FEDERAL COURT OF AUSTRALIA

Millar v Ropeload Pty Ltd [2020] FCA 725

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s application be dismissed.

2.    The first respondent’s cross-claim be dismissed.

3.    The parties file and serve outlines of submission on costs not exceeding 5 pages within 7 days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’CALLAGHAN J:

INTRODUCTION

1    Mr Jason Millar (or the applicant) has experience, skill and reputation in the heavy haulage industry in Australia, which involves the transportation of oversized components of infrastructure, including large components of wind farm equipment. He is the Managing Director of Ares Transport Group Pty Ltd (Ares), which since August 2016 has provided heavy haulage services using specialised equipment.

2    Mr Millar is also the Managing Director of the third respondent, Millars Heavy Haulage Pty Ltd (MHH), which owns heavy haulage equipment and leases it to Ares. Ares is wholly owned by MHH.

3    Mr Millar caused Ares to be incorporated on 10 August 2016. Originally, it was wholly owned by Jason Millar Investments Pty Ltd (JMI), which was wholly owned by Mr Millar.

4    On 22 November 2016, Mr Millar and Mr Roberto Corvetti agreed that Mr Corvetti or his nominee would be issued 45% of the shares in Ares. Mr Corvetti, the second respondent, was and is the General Manager of Westkon Precast Concrete Pty Ltd (Westkon) and the CEO of Westkon’s corporate group. Westkon specialises in the production and construction of precast concrete products for major public projects.

5    On 25 January 2017, Mr Millar arranged for JMI to transfer its shares in Ares to MHH. At that time, Mr Millar owned all ten issued shares in MHH.

6    On 27 January 2017, Mr Millar caused MHH to issue ten additional ordinary shares (bringing the total number of ordinary shares in MHH to twenty). One of the additional shares was issued to Mr Millar, and the other nine were issued to the first respondent (Ropeload), so that, of the twenty issued shares in MHH, Mr Millar owned eleven and Ropeload owned nine.

7    Ropeload holds its nine shares on trust for the R&D Corvetti Family Trust, of which Mr Corvetti is a beneficiary.

8    Mr Millar seeks either:

(1)    an order under s 1324 or s 1325 of the Corporations Act 2001 (Cth) (Corporations Act), alternatively s 12GD of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), that the shares allotted in the capital of MHH to Ropeload be cancelled;

(2)    an order under s 175 of the Corporations Act that the share register of MHH be rectified by removing Ropeload as a shareholder nunc pro tunc; or

(3)    an order under s 1324 or s 1325 of the Corporations Act, alternatively s 12GF of the ASIC Act, against Mr Corvetti for damages in a sum equal to the economic value of the shares held by Ropeload in MHH.

9    From the outset of the hearing, counsel for the first and second respondents insisted, as they were entitled to do, that the applicant be held strictly to his pleaded case.

10    The Amended Statement of Claim dated 7 October 2019 relevantly provides:

6.    From about June 2016 to January 2017 Millar discussed with Corvetti:

  (a)    the establishment of Ares; and

(b)    the establishment of a heavy haulage transport business ultimately to be conducted by Ares (Ares Heavy Haulage Business).

7.    In the course of the discussions between them in the period June 2016 to January 2017, Corvetti engaged in conduct comprising representations either orally or in writing or by conduct to the following effect (Representations):

(a)    Westkon had much work coming up which would allow Westkon to purchase services to the value of $5m per annum from the Ares Heavy Haulage Business if Millar commenced it, and that if Corvetti was a part owner of the Ares Heavy Haulage Business he would ensure that Westkon purchased such services from it;

(b)    Further, that if Corvetti was a part owner of the Ares Heavy Haulage Business he would procure Westkon to continue to engage it for substantial projects other than the Skyrail project;

(c)    Corvetti was known to and influential with other manufacturers of precast concrete products and was in a position to, and if he was a part owner of the Ares Heavy Haulage Business would, assist Millar to secure work for it from those other manufacturers of precast concrete products;

(d)    Corvetti possessed the business acumen and skills to grow a successful business and, if a part owner of the Ares Heavy Haulage Business, would utilise those skills for its benefit;

(e)    Corvetti had secured the approval of the board of Westkon to treat the Ares Heavy Haulage Business as Westkon’s preferred heavy haulage contractor and, if a part owner of the Ares Heavy Haulage Business, would ensure that Westkon did so,

(f)    Corvetti had the authority of the board of Westkon, alternatively that the board would act in accordance with any recommendation he made, to ensure that Westkon continue to engage the Ares Heavy Haulage Business as its preferred contractor for haulage services,

(together the Representations)

PARTICULARS

The representations referred to in paragraph (a), (b) and (c) were by telephone on 7 June 2016 and later in June 2016, by email dated 18 July 2016 from Corvetti to Millar, at a meeting in Lygon Street, Carlton, on 4 August 2016, attended by Millar, Corvetti, Jon Kelly and Geoffrey Turner.

Further, the representation referred to in paragraph (b) above was made by Corvetti’s conduct in failing to inform Millar that the assumptions made by Millar in each of the November and December business cases as to the projects identified in each of the business cases as projects which Westkon would award to Ares was an incorrect assumption.

The representation referred to in paragraph (c) was by telephone on 7 June 2016 and later in June 2016, and by email dated 18 July 2016.

The representations referred to in paragraphs (d) and (e) were by telephone in late June 2016 and at the Lygon Street meeting on 4 August 2016.

The representation referred to in paragraph (e) was to be inferred from the representations set out and the business case documents emailed by Millar to Corvetti on 22 November 2016 on 6 December 2016 and Corvetti’s failure to suggest or say to Millar that the assumptions therein about work from Westkon were not accurate.

The representation referred to in paragraph (f) was by email dated 12 January 2017 from Corvetti to Millar.

14 [sic]. As at 24 January 2017 Millar was the ultimate beneficial owner of each of MHH and Ares.

PARTICULARS

Millar owned all of the issued shares in JMI. JMI owned all of the issued shares in Ares. Millar owned all of the issued shares in MHH.

15.    On 24 January 2017, Corvetti requested that Millar cause MHH to issue 9 shares being 45% of MHH’s capital to Ropeload.

PARTICULARS

Letter dated 24 January 2017 from Graeme Knott of Knott Partners (acting on behalf of Corvetti) requesting that MHH issue 9 shares in MHH to Ropeload as trustee for the R & D Corvetti Family Trust.

16.    Pursuant to the request and relying wholly upon the Representations:

(a)    on 25 January 2017 Millar caused JMI to transfer to MHH all the shares that JMI held in Ares, causing Ares to become a wholly owned subsidiary of MHH from that date; and

(b)    on 27 January 2017 Millar caused MHH to issue the 9 ordinary shares in MHH to Ropeload,

so that from that 27 January 2017 MHH and its wholly owned subsidiary Ares became owned as to 45% by Ropeload and as to 55% by Millar.

17.    Neither Ropeload nor Corvetti provided any consideration to MHH for the shares in MHH allotted to Ropeload.

18.    Each of the Representations was:

(a)    conduct in relation to a financial product for the purposes of s 1041H of the Corporations Act 2001;

(b)    a statement or dissemination of information that was likely to and did induce MHH to dispose of a financial product within the meaning of s 1041E of the Corporations Act 2001;

(c)    conduct in relation to financial services within the meaning of s 12DA of the Australian Securities and Investments Commission Act 2001 (“ASIC Act”).

19.    Each of the Representations in paragraph 7 above was at least in part a representation as to a future matter within the meaning of s 769C of the Corporations Act 2001 and s 12BB of the ASIC Act.

20.    Further or alternatively to paragraph 19, each of the Representations was conduct that was misleading or deceptive, likely to mislead or deceive or materially misleading in that:

(a)    Corvetti, as the general manager of Westkon at all material times, knew that Westkon was not committed to purchasing services from the Ares Heavy Haulage Business:

(i)    being further substantial projects in addition to the Skyrail project;

(ii)    for which Ares would be able to invoice Westkon at least $5m per annum; or

(iii)    likely to make sufficient purchases of services to allow the Ares Heavy Haulage Business to rely on Westkon for 100% of its revenues;

(b)    Corvetti knew that, as general manager of Westkon, he was at all material times subject to the instructions of the board of Westkon in making purchasing decisions, including further substantial services for the Ares Heavy Haulage Business in addition to the Skyrail project;

(c)    in the circumstances, unless Corvetti had obtained the approval of the board of Westkon to purchase services from the Ares Heavy Haulage Business having an invoice value of no less than $5m per annum he had no reasonable basis to represent that he could assist Millar to secure work for the Ares Heavy Haulage Business from:

   (i)    Westkon; or

(ii)    that Westkon would treat the Ares Heavy Haulage Business as its preferred provider of such services;

(d)    absent Corvetti having confirmed with other manufacturers of precast concrete product that they would use services of the Ares Heavy Haulage Business, there was no reasonable basis for Corvetti to represent that he was in a position to procure those manufacturers to do so;

(e)    Corvetti did not intend to divert himself from his occupation as general manager of the Westkon business and bring to bear for the benefit of the Ares Heavy Haulage Business any business skills or acumen he might possess, nor has he done so; and

(f)    as at 12 January 2017, Corvetti had not secured the approval of the board of Westkon to treat the Ares Heavy Haulage Business as its preferred supplier of heavy haulage services.

21.    In the circumstances, Corvetti engaged in:

(a)    the making of materially of [sic] misleading statements in contravention of s 1041E of the Corporations Act 2001;

(b)    misleading or deceptive conduct in contravention of s 1041H of the Corporations Act 2001; and/or

(c)    conduct, in trade or commerce, in relation to financial services that was misleading or deceptive or likely to mislead or deceive in contravention of s 12DA of the ASIC Act.

22.     But for the Representations:

(a)    Millar, who at all material times had complete control of both Ares and MHH, would not have caused MHH to issue 9 shares in its capital, or any such shares, to Ropeload for no consideration or at all;

(b)    Millar would not have caused MHH to record in its share register Ropeload as the holder of 9 shares; and

(c)    Millar would continue to enjoy ownership of 100% of the issued shares in MHH and the concomitant economic value (being the maximum price that a buyer is prepared to pay for the shares) of that shareholding.

23.    Further, in taking the shares in MHH for no consideration, Ropeload has taken the benefit of Corvetti’s said wrongful conduct to obtain for the beneficiaries of the Corvetti Family Trust, including Corvetti himself, the economic value of that shareholding to the detriment of Millar, who otherwise would have enjoyed that economic value.

24.    In the circumstances, Millar, in consequence of and relying upon Corvetti’s said misleading and deceptive conduct, has deprived himself of the economic value of the shareholding recorded in MHH’s share register as held by Ropeload, being 9 of 20 issued shares, being 45% of the issued shares.

25.    Upon rectification of the share register by removing Ropeload as the holder of 9 of 20 of the issued shares in MHH, Millar will be restored to holding 100% of the shares in MHH and to enjoying the economic value of such shareholding.

(Emphasis in original.)

11    Mr Corvetti and Ropeload pleaded and contended at trial, among other things, that the representations alleged were never made.

12    The parties agreed that evidence concerning oral representations alleged to have been made by Mr Corvetti to Mr Millar during “critical conversations” (such as during a meeting at a Lygon Street Carlton café on 4 August 2016, discussed below) should be given viva voce. The paragraphs relating to the content of such conversations contained in the affidavits otherwise relied on by the parties were accordingly not read.

13    In addition to his own evidence, Mr Millar relied on the affidavits and oral evidence of Mr Kelly and Mr Turner, who were present at the 4 August 2016 meeting referred to above.

14    Mr Corvetti also brings, by way of cross-claim, an oppression case.

THE EVIDENCE

Early 2016 – October 2016

15    Mr Millar was employed by Toll Global Logistics as its national operations manager of heavy haulage between late 2012 and August 2016. He had started Toll’s heavy haulage division and had assisted it to build a business unit that had, by the time of his departure, an annual turnover of approximately $25 million.

16    By early 2016, Mr Millar was considering leaving Toll, and starting a heavy haulage business of his own, with his friend Mr Jon Kelly. Mr Kelly was employed by Toll as a business development manager, and had in the late 1990s established and run a heavy haulage business of his own. Mr Millar and Mr Kelly had discussed the idea of establishing a new business specialising in heavy haulage for wind farm projects, which require particularly specialised logistical and engineering skills.

17    Mr Millar gave evidence that, in late 2015, Toll had conducted a heavy haulage project relating to the M1 Freeway in Werribee for Westkon. Heavy haulage of precast components for such projects generally involves transporting long concrete beams, pillars, crossheads, haunches and barriers. Mr Millar managed that project for Toll.

18    In early June 2016, Mr Millar was asked by an estimating manager at Westkon that Toll quote for a large job involving the haulage of 400 beams to be delivered between December 2016 and April 2017, for the purposes of the Victorian Government’s Level Crossing Removal Project (or LCRP, also referred to as the Sky Rail Project). This request was copied to Mr Corvetti. Mr Millar had some reservations about Toll’s ability to tender convincingly or to perform the work without acquiring some jinkers (specialised trailers used for hauling long objects), which Mr Millar knew were for sale, and which Toll had so far declined to purchase. He shared these concerns with Mr Kelly.

19    In June and July 2016, Mr Millar and Mr Corvetti had several telephone conversations. During one of these conversations, Mr Millar told Mr Corvetti that he doubted Toll could do the LCRP job without the jinkers. This led them to discuss alternative ways that someone might acquire the jinkers and do the work. Mr Millar gave the following oral evidence in chief:

[W]e were basically trying to figure out how we could come up with a way that we could kick something off that would get this [LCRP] job done … We kicked the idea around of me going to work for Westkon. We kicked around the idea of Westkon buying the jinkers – starting up a new company and contracting to them. We talked about whether or not Westkon could purchase the jinkers and we could lease them off Westkon and – just a number of ideas.

20    During these conversations, Mr Millar said that he was dissatisfied with Toll and was contemplating leaving the company. Mr Corvetti said that Westkon was dissatisfied with Hi-Haul, one of its incumbent heavy haulage contractors, and that it would like a competitor to Hi-Haul to enter the market. Mr Millar and Mr Corvetti also discussed upcoming projects. On this topic, Mr Millar gave the following oral evidence in chief:

Did you have any discussions about the Westkon business?---Yes. Again, I don’t know if it was June or July when we spoke about that. But we talked about other works, about building – you know, if we’re going to start another … business, what the business would consist of. And then we talked about jobs that Westkon had done, work that was coming up. We talked about the amount of work that Westkon did in the general freight side of things. So we talked about what Westkart did …Westkart is the general transport side of Westkon.

Do you recall Mr Corvetti telling you anything about what Westkart did?---I already knew what Westkart did as far as I knew that Westkart did general – they did their hollow core and did the panels and all the rest of it. He just spoke about – he said that … Westkart was an internal business to Westkon. He said that they did about two or three million dollars a year just in general transport and Westkart. But look, I don’t know if he referred to that as being a cost or a revenue. But he just – that was just the number that he said.

And what about work that Westkon had been performing? Do you recall him saying anything about that?---Yes. We talked about work in the past and work that was coming up.

What did he tell you?---Look, the only thing I remember him talking about historically was the Mornington Peninsula job. And I remember him saying that their spend on transport … was anywhere between two to three to five million dollars a year up to … he said on the year that they did the Peninsula Link, they spent – it was a $10 million on transport. But that may have been throughout the entire business, not just on that particular project.

Okay. Now, can I just ask you before you – yes. Before you went to Vietnam, do you recall Mr Corvetti saying anything about Westkon’s future?---It was in nearly every conversation that we sort of had, that Westkon was - - -

So can you recall what he said to you? It’s important - - -?---Yeah.

- - - for his Honour to be able to understand if you can recall what he said to you?---Well, at that point in time, the – CTD – so the level crossing project had heaps of subprojects inside of it. So the level crossing project was – I don’t know the number. It may have been 50 crossings or something throughout the state that got converted to remove the level crossings. At that point, they were about to be awarded CTD, which is nine crossings in Caulfield to Dandenong. And he talked about all of the other crossings. And then we talked about the tunnel and Footscray Road and – sorry, when I say the tunnel, the Metro Tunnel. We talked about the Westgate Tunnel, which is a separate tunnel project again.

So when you talked about these things, are you able to recall what Mr Corvetti was saying to you about these things, these projects?---Not word for word. But it was - - -

The sense of it?---It was just that there’s a lot of work coming up. There’s a lot of work coming up. And one of the concerns was that Bill [Smith of Hi-Haul] couldn’t do it all on his own anyway. So even if he wasn’t disgruntled or Westkon weren’t disgruntled with Bill or with Hi-Haul, that Bill wasn’t – on his own, Bill couldn’t do all of it anyway.

21    During the course of these conversations, the proposal evolved into the incorporation of a new company to purchase the jinkers, in which Mr Millar, Mr Corvetti and Mr Kelly would be involved. Part of Mr Corvetti’s oral evidence in chief included the following exchange about his June and July telephone conversations with Mr Millar:

Did you say anything to Mr Millar as to what might happen if the new company was formed, whether Westkon would be involved?---Yes. Yes, I – I was definitely interested to support the business. At that early stage of discussion, the – I would welcome the new business. We – we knew Jason [Millar] and his – how good he was at what he did. If he was going out without having support from someone else, we would definitely support a business like that. Yes.

That’s Westkon?---Westkon. Sorry. Yes.

…

What did – did you say anything to Mr Millar about what supporting meant?---Yes, just – that would be along the lines of the - being preferred, as long as he can have the business set-up. The – the systems and processes he had at Toll was impressive and a lot better than Hi-Haul had been doing a long time and very – more regular, from what we were – experienced in Australia. So – so long as he got his business up to that spec - - -

And what does ‘preferred’ mean? You’ve said – did you discuss why he would be preferred?---Yes. Preferred - we – we – we use that terminology around our – like, our partnering companies. We have a – whether it’s concrete reinforcement – preferred would mean - commercial terms – things like their supply arrangements, we work together on - when we work on a tender, we try and work together, but we still throw ..... to get quotes form [sic] others to keep it competitive.

…

So before contracts are let, can you ensure anyone will get the work?---No.

Did you ever say you would?---Can’t, no.

22    Mr Corvetti later said the following during the course of his cross-examination:

… in those conversations you explained how successful Westkon had become. That’s correct?---I don’t recall saying that in those conversations.

And you explained to Mr Millar that you had spent – that Westkon was spending between five and – I think on the Frankston project you had spent about 10 million on heavy haulage or haulage in that year. That’s correct?---Which Frankston project? Sorry.

The Mornington peninsular link. That’s correct?---We didn’t provide haulage on the Mornington peninsular project at all.

Is it your evidence to his Honour, that you never said to Mr Millar that Westkon had spent up to $10 million a year on haulage?---Nowhere near that much.

Is it your evidence, that you never said that to Mr Millar? ‘Yes’ or ‘no’?---Yes. That’s my evidence.

All right. And you said to Mr Millar that in any year Westkon could spend up to 5 million on haulage. That’s correct?---That’s correct. Yes.

And you said that to him during one of these conversations in May or June 2016. That’s correct?---Could have been. Yes.

Sorry?---It could have been. Yes. Around that period.

Do you doubt that?---Could have been around those few months. Yes. When we were discussing how much we spent. I can’t be specific to which month it was. Could have been July.

What do you want your evidence to his Honour to be, Mr Corvetti? Do you want it to be that you didn’t say it in May or June, or do you want it to be that you could have said it in May or June? It’s your evidence?---I could have said it in May or June.

…

MR WYLES: See, Mr Corvetti, when you spoke to Mr Millar – the fact of the matter is when you spoke to Mr Millar before 22 November 2016 - - -?---Yes.

- - - you spoke to Mr Millar about there being substantial work available from Westkon; that’s correct?---Yes.

Yes. And you spoke to Mr Millar about the fact that you could bring that work; that’s correct?---I had a capacity. We can spend up to five million, yes.

Yes?---I’ve quoted that, yes.

23    On 14 July 2016, Mr Millar sent an email introducing Mr Corvetti to Mr Kelly. Mr Millar told Mr Corvetti that Mr Kelly was working on obtaining finance for the jinkers, among other things, and asked Mr Corvetti when he would know more details about the LCRP, or whether he had a “bit of a pipeline of works that we could put into the business model”.

24    On 18 July 2016, Mr Corvetti emailed Mr Millar and Mr Kelly as follows:

Agree, busy times ahead…

I have just landed in singapore on my way to China…

I have had to get over to China this week for a few things we are sourcing from there…

It was a bit last minute…i should be back by the end of the week…

So far, we have secured the piers and crossheads for skyrail in Dandenong… 300+ deliveries.. jason [Millar] I think you quoted this one for us…

I am close to securing the beams…

400 loads from Nov/Dec 16 thru to April/May 17 at this stage…

One to keep in the back of your mind is Mernda rail currently out for tender…

500+ beams at this stage… i understand this to be 3rd/4th qtr delivery next year, going into early 2018….

Looking forward to catching up…

Rob

(Ellipses in original.)

25    Later the same day, Mr Corvetti again emailed Mr Millar and Mr Kelly, as follows:

Just on Skyrail…

I think one of you need to get involved in the tender for the segments direct to the alliance..

I will have contacts for you…

Segments are being cast out of Pakenham..

2000+.. delivery starting Feb 17ish

I don’t think they are superheavy..

Just for your info…

This skyrail job is an Alliance.

LXRA (level crossing auth) and Lend lease and CPB.

There is a sub-alliance setup for the delivery of the structure which includes all of the above and VSL…

The sub alliance has developed precast yard in Pakenham…

This is who we will need to chase…

(Ellipses in original.)

26    On 21 July 2016, Mr Millar sent an email to Mr Corvetti, copied to Mr Kelly, asking him when he would be in a position to discuss a proposed business between them further, noting “we need to move very quickly in these Jinkers and want to make sure you’re across and in agreement of everything”.

27    On 26 July 2016, Mr Millar emailed Mr Corvetti to tell him that Mr Kelly and he had put a deposit on the jinkers, and that they had a “pretty rock solid game plan” that they would show Mr Corvetti the following week. Mr Millar deposed that “[a]t that point, Kelly and I were considering including Corvetti in the new business because it made sense to de-risk its cash flow with Westkon’s precast transport work, even if at a lower margin”.

28    Mr Millar resigned his position at Toll at the end of July 2016.

29    On 4 August 2016, Mr Millar, Mr Kelly, Mr Corvetti and Mr Kelly’s accountant, Mr Turner, met at the Koko Black café in Carlton. This was their first face-to-face meeting.

30    In their written closing submission, counsel for the applicant set out at considerable length extracts from the transcript on the basis that they “sought to allow the evidence to speak for itself”.

31    Mr Millar gave the following evidence, which counsel extracted in their written closing submission:

And you met with Mr Corvetti at Koko Black?---Yes.

In August of 2016; do you recall that?---Yes.

Now, are you able to tell his Honour your recollection of what was said to you by Mr Corvetti at that meeting?---Yes. So there was four of us at that meeting.

Yes. Who was there?---There was myself, John, John’s accountant - - -

That’s John Kelly?---John Kelly, [Geoffrey] Turner and Rob [Corvetti].

Who’s Mr Turner?---I think he’s an accountant. I think he’s John’s accountant.

Yes?---So we talked about – we had had a few emails and conversations about all meeting up. And it was a first face to face.

Yes?---Everybody meeting everybody. [Geoffrey] wasn’t part of it, though. [Geoffrey] wasn’t part of the business. He was just somebody John wanted to bring along. So it was really just me, John and Rob meeting for the first time. And it was just – we just talked. We were there for probably an hour and we just talked about the new business and what everybody was going to bring. So the main topics we talked about was that I would be the sole director; that – we talked about John and Rob for whatever reasons both not wanting their share or their position in the business being known to the public. So they wanted their position to sit behind entities and stuff like that. We talked about who was going to do what. John was going to do – John was going to procure equipment and do work in the gas and oil. I was going to run the business day to day and bring wind farm work. And Rob’s involvement was to bring work from Westkon.

What did Mr Corvetti say? Can you recall? Can you tell his Honour not word for word but are you able to recall the sense of what Mr Corvetti said to you?---Look, by that stage – by that stage we had all sort of – we had all sort of agreed that this is where – this is where we were going. We were all going to be part of this new company. So we weren’t sitting in a room trying to sell to each other. We were just sitting there saying, ‘Okay. Who’s going to do what.’ And Rob basically was saying, well, he’s got CTD, CTD’s got other work. He said that there was Mernda which was at like – he basically just talked about all the same things that we talked about – that I talked about before. So we talked about Mernda, the Westgate tunnel, the Metro tunnel, just all the different precast work that was coming up. We talked about [W]estkart – not a lot. We didn’t talk a lot about [W]estkart. But we talked about that [W]estkart did the general side of things. He said that, you know, [W]estkart wasn’t ran all that well and that we could look into bettering that. He talked about the Tullamarine barriers that - - -

What were the Tullamarine barriers?---Oh, it was a – you know, the concrete barriers that - - -

Yes?--- - - - run down the middle of the freeway. They just – they had a contract for doing those. I think there was - - -

HIS HONOUR: Did you need a jinker to transport them too?---No. They are just general – they’re just general transport items.

…

Now, I would like to try to get you back to Koko Black - - -?---Yes.

- - - on 4 August?---Yes.

And I think you said that you were not selling to one another at that meeting. Do you recall saying that?---Yes.

Yes. All right. So – and can you just tell his Honour what you can recall of what Mr Corvetti said to you. You’ve said he mentioned Westkart and it wasn’t run well. Do you recall what else Mr Corvetti had to say at that meeting?---No. We really just talked about the jobs that were coming up. And we talked about the jinkers and - - -

Yes?---How we were going to – when they were going to be ready, if they were going to be ready in time. We talked - - -

In time for what?---In time for Skyrail. Because at that point, it was August or something. And Skyrail was supposed to start at the middle of November.

32    Mr Kelly also gave evidence about the meeting at a café in Carlton. The applicant relied on the following extract from the transcript:

Now, Mr Kelly, when did you first meet Mr Corvetti?---Exact timing - - -

Just roughly?---2016.

Yes. And can you recall the circumstances of meeting him?---Jason Millar and myself were discussing a new start-up venture. Rob was a potential component to that transaction, and it was the first time that we arranged a meeting in Carlton.

Do you recall whether – in Carlton?---Yes. And do you recall the café it was in, or - -

…

THE WITNESS: I don’t recall the exact café.

MR WYLES: Okay. That’s fine. Okay. Now, more importantly than the café it was in or whatever you ate there, what can you recall about what Mr Corvetti said at that meeting – that you heard him say?---The discussions were about predominantly Mr Corvetti’s existing business in Westkon.

Yes?---And the work they were doing surrounding the level crossing project that was pretty imminent for award here in Melbourne.

Yes?---Jason and I got a portfolio of equipment together to basically do that job and we wanted some assurance around the fact that we were going to win that work to justify, I suppose, the acquisition of the equipment and, you know, it was a meeting of – with Rob to basically, you know, get a standpoint that we would be awarded the job and could, you know, afford to go ahead and – and – and buy these specialised trucks and trailers.

So Mr Kelly … can I push you a little bit and ask you to do the best you can to tell his Honour what you can recall – not the exact words, but what Mr Corvetti was saying about the things you were discussing?---Okay. To my best recollection, Mr Corvetti was saying that Westkon had an incumbent transport provider in Hi-Haul. He was concerned about the level of service that they were offering and their capacity to deliver this new project and that the business venture of Ares would suit the level crossing project and further projects in the future. And that, basically, he had the decision making authority to award us the project and ensure our commercial terms were met.

And just explain to his Honour what you mean by commercial terms?---Coming from my background of heavy haulage previously, we were using specialised trailers and I was not a fan of this style of work. So I asked Mr Corvetti about the commercial terms that I knew that Hi-Haul were not the most expensive people in the field and I explained to him that, you know, while Hi-Haul’s pricing might be effectively here, our pricing will be above, can we get – you know, we will justify our pricing with, you know, dedicated equipment, better service. You know, I wanted some assurance that if we’ve got to have the specialised fleet that we could get those commercials approved to justify the acquisition of those specialised assets. And – and he assured us that if we were awarded that contract that we would be paid the – the correct commercials.

Okay. And that was immediate contracts. What about the – did you have any discussions about the future?---Definitely. Yes. So there was a lot of discussions in around – I believe it was the Western Distributor project and – and other future work that Westkon were looking at winning. Westkon, I believe, were going through a massive expansion in their manufacturing facility and - - -

Did Mr Corvetti tell you that?---Yes. Yes. And, you know, subsequent to that meeting we went out and inspected site and, you know, their handstand facilities and what they were doing with the expansion was phenomenal. Like, you – you could see that they were in – in an expansion phase.

When you say ‘we’, was that you and Mr Millar?---Correct.

And was that about towards the end of August - - -?---I would say so. Yes.

- - - 2016? Yes.

33    Mr Turner also gave evidence about the meeting at a café in Carlton. The applicant relied on the following extract from the transcript:

You attended a meeting on 4 August 2016; is that right?---I did.

So I’m going to ask you some questions about that meeting. Broadly, yes, I will start broadly. Do you recall what happened at that meeting? Who attended that meeting, sorry?---Well, John Kelly, Robert Corvetti and Jason Millar and myself were at the meeting.

And you - - -?---I was the account [sic] for John Kelly at the time.

And do you recall what was discussed at that meeting?---Yes, in broad terms. Yes, I had – I took notes at the meeting and – but we are talking about three years ago.

When you say ‘in broad terms’ what’s your broad recollection of what was discussed at the meeting?---It concerned the formation of a joint venture or joint operation between Millar, Corvetti and Kelly. Mr Corvetti, who I had not met before, was introduced to me as the general manager of Westkon and the conversations surrounded the opportunities that presented themselves for the cartage of concrete beams essentially relating to bridges and other – other construction items.

And you referred to a joint venture; what was that to involve?---Well, it was the three of them were to be involved in a – in a joint venture to provide trucks to cart or haul the – the concrete beams.

And in terms of each of the three of them what were they each bringing?---Well, in my view, mister - - -

…

HIS HONOUR: I think this is – you need to relate your recollection of who said what, rather than some view you formed, at least at this stage; does that make sense?---Okay, your Honour. I will – I will do my best.

I know – we all find it difficult to remember things – some of us, even yesterday – but - - -?---Correct, actually, your Honour. Correct.

But I think what you’re being asked to do is to tell me your recollection of what each of the other gentlemen said that they would bring to this joint venture you’ve mentioned?---Well, certainly, my client, John Kelly, and Mr Millar were well known in the haulage – heavy-haulage game – trucks, and Mr Corvetti was the general manager of Westkon. And my understanding is that the two gentleman that had the heavy-haulage operation were to provide their services and their trucks in order to move concrete beams.

MS PATHAN: And you said that Mr Corvetti was the general manager of Westkon?---Yes.

What do you recall him saying about what he was bringing - - -

…

MS PATHAN: - - - if anything?---There was future business to be derived from contracts – the Dandenong contract which I think was on foot – and there was to be another – or Skyrail – and then there was a – a – a possibility of picking up the Dandenong contract, again, to – to carry the concrete beams which were about 35 tonnes. So this was specialist cartage heavy haulage. And it was my understanding that – from the conversation, that there were to form a joint venture in – in respect of the – the cartage of those– those beams. Mr Corvetti did say that – that he expected there to be further contracts in the future.

34    Four days after that meeting, Mr Corvetti emailed Mr Millar a spreadsheet entitled “Beams Delivery Programme Summary”, which contained a list of 13 Westkon jobs for delivery between September 2016 and July 2017. Mr Corvetti’s email went on to say: “[l]et me know when Peter Southorn [the Estimates Manager at Westkon] is right to contact you for future tenders…. He is pricing stuff all the time….” (ellipses in original).

35    On the same day, Mr Corvetti forwarded to Mr Millar some delivery schemes for planks and beams for the Mernda rail extension project, and asked Mr Millar to provide a quote for the work immediately so that Westkon could submit its tender at the end of the week.

36    On 10 August 2016, Mr Millar caused Ares to be incorporated, for the purpose of conducting the envisaged new business.

37    Mr Corvetti deposed that as at 10 August 2016 “there had been no agreement or definitive commitment for me to join the new business. There had been a lot of discussions and expectation, but there had been no commitment. It was still fluid albeit, we all expected to go into the new business together”.

38    It is also apparent that Mr Corvetti made it clear that he did not want to have any day-to-day or operational involvement in any new business. (Although the Amended Statement of Claim alleges that Mr Corvetti represented: (a) that he “was known to and influential with other manufacturers of precast concrete products and was in a position to, and if he was a part owner of [Ares] would, assist Millar to secure work for it from those other manufacturers of precast concrete products”; and (b) that he “possessed the business acumen and skills to grow a successful business and, if a part owner of [Ares], would utilise those skills for its benefit”, as noted below, these allegations formed no part of the applicant’s case put in closing.)

39    Mr Millar emailed Mr Corvetti on 11 August 2016 to let him know that he had resigned from Toll, and that he had secured six jinker sets (new and second-hand). He also said that if Mr Corvetti had anything that he needed priced or engineered, or if he needed assistance, then he should contact him. Mr Corvetti responded on the same day, telling Mr Millar that he would pass on his email to others at Westkon, adding “[w]e have a bit of work coming up, so we are happy for you to tender on them”.

40    Mr Millar and Mr Kelly purchased four jinkers in late August or early September 2016 by paying a $100,000 deposit. Mr Millar described the purchase and refurbishment arrangements as follows:

[The four jinkers] were acquired from Tarrant Logistics with the deposit being paid to Tarrant. We arranged for the jinkers to be refurbished by MTE [Modern Transport Engineers] … it was agreed that MTE would purchase the jinkers from Tarrant for $608,000 ($152,000 each) and sell them back to MHH for $880,000 ($220,000 each) including the cost of refurbishment.

41    On 12 August 2016, Mr Corvetti forwarded to Mr Millar an email that Mr Corvetti had sent to the team at Westkon, explaining that Mr Millar had left Toll and set up a new company called Ares, and that members of the Westkon team should contact him about certain projects.

42    On 18 August 2016, Mr Southorn of Westkon contacted Mr Millar asking him to provide a quote for heavy haulage of precast concrete beams for the LCRP. Mr Millar sent Ares’ quote for that work on 25 August 2016.

43    On 25 August 2016, Mr Millar and Mr Kelly met with Mr Southorn and Mr Corvetti (among others) at Westkon’s premises, to discuss the details of Ares’ quote for the LCRP work.

44    On the same day, Mr Corvetti emailed Mr Millar saying that he thought “today went ok [I] think?”, that it “[s]eems to be all doable”, and asking him “what’s the plan going forward with ARES? Can you give me some sort of time line when I can expect some stuff coming thru for companies, trusts, cashflows, etc? I need to give [my accountant] some time to set things up at my end”.

45    Mr Millar replied by email on the same day in these terms:

Hi Rob

Today went well, Jon and myself walked away happy, we hope you guys like the offer.

We spoke with Geoff [Turner, Mr Kelly’s accountant] today and he is going to hopefully have something to us tomorrow. I am going to get back to him in the morning, he likes the numbers but there are a few errors (that I was aware of) around finance and start dates etc that I need to fix up that work towards a higher EBIT anyway.

I don’t have anything from Geoff I will send you what I have anyway but just be mindful it has not had his sign off or advice in my version.

I am going to send an email with photos of the Jinker and the list of items that are to be fitted. Also just some progress shots of the trucks to show that we are actually doing the things we say we are.

I need to discuss the shareholding of the holding company with you as we may want to have a non-disclosed deed that splits the ownership of shares rather than listing it in ASIC. This way if anyone was to start digging into the structure of ARES they would only find me and as a single shareholder but the deed would disclose the actual shareholders.

You can call me any time to discuss, in no way am I trying to be dodgy, I am just worried that if we are awarded the contract that certain companies are going to wonder how we did it and may go looking deeper. I have no problem how it looks, I am just trying to keep both yourself and Jon protected from any unwanted disclosure of shareholding. This is not my strong suite mate so forgive me if I have it wrong, we will get legal advice and make sure we are right.

46    Mr Millar also provided a quote for the transportation of concrete barriers for the Tullamarine Freeway in an email to Mr Corvetti dated 29 August 2016.

47    Two days later, Mr Southorn emailed Mr Millar asking him to quote for heavy haulage of precast concrete beams for the Melton Highway Grade Separation Project, which quote was provided on 1 September 2016.

48    On 5 September 2016, Mr Millar prepared a business plan for Ares and sent it to Mr Corvetti. The plan included details of the prospective business, including wind farm work and the Tullamarine Freeway barriers project. Mr Millar deposed that in the months that followed he prepared several revised business plans for Ares, which generally assumed a gross margin of about 30% for precast concrete haulage, with an EBIT after overheads of about 10%, and that “[Mr] Corvetti did not acknowledge or comment on any of [them]…” Mr Millar said that with respect to each of those plans he “proceeded on the basis that [Mr Corvetti] agreed with them”.

49    On 3 October 2016, Mr Millar sent an email to Mr Kelly, Mr Corvetti and others at Westkon providing an update on the procuring and fitting out of trucks, trailers and other equipment, as follows:

Hi Guys,

It’s been just over a month since I updated the status of everything so I thought I would shoot an email and let you know what we have been doing.

Trucks

All but one of our trucks have been painted and the balance are currently in Albury getting their final chrome works and detailing. All have been serviced, inspected and will be registered in the coming week or so ready to go to work. Once I have some finished photos of them I will send forward them to you to have a look at.

Jinkers

I travelled to Brisbane and New Zealand a week ago and the Jinkers / Dollies are coming along very well. The Jinkers has all been stripped to their chassis, blasted and going through the paint bay. By now they should be being reassembled back to new condition. We are awaiting the steering and safety system to make its way across from NZ with the new Dollies.

Dollies

The Dollies in NZ should be painted by now and going through final fit out. I believe they are booked in to sail to AU on the 15th of this month. They were still in primer when I was there but I should have some photos of them painted later in the week.

Flat Tops

The (2) flat tops that we purchased are currently in getting painted and prepared for work. They didn’t need a lot doing to them other than a paint and service.

Barrier Racks

I called in and seen these last week. They were basically finished awaiting paint. I’m told that they should be painted and ready to collect on Wednesday to bring to your yard to test. I will check again tomorrow to see how they are going and advise accordingly.

System / OHSE

Our custom made transport software is underway and expected to be up and running by the 15th of November. We are currently in the process of having our ISO policies and procedures implemented. I am told that final accreditation may take around another 5-6 weeks but that is just for the sticker on the door.

Overall we should have the majority of the equipment ready to work by the end of the month and all systems up and running by mid NOV as originally planned.

50    During October 2016, Mr Millar had various discussions with Mr Corvetti about Mr Kelly’s involvement in the proposed enterprise. Mr Millar deposed as follows:

Corvetti was uncomfortable about going into business with Kelly who, in the previous 18 months, had been involved in a failed [heavy haulage] company. Corvetti said he was prepared to walk away and leave Ares to me and Kelly. Corvetti said he would continue to support Ares with work from Westkon, including the LCRP, even if he walked away.

51    Similarly, Mr Corvetti deposed:

In or about October 2016 I had discussions with Millar about Kelly’s involvement in the proposed business. I said words to the effect: ‘I feel uncomfortable going in with Jon. I am content to stay out of it and I will continue to support Ares at Westkon’.

At that stage, whilst we had discussed a ‘partnership’ together, I had not reached any firm agreement or commitment with Kelly and/or Millar about me being a part owner of the business.

Millar and Kelly had moved ahead in buying the Jinkers and other equipment. I often asked for info and didn’t get anything and Millar and Kelly were moving ahead quickly together. By early October Millar and I had agreed that I would not proceed with the new business. I was not going to be a shareholder. I did not know what the business entailed. On 10 October 2016 I sent a txt to Millar ‘Great.. Sending me photos of something [trucks/jinkers] I don’t own any more..greeeat!’

Millar sent me a txt in response ‘You will be mate, you just need to work out when’.

(Italicisation in original.)

52    In any event, in the events that occurred, Mr Millar and Mr Kelly agreed that the latter would have no further involvement in the proposed business.

22 November 2016

53    Mr Millar telephoned Mr Corvetti on 22 November 2016, after Mr Kelly had withdrawn from the proposed venture (something that, unless some arrangement were made with Mr Corvetti, meant that Mr Millar would be the sole owner of the business).

54    During that conversation, after Mr Millar initially offered Mr Corvetti a 50% interest in MHH, they agreed that Mr Corvetti’s interest (or his nominee’s interest) would be 45%.

55    Both Mr Millar and Mr Corvetti gave viva voce evidence about this conversation.

56    Mr Millar’s evidence in chief was relevantly as follows:

And November of 2016. Did you have a discussion with Mr Corvetti about Mr Kelly?---Yes. He - - -

Are you able to recall that conversation?---He contacted me.

About Mr Kelly?---Again, I don’t remember any of this stuff word for word. But it was along the liens [sic] of – that he just wasn’t comfortable with John for whatever reason. I think it might have had something to do with the fact that John used to own a heavy haulage company and it went broke and yadda yadda yadda.

And did you find out something about Mr Kelly - - -?---No, this was - - -

- - - at this time?---This was after – no. So there was a conversation between me – with me and Rob where Rob – I wouldn’t say got cold feet but just decided he didn’t want to do the business with me, him and John.

Right. Yes?---And he sort of said, ‘Look, I will step back.’ And he – there must have been something along the lines – he must have said something along the lines of, ‘You know, maybe down the track once it – you know, I will look at coming back in later on’ or whatever. And then I said, ‘All right. No dramas.’ But it wasn’t a very long period of time between then and – me and John had a falling out.

Just tell his Honour what you mean by that?---There was – a bit of stuff resurfaced about John from stuff that went on when his company went broke.

Right?---And me and John had a conversation. I just said, ‘Look, until you get your’ – you know, ‘your stuff in order, it’s not a good idea that I get into business with you.’ So that was around – I don’t know, some day in November.

Yes?---And then I spoke to Rob that same afternoon and said, ‘Look, John’s out. Me and John have decided to part ways. Do you want back in?’ And we agreed that we would just do it with me and him.

And do you recall what Mr Corvetti said to you in that conversation?---We didn’t – there wasn’t a lot said. We basically – we basically just – I said to him – I said, ‘Look, we’re’ – you know, we were 33 [sic] way split with the three of us. ‘It’s going to be just you and me so we might as well do it fifty-fifty.’

Right?---And then we talked about, you know, ‘Well, there’s got to be a controlling shareholder and I want that to be me.’

Yes?---So we talked about 51/49, 45/55 and we landed on 45/55.

Okay. And did anything else happen in the course of that conversation?---Not really. That was about it.

Okay. And then just – I think this is covered but just in case. And then later that day, did you send a business case to Mr Corvetti?---Yes.

57    Mr Corvetti was cross-examined about the 22 November 2016 conversation. Counsel for Mr Millar cited these exchanges in their written closing submission, as follows:

And then if we go to page 322 we can come to an email, under cover of which Mr Millar sent to you another business case; you recall that?---Yes.

And before Mr Millar sent you that business case, you had had a discussion with Mr Millar on 22 November; that’s correct?---Yes.

And I think this morning you said to Mr Magee that you were uncomfortable in the course of that discussion with Mr Millar; do you recall saying that?

…

MR WYLES: Do you recall saying that to Mr Magee this morning?---Yes, it was uncomfortable regarding the fifty-fifty split.

Yes. So not long prior to 22 November you told Mr Millar that you didn’t want to be involved in the business if Mr Kelly was going to be involved; that’s correct?---That was quite some time before, yes.

Well, you say it was quite some time before. Tell me where were you when you said those words to Mr Millar?---I can’t be specific. I’m sorry.

All right?---I can’t recall where I had the phone call.

No, no. So the fact is you can’t recall when you said those words to Mr Millar, can you?---Specifically, no.

Okay. But you had said you didn’t want to be involved [if] Mr Kelly was involved. And certainly as at 5 September you were wanting to be involved; that’s correct?---At the 5th, yes.

Yes?---It was still going.

All right. And when Mr Millar rang you on 22 November he told you that Mr Kelly would no longer be in the business; that’s correct?---Correct.

And you said to Mr Millar that you would still like to be involved in the business; that’s correct?---Yes.

And that you would like to have some shareholding or ownership or something in the business?---I wouldn’t have said that. It was offered to me.

All right. Well, you didn’t say, ‘No, no, I don’t want to be – I don’t want to own any shares in it’?---I said, ‘It’s not necessary’. I would still support the business, as I was doing.

You didn’t say, ‘No, no, I don’t want any shares in it’?---‘I don’t want’ – okay, words to that effect. Yes, okay. Yes.

You said, ‘I don’t want any shares’?---I feel I would have said I didn’t want any shares. I didn’t – it was not necessary. I made that point.

I know you - - -?---Sorry. I’m just trying to, sort of, run through it. He called me – I’m just going through it again. John Kelly left. Go fifty-fifty. We just move forward. Yes, I was interested, and there [was] no need for me to have a fifty-fifty split, because I can’t offer what he can.

So you say to his Honour you said to Mr Millar, ‘Jason, there is no need for me to have fifty-fifty’?---Correct.

Okay?---Sorry. Yes.

All right. And then you said to Mr Millar, ‘All right. 45 per cent’?---No. No, I said a lot less. I would have said the – the 70 – 30 – move – and we moved from then. He said ‘fifty-fifty’. I said ‘you need’ – ‘Mate, you need control. I can’t offer what you can offer, because I have got Westkon to continue to operate, as I have been’.

What could you offer?---Support.

With work?---With work, with - - -

Okay. Thank you?--- - - - just knowledge, with tendering.

What knowledge do you have? You don’t have much knowledge?---Of the industry here in Victoria?

Of precast concrete, but not of haulage?---Not of haulage, no ..... commercially for - - -

This was a haulage … business, wasn’t it?---Which was always going to chase – yes, it is a haulage business.

Thank you. And you didn’t have a lot of knowledge of haulage, did you?---Not a lot.

No. Your expertise is - - -?---Not to the level - - -

Your expertise is manufacturing concrete; that’s correct?---And amongst other things, but not haulage, correct. Amongst other things, though.

Well, what are the other things?---Facades, construction. We build – develop.

All right. So building and development?---Yes.

And manufacturing concrete?---Yes, and facades and aluminium. That’s my history.

Thank you. And in – I’m just trying to understand. In this conversation you didn’t say to Mr Millar, ‘Look, just don’t give me any shares and I will support the business how I can’?---I don’t recall saying that.

No. And in that conversation you said Mr Millar, ‘Okay, 45 per cent’?---I didn’t say 45. I was the – ‘70 – 30 is plenty. You’ – it was – that’s how I saw it – that because of how much output he would be doing. It was his life. That’s what – we were close back then. I understood what he was going to do.

Well, let me see - - -?---I didn’t want to take a piece of it like that. Anyway. Well, let me see if you can agree with me about this?---Okay.

At some point in the conversation, say, Mr Millar said, ‘Well, you can have 45 per cent’?---We arrived at that, yes.

No, no. You say - - -?---Sorry.

You say you didn’t use the words ‘45 per cent’ don’t you?---Okay. I – I think understand what you mean

So you - - -?---We arrived at - - -

- - - didn’t use the words - - -?---We arrived at - - -

- - - 45 per cent - - -?---We arrived at - - -

- - - did you?---We arrived at 55 – 45.

I’m not asking you that, Mr Corvetti. I’m trying to explore what was said?---Okay

And you were in this conversation there were only two of you - - -?---Yes, yes.

- - - you and Mr Millar; that’s correct? That’s correct?---Yes, yes. Yes. Yes.

And your evidence on oath to his Honour is that you did not say the words ‘45 per cent’; that’s correct?---I can’t – I can’t say that.

Thank you?---I cannot confirm if I said – I arrived at it first. We – I know we went back. I didn’t want fifty-fifty. I pushed back to 70 – 30. We arrived at 55 – 45 at the end. Who said that number I cannot be sure. I’m sorry.

Right?---I can’t recall.

But, Mr Corvetti, when the numbers were said - - -?---Yes.

- - - you didn’t say to Mr Millar, ‘Look, not only do I not have the time, but, mate, I just can’t guarantee you any work from Westkon’, did you?---No, I wouldn’t – I didn’t say that.

No. And you knew that – I think we discussed this morning that, at least as at 4 August, what you were bringing to the business was Westkon work; that’s correct?---Yes.

And you knew at 5 September Mr Millar was building a business case, effectively, with assumptions about Westkon work in it; that’s correct?--- Yes.

So when you spoke to him on 22 November – Mr Millar – didn’t you need to say to him, ‘Mate, I don’t know why you’re giving me any shares. I’m not going to bring anything to this business’?---Why would I – no. I didn’t say that.

No. Because you were promising to bring work to the business, weren’t you?

…

THE WITNESS: I was bringing work.

MR WYLES: Yes?---And – amongst other things. Yes.

And you had told Mr Millar and been speaking to him about the amount of work Westkon could get, and you knew - - -?---Yes. Work was coming.

- - - you were getting your shareholding because he believed you would bring work to Westkon – to – what am I confusing - - -

HIS HONOUR: Ares.

MR WYLES: - - - Mr Corvetti? Ares?---Ares. Yes. Yes.

Thank you?---But it wasn’t just for that. We were building a business, the heavy haulage business, not just around precast. It had a good - - -

But you weren’t going to - - -?---Good - - -

- - - build anything, Mr Corvetti. You’ve just told his Honour you weren’t leaving Westkon. You couldn’t give it any time, could you?---No. The day-to-day run, no, I couldn’t – I couldn’t afford that time.

No?---I wouldn’t be – he would lead – Jason would be leading the - - -

And so you can’t build a business - - -?---The day-to-day.

- - - unless you can give it day-to-day time, can you?---You can support a business.

Sure?---Okay.

Sure. You can support it, but the only support you could give that was tangible was Westkon work, wasn’t it?---Okay. I - - -

Yes or no?---It wasn’t just Westkon work.

58    Later on 22 November 2016, after their conversation, Mr Millar sent Mr Corvetti a revised business plan. The plan anticipated revenue in the first year of operations of $2,938,175. The EBIT figure was $301,810. Mr Millar’s business plan reflected the agreement that had been reached during his conversation with Mr Corvetti, namely that he would be a 55% shareholder of MHH, and that Mr Corvetti would have a 45% shareholding. Consistently with that position, the plan anticipated that Mr Millar’s profit share for the first year of operations would be $165,996, and Mr Corvetti’s would be $135,815. One of the notes to the plan states: “[e]ssentially Ares Transport Group P/L will be owned and run by Jason Millar with a profit share arrangement going to Jon and Robert”. (The reference to Jon (Kelly) ought to have been deleted, of course, following the agreement Mr Millar and Mr Corvetti had reached earlier that day.) The business plan also recorded that MHH would own “3 x Company Trucks”, “4 x Jinkers”, “4 x Dollies”, “2 x Flat tops” and “1 x 4R8 Swingwide”; that the “loan repayments on these assets will be funded by ARES Transport Group Pty Ltd”; and that $2,216,460 in finance was required to purchase these assets.

59    The projected revenue streams included “Westkon Sky Rail – Beams” in the sum of $1,730,914 and “Westkon Sky Rail – Pillars / C-heads” in the sum of $296,796, with total anticipated revenue in the vicinity of $3 million. As counsel for Ropeload and Mr Corvetti repeatedly emphasised, in the events that occurred these jobs were in fact subsequently given to Ares.

Post 22 November 2016

60    On 25 November 2016, Mr Pramesh Shah from Westkon emailed to Mr Millar and Mr Corvetti Westkon’s purchase order to Ares for the LCRP, in the sum of $2,283,954.86.

61    On 6 December 2016, Mr Millar emailed Mr Corvetti a revised business plan, which projected revenues from Westkon in the 2017-18 financial year of $180,000 from general work, $875,000 from Mernda work, and $700,000 from miscellaneous beam work.

62    Mr Millar’s counsel sought to make much of the allegation that Mr Corvetti made no comment on the 22 November 2016 or 6 December 2016 business plans, although Mr Corvetti deposed that he did speak with Mr Millar “on a number of occasions about the content of his business plans and the quotations received by Westkon, including Millar’s pricing structure. Millar priced the jobs based on the cost of purchasing the trucks and equipment for a particular job rather than seeking to compete with market prices. On a number of occasions I discussed the pricing proposed by Millar on the basis that his prices were too high and well above market rates. It was an issue we agreed to disagree on”.

63    Mr Millar deposed that during the course of various telephone conversations that occurred in December 2016 he:

agreed with Corvetti that [he] would arrange for MHH to take ownership of Ares, and that [he] would have MHH restructure its shares whereby it would have 20 ordinary shares, 11 of which would be issued to [him] and 9 of which would be issued to Corvetti, effectively giving Corvetti a 45% share of Ares’ business. [Mr Millar] would be sole director of MHH and Ares, as Corvetti did not want his interest disclosed … The agreement … was not recorded in writing.

December 2016 – the need for funding

64    Mr Millar also gave detailed evidence about his attempts to obtain start-up capital for MHH, in particular to permit the business to purchase the four jinkers.

65    After he had agreed with Mr Corvetti on the 55% / 45% share split, Mr Millar on behalf of MHH instructed Mr Josh Egan of Astute Financial to procure finance for the start-up capital for MHH. Initially, the company needed about $1.5 million, including for the four jinkers.

66    In mid-December 2016, Mr Egan told Mr Millar that he was having trouble raising the finance, and asked whether any personal guarantees could be offered. Mr Millar had very few assets in his own name, so a personal guarantee from him would not carry any weight. In one email, dated 15 December 2016, Mr Egan explained to Mr Millar:

Thought it might be best to send an email with progress. I have spoken to several lenders to establish their interest and have not had any joy so far.

Main concerns have been the obvious ones:

Contract is for 6 months – concern is around future work at the sustainable level as the first 6 months,

Asset Backing combined with ‘New Venture’ although they acknowledge your experience in the industry from your position at Toll and previous business,

Working Capital – given you will have to fund at a minimum 60+ days based on invoicing end of month and payment of 45 days.

To progress this further I am wondering/enquiring whether there is any chance of guarantees?

I notice Robert Corvetti is to be a shareholder (45%) of the entity and is also a Director/Secretary of Westkon Precast who are supplying the work. Would it be possible for a guarantee from him also given he will be a substantial shareholder. It could open up many avenues to progress.

Let me know your thoughts?

67    In a second email sent the same day, Mr Egan wrote to Mr Millar:

Hey Mate,

Spoken to a number of places and they all have the same concerns. Can you answer their concerns below and how you plan to get around them?

•    What work can be guaranteed after the 6 months? Can we get something in writing? Do we know what size these jobs will be?

•    Working Capital? How will this be overcome?

Is there a chance of a guarantee from Robert [or] even Westkon? Sorry mate need to look at all avenues and this has been the responses.

68    Mr Millar responded a few minutes later, as follows:

So the guarantee is to appease their concerns around serviceability, that if the company fails to meet repayments that both he and I can service them?

The working capital will be via the GST paid back $150k plus there is $100k from Rob [Corvetti] and a further $50k input from me, total of $300k working capital. The repayments are only 27K per month.

69    Mr Millar wrote another email a few minutes later adding:

Mate the other thing is that a big majority of my work will be performed by contractors with matched terms of 45 days.

70    The next day, 16 December 2016, Mr Millar emailed Mr Egan telling him that he had made Mr Corvetti “aware of the guarantee position” and that he would complete a form attached to that email and send it back to Mr Egan.

71    On 17 December 2016, Mr Millar followed up with Mr Corvetti as follows:

Hi Rob,

Sorry mate I thought I sent this through.

Can you please let me know when you think you could have the form back to Josh as I would really like to settle these before Christmas as MTE are giving me quite a hard time about it.

I’m not desperate for the 100K just need to get the loans done that way I would like to get (2) units down over Christmas so I can use them for the week back to move the beams in the yard.

Thanks mate.

72    On 28 December 2016, Mr Egan emailed Mr Millar and said he had not yet received Mr Corvetti’s tax returns and that one of the banks had requested that Mr Millar provide cash flow forecasts and a detailed business plan prepared by an accountant. Mr Millar forwarded that email to Mr Corvetti, who replied by saying that he would follow it up with his accountant and that Mr Egan could contact him if he wished.

73    On 9 January 2017, Mr Millar sent a business case spreadsheet to his accountant, asking him to prepare a cash flow statement.

74    On 11 January 2017, Mr Egan emailed Mr Millar about another topic, namely whether he, Mr Millar, could get a letter from Westkon stating that Ares would be its preferred supplier and that work would continue after the initial contract. Mr Millar forwarded that email to Mr Corvetti, asking him: “[m]ate do you have any issue writing a letter to this effect from Westkon. Something along the lines of Ares being a ‘current’ preferred contractor. I guess they are looking for validation that work will continue past the end of the [LCRP]”.

75    On 12 January 2017, Mr Corvetti’s executive assistant emailed to Mr Millar a copy of a letter on Westkon letterhead, which was signed on behalf of Mr Corvetti and read as follows:

To whom it may concern:

Re: Preferred Supplier

ARES TRANSPORT GROUP will remain as preferred heavy haulage contractor after the completion of the LRCP [sic] contract.

Any queries please don’t hesitate to contact me.

76    On 23 January 2017, Mr Egan sent Mr Millar an email asking him and Mr Corvetti, as shareholders of MHH, to provide signed privacy and confidentiality consents for NAB. He also asked that Mr Corvetti be added as a shareholder of MHH and Ares. As Mr Millar deposed, however, Mr Corvetti “had not been recorded as a shareholder of MHH because he did not want to be visible as such. He had not been recorded as a shareholder of Ares because we intended Ares to be a wholly owned subsidiary of MHH”.

77    On 24 January 2017, Mr Egan forwarded Mr Millar an email chain that included an earlier email from Mr Delponte of NAB. Mr Delponte had explained that he needed “to show a corporate benefit for taking a guarantee from [Mr Corvetti]. Therefore, we need to see a link to [Mr Corvetti] to the proposal either via a company shareholding where he is a director/shareholder or a trust beneficiary”. Mr Egan asked in his covering email to Mr Millar: “[Mr Corvetti] can be a trust beneficiary which might be the way they are looking to structure it?”

78    Mr Millar forwarded that email chain to Mr Corvetti’s accountant, Mr Knott. On the same day, Mr Knott sent a letter to Mr Egan, as follows:

We hereby confirm the following:

1.    That Ropeland [sic] Pty Ltd will be issued 9 Shares in [MHH] which, after an issue of a further 1 Share to Jason Millar, Ropeland [sic] Pty Ltd will own 45% … of the company.

2.    That Ropeland [sic] Pty Ltd acts as Trustee for R & D Corvetti Family Trust.

3.    As Robert Corvetti is a beneficiary of that Trust, that should be sufficient for him to sign a personal guarantee.

79    On the same day, Mr Knott emailed Mr Millar’s accountant and asked her to “obtain approval from Jason Millar to undertake the following”:

Millars Heavy Haulage Pty Ltd

1.    Issue a further 1 Share to Jason Millar

2.    Issue a further 9 Shares to Ropeland [sic] Pty Ltd ACN 616 555 750

Ares Transport Group Pty Ltd

1.    Issue the relevant additional shares that will result in Jason Millar owning 55% … of shares and 45% … to Ropeland [sic] Pty Ltd ACN 616 555 750.

2.    Forward to me a copy of the Balance Sheet at 30 June 2016 and print out of ASIC showing Directors and Shareholders of this company.

80    At about the same time as these exchanges were occurring, Mr Egan emailed Mr Millar, asking him: “[w]hen are the shares going to be issued to [Ropeload]? They definitely will not settle the equipment until the shares have been issued”.

81    Over the next couple of days the share restructuring was put into effect and the relevant share transaction report lodged with ASIC.

82    On 14 February 2017, Mr Millar, Mr Corvetti and Ares executed a guarantee in support of a Master Asset Finance Agreement entered into between MHH and National Australia Bank Limited. The amount guaranteed was limited initially to $1,711,467 plus interest and costs.

83    The application for finance which Mr Millar completed showed that the total value of what he owned was $326,200.

84    Mr Millar and Mr Corvetti subsequently executed further guarantees to support the business, including the following:

(1)    a 15 March 2017 Variation of Guarantee Limit, which increased the value of the personal guarantees to $1,769,020 (to finance the acquisition of a vehicle);

(2)    a 21 August 2017 Variation of Guarantee Limit, which increased the value of the personal guarantees to $2,820,000 (to finance the acquisition of wind farm heavy haulage equipment and another jinker);

(3)    a Variation of Guarantee Limit, executed in November 2017, which increased the value of the personal guarantees to $4,400,000 (for the acquisition of additional wind farm heavy haulage equipment); and

(4)    a 24 April 2018 Variation of Guarantee Limit, which increased the value of the personal guarantees to $5,620,000 (to finance the acquisition of three new prime movers).

85    After the LCRP work finished, Ares continued to perform heavy haulage services for Westkon on the following jobs: “Melton Highway beams; NEPA Burgundy Bridge; Hallets Way beams; WPA KCR; and Abbots Road”. The evidence was that Westkon spent around $3.55 million in heavy haulage services in the period from early 2017 until early 2018.

86    Both Mr Millar and Mr Corvetti deposed to other events that subsequently occurred, but no party placed any particular reliance on them for the purposes of Mr Millar’s claim. That is not surprising, because the applicant’s only pleaded case is that he was induced by the pleaded representations to cause JMI to transfer all its shares in Ares to MHH on 25 January 2017, and to cause MHH to issue nine shares to Ropeload on 27 January 2017. (As counsel for Mr Corvetti and Ropeload pointed out, there is no allegation that Mr Corvetti’s conduct caused Mr Millar: (i) to establish the Ares business; (ii) to enter into any contract to acquire equipment (like jinkers); or (iii) to offer Mr Corvetti or his nominee 45% of the shares on 22 November 2016.)

87    Although the relationship between Mr Millar and Mr Corvetti remained amicable for a time after the shares were issued, and Ares’ business prospered, including because it performed heavy haulage services for Westkon, by June 2018 their relationship began to deteriorate.

88    Mr Millar does not complain that the Ares heavy haulage business is unprofitable. Nothing could be further from the truth. For the year to 30 June 2018, the Ares financial statements in evidence disclose sales of approximately $19.5 million and a retained profit $892,597. The draft financial statements for the year to 30 June 2019 disclose sales of approximately $34 million and a retained profit of $2,661,563. Westkon had substantially ceased using the services of Ares long before the relationship between Mr Millar and Mr Corvetti deteriorated, mainly because Mr Millar wanted to focus the business on heavy haulage related to wind farms.

89    The source of Mr Millar’s dissatisfaction, it seems, is that he believes that it is unfair that “he does all the work in the business”. There was also evidence in the affidavit material of attempts by Mr Millar and Mr Corvetti to reach some resolution based on paying Mr Corvetti out, but they were unsuccessful.

The issues

90    As I have explained, the hearing of this proceeding was conducted on the basis that the applicant would be held to his pleading.

91    The first issue that arises is whether the applicant has proved the six pleaded representations, which, it will be recalled, are these:

(a)    Westkon had much work coming up which would allow Westkon to purchase services to the value of $5m per annum from the Ares Heavy Haulage Business if Millar commenced it, and that if Corvetti was a part owner of the Ares Heavy Haulage Business he would ensure that Westkon purchased such services from it;

(b)    Further, that if Corvetti was a part owner of the Ares Heavy Haulage Business he would procure Westkon to continue to engage it for substantial projects other than the [LCRP (called the Skyrail project in the pleading)];

(c)    Corvetti was known to and influential with other manufacturers of precast concrete products and was in a position to, and if he was a part owner of the Ares Heavy Haulage Business would, assist Millar to secure work for it from those other manufacturers of precast concrete products;

(d)    Corvetti possessed the business acumen and skills to grow a successful business and, if a part owner of the Ares Heavy Haulage Business, would utilise those skills for its benefit;

(e)    Corvetti had secured the approval of the board of Westkon to treat the Ares Heavy Haulage Business as Westkon’s preferred heavy haulage contractor and, if a part owner of the Ares Heavy Haulage Business, would ensure that Westkon did so,

(f)    Corvetti had the authority of the board of Westkon, alternatively that the board would act in accordance with any recommendation he made, to ensure that Westkon continue to engage the Ares Heavy Haulage Business as its preferred contractor for haulage services …

92    Representations (c) and (d) can be put to one side, because, on any view of the matter, they were not pursued.

93    Counsel for Mr Millar did not formulate their closing submission by reference to the pleaded representations. Their written closing submission on the applicant’s claim comprised over 100 pages, plus a five page annexure. A footnote on the first page reads:

Whilst we have pursued brevity in these submissions, we have sought to allow the evidence to speak for itself. Setting out the evidence has lengthened the submissions but we considered it was more convenient for the Court to have the evidence set out rather than having to cross-reference transcript.

94    Consistently with that footnote, the submission set out lengthy extracts of the transcript of the evidence given in chief and in cross-examination by, principally, Mr Millar and Mr Corvetti. The overwhelming majority of the written closing submission is made up of such extracts.

95    The submission contains a number of propositions that purport to summarise the effect of the extracts from the transcript. Those propositions are as follows:

(1)    “Properly analysed, Mr Corvetti’s own evidence is that he wanted Mr Millar to understand that he would cause Westkon to purchase haulage services from Ares and had every confidence that Westkon would have a lot of work for Ares to perform, in the order of $5 million per annum.”

(2)    “Mr Corvetti represented to Mr Millar on 4 August that Mr Corvetti would procure Westkon to engage Mr Millar’s new business for substantial future projects, including projects other than the [LCRP].”

(3)    “Between 8 August 2016 and December 2016, Mr Corvetti was aware that his staff at Westkon had asked for Mr Millar to provide a substantial number of quotes. In response, Mr Millar provided numerous quotes to Westkon for future work. The relevant conduct of Mr Corvetti in inducing in Mr Millar an expectation that Mr Corvetti would cause Westkon to purchase significant services from Ares is summarised at Annexure A.” (Annexure A to the submission contains a list of quotes and requests for quotes exchanged between Westkon and Ares in the period from 8 August 2016 to 9 March 2017.)

(4)    “Following [their conversation earlier that day], Mr Millar emailed Mr Corvetti a revised business case at 6.44pm on 22 November 2016. The business case projected some $2.2m as being earned from sales by Ares to Westkon of projected total sales of $2.9m in the 2016-17 financial year. Mr Corvetti did not say to Mr Millar that these assumptions in the business case were unrealistic or should not be made because Ares would not make sales of that amount to Westkon.”

(5)    “It is Mr Millar’s evidence that Mr Corvetti did not say to Mr Millar that [the] assumptions in the [6 December 2016] business case were unrealistic or should not be made because Ares would not make sales of that amount to Westkon.”

(6)    “On 12 January 2017, Mr Corvetti … authorised for Mr Millar to be sent the ‘preferred supplier’ letter … At no point prior to Mr Corvetti receiving shares in MHH in January 2017 did Mr Corvetti disclose to Mr Millar that being a ‘preferred supplier’ to Westkon did not mean that any particular work would be awarded to Ares.”

(7)    “Mr Corvetti’s evidence was that tendering to Westkon was competitive and that he could not ensure anyone would get work.”

(8)    “To the extent that Mr Corvetti denied saying he would ensure that Ares would get Westkon’s haulage work, the evidence of Mr Millar (consistent with the evidence of Mr Kelly and Mr Turner (not challenged) about the 4 August 2016 meeting) as to what was represented to him by Mr Corvetti should be preferred. Mr Corvetti’s evidence was, assessed fairly, confusing and inconsistent on the critical question of his conduct which represented to Mr Millar that Mr Corvetti would ensure Ares had a steady supply of Westkon work if Mr Corvetti held shares in it. Properly assessed Mr Corvetti’s own evidence dictates a finding on the balance of probabilities that he has failed to discharge the onus imposed upon him by s 12BB and s 769C.”

(9)    “Mr Corvetti’s conduct constituted misleading and deceptive conduct about what he would do in the future, namely, procure Westkon to purchase services from Ares. His conduct included misleading and deceptive conduct by non-disclosure.”

(10)    “The evidence establishes on the balance of probabilities that Mr Corvetti’s conduct had a tendency to lead Mr Millar into error. It led Mr Millar (acting reasonably and sensibly) to expect that there would be significant work for Ares from Westkon if Mr Corvetti were to be a part owner of Ares.

Assessed objectively, Mr Corvetti’s conduct in this regard was capable of giving rise to, and did in fact give rise to, a reasonable expectation on Mr Millar’s part that Mr Corvetti would have told Mr Millar if Mr Corvetti actually did not know whether there would be significant work for Ares from Westkon upon which Mr Millar could build Ares[’] business (for any reason). Mr Corvetti’s evidence was that that he made no attempt to make sure Mr Millar understood Mr Corvetti’s lack of commitment (or reasonable basis).”

96    It is readily apparent, with respect, that such submissions, even if the evidence was capable of sustaining them, do not align with, or make good, representations (a), (e) or (f).

97    That leaves representation (b). It is true that that representation (“if Corvetti was a part owner of [Ares] he would procure Westkon to continue to engage it for substantial projects other than the [LCRP]”) is consistent with the submission contained in the applicant’s written closing submission that “Mr Corvetti represented to Mr Millar on 4 August that [he] would procure Westkon to engage [Ares] for substantial future projects, including projects other than the [LCRP]”. But the difficulty for the applicant’s case in that regard is that the passages of the transcript upon which the applicant relies (substantially set out at [31]-[33] above) do not contain evidence to that effect. The closest it gets – which is not close enough – is that Mr Corvetti and Mr Millar discussed future opportunities arising from the large volume of precast concrete work in which Westkon was, and expected to be, involved. It follows that representation (b) is not made out either.

98    For the foregoing reasons, the applicant has not proved to the reasonable satisfaction of the court the pleaded representations: cf Watson v Foxman (1995) 49 NSWLR 315 at 318-319 (McLelland CJ in Equity).

99    In any event, it should not be the court’s function to sift through close to 100 pages of quoted extracts from the transcript of oral testimony to determine whether, or to what extent, the evidence justifies such submissions, and whether they have anything to do with the pleaded case or not. As Allsop P (as the Chief Justice then was) said in Jackson v Lithgow City Council [2008] NSWCA 312 at [92] (Basten JA and Grove J agreeing): “[i]t is not for the Court to rummage through the evidence and Commonwealth and State legislation to piece together the appellant’s entitlements on the evidence. Counsel gave no real assistance in this regard. Decisions on appellate review do not require the Court on appeal to search out and piece together the cases of the parties”. In my view, it is likewise not the court’s function to piece together a case for a party at the trial level either.

Disposition

100    For these reasons, I am not satisfied that any of the pleaded representations were made.

101    It follows that the applicant’s proceeding will be dismissed.

Ropeload’s cross-claim

102    Ropeload also brings a cross-claim, alleging oppression, on four grounds.

103    The relevant parts of the cross-claim (dated 23 September 2019) are as follows:

Failure to Distribute Dividends

5.    In each of the years to 30 June 2018 and 30 June 2019 Millar breached the agreement by failing to pay or account to Ropeload for 45% of the net profit of the business.

Particulars

For the year to 30 June 2018 the Financial Statements for Ares disclose sales of approximately $19.4M and a retained profit of $892,597. The Financial Statements for MHH disclose retained profit of $81,660.

For the year to 30 June 2019 the draft Financial Statements for Ares disclose sales of approximately $34M and a retained profit of $2,661,563. The draft Financial Statements for MHH disclose retained profit of $145,933.

Threat to Wind Up

6.    On 18 August 2018 Millar threatened Ropeload (and Corvetti) that Millar would start to wind up MHH and/or Ares.

Particulars

The threat is contained in a txt message sent from Millar to Corvetti on 18 August 2018 ‘I withdraw all offers and start working on how to wind it al [sic] up on Monday’.

The txt message may be inspected at the offices of the cross claimant upon request.

Overpayment of Salary

7.    In the year to:

a)    30 June 2017 Millar caused Ares to pay him a salary of at least $405,000 (being $240,000 as a consultant and $165,000 as an operations manager of Ares); and

b)    30 June 2017 Millar caused Ares to pay him a salary of at least $465,000 (being $300,000 as a consultant and $165,000 as an operations manager of Ares);

being a salary disproportionately high for the role of a manager of a heavy haulage transport business and amounts that were in breach of the agreement.

Particulars

In addition to the amounts pleaded, a further sum of $240,000 is disclosed in Business Case 35 (Forecast Tab) as payable to ‘General Manager’ for the years to 30 June 2018 and 30 June 2019.

Bringing this Proceeding

8.    On 31 May 2019 Millar issued this proceeding asserting a claim against Ropeload and Corvetti for misleading and deceptive conduct and seeking an order that MHH’s share register be rectified by removing Ropeload as a shareholder nunc pro tunc.

9.    Millar instituted this proceeding to try to deny Ropeload’s [sic] the current economic value of its shares in MHH.

Particulars

The intention of Millar is inferred by profitability of the business; the deterioration of the relationship between Corvetti and Millar from or about August 2018 and Millar’s threat to wind up MHH and Ares.

10.    The conduct of Millar referred to in paragraphs 5 to 9 herein has eroded the trust and confidence that Corvetti had in Millar and it is just and equitable that MHH be wound up pursuant to section 461 of the Corporations Act 2001.

11.    The conduct of Millar referred to in paragraphs 5 to 9 herein is oppressive conduct within the meaning of section 232 of the Corporations Act 2001 that is against the interests of the members as a whole and/or oppressive to, unfairly prejudicial to or unfairly discriminatory against Ropeload.

(Cross-references omitted.)

104    The following relief is sought:

1.    An order that [MHH] be wound up pursuant to section 461(e), (f), (g) or (k) of the Corporations Act 2001.

2.    A declaration pursuant to section 232 of the Corporations Act 2001 that:

  a.    the conduct of the affairs of [MHH];

b.    the actual and/or proposed acts of by [sic] [MHH] or by Jason Millar on behalf of [MHH];

is either contrary to the interests of the members as a whole; or oppressive to, unfairly prejudicial to, or unfairly discriminatory against [Ropeload], a member of the company.

3.    An order under section 233(1)(a) of the Corporations Act 2001 that [MHH] be wound up.

4.    An order under section 233(1)(d) of the Corporations Act 2001 that Jason Millar purchase Ropeload’s shares in [MHH].

5.    An order under section 233(1)(e) of the Corporations Act 2001 for the purchase of the shares held by Ropeload with an appropriate reduction of the company’s share capital.

6.    An order under section 233(1)(h) of the Corporations Act 2001 for the appointment of a receiver and manager to [MHH].

105    Very little, if any, attention was given by the parties during the hearing to the cross-claim.

106    The parties were, it seems, content to rely on their brief written submissions about it.

No dividends

107    Ropeload’s written submission acknowledges that the declaration of dividends is (usually) within the discretion of the directors, and that, if they consider that in the best interests of the company no dividends should be paid, the court will not question their decision or substitute its own view of what the directors ought to have done. Nonetheless, Ropeload contends that the court should consider whether Mr Millar (as director of MHH) did genuinely take a decision with regard to payment of dividends, and whether the reasons advanced by Mr Millar genuinely formed the basis for his decision at the time (citing Re McCarthy Surfacing Ltd [2009] 1 BCLC 622 at [70]).

108    But, as Mr Millar submitted, his un-contradicted evidence is that:

The reason that no dividends have been paid to any shareholders is that Ares is about to embark on some large projects that will eat into capital with trade debt. Additionally, MHH currently has significant debts. It would not be in the interests of Ares or MHH to pay any form of dividend to shareholders given the current level of exposure.

109    Ares is a new business and has only been trading for about three years. Mr Millar’s evidence as to the business reasons for the company’s board determining to retain profits to date has not been challenged or contradicted. Mr Millar was not cross-examined on the business factors pertinent to that decision such as the history of the company, its borrowings, the extent of its financial needs and the prevailing and expected economic circumstances. Nor was any evidence given on behalf of Ropeload in support of its claims in this regard.

110    It follows that the non-payment of dividends ground must fail.

Overpayment of salary

111    Ropeload made no submission about this ground. Mr Millar gave un-contradicted evidence explaining his remuneration. This ground also fails.

Threat to wind up

112    There is also nothing in this point. Mr Millar’s text message threatening to wind up the enterprise was, one is to assume, made in a fit of pique, and Mr Millar, through his solicitors, has been emphatic that he has no intention of seeking to wind up either MHH or Ares. He was not challenged about that assurance, so this ground too must fail.

Bringing this proceeding

113    There is also no evidence to support this ground, and, in any event, the proceeding failed.

Lack of good faith (not pleaded)

114    Ropeload’s written closing submission also alleged a “failure to negotiate in good faith”, but it is not pleaded, and I do not propose therefore to deal with the point.

Disposition

115    It follows that the cross-claim will be dismissed.

Associate:    

Dated:    28 May 2020