business, Mr Tomanovic refused to provide his consent to the extension, otherwise than on terms that Sayer cause all (or some) of the funds to payments to Mr Tomanovic; (h) Mr Sayer proceeded to secure the increase in the facility, without securing a guarantee from Mr Tomanovic for the increase; (i) The additional $900,000 funding was applied almost immediately to the MHA Business during the first months of the calendar year 2008, according to the evidence of the CFO, Mr King, and thereafter, the extension of the facility was used as an overdraft, and the balance fluctuated from time to time; (j) At the time the increase was obtained, Mr Sayer had no intention of using the facility to fund his purchase of MBL shares; (k) On 10 November 2008, a drawdown was made on the facility in the amount of $754,000 to fund the acquisition by One Australia of MBL's 10% shareholding in GMEC. The transaction was recorded as an advance to One Australia. 185 The Sayer interests submit that there was no oppression as to the original extension of the facility for the following reasons: (a) the increase in the facility was sought and procured for legitimate business purposes, entirely unrelated to the proposed purchase by One Australia of MBL's share of MBL; (b) far from evidencing any oppressive preference for his own interests over the minority shareholders, the circumstances surrounding the procurement of the extension to the facility constitute a further example of Mr Sayer assuming disproportionate financial burden with respect to the operations of the MHA Finance Business. He alone incurred personal exposure in relation to the guarantee of the facility, in circumstances where the procurement of the extension was necessary for the conduct of the business; (c) it was not improper for Mr Sayer to proceed without the consent of Mr Tomanovic, in circumstances where Mr Tomanovic was not a director, the extension of the facility was necessary for the business, and Mr Tomanovic was opposing the extension only for the purpose of pressuring Sayer to cause payments to be made personally to Mr Tomanovic (and apparently without regard to the interests of the business). 186 I agree with this reasoning. 187 As to the drawdown of $754,000 to make an advance to Ken Sayer Investments Pty Limited ATF Sayer Family Trust, which in turn on lent that money to One Australia: (a) at the time of the advance, Argyle HQ Pty Ltd (ATF 9 Argyle Street) was itself indebted to One Australia in the amount of $465,990.30; (b) at the time of the advance, the Sayer interests were very substantial net lenders to the MH Finance Business generally: as at 30 June 2008 the audited GMEC group accounts record the GMEC group as having a liability to Mr Sayer for $3,040,000.00 in respect of employment services; (c) as at 30 June 2008 Argyle HQ owed MHA $7,543,458 and GMEC $1,856,346, being a total amount of $9,399,804 owing from Argyle HQ to the GMEC Group; (d) as at 30 June 2008 the 9 Argyle Street Trust owed Argyle HQ $9,035,866; (e) in other words, to the extent that the loan from the 9 Argyle Street Trust to the Sayer Family Trust exceeded the loan from One Australia to the 9 Argyle Street Trust, that should be seen in the context of the 9 Argyle Street Trust owing $9,035,866 to Argyle HQ which in turn owed the GMEC group $9,399,804 which in turn had a liability to Sayer of $3,040,000.00; (f) the evidence clearly discloses that the companies in the MH group substantially conducted business as a single commercial entity; (g) in all the circumstances, the advance by Argyle HQ Pty Ltd of the sum of $754,000 was not unfair or oppressive. 188 Once again, I agree with this reasoning, given the nature of this corporate group.

Issue of B class share to One Australia 189 I have dealt with the comparable transaction with respect to GMEC subsidiaries above. For the same reason, there is no oppression of unfair prejudice on this occasion. Fourth oppression category: Oppressive conduct generally

Failure to make books and records available and to provide information

(i) requests for access made October 2007 - not complied with 190 The Sayer interests submit that there is no basis for a finding of oppression by reason of denial of access to information. 191 They claim that Mr Tomanovic generally had unfettered access to information within the business: (a) Charles King, the CFO states that: "When Tomanovic asked me for any financial information I would supply that information to him immediately after obtaining approval from Sayer. In relation to the infrequent requests, approval was never refused"; (b) Derek Angel, the general manager of the Mortgage House Finance Business, states that on no occasion did Mr Sayer instruct him not to provide information to Mr Tomanovic, and on no occasion did Mr Tomanovic request financial information, although he had frequent discussions with Mr Tomanovic in relation to the financial circumstances of the Mortgage House Business. (c) there is evidence of substantial information regularly being provided to Mr Tomanovic, in the affidavits of Mr Sayer, Mr Sellars, Mr King and Mr Neil Sayer. 192 Mr Tomanovic has made particular complaint in relation to the failure by Mr Sayer fully to respond to a series of requests for information by Mr Tomanovic's solicitors, from November 2007. Mr Sayer has responded to the allegations in his first affidavit. 193 The Sayer interests submit that no oppression arises, by reason of the following circumstances: (a) some of the information had already been provided; (b) Mr Tomanovic had no entitlement to some of the information; (c) the failure to provide some of the information was explicable by reference to irritation at the peppering of Mr Tomanovic's information requests against the backdrop of failure by Mr Tomanovic to provide information reasonably requested by Sayer in relation to Multi-own (and not some sinister intention to keep Mr Tomanovic in the dark); (d) Mr Tomanovic was conducting a competitive business at the time, and some of the information sought was commercially sensitive; (e) in any event, prior to Mr Sayer being aware of the commencement of these proceedings, he offered to provide access to most of the documents sought, on reasonable conditions of confidentiality to which he deposes in his first affidavit. Mr Tomanovic has not responded to that offer. Therefore, to the extent there was any oppression in relation to the failure to provide records, that oppression has long since been removed. 194 On the basis of the evidence to which I had been referred, and the oral evidence given in court, my view is that the answer to Mr Tomanovic's allegations on the subject is convincing.

(ii) failure to convene AGM's in 2005, 2006 and 2007 195 It is common ground that there was no general practice of conducting annual general meetings. 196 The Sayer interests submit that GMEC was a closely held company, and all shareholders acquiesced in the company conducting its operations with a high level of informality in relation to the conduct of meetings. As to this, they say : (a) it is common ground that Mr Tomanovic and Mr Sayer regularly conducted informal discussions in relation to the conduct of the MHA Business, which occurred roughly every two weeks and lasted 20 to 30 minutes; (b) up until October 2008, Mr Tomanovic did not seek to convene (or request Mr Sayer to convene) any formal meeting of directors or shareholders; (c) up until October 2008, there is no evidence of any complaint by Mr Tomanovic in relation to the failure to convene formal meetings. 197 The Sayer interests submit that absence of the conduct of formal shareholder meetings is not oppressive to Mr Tomanovic, because: (a) the absence of formal meetings is entirely reasonable, in light of the undisputed extensive informal discussions that took place between Mr Tomanovic and Mr Sayer; (b) in any event, there is no basis for an oppression claim in relation to conduct undertaken with the "acquiescence or consent" of Mr Tomanovic. 198 Mr Tomanovic alleges that there was a single occasion November 2007, on which he states that he asked Mr Brown of MBL to arrange a shareholders' meeting, and was told by Mr Brown that Mr Sayer cancelled it. He says that he had "no knowledge as to why the proposed shareholders meeting was cancelled". 199 Mr Sayer's evidence on this question is set out in his second affidavit at [71], and is to the following effect: (a) He does not recall being informed (or otherwise aware) that Mr Tomanovic had requested a general meeting to be convened; (b) He recalled a heated discussion with Mr Doecker of MBL, in which Mr Doecker made certain criticisms of Sayer. Sayer felt angry about the tone and substance of criticism directed at him by Mr Brown during that meeting, and said that he wouldn't be attending any meeting. He did not hear anything further from Mr Doecker or Mr Tomanovic about convening a meeting, until he received the letter from Mr Tomanovic's lawyers on 23 October 2008, which is referred to below. 200 The Sayer interests submit that Mr Tomanovic has not denied any aspect of Mr Sayer's evidence on this question, and has not led evidence of any dealings with Mr Sayer in relation to the convening of a meeting at this time (or even of following up Mr Brown in relation to the why Mr Sayer had indicated that the "meeting was cancelled"). They note that Mr Tomanovic's lawyers convened a meeting on 14 November 2008, which Mr Sayer duly attended. They invite the Court to find that the allegation of oppression in relation to the failure to convene meetings is specious and contrived. 201 I would not use the word "specious", but rather "insignificant". Refusal to convene shareholders' meetings is sometimes a very serious matter, when the evidence as a whole shows that the oppressing party is using the machinery of corporate governance to excluded a minority member from participating in corporate affairs, usually with some additional collateral motives. But that is not the present case. It seems to me that in this case contention about general meetings has arisen as a tool to promote the conflict that has emerged between Mr Tomanovic and Mr Sayer since December 2004. I do not regard the evidence before me as of any significance for making out a Part 2F.1 ground.

(iii) 2008 Financial Statements only received in March 2009, and 2009 Financial Statements not received yet. 202 As to 2005 audited Financial Statements, they were provided to Mr Tomanovic's accountant on 2 February 2007, according to the affidavit of Mr Sellars, at [79]. As to 2006 audited Financial Statements, they were provided to Mr Tomanovic's accountant on 24 January 2007, according to the affidavit of Mr Sellars, and [73] - [74]. As to 2008 audited Financial Statements, they were provided to Mr Tomanovic on 11 June 2009, approximately 5 weeks after they were completed, according to the affidavit of Neil Sayer, at [24]. 203 As to the audited 2009 Financial Statements, they are awaiting finalisation. 204 No ground for complaint has been established.

B Failure to maintain books and records in relation to moneys provided by MHA, DMS and Argyle HQ to MHL for on-lending to borrowers - not repaid on settlement to fund providers but instead paid to One Australia (see 2B above). 205 The Sayer interests submit that there is no basis for a finding of oppression, for four reasons. 206 Firstly, MHL is not a subsidiary of GMEC, and any irregularity in its accounts could not relevantly comprise part of the affairs of GMEC for the purpose of an oppression suit. 207 Second, there is no basis for a finding that accurate books and records were not maintained in relation to advances made by MHL to One Australia. The books and records could hardly be construed as contrived in a manner advantageous to the Sayer Interests. The accounts of MHL records substantial indebtedness of the Sayer Interests to MHL, as Mr Sayer explains in his second affidavit, at [97(h)]. 208 Thirdly, there is no proper evidentiary basis for a finding that there has otherwise been a failure to maintain books and records in relation to money advanced to MHL for "on-lending to borrowers". 209 Fourthly, even if there were a sloppy informality record-keeping at any particular period of time in relation to the operations of MHL, that does not constitute a proper basis for a finding of oppression. There is no basis for a finding that it was associated with any unfair attempt to take advantage of Mr Tomanovic. Mr Tomanovic agreed that in the early years "we were growing, we focused on growth", by reason of which general "compliance" was wanting: T200.13. 210 As with meetings, failure to keep proper books and records and financial statements can be a matter that the Court will regard very seriously. But in this case I am influenced by all four points made on behalf of the Sayer interests, and I would not regard such non-compliance as is shown by evidence as constituting a ground relief in the Part 2Ff.1, or as making any significant contribution to such a ground.

C Failure to declare or pay dividends by GMEC to AFSC since December 2004 211 The failure to declare dividends is not necessarily oppressive, though to embark upon a systematic and long-term course of conduct that excludes a minority shareholder from participating in the company's profits would obviously be a different matter. 212 The Sayer interests submit that there is no basis for finding that dividends have not been declared for any unfair or oppressive purpose. They say it is common ground that Mr Sayer and Mr Tomanovic were committed to the objective of expansion of the business, and that according to Mr Tomanovic, expansion "placed financial strains on the company" (T199.10), by reason of which the business was constantly cash-starved. As Mr Tomanovic himself stated in an email to Mr Gunderson-Briggs in respect of the period 1999-2003, "everything went back into the bus[iness]": TB.7.2952. 213 Prior to the commencement of these proceedings, there is no evidence of any request by Mr Tomanovic for the payment of dividends, or complaint about the failure to dividends to be declared. 214 I accept these submissions.

D $750,000.00 to fund One Australia acquisition of MBL 10% shareholding in GMEC in November 2008 is utilised out of $900,000.00 drawn down in October 2007 on security of two Argyle Street properties owned by Argyle HQ (see 3A above). 215 The circumstances of the $900,000 drawdown have already been considered. I have concluded that the transaction has been satisfactorily explained.

E Failure to reinstate Tomanovic as director of GMEC and finance group companies after exit of MBL in November 2008 - now no supervision of Sayer 216 It is common ground that: (a) Mr Tomanovic resigned his directorships in GMEC and the finance group companies in around June 2003, just prior to the acquisition by MBL of a stake in GMEC; (b) Mr Tomanovic has not been re-instated, following the sale by MBL of its stake in GMEC. 217 The Sayer interests submit that failure to reinstate Mr Tomanovic is not oppressive, because Tomanovic has no legitimate expectation of reinstatement, for the reasons set out below. 218 Even at the inception of the business arrangement in around 1999, Mr Tomanovic had no legitimate expectation of an equal management role. Rather, it is common ground that the arrangement between Mr Tomanovic and Mr Sayer was that Mr Sayer would have the "final say", as noted earlier. 219 Even if Mr Tomanovic had a legitimate expectation of being a director in around 1999, such an expectation would not be immutable. The non-fulfilment of expectations is not oppressive, if there are good reasons for their extinguishment. There are numerous good reasons for the extinguishment of any "expectation" Mr Tomanovic may once have had to be a director. 220 First, as a matter of fact, Mr Tomanovic never played a significant management role in the MHA Finance Business. There is some dispute about the extent of Mr Tomanovic's role, but he does not dispute that the arrangement was that Mr Sayer had the "final say"; that Mr Sayer was "responsible for managing the key elements of the MHA Finance Business"; and that "it was not [Mr Sayer's] general practice to seek the agreement of Mr Tomanovic (or advise him in advance) of proposals for future action in relation to the MHA Finance Business". Senior employees affirm the absence of a significant management role of Mr Tomanovic: Derek Angel, the general manager, states in his first affidavit (at [44]) that as far as he was aware "Tomanovic was not involved in the management of the MHA Finance Business". Charles King, the CFO who was employed from the end of 2006, stated in his first affidavit (at [18]) he never took instructions from Mr Tomanovic, or observed him giving instructions to others. It is common ground that there was a practice of regular informal discussions between Mr Sayer and Mr Tomanovic in relation to the MHA business, and no formal directors' meetings. In circumstances where Mr Tomanovic acquiesced in the conduct of operations in which he had no significant management role, there is no basis for a continuing expectation of a directorship role. Any expectations with respect to involvement in the companies can be reasonably satisfied without directorship. 221 Second, Mr Tomanovic voluntarily resigned his directorships. There is no basis for the finding that the resignation was procured by unfair conduct by Sayer. The background to the resignation was that Macquarie Bank had expressed a preference for a management structure which excluded Mr Tomanovic from the board (according to affidavit evidence given by Mr Sayer and Mr Gunderson-Briggs). Mr Sayer did not consider that MHA was in any position to negotiate in relation to that preference. Mr Tomanovic contends that he resigned at Mr Sayer's request. Mr Sayer says he has no recollection of that request being made. However, he says, any such request was a necessary consequence of the position expressed by Macquarie Bank, for which Mr Sayer can not be blamed and in which Mr Tomanovic acquiesced. The fact that Mr Tomanovic voluntarily resigned extinguished any residual legitimate expectation to be appointed director. 222 Third, following the acquisition by Mr Sayer of the Macquarie Bank stake in GMEC, Mr Tomanovic no longer had an equal interest in GMEC to Mr Sayer, which further militates against a legitimate expectation of appointment to the Board. Mr Tomanovic cannot reasonably contend that the mere fact that Mr Sayer acquired Macquarie Bank's interest is itself a cause for complaint about the frustration of his legitimate expectations. Whatever was the relationship of the parties when they commenced their "partnership" in 1999, the relationship ended and was replaced with a new shareholder relationship when the SPA was entered into and Macquarie Bank acquired an interest in GMEC. There was no partnership involving Macquarie Bank. The SPA expressly provided for the disposal of shareholdings, and created the obvious possibility that Macquarie Bank might subsequently dispose of its interests (in which case one or other or both of Mr Sayer and Mr Tomanovic would be reasonably foreseeable purchasers). It cannot reasonably be contended, in the submission of the Sayer interests, that the realisation of that clearly foreseeable consequence could be characterised as a frustration of Mr Tomanovic's "legitimate expectations". Further, Mr Tomanovic was given the opportunity to acquire Macquarie Bank's shareholding in GMEC, but declined the opportunity, according to Mr Sayer's evidence. 223 Fourth, since his resignation of directorships, Mr Tomanovic had caused Multi-own to establish a relationship with a company called Reismac for the provision to multi-owned entities of wholesale funding, for the purpose of providing finance to retail customers: T194.44. This is a business competitive with the MHA Retail Business. In those circumstances, there was scope for a conflict of interests if he were appointed a director. 224 Fifth, even if there were a frustration of a legitimate expectation of management (which the Sayer Interests deny), that does not ground a finding of oppression on these facts. The authorities make clear that it is not the mere exclusion from management which supports a finding of oppression; rather, it is the exclusion of management combined with the failure to make a reasonable offer to "buy-out" the minority interest. On these facts there were two concrete and unimpeachably reasonable offers to effect a buy-out as envisaged by the Second Heads of Agreement. Those offers eliminate exclusion from management as a ground for oppression. 225 Notwithstanding those matters, Mr Sayer gave sworn evidence that he is now willing consent to the appointment of Mr Tomanovic as a director. 226 This is a matter of some difficulty but in my view the basic components of the contentions of the Sayer interests are persuasive, assuming the factual basis for their contentions is correct. The proposition that Mr Tomanovic voluntarily left the board because of the attitude of Macquarie Bank is supported by the evidence of Mr Gunderson-Briggs, whom I regarded as an impressive witness. I am also influenced by the evidence at the trial concerning the management operations of the Group when both men were directors, the fact that the shareholding balance changed when Macquarie Bank sold out, and the fact that Mr Tomanovic is engaged in other ventures, particularly Multi-own. My conclusion is that no Part 2F.1 ground has been shown.

F Attempt to convert Sayer interest loan accounts in GMEC and subsidiaries to shares which would have had the effect of diluting AFSC and MBL shareholdings - unsuccessful because blocked by MBL and Tomanovic 227 This evidently relates to a proposed capital raising exercise in 2007, which is addressed in Mr Sayer's first affidavit, at [359]-[377]. 228 According to the Sayer interests, the relevant circumstances were that: (a) in or about November 2007, Mr Sayer reasonably formed the view that the MHA Finance Business needed more capital on its balance sheet, to be effected by either raising additional capital and/or converting debt to equity. The Auditor's Report for the year ended 30 June 2007 had recorded a "material uncertainty" regarding continuation as a going concern due to operating loss and deficiency in net assets (TB11.4834, p 25); (b) Mr Sayer notified AFSC of the proposal to raise further capital, and convert debt to equity; (c) the 2007 audited Financial Statements were provided to Mr Tomanovic on 29 November 2007. He must reasonably have been aware of the need for additional capital on the balance sheet (d) the proposed arrangements ultimately did not proceed, because Macquarie Bank withdrew its consent to the proposal. 229 There is no basis for a finding of oppression, because: (a) the proposal was for bona fide and reasonable corporate purposes; (b) in any event, the capital raising did not proceed because Macquarie Bank, after originally consenting, withdrew that consent. 230 I agree.

G Sayer instructs company accountants (Precise Financial Services) after 2001 to alter shareholdings in MHA and DMS from 50:50 Sayer:Tomanovic interests to 75:25 - instruction countermanded by Tomanovic 231 This matter is addressed in Mr Sayer's second affidavit at [62]. The Sayer interests submit that it is irrelevant to the oppression case, for the following reasons: (a) Mr Sayer does not recall giving those instructions; (b) there is no admissible evidence of those alleged instructions; (c) in any event, there is no suggestion that a change in shareholding was ever effected; (d) the alleged conduct pre-dates the incorporation of GMEC, and therefore cannot logically be relevant to the "affairs" of GMEC for the purpose of an oppression action under s 232; (e) in any event, there is no doubt that at the time of incorporation of GMEC, each of Mr Tomanovic and Mr Sayer acquired an equal 45% interest in GMEC, which conferred upon them an equal share in MHA and DMS. Even if there were oppressive conduct (which is denied) in relation to the alleged conduct, that oppression was totally removed by the time of incorporation of GMEC. 232 In my view, this matter is not of any significance for the purposes of assessing grounds under Part 2F.1, for the reasons given by the Sayer interests.

H Failure to manage finance group companies in best interests of shareholders - lack of transparency, failure to keep shareholders informed. 233 This allegation is not properly particularised and in the absence of an identified evidentiary foundation it cannot be assessed. Breakdown in shareholder relationship - winding up on just and equitable ground

234 "Lack of trust" or "breakdown" is not a ground of oppression. This allegation is presumably an invocation of the "just and equitable" ground for winding up. 235 One only has to observe the serious and personal nature of the allegations that the Tomanovic interests have made against the Sayer interests, and (to a lesser extent) the Sayer interests have made against the Tomanovic interests, to realise that there has been and is a breakdown and lack of trust between the two shareholders in this corporate group. The difficulty has been manifest since late 2004 but seems to have escalated in the months after the Second Heads of Agreement failed to mature into a formal transaction. 236 But this is a case where one needs to be cautious about the conclusions to draw from the obvious breakdown in the shareholder relationship at a personal level. First, the breakdown in the relationship has apparently not prevented the business interests associated with Mr Sayer and Mr Tomanovic from co-operating. It appears that the MH group and Multi-own continue to refer work to each other. More importantly, the breakdown in the personal relationship does not appear to have had any significant effect on the business of the MH group in a managerial sense. Because Mr Sayer was already in managerial control of the business before difficulties occurred, he has been able to continue on in much the same fashion. There is no deadlock as Mr Sayer controls 55% of the company. It appears that the business has been operated successfully (subject to the vicissitudes of the credit market) for over 5 years since Mr Tomanovic withdrew from active participation. 237 I have reached the reasonably firm view that grounds for relief under Part 2F.1 have not been established. There remains the question whether the Court should make a winding up order on the just and equitable ground in s 461(1)(k). The possibility that I might do so was very much on my mind during the trial. But I have concluded upon review of all the evidence that the plaintiffs' case in the two equity proceedings is not factually strong. And having considered the submissions of the parties, I have decided that it would be unwise to order the winding up of the viable and now reasonably long-standing business, in circumstances where the breakdown in the shareholder relationship is not materially frustrating the commercially viable and sensible operations of the company. 238 It is frustrating for the Court, and even more frustrating for at least one of the parties, that the legal outcome of this case will not be a commercial outcome. Once the legal dust settles, I hope the parties can try again for a mediated resolution. The problems with a renewed buy-out negotiation between the two shareholders are obvious, given the history of the matter, but if the business is able to thrive in an economic upturn, third-party equity may provide a solution. Conclusions 239 I shall make orders dismissing the two Equity proceedings, as no ground for relief has been shown. As to the statement of claim in the Common Law proceedings, on the evidence before me it has been proven that the defendants received the sum of $1,341,750 over a period up to November 2006. By virtue of the operation of the Heads of Agreement, the payments are characterised as loans that have been due and payable in each case from a date earlier than the commencement date for the calculation of interest that is sought in the statement of claim. Therefore the Common Law plaintiffs have made out their entitlement to judgment for that sum, plus interest from the beginning of December 2006. The cross-claim for specific performance has failed because of my finding that there was no relevant contract. 240 On the question of costs, it seems to me plain that I should order the plaintiffs in the two Equity proceedings to pay the defendants' costs as agreed or assessed, and I should order the defendants/cross-claimants in the Common Law proceedings to pay the costs of the plaintiffs/cross-defendants as agreed or assessed, both in respect of the proceedings and the cross-claim. I have not observed anything that would cause me to entertain an application for indemnity costs, and I would only consider such an application if there is some specific and limited fresh evidence (for example, a solicitor's letter) that might shed light on the question. *********

08/03/2010 - [28] 1st line "Mr Sayer" has replaced "Mr Tomanovic"; [35] - 6th line, the word "with" has replaced the word "was". - Paragraph(s) [28], [35] 08/03/2010 - [177] 5th line, the words "were not" have replaced "was a". - Paragraph(s) [177]

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