219 As far as the (perhaps more common) basis of awarding relief on the valuation of the shares is concerned, in Rankine v Rankine (1995) 124 FLR 340, Thomas J (as he then was), with whom Macrossan CJ and McPherson JA agreed, said at 345-346:
In granting a remedy in favour of an oppressed shareholder under CL s 260(2)(e) or 260(2)(f) by ordering the compulsory purchase of the applicant's shares at a stated price, the court is in effect awarding compensation for the respondents' breach of duty. The nature of the duty is both subtle and complex, and not capable of exhaustive definition, but the most useful expressions of it are collected in McPherson, The Law of Company Liquidation , 3rd ed, Donovan, pp 143-44. One such expression describes it as a duty of probity and fair dealing (Meyer, above, 364, per Lord Keith). The compensatory nature of the remedy is recognised by Lord Denning in Meyer at 369, in Re a Company No 002612 of 1984 (1986) 2 BCC 99 at 495 and in Coombs v Dynasty , above, at ACLC 918. The ultimate finding of the price that should be paid cannot be made until the nature and effect of the oppression has been identified and its effect quantified or allowed for. By contrast a valuation of shares on the basis of the value of the company as a going concern, or by reference to its underlying assets, as has been directed in this case, is a conventional valuation exercise without adjustments for the oppression factors.
220 In Roberts v Walter Developments, at 906-7, where a discount was applied to the value of the shares of the oppressed minority shareholder, the court nevertheless noted that generally it will be inappropriate to apply a discount to the value of the shares of a minority shareholder which are to be purchased as a result of oppression of the shareholder. This was also observed in Mopeke Pty Ltd v Airport Fine Foods Pty Ltd (2007) 61 ACSR 395; 25 ACLC 254; [2007] NSWSC 153, at [96] where no discount was applied.
221 As to the time for valuing the respective shares, in Short v Crawley (No 30) [2007] NSWSC 1322, White J stated:
[1237] The overriding requirement is that the valuation, and the time at which the valuation is to be carried out, be fair. Fairness depends on the facts of the particular case ( Re London School of Electronics Ltd [1986] Ch 211 at 224; Dynasty Pty Ltd v Coombs (1995) 59 FCR 122 at 144; Profinance Trust SA v Gladstone [2002] 1 WLR 1024 at 1034). The valuation must exclude the depreciating effect on the value of the applicant's shares brought about by the oppressive conduct (Scottish Co-operative Wholesale Ltd v Meyer [1959] AC 324 at 364 and 369).
[1238] In Profinance Trust SA v Gladstone , the Court of Appeal, having reviewed the English authorities, ventured the following propositions (at 1041-1042 [60]-[61]):
… The starting point should in our view be the general proposition stated by Nourse J in In re London School of Electronics Ltd [1986] Ch 211,224: 'Prima facie an interest in a going concern ought to be valued at the date on which it is ordered to be purchased.' That is, as Nourse J said, subject to the overriding requirement that the valuation should be fair on the facts of the particular case.
The general trend of authority over the last 15 years appears to us to support that as the starting point, while recognising that there are many cases in which fairness (to one side or the other) requires the court to take another date. It would be wrong to try to enumerate all those cases but some of them can be illustrated by the authorities already referred to.
(i) Where a company has been deprived of its business, an early valuation date (and compensating adjustments) may be required in fairness to the claimant: see Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324.
(ii) Where a company has been reconstructed or its business has changed significantly, so that it has a new economic identity, an early valuation date may be required in fairness to one or both parties: see In re OC (Transport) Services Ltd [1984] BCLC 251, and to a lesser degree In re London School of Electronics Ltd [1986] Ch 211. But an improper alteration in the issued share capital, unaccompanied by any change in the business, will not necessarily have that outcome: see In re DR Chemicals Ltd (1988) 5 BCC 39.
(iii) Where a minority shareholder has a petition on foot and there is a general fall in the market, the court may in fairness to the claimant have the shares valued at an early date, especially if it strongly disapproves of the majority shareholder's prejudicial conduct: see In re Cumana Ltd [1986] BCLC 430.
(iv) But a claimant is not entitled to what the deputy judge called a one-way bet, and the court will not direct an early valuation date simply to give the claimant the most advantageous exit from the company, especially where severe prejudice has not been made out: see In re Elgindata Ltd [1991] BCLC 959.
(v) All these points may be heavily influenced by the parties' conduct in making and accepting or rejecting offers either before or during the course of the proceedings: see In re A Company (No 00709 of 1992) [1999] 1 WLR 1092.
…
[1240] Lord Denning spoke to like effect. Counsel also relied upon the observations of Vinelott J in Re a Company [1983] 2 All ER 854 and submitted that authority in Australia showed that the prima facie starting point of valuation is that the valuation be undertaken as at the date proceedings are commenced (citing Dynasty Pty Ltd v Coombs at 143-144; Re Bodaibo Pty Ltd (1992) 6 ACSR 509 at 513; Bagot Well Pastoral Company Pty Ltd ; Shannon v Reid (1992) 9 ACSR 129; Shirim Pty Ltd v Fesena Pty Ltd [2002] NSWSC 10 at [14]; and United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514 at 520-521).
[1241] I do not agree that there is such a prima facie principle.
[1242] In Re a Company (1986) 2 BCC 99,453, Vinelott J said (at 99,492-99,493) that he:
… would at least incline to the view that the date of the petition is the correct starting point, the valuation of course being adjusted to take account of unfair conduct which has depreciated the value of the shares (as in Meyer), and that a departure from this date must be justified on the ground of some special circumstance. The date of the petition is the date on which the petitioner elects to treat the unfair conduct of the majority as in effect destroying the basis on which he agreed to continue to be a shareholder, and to look to his shares for his proper reward from participation in a joint undertaking.
[1243] That was a case in which the value of the shares declined between the institution of proceedings and the hearing of the petition. It is in that context that Vinelott J continued:
If he succeeds in his petition and establishes that the breakdown in the relationship justifies an order for the compulsory purchase of his shares he has established that the respondents, if they had acted fairly, would have agreed, following the breakdown in their relationship, that his shares should be purchased at fair value. [In that event] it would not have been open to [the petitioner] to have resiled from that bargain if the shares subsequently fell in value, and he should be in no better position as a result of having contested the petition. By contrast, if the respondents to a petition contest the petition and continue in effect to employ the value of the petitioner's investment in the company, justice may require that they account to him for any enhanced value of the company's business at the date of valuation, unless it can be said that the increase in value is solely attributable to their efforts. That question does not arise for decision and I express no opinion on it.
[1244] The date chosen for the valuation of the company was affirmed on appeal ( Re a Company (1986) 2 BCC 99,495; also cited as Re Cumana Ltd [1986] BCLC 430). In Re Cumana , the Court of Appeal emphasised that the choice of the valuation date was very much a matter for the judge's discretion (at 436, 445).
[1245] As noted above, in Profinance Trust SA v Gladstone , the English Court of Appeal took as the general starting point the date of the order rather than the date proceedings were commenced . In Re London School of Electronics Ltd, Nourse J did not apply what he took to be the general rule that valuation should be carried out as at the date of the order, where the value of the shares had increased due entirely to the efforts of the respondent directors in a way which was unlikely if the petitioner had remained with the company. On the other hand, in Profinance Trust SA v Gladstone , the Court of Appeal warned against assuming that capital invested by the petitioning creditor had no real connection with healthy profits earned after the commencement of the proceedings and contrasted the facts in that case with " ; a rearrangement of its structure and business (typically by an increase in issued capital and the injection of a new business) which means that the company is (in the eyes of a businessman or an investor) no longer what it was before." (at [56] 1040).
[1246] I do not consider that the authorities cited establish that the date of commencement of proceedings is, prima facie, the date at which valuation is to be effected, although in Shirim Pty Ltd v Fesena Pty Ltd , Davies AJ said that valuations " usually" occur as at the date of commencement of proceedings. However, there are many cases where that is not the case (eg In the Matter of Rankine Bros Pty Ltd (3 April 1998, de Jersey CJ unreported; BC9801022) where the shares had declined in value after the commencement of proceedings, and Dynasty Pty Ltd v Coombs where the Full Court of the Federal Court approved of the statement of Nourse J in Re London School of Electronics Ltd [1985] 3 WLR 474 at 484 that if there were such a thing as a general rule it should be the date of the order rather than the date of presentation of the petition or the occurrence of the acts of oppression (at 144)). I do not accept that there is a "usual starting point" being the date of the filing of the originating process. The question is, simply, what is the fair time to adopt as the time for valuation of the plaintiffs' shares?
222 There is some support for the approach of valuing an applicant's shares in a company which has lost business opportunities due to breaches by the directors (where this conduct also constitutes the oppression) by treating the new company, which took the business opportunity, as if it were a wholly-owned subsidiary of the subject company (Re Bright Pine Mills, at 1013 - 1014; Dwyer v Lippiatt; Dwyer v Backpackers R Us, at 355; Drinkwater v Caddyrack Pty Ltd [1997] NSWSC 431).