Hurburgh v Hurburgh - Shareholder Oppression

Original Word Document (164.9 KB) Federal Court of Australia

Hurburgh v Hurburgh, in the matter of Richard Pitt & Sons Pty Ltd [2026] FCA 361

| File number: | VID 622 of 2024 |
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| Judgment of: | NESKOVCIN J |
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| Date of judgment: | 31 March 2026 |
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| Catchwords: | CORPORATIONS – shareholder oppression – where the plaintiff is a one-third shareholder – where the three shareholders are family members and received their shares by way of an in specie distribution under a will – where the first defendant is the sole director of the company and a one-third shareholder – breakdown of relationship between the shareholders – whether the conduct of the company was oppressive or unfairly prejudicial within the meaning of s 232 of the Corporations Act 2001 (Cth) – whether the Court should order remedies for oppression under s 233 or for the just and equitable winding up of the company under s 461(1)(k) – conduct of the company found to be oppressive to the plaintiff – order that the company buy-out the plaintiff’s shares with a commensurate reduction in the share capital |
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| Legislation: | Corporations Act 2001 (Cth), ss 53, 232, 233, 237, 461(1)(k)

Evidence Act 1995 (Cth), s 191 |
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| Cases cited: | Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 225; [2008] VSCA 86

Ananda Marga Pracaraka Samgha Ltd v Tomar (No 6) (2013) 300 ALR 492; [2013] FCA 284

Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) (2013) 93 ACSR 189; [2013] FCA 234

Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25

Catalano v Managing Australia Destinations Pty Ltd (2014) 314 ALR 62; [2014] FCAFC 55

Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60

Crawley v Short (No 2) [2010] NSWCA 97

Donaldson v Natural Springs Australia Limited [2015] FCA 498

Dynasty Pty Ltd v Coombs (1995) 59 FCR 122

Exton v Extons Pty Ltd (2017) 53 VR 520; [2017] VSC 14

Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688

Fexuto Pty Ltd v Bosnjak Holidngs Pty Ltd (2001) 37 ASCR 672; [2001] NSWCA 97

Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21

Ian Allan Byrne v A J Byrne Pty Limited [2012] NSWSC 667

Joint v Stephens (2008) 26 ACLC 1467; [2008] VSCA 210

Hillam v Ample Source International Limited (No 2) (2012) 202 FCR 336; [2012] FCAFC 73

Melrob Investments Pty Ltd v Blong Ume Nominees Pty Ltd (2022) 141 SASR 1; [2022] SASCA 29

Meytor Inc v Queensland Electronic Switching Pty Ltd [2003] 1 Qd R 186; [2002] QCA 269

Mopeke Pty Ltd v Airport Fine Foods Pty Ltd (2007) 61 ACSR 395; [2007] NSWSC 153

O’Neill v Phillips [1999] 1 WLR 1092 at 1098

Re Dalkeith Investments Pty Ltd (1986) 9 ACLR 247

Re SRW Nominees Pty Ltd [2019] VSC 547

Regal Hastings v Gulliver [1967] 2 AC 134

Sargent v ASL Developments Ltd; Turnbull v ASL Developments Ltd [1974] HCA 40; 131 CLR 634

Smith Martis Cork & Rajan Pty Ltd v Benjamin Corp Pty Ltd (2004) 207 ALR 136; [2004] FCAFC 153

Smith Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd (2004) 207 ALR 136; [2004] FCAFC 153

Szencorp Pty Ltd v Clean Energy Council Ltd (2009) 69 ACSR 365; [2009] FCA 40

Tomanovic v Global Mortgage Equity Corp Pty Ltd (2011) 288 ALR 310, [2011] NSWCA 104

Ubertini v Saeco International Group Spa (No 4) (2014) 98 ACSR 138; [2014] VSC 47

United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ASCR 514; [2003] NSWSC 910

United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514; [2003] NSWSC 910

Vigliaroni v CPS Investment Holdings Pty Ltd (2009) 74 ACSR 282; [2009] VSC 428

Warman International Ltd v Dwyer (1995) 182 CLR 544 |
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| Division: | General Division |
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| Registry: | Victoria |
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| National Practice Area: | Commercial and Corporations |
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| Sub-area: | Corporations and Corporate Insolvency |
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| Number of paragraphs: | 162 |
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| Date of hearing: | 8–11 September 2025, 17 September 2025 |
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| Counsel for the Plaintiff: | Mr M Robins KC and Mr N M Elias |
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| Solicitor for the Plaintiff: | KCL Law |
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| Counsel for the Respondents: | Mr M Clarke KC and Ms V Plain |
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| Solicitor for the Respondents: | HWL Ebsworth Lawyers |
ORDERS

| | | VID 622 of 2024 |
| IN THE MATTER OF RICHARD PITT AND SONS PTY LTD (ACN 009 483 998) | | |
| BETWEEN: | LISA MARY KENNON HURBURGH

Plaintiff | |
| AND: | ISABEL ELIZABETH LOUISE HURBURGH

First Respondent

ALEXANDER MAXWELL HURBURGH

Second Respondent

GLEN DHU FARMING PTY LTD (and another named in the Schedule)

Third Respondent | |

| order made by: | NESKOVCIN J |
| DATE OF ORDER: | 31 MARCH 2026 |
THE COURT ORDERS THAT:

1. By 4.00pm on 10 April 2026, the parties are to submit a minute of orders, or separate minutes if not agreed, to give effect to these reasons and for a timetable for the filing of written submissions as to costs (not exceeding 5 pages).

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

REASONS FOR JUDGMENT

NESKOVCIN J:

1 The plaintiff and the first and second defendants each own one third of the shares in the fourth defendant, Richard Pitt & Sons Pty Ltd (RBS), having received them by way of an in specie distribution under the Will of Richard Pitt, who died on 26 September 2017. The first and second defendants are the plaintiff’s mother and brother respectively.

2 The plaintiff and first and second defendants were named in the Will as residuary beneficiaries, in equal shares. The first defendant is the co-Executor of the Estate of the late Richard Pitt. She was also appointed a director of RBS on 11 December 2020, and became the sole director of the company from 1 June 2022.

3 The third defendant, Glen Dhu Farming Pty Ltd, is a company owned and controlled by the first and second defendants.

4 Regrettably, the relationship between the plaintiff and the first and second defendants has completely broken down, and for some years they have been embroiled in a dispute concerning the plaintiff’s distribution under the Will. Having been unsuccessful in resolving all aspects of that dispute to her satisfaction, the plaintiff brought this proceeding against the first to fourth defendants seeking remedies, under ss 232 and 233 of the Corporations Act 2001 (Cth), for oppression in relation to the conduct of the affairs of RBS or, alternatively, an order for the just and equitable winding up of RBS under s 461(1)(k) of the Corporations Act.

5 A great deal of the plaintiff’s evidence and submissions in the proceeding concerned her grievances in relation to the distribution of the Estate and desire for her shares in RBS to be bought out. Her claim that the farming business of her late uncle, Richard Pitt, was transferred to the first and second defendants without any value attributed for goodwill was abandoned in opening. This proceeding is concerned only with the conduct and affairs of RBS and will be determined accordingly.

6 The plaintiff’s principal claim was that the affairs of RBS have been conducted in a manner that is contrary to the interests of the members as a whole, or oppressive to, unfairly prejudicial to, or unfairly discriminatory against the plaintiff, and she sought remedies for oppression under ss 232 and 233 of the Corporations Act. The relief sought by the plaintiff was an order for the buy-out of her shares in RBS or, alternatively, that RBS be wound up. The plaintiff also sought an order for the taking of accounts in respect of transactions which she alleges were for the benefit of the first, second and third defendants (collectively, the defendants). The defendants opposed the plaintiff’s application, denied the plaintiff’s claims and asserted that, even if the claims were established, the Court should exercise its discretion to refuse any of the relief sought by the plaintiff.

7 For the reasons that follow, the plaintiff has established that certain impugned conduct was contrary to the interest of members of RBS as a whole and oppressive to the plaintiff. A working relationship between the shareholders is unlikely and there is a risk of ongoing disputation between them. As a result, and by way of remedy, I would exercise the discretion to make an order pursuant to s 233 of the Corporations Act that RBS buy-out the plaintiff’s shares with an appropriate reduction of capital.

background

RBS

8 RBS was incorporated on 27 October 1961. At the time of Richard Pitt’s death, he owned all of the shares in RBS and was its sole director. As already mentioned, the first defendant was appointed as a director of RBS on 11 December 2020 and became the sole director of the company from 1 June 2022.

9 The objects of RBS, as set out in its Articles of Association, include conducting and carrying on the business of breeding and dealing with livestock and farming of all description.

Farming business

10 Prior to his death, Richard Pitt had operated a farming business under the name “RBK Pitt & Partners”. The farming business had previously been conducted by Richard in partnership with his brother, Frank Pitt, until Frank’s death on 31 August 2008.

11 The farming business largely involved breeding and handling livestock on properties owned by RBS, Richard Pitt and Frank Pitt, with Frank’s properties being transferred to Richard on Frank’s death.

12 Prior to Richard’s death, the properties on which the farming business was conducted comprised:

| Property | Ownership |
| Green Hills | RBS |
| Glen Dhu | RBS |
| McGuires Marsh | RBS (2/3 share)

Richard Pitt (1/3 share) |
| Lachlan Vale | Richard Pitt |
| Lake Repulse Road | RBS |
| Vermont | Richard Pitt |
| Glen Dhu Homestead | Richard Pitt |
| Watsons Marsh | Richard Pitt |
13 The Glen Dhu, Green Hills and McGuires Marsh properties were all purchased prior to 1985 and are not subject to capital gains tax.

14 Although the RBK Pitt & Partners farming business was conducted on properties owned by RBS, the business did not at any stage pay rent to RBS.

Probate

15 On 27 October 2017, probate of the Will was granted and the first defendant and David Rees, solicitor, were appointed Executors of the Estate.

16 Under the Will, the Executors were granted the power at their discretion to partition or appropriate any real or personal property forming part of the Estate towards the satisfaction of a beneficiary’s share, which partition or appropriation would be binding on all persons interested under the Will.

The $2.4 million loan

17 At the time of Richard Pitt’s death, a $2.4 million loan was owed to Tasmanian Perpetual Trustees Limited (Tasmanian Trustees). The loan was secured by way of a charge over the assets of RBS and a mortgage over the Green Hills, McGuires Marsh and Vermont properties.

18 From at least 1 July 2016 to March 2025, the $2.4 million loan was recorded as a liability in the financial statements of Richard Pitt and RBK Pitt & Partners. Prior to March 2025, the loan was never recorded as a liability of RBS.

19 In about September 2019, the $2.4 million loan was discharged via two loans (a $1.8 million loan from the Famburgh Superannuation Fund and a $600,000 loan from the Hurburgh Family Trust, being entities associated with the first defendant (Hurburgh -related entities)) provided to the Estate of Richard Pitt to repay the loan from Tasmanian Trustees.

Distribution of the Estate

20 In November 2020, the Executors obtained valuations in relation to the properties owned by RBS and Richard Pitt and other assets that belonged to the Estate.

21 In December 2020, a Summary of Financial Position of the Estate as at 20 December 2020 was prepared on behalf of the Executors. The Summary showed net assets of the Estate of $14,474,713.05, whereby:

(a) the assets of the Estate were assessed at $16,934,194.90; and

(b) the liabilities of the Estate were assessed at $2,459,481.85, with the principal liability being the $2.4 million loan, which by that stage was owing to the Hurburgh-related entities.

22 The Summary included a breakdown of “Company Assets” and “Estate Assets”, that together comprised the net assets of the Estate whereby:

(a) the “Company Assets” were assessed at $7,963,333.336 with no recorded liabilities; and

(b) the “Estate Assets” were assessed at $6,511,379.72 comprising assets assessed at $8,970,861.57 less the liabilities assessed at $2,459,481.85, which included the $2.4 million loan.

23 On 29 June 2020, the Executors exercised their discretion to distribute to the plaintiff her one third entitlement in the Estate and, as a result, the plaintiff received:

(a) 14,600 shares in RBS, being one third of the shares in RBS, with the remaining shares being transferred to the first and second defendants, as to one third each;

(b) two titles of the properties known as Lachlan Vale, including Lake Repulse Road; and

(c) $1,225,307 in cash.

24 The balance of the Estate was transferred to the first and second defendants, being all of the assets not distributed to the plaintiff as recorded in the Summary, including the farming business previously conducted by RBK Pitt & Partners (which included livestock, farming machinery and so on), the balance of the real estate owned by Richard Pitt and the remaining shares in RBS.

Leases to Glen Dhu Farming

25 The farming business previously conducted by RBK Pitt & Partners was ultimately transferred to Glen Dhu Farming, which as already mentioned is a company owned and controlled by the first and second defendants.

26 From 1 July 2021, Glen Dhu Farming leased the Glen Dhu, Green Hills and McGuires Marsh properties from RBS, being the RBS properties on which RBK Pitt & Partners had previously conducted the farming business. The rental paid by Glen Dhu Farming was determined according to a valuation which the Executors obtained from Acumentis, dated 26 May 2021.

27 There were no written lease agreements entered into between RBS and Glen Dhu Farming.

Amendment of RBS’ financial statements

28 On 7 March 2025, RBS re-stated its financial statements for the financial years 30 June 2022 and 30 June 2023, and issued financial statements for the financial year ended 30 June 2024. Each of those financial statements recorded the $2.4 million loan as a liability of RBS.

issues in dispute

29 The proceeding was commenced by originating process. There were no pleadings and therefore no “pleaded issues” as such. However, the parties agreed a list of issues for determination. While the list framed some of the issues by reference to whether the impugned conduct was “wrongful”, the issues were approached on the basis that the issue for determination was whether the impugned conduct was contrary to the interests of members of RBS as a whole or oppressive, in the requisite sense.

30 Allowing for overlap and having regard to the way the issues were presented, the following issues arose for determination:

Oppression

(a) In respect of the $2.4 million loan:

(i) Whether the $2.4 million loan was a liability of RBS?

(ii) Whether the allocation of the $2.4 million loan to RBS in March 2025 or the allocation of the interest liability to RBS was contrary to the interests of members of RBS as a whole or oppressive?

(b) In respect of the leases to Glen Dhu Farming:

(i) Whether RBS’ farmland and farm improvements have been utilised by Glen Dhu Farming at less than market rent since the plaintiff has been a shareholder?

(ii) Whether the leases were contrary to the interests of members of RBS as a whole or oppressive?

(iii) Whether the payment at less than market rent has been fully rectified?

(c) Whether the offset of expenses for interest on the $2.4 million loan and property improvements against the rent due from Glen Dhu Farming was contrary to the interests of members of RBS as a whole or oppressive?

(d) Whether the failure to hold annual general meetings was oppressive?

(e) Whether the failure to provide RBS’ financial statements to the plaintiff was oppressive?

(f) Whether the defendants preferred their own interests to those of RBS and/or the shareholders as a whole in respect of items (a) to (c)above?

(g) Whether the plaintiff was wrongfully excluded from the management of RBS in respect of any of the above matters?

(h) If “yes” to any of the above, was any of the above conduct contrary to the interests of members of RBS as a whole, or oppressive and unfairly prejudicial to, or unfairly discriminatory against, the plaintiff as a member, whether in that capacity or any other capacity, within the meaning of s 232 of the Corporations Act?

(i) If “yes” to paragraph (h), should the Court exercise its discretion to make any, and if so what, orders under s 233 of the Corporations Act?

(j) If the Court considers that an order should be made for the buy-out of the plaintiff’s shares in accordance with ss 233(d) or (e) of the Corporations Act, what is the value of the plaintiff’s shares?

Just and equitable winding up

(k) Is there a lack of confidence in the conduct and management of RBS’ affairs, or a breakdown of trust and confidence as between the plaintiff and the other shareholders of RBS?

(l) If “yes” to paragraph (k), whether it is just and equitable that RBS be wound up in accordance with s 461(1)(k) of the Corporations Act?

Taking of accounts

(m) Is the plaintiff entitled to an order for the taking of accounts in respect of any transactions by which the first and/or second defendants have used assets of RBS for their own benefit or for the benefit of Glen Dhu Farming in connection with the issues in paragraphs (a) to (c) (the Disputed Transactions)?

(n) Alternatively, is the plaintiff entitled to an order that the first, second and/or third defendants pay loss or damage arising from the Disputed Transactions?

LEGAL PRINCIPLES

Oppression

31 Section 232 of the Corporations Act provides:

The Court may make an order under section 233 if:

(a)    the conduct of a company's affairs; or

(b)    an actual or proposed act or omission by or on behalf of a company; or

(c)    a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d)    contrary to the interests of the members as a whole; or

(e)    oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

32 Section 233 identifies the relief that may be sought, and relevantly provides:

(1)    The Court can make any order under this section that it considers appropriate in relation to the company, including an order:

(a)    that the company be wound up;

(b)    that the company’s existing constitution be modified or repealed;

(c)    regulating the conduct of the company’s affairs in the future;

(d)    for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law;

(e)    for the purchase of shares with an appropriate reduction of the company’s share capital;

…

33 The “affairs” of a body corporate are described broadly, including for the purpose of s 232 and s 233, in s 53 of the Corporations Act. Those affairs relevantly include the formation, membership, business, transactions and dealings, property, profits and liabilities of the company (s 53(a)); the internal management of the company (s 53(c)) and the ownership of shares in the body (s 53(e)).

34 The principles to be applied in determining whether conduct falls within s 232 of the Corporations Act are well established and, insofar as they are relevant to the matters relied upon by the plaintiff, may be summarised as follows.

35 The phrase “oppressive to, unfairly prejudicial to, or unfairly discriminatory against” is a compound expression, which should be considered as different aspects of the essential criterion, namely, commercial unfairness: Joint v Stephens (2008) 26 ACLC 1467; [2008] VSCA 210 at 134; Hillam v Ample Source International Limited (No 2) (2012) 202 FCR 336; [2012] FCAFC 73 at 4.

36 The concept of “fairness” was helpfully summarised by Robson J in Re SRW Nominees Pty Ltd [2019] VSC 547 at [34]–[40], which is gratefully adopted, but which it is unnecessary to repeat. The question is whether objectively in the eyes of the commercial bystander there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the conduct or decision fair. Whether there has been unfairness in the requisite sense is to be judged objectively: Catalano v Managing Australia Destinations Pty Ltd (2014) 314 ALR 62; [2014] FCAFC 55 at 9.

37 Fairness is not to be assessed in a vacuum, but having regard to the context in which the conduct complained of occurred. That context includes the business, the conduct of the aggrieved party—which may be such that the conduct complained of is not unfair, or may affect the relief to be granted—and the nature of the relationship between the people participating in the business: O’Neill v Phillips [1999] 1 WLR 1092 at 1098 (Lord Hoffmann, with whom the four other members of the House of Lords agreed); Exton v Extons Pty Ltd (2017) 53 VR 520; [2017] VSC 14 at [49]–54.

38 Oppressive conduct may arise from a series of events, or from a single act or omission: Donaldson v Natural Springs Australia Limited [2015] FCA 498 at [248]–249.

39 Mismanagement or poor management alone does not constitute oppression: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 at 726 (Young J, as his Honour then was), (this reasoning was upheld on appeal in Fexuto Pt y Ltd v Bosnjak Holidngs Pty Ltd (2001) 37 ASCR 672; [2001] NSWCA 97 (Fexuto (No 2)) at [16]–19); Ananda Marga Pracaraka Samgha Ltd v Tomar (No 6) (2013) 300 ALR 492; [2013] FCA 284 at 417; Natural Springs at 250.

40 Subsections 232(d) and (e) constitute distinct grounds for the award of relief in respect of oppressive conduct. Conduct can be contrary to the interests of the members as a whole even if it does not involve commercial unfairness: Exton at 39. The sections are enlivened if the conduct occurs at any time and notwithstanding that it may have ceased at the time of trial. However, this will be of relevance in determining whether and to what extent orders should be made. There may be no need for, or utility in, the remedy: Exton at 34.

41 Section 232 does not regulate or provide a remedy for “family law” style disputes dressed up in a corporate guise, and the regime does not provide for some kind of corporate “no fault divorce” allowing a shareholder to require other shareholders to purchase their shares simply because there has been a breakdown in the trust and confidence between the shareholders: Natural Springs at 250, citing O’Neill v Phillips at 1104 (Lord Hoffman). However, a breakdown in personal relations can be one of several factors that together lead to a conclusion that oppression has been made out: Tomanovic v Global Mortgage Equity Corp Pty Ltd (2011) 288 ALR 310, [2011] NSWCA 104 at 199.

42 Finally, the grant of a remedy for oppressive conduct is discretionary. The discretion under s 233 is wide as to the appropriate remedy: Smith Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd (2004) 207 ALR 136; [2004] FCAFC 153 at 70 citing United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514; [2003] NSWSC 910 at [34]–38. Remedies for oppressive conduct will be moulded to bring an end to the oppression and to compensate the person oppressed for the effects of the oppression: Vigliaroni v CPS Investment Holdings Pty Ltd (2009) 74 ACSR 282; [2009] VSC 428 at 85, citing Szencorp Pty Ltd v Clean Energy Council Ltd (2009) 69 ACSR 365; [2009] FCA 40 at 71; Natural Springs at 270.

43 It is necessary to consider the appropriateness of the remedy at the time of trial, and not simply at the time when the application was filed. If the conduct giving rise to the claim has ceased at the time of the trial, this will be of relevance in determining whether and to what extent orders should be made: Szencorp at [69]–71; Exton at 34. The Court should only look to wind up an otherwise solvent company as a “last resort”: Fexuto at 742 (Young J).

Just and equitable winding up

44 Section 461(1)(k) confers a discretion on the Court to order the winding up of a company if the Court “is of opinion that it is just and equitable that the company be wound up”.

45 The jurisdiction to order a winding up on the just and equitable ground may be exercisable in circumstances that do not amount to oppression, unfair prejudice or unfair discrimination: Fexuto (No 2) at 89.

46 In Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) (2013) 93 ACSR 189; [2013] FCA 234 at [19]–[21], Gordon J summarised the relevant principles as follows:

19    … The classes of conduct which justify the winding up of a company on the just and equitable ground are not closed, and each application will depend upon the circumstances of the particular case: Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at 374 and 376-379; Australian Securities and Investment Commission v Kingsley Brown Properties Pty Ltd [2005] VSC 506 at [95]-[97]; Nilant v RL & KW Nominees Pty Ltd [2007] WASC 105 at [117]. Nevertheless, it is possible to discern some guiding principles from the authorities.

20    It has long been established that a company may be wound up where there is “a justifiable lack of confidence in the conduct and management of the company’s affairs” and thus a risk to the public interest that warrants protection: Loch v John Blackwood Ltd [1924] AC 783 at 788. In Australian Securities and Investments Commission v ABC Fund Managers (2001) 39 ACSR 443 [2001] VSC 383 at 119, Warren J (as her Honour then was) set out three “general fundamental principles”:

[119]    First, there needs to be a lack of confidence in the conduct and management of the affairs of the company … Second, in these types of circumstances it needs to be demonstrated that there is a risk to the public interest that warrants protection.  Third, there is a reluctance on the part of the courts to wind up a solvent company. [Citation omitted.]

21    In relation to the first, a lack of confidence may arise where, “after examining the entire conduct of the affairs of the company” the Court cannot have confidence in “the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company”: Galanopoulos v Moustafa [2010] VSC 380 at [32]; see also Australian Securities Commission v AS Nominees Limited (1995) 62 FCR 504 at 532-3 133 ALR 1 at 61–2; 18 ACSR 459 at 518–19 (AS Nominees); ABC Fund Managers at [117]-[118]; Australian Securities and Investments Commission v International Unity Insurance Pty Ltd (2004) 22 ACLC 1416; [2004] FCA 1059 at [135]-139.

47 Matters that may inform the question of whether a just and equitable winding up order should be made include a deadlock in the management of the company and a breakdown in the relationship between the shareholders. As Dodds-Streeton JA explained in Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 225; [2008] VSCA 86 at [119]:

Winding up is the characteristic remedy in circumstances where a working relationship predicated on mutual co-operation, trust and confidence has broken down, whether resulting in deadlock or otherwise. Equity would not ordinarily order the continuation of such an association where it would be a futility, would require continuing supervision or would be tantamount to specific enforcement of a contract of personal services.

EVIDENCE AND witnesses

48 The parties relied on a Statement of Agreed Facts, setting out facts agreed by the parties for the purpose of s 191 of the Evidence Act 1995 (Cth). The Statement of Agreed Facts helpfully set out a series of agreed facts in relation to the history of RBS, the properties of RBS and Richard Pitt and the distribution of the Estate.

49 The plaintiff relied upon three affidavits, which she affirmed on 2 July 2024, 1 April 2025 and 5 September 2025.

50 The defendants relied upon three affidavits of the first defendant sworn on 19 August 2024, 20 February 2025 and 8 September 2025, and three affidavits of the second defendant sworn on 19 August 2024, 7 March 2025 and 8 September 2025.

51 In addition, the defendants called Mr Richard Cooper, who swore an affidavit on 7 March 2025. Mr Cooper is a certified practising accountant with over 30 years’ experience. He had been the accountant for Richard Pitt and the businesses of the Pitt family since the late 1990s and he was later engaged by the Executors of the Estate. Mr Cooper assisted the Court by preparing a reworked Summary of the financial position of the Estate as at December 2020 on the assumption that the $2.4 million loan been attributed to RBS in the calculations at the time of the distribution of the Estate. Mr Cooper was an honest and straightforward witness who I regard as an independent or neutral witness in the dispute between the parties.

52 Finally, the defendants relied on an expert report from Michael Smith, a forensic accountant, dated 9 May 2025 regarding the market value of the plaintiff’s shares in RBS, with alternative calculations based on whether or not the $2.4 million loan was attributable to the company.

53 In the course of the proceeding, the parties jointly appointed Mr Andy Bevin from Preston Rowe Paterson to provide valuation reports on the market value of the Glen Dhu, Green Hills and McGuires Marsh properties as at 26 September 2024 (property valuation reports), and the market rent of the three properties for the years commencing 30 September 2017 to 30 September 2023 (market rental valuation reports). In addition, Mr Bevin was separately engaged by the plaintiff to provide updated property valuation reports for each of the three properties as at 23 July 2025.

54 The first defendant is a woman in her early 80’s who presented as an articulate witness. Although she struggled at times to answer questions, such as when documents were shown to her electronically in cross-examination, I put that down to her age and the usual challenges of answering questions in an unfamiliar environment. I consider her to be an honest witness who answered questions to the best of her abilities. Furthermore, having had an opportunity to assess her demeanour, I am satisfied that her motives and conduct were at all times well-meaning.

55 The second defendant previously ran an architectural firm and now works full-time in farming. I also consider the second defendant to be an honest and forthright witness, who struck me as wanting to remain neutral in family disputes.

56 The plaintiff qualified as a lawyer, although she is not practising as a lawyer. The plaintiff was not an impressive witness, however, I was not asked to make any findings in relation to her credit, which was not challenged. The plaintiff’s case was largely documentary and, to a significant degree, her claims were able to be determined on the documents. The defendants tendered emails which the plaintiff sent to the first defendant’s husband in December 2020 and June 2023, and the second defendant in August 2023, using very offensive language. The emails were not relied upon to discredit the plaintiff, but rather to show that the plaintiff is partly to blame for the disintegration of the relationship between the parties and to refute the plaintiff’s entitlement to any relief.

The $2.4 million loan

Background

57 The following matters were not in dispute: first, at the time of Richard Pitt’s death, a $2.4 million loan was owing to Tasmanian Trustees. Secondly, Tasmanian Trustees’ documents referred to Richard Pitt as the borrower. Thirdly, the loan was secured by way of a charge over the assets of RBS and a mortgage in favour of Tasmanian Trustees over the Green Hills property (owned by RBS), the McGuires Marsh property (owned by RBS and Richard Pitt) and the Vermont property (owned by Richard Pitt). Fourthly, prior to March 2025, the loan was only ever recorded as a liability in the financial statements of Richard Pitt or RBK Pitt & Partners. Finally, the loan was treated as a liability of the Estate until early 2025 and, relevantly, at the time of the distribution of the Estate in late 2020.

58 In February 2016, a year prior to his death, Richard Pitt had refinanced a loan through Tasmanian Trustees. On 10 February 2016, Tasmanian Trustees sent a letter to Richard Pitt confirming the draw down details of a loan facility in the amount of $2.4 million. Attached to the letter was a draw down notice, which referred to Richard Pitt as the “Borrower”. However, the draw down notice also referred to a “Loan agreement dated 10/2/2016 between Richard King Pitt, Richard Pitt & Sons Pty Ltd and the Mortgagee”. The loan agreement was not tendered in evidence.

59 In or around September 2019, as already mentioned, the $2.4 million loan was discharged via loans from the Hurburgh-related entities, which were provided to the Estate of Richard Pitt to repay the loan owing to Tasmanian Trustees. The first defendant explained that the $2.4 million loan from Tasmanian Trustees had a three-year term and was due to be repaid in 2019. The Executors were unable to refinance the loan and Mr Rees advised the first defendant that, if the loan was not repaid, the whole of the Estate would have to go on the market. As a result, the first defendant arranged for the Hurburgh-related entities to provide loans totalling $2.4 million to the Estate to repay the Tasmanian Trustees loan.

60 In early 2025, the first defendant undertook a review and discovered a suite of mortgages, pre-dating the 2016 loan from Tasmanian Trustees, which RBS had entered into between 1993 and 2009. It was not clear what precipitated the review. Upon reviewing the mortgages, which the first defendant saw for the first time in 2025, the first defendant, or solicitors on her behalf, provided instructions to Mr Cooper to amend RBS’ financial statements to record the $2.4 million loan as a liability of RBS and to make provision for interest charges on the loans provided by the Hurburgh-related entities.

61 The documents showed a sequence of loans and mortgages as follows:

(a) On 13 December 1993, a mortgage was entered into between Tasmanian Trustees, as “mortgagee”, and RBS, as “mortgagor”. Frank Pitt and Richard Pitt were noted in the mortgage as “guarantors”. The mortgage stated that Tasmanian Trustees had agreed to lend RBS the sum of $2.25 million, at the request of the guarantors. The principal sum was due in November 1996. There was a further mortgage to Tasmanian Trustees registered on 25 January 1994 that appeared to be in the same terms. The 1993 mortgage was registered on the title to the Glen Dhu properties, and the 1994 mortgage was registered on the title to the Green Hills properties, which were both owned by RBS.

(b) In late 1996, Tasmanian Trustees refinanced the loans referred to above.

(c) On 6 March 2009, the Commonwealth Bank of Australia (CBA) sent a letter to Mr Lyndon Bean, who appears to have been assisting Richard Pitt, stating that CBA was “interested in progressing an application from Richard to refinance the current facilities with Tasmanian Trustees Ltd to an amount of $2,250,000.00”.

(d) On 13 July 2009, CBA confirmed that they had lodged for registration an “equitable Mortgage/Charge with the Australian Securities Commission”, which I infer is a reference to the charge over the assets of RBS registered in July 2009 in the companies’ register kept by ASIC.

(e) Further, in July 2009, a mortgage in favour of CBA was executed by RBS and registered on the titles to the Green Hills and McGuires Marsh properties. The mortgage in favour of CBA was not registered over the Glen Dhu property, and was instead registered over the McGuires Marsh property, which was owned by RBS and Richard Pitt. It was not clear why this change occurred, however, it may have been relevant that Mr Pitt resided in the homestead on the Glen Dhu property, and may not have wanted the property on which he lived to be used as security for the mortgage.

(f) On 1 September 2010, RBS refinanced the CBA loan with Rabobank. The loan from Rabobank was secured by a mortgage from RBS, which was registered on the titles to the Green Hills and McGuires Marsh properties.

(g) In February 2016, Tasmanian Trustees agreed to refinance the Rabobank loan facility and provided the $2.4 million loan mentioned earlier, which was secured by a registered charge over the assets of RBS and by way of registered mortgage on the titles to the Green Hills and McGuires Marsh properties and, on this occasion on the title to the Vermont property owned by Richard Pitt. Like the draw down notice, the schedule to the mortgage referred to the secured agreement as a “Loan agreement dated 10/2/2016 between Richard King Pitt, Richard Pitt & Sons Pty Ltd and the Mortgagee”.

(h) The Tasmanian Trustees mortgage was transferred to MyState Bank Ltd in February 2017, however, the parties referred to it as the Tasmanian Trustees mortgage until it was discharged and no significance was placed on the transfer to MyState Bank.

Whether the $2.4 million loan was a liability of RBS?

62 Mr Cooper explained that Richard Pitt “ran one set of books” and conducted his affairs as though RBS did not exist. Mr Cooper said that financial statements for RBS were not prepared between 2010 and 2020. Mr Cooper subsequently prepared financial statements for RBS for the years ended 30 June 2021, 30 June 2022 and 30 June 2023, which were signed by the first defendant on 1 October 2021, 23 May 2023 and 3 July 2024 respectively.

63 Mr Cooper said that, at a meeting in February 2025, the first defendant and some “legal advisers”, he did not recall who, told Mr Cooper that some information had been discovered and he was instructed to amend RBS’ financial statements to recognise the $2.4 million loan and some related interest calculations and to make some additions for rent. Mr Cooper was provided with some documents, which he reviewed, including the 2016 mortgage to Tasmanian Trustees, the 2016 draw down notice from Tasmanian Trustees, the 1993 mortgage to Tasmanian Trustees and some other documents, although he could not recall the precise details.

64 Mr Cooper said that, on reviewing the documents, he was satisfied that it was appropriate to record the $2.4 million loan and the interest charges on the loan, which by that stage was owed to the Hurburgh-related entities, as liabilities of RBS in the financial statements for RBS for the year ended 30 June 2024 and to re-state the financial statements for the years ended 30 June 2022 and 30 June 2023. The only reservation Mr Cooper expressed about carrying out his instructions was that, at the time of the distribution of the Estate, the shares that were distributed to the current shareholders were free from debt.

65 The plaintiff submitted that the Court should find that the $2.4 million loan was not a liability of RBS for the following reasons.

66 First, the plaintiff submitted that the Glen Dhu, Green Hills and McGuires Marsh properties were acquired before the relevant loans, such that the Court could not be satisfied that the loan was a debt that belonged to RBS. This is a matter that Mr Cooper said he had specifically considered in reaching the conclusion that the loan was a liability of RBS. Mr Cooper’s view was that the purchase of the properties had to be funded and the debt had always been there, and so he was satisfied that the debt belonged to the company.

67 Secondly, the plaintiff relied on acknowledgements made by the Executors or their solicitors to the effect that the loan was a liability of Richard Pitt or the Estate. Those acknowledgements, however, preceded the first defendant’s and Mr Cooper’s review of the documents that revealed the background and sequence of loans and mortgages from 1993 to the Tasmanian Trustees’ loan in 2016 as described above.

68 Thirdly, the plaintiff submitted that the proper construction of the documents supports a finding that the loan is not a liability of RBS. In my assessment, the proper construction of the documents supports the conclusion reached by Mr Cooper that the loan was obtained by RBS and the debt belonged to the company. The assets and properties of the company were used as security for the loan. The loan from Tasmanian Trustees had to be repaid, and the loan from the Hurburgh-related entities was used for that purpose. Furthermore, the evidence of Mr Cooper, who is a qualified accountant with considerable experience and familiarity with Richard Pitt’s affairs, is persuasive and I find that, on the balance of probabilities, the $2.4 million loan was a liability of RBS.

69 Finally, in closing submissions, the plaintiff submitted that the first defendant, as Executor and sole director of RBS, made a binding election to treat the loan as a liability of the Estate. The plaintiff relied on Sargent v ASL Developments Ltd; Turnbull v ASL Developments Ltd [1974] HCA 40; 131 CLR 634 at 656 (Mason J) for the proposition that where a party makes a clear choice between inconsistent alternatives and acts upon that choice, then the party is bound by its election. As the defendants submitted, the doctrine of election is not apposite in the present circumstances because directors have an ongoing obligation to maintain proper and correct financial records. Furthermore, for the doctrine of election to apply, the elector must at least know of the facts which give rise to the alternative legal rights: Sargent at 642 (Stephen J). As already mentioned, any purported election by the first defendant occurred with incomplete knowledge of the relevant facts.

Whether the allocation of the $2.4 million loan to RBS in March 2025 or the allocation of the interest liability to RBS was contrary to the interests of members of RBS as a whole or oppressive?

70 On 7 March 2025, on instructions from the first defendant, Mr Cooper prepared re-stated financial statements for RBS for the years ended 30 June 2022 and 30 June 2023, and financial statements for RBS for the year ended 30 June 2024, which:

(a) recorded the $2.4 million loan as a liability of RBS (which by that time was owed to the Hurburgh-related entities);

(b) included interest charges on the $2.4 million loan from the Hurburgh-related entities;

(c) included a revaluation of the Glen Dhu, Green Hills and McGuires Marsh properties to accord with Mr Bevin’s property valuation reports; and

(d) took into account Mr Bevin’s market rental valuation reports for the Glen Dhu, Green Hills and McGuires Marsh properties.

71 The plaintiff submitted that the financial statements of RBS should not have been amended to reflect that the $2.4 million loan was a liability of RBS because the in specie distribution under the Will occurred on the basis that the loan was a liability of the Estate. The plaintiff submitted that the allocation of the loan to RBS was oppressive to her because it failed to take account of her interest as beneficiary and that the first and second defendants received additional assets in the distribution of the Estate to compensate them for discharging the loan. Furthermore, the defendants had preferred their own interests over the interests of the plaintiff and RBS as a whole.

72 It is trite that directors are obliged to prepare financial statements that are accurate. Financial statements are used by companies to prepare tax returns and by external stakeholders, including lenders, to make decisions in relation to the company. If directors become aware of a material error in a financial statement, they are obliged to correct it.

73 Mr Cooper, who is a certified practising accountant with considerable experience, evidently formed the view that the $2.4 million loan was a debt owed by RBS and that it should be recorded in the financial statements of RBS as a liability. He also formed the view that it was appropriate to include interest charges on the loan which had been provided by the Hurburgh-related entities to repay the loan from Tasmanian Trustees. The first defendant said that she relied on advice from Mr Cooper and the legal advisers in approving the relevant financial statements for RBS.

74 However, in deciding whether conduct is oppressive, in the sense of commercially unfair, the context is relevant, including the nature of the relationship between the shareholders: O’Neill v Phillips at 1098 (Lord Hoffman). The circumstances of this case are unique. None of the shareholders invested in the company or paid consideration for their shares. The plaintiff and the first and second defendants were fortunate to become shareholders in RBS by way of in specie distribution under the Will. However, the distribution of the Estate occurred in circumstances where the RBS shares were free from debt and the distribution to the first and second defendants recognised, and effectively compensated them for, the fact that they had taken on the liability in respect of the loan, which at that time resided in the Estate. A reasonable director, knowing these circumstances, would regard the allocation of the $2.4 million loan to RBS as having imposed a disadvantage or burden on the plaintiff which was commercially unfair, within the meaning of that term in the context of oppression under s 232 of the Corporations Act (see SRW Nominees at [34]–40), if the plaintiff was not otherwise compensated for the retrospective reduction in the value of her distribution under the Estate.

75 For completeness, the plaintiff further submitted that the Court should find that $2.4 million loan was a liability the defendants were required to discharge on behalf of the Estate. The plaintiff submitted that the $2.4 million loan was fully discharged in 2019, when the Hurburgh-related entities provided funds to pay out the loan from Tasmanian Trustees. Secondly, those entities agreed to lend money to the Estate on terms that made no reference to any loan to RBS and expressly provided that the lenders would have no recourse other than to assets of the Estate. It is unnecessary to determine those issues in light of the previous finding.

76 In my assessment, the allocation of the loan to RBS, in the circumstances described above, and treatment of the interest charges on the loan was oppressive in the requisite sense. That conclusion does not mean that the entries in RBS’ financial statements ought to be reversed, because the remedy can be moulded to compensate the plaintiff for the oppression.

The leasing of farming properties to Glen Dhu FARMING

Background

77 Following the distribution of the Estate, the assets of the RBK Pitt & Partners farming business were transferred to Glen Dhu Farming.

78 Glen Dhu Farming has operated the farming business on and from the Glen Dhu, Green Hills and McGuires Marsh properties under leasing arrangements that evidently were approved by the first defendant, on behalf of RBS. The plaintiff was unaware of the leases until Mr Cooper told her about them in May 2023.

79 The plaintiff’s principal objections to the leases were that the leases were not at arm’s length, the rent was paid yearly in arrears and was below market rent, the leases were not in writing, the leases were entered into without her knowledge or consent and were to the benefit of the first and second defendants, to the detriment of RBS and the plaintiff. The plaintiff also raised a further objection, that RBS did not have a separate bank account for receiving the rent, to which I will return later. The defendants rejected each of the allegations.

80 As already mentioned, there were no written lease agreements. The leases evidently were approved by the first defendant, as director of RBS, at a director’s meeting on 13 July 2023. The defendants submitted that the leases were at arm’s length and market rent was paid. In that regard, the defendants relied on the minutes of the director’s meeting and attached “Q&A” document. The circumstances in which the meeting was convened and the Q&A document was prepared are referred to at paragraphs 115 – 122 below.

81 The minutes of the director’s meeting recorded that the properties had previously been used by the RBK Pitt & Partners partnership, which had not paid rent to RBS. The Q&A document stated that the “directors (at the time) sought an arms [sic] length valuation and used that as the basis to determine rent in the absence of any useful dialogue and agreement on the matter”.

82 At the time of the director’s meeting, the only rental valuation in existence was the Acumentis valuation which the Executors had obtained in May 2021. In that valuation, Acumentis calculated rent for all of the properties owned by the Estate and RBS on a DSE (dry sheep equivalent) basis. The Executors had used the Acumentis valuation to calculate the rent payable to RBS by Glen Dhu Farming for use of the McGuires Marsh, Green Hills and Glen Dhu properties from 2021. I infer that this was the arm’s length valuation referred to in the Q&A document which was used by the first defendant, as director of RBS, to determine the rent payable by Glen Dhu Farming.

83 The minutes of the director’s meeting also recorded a resolution to obtain a rental valuation to determine rent payable for the year ended 30 June 2024 and a revaluation every three years with CPI applied on an annual basis between valuations.

84 The plaintiff did not accept the Acumentis valuation. The plaintiff contended that, first, the DSE approach to calculating rent was not appropriate because it was based on the stock actually carried on the land rather than the land’s full carrying capacity, secondly, the valuation did not include the cottages and other improvements on the properties and, thirdly, the valuation stated that “[t]his letter, and all advice, assessments or conclusions herein are general in nature and do not constitute a stand alone valuation or rental assessment”.

85 In November 2023, the plaintiff’s former solicitors wrote to the first and second defendants maintaining the plaintiff’s objections to the leases and seeking a revaluation of the market rent since the plaintiff became a shareholder of RBS.

86 In December 2023, the first and second defendants responded to state that a valuation would be obtained to determine the market rental for the leases “for the 2024 year”, but not for prior years, and that the valuation would be renewed every three years, as per the resolution recorded in the minutes of the director’s meeting held on 13 July 2023.

87 In February 2024, the first and second defendants provided a draft brief to the valuer to the plaintiff for her comments. The proposed brief to the valuer was not acceptable to the plaintiff because it excluded improvements on the land, a matter to which I will return.

88 RBS did not obtain a rental valuation for the properties for the year ended 30 June 2024, despite the defendants’ correspondence and the resolution passed at the director’s meeting on 13 July 2023.

89 After the proceeding commenced, as already mentioned, Mr Bevin of Preston Rowe Paterson was jointly appointed by the parties to provide a valuation of the Glen Dhu, Green Hills and McGuires Marsh properties and a valuation of the market rent for those properties which were provided on 26 September 2024 and 11 October 2024 respectively. The defendants accepted Mr Bevin’s property and market rental valuations reports, although they did not accept Mr Bevin’s updated property valuation reports as at 23 July 2025.

90 The first defendant instructed Mr Cooper to adjust RBS’ balance sheet and profit and loss statements to account for Mr Bevin’s property valuation reports and to adjust the rental to adopt Mr Bevin’s market rental historically and going forward. Those adjustments were made in the financial statements for RBS that Mr Cooper prepared or re-stated in March 2025.

91 As a result of the adjustments to reflect Mr Bevin’s market rental valuation reports, a shortfall of $448,935 for market rent between 1 July 2021 and 30 June 2024 was owed to RBS.

92 However, the rent owed by Glen Dhu Farming was offset entirely by interest expenses owing on the $2.4 million loan and expenses incurred by Glen Dhu Farming in undertaking improvements on the Glen Dhu and Green Hills properties. Furthermore, Mr Cooper’s adjustments to RBS’ financial statements did not include interest on the underpayment of market rent. These matters are addressed in paragraphs 104 – 109 and 156 respectively.

Whether RBS’ farmland and farm improvements have been utilised by Glen Dhu Farming at less than market rent?

93 It was not in dispute that the Glen Dhu and Green Hills properties which Glen Dhu Farming leased from RBS had five cottages (two on Green Hills and three on Glen Dhu) which Glen Dhu Farming has sublet to third parties. Nor was it in dispute that the rent from subletting the cottages had been retained by Glen Dhu Farming and had not been paid to RBS.

94 Although the plaintiff otherwise relied on Mr Bevin’s property and market rental valuation reports, the plaintiff contended that Mr Bevin’s market rental valuations did not include the cottages on the Glen Dhu and Green Hills properties, which Glen Dhu Farming had sublet to third parties, a proposition which the defendants rejected.

95 In oral closing submissions, senior counsel for the defendants submitted that Mr Bevin’s market rental valuation reports could be taken to include the cottages and other improvements for two reasons. First, Mr Bevin’s alternative approach to valuing the market rent was to apply a rate of 2% of the value of the land from Mr Bevin’s property valuation reports, which included residential dwellings and improvements. Secondly, “it [was] far from clear” that the cottages were excluded from Mr Bevin’s market rental valuations. I do not accept those submissions.

96 The market rental valuations clearly stated that “ [t] he rental value of the dwellings is excluded from this assessment ” (emphasis in original). Irrespective of Mr Bevin’s separate property valuations, it is abundantly clear that the market rental valuations did not include the cottages.

97 The inevitable result of the preceding matters is that Glen Dhu Farming has utilised the RBS farming properties for less than market rent by subletting the cottages and retaining the rent from the subleases.

Whether the leasing of farm properties to Glen Dhu Farming was contrary to the interests of members of RBS as a whole or oppressive?

98 The adjustments that were made to RBS’ financial statements, to take into account Mr Bevin’s market rental valuations, were an acknowledgement that the rental paid by Glen Dhu Farming from 1 July 2021 to 30 June 2024, based on the Acumentis valuation, was below market rent.

99 It should have been obvious to the defendants that Mr Bevin’s market rental valuation reports did not include the cottages. Pausing there, the first defendant did not give evidence that she personally read the valuations. The evidence from the first and second defendants simply did not address the issue. Nevertheless, at the trial, the defendants maintained that the rental that Glen Dhu Farming had been paying to RBS for the properties included the cottages and that Glen Dhu Farming was not required to account to RBS for the rental on the cottages.

100 The leasing of the farm properties to Glen Dhu Farming was contrary to the interests of RBS as a whole and oppressive to the plaintiff because Glen Dhu Farming has utilised the RBS farming properties at less than market rent and the rent from subletting the cottages has not been passed on to RBS.

101 There is also the issue of the absence of written lease agreements. The consequence of the fact that there were no written lease agreements was that there was nothing in writing to deal with obligations in relation to maintenance and repairs, or what was to occur if Glen Dhu Farming carried out improvements in relation to the properties. This meant that there was nothing in writing to protect RBS’ interests when, as occurred in this case, Glen Dhu Farming undertook and paid for improvements to the properties and took it upon itself to decide to deduct the expenses from the rental owing. The absence of written lease agreements was contrary to the interests of members of RBS as a whole.

Whether the payment at less than market rent has been fully rectified?

102 As already mentioned, the shortfall in market rent from 1 July 2021 to 30 June 2024 has been rectified. Although the plaintiff’s evidence and written submissions addressed the issue of unpaid rent prior to 2021, in opening, the plaintiff’s senior counsel said that the Court need not trouble itself with rent prior to July 2021.

103 RBS’ financial statements have not been adjusted for market rent for the financial year ended 30 June 2025. Furthermore, as already mentioned, the rental from subletting the cottages has been retained by Glen Dhu Farming and has not been remitted to RBS.

Whether the offset of expenses for INTEREST ON THE LOAN AND property improvements against the rent due from Glen Dhu FARMING was CONTRARY TO THE INTERSTS OF MEMBERS OF Rbs AS A WHOLE OR oppressive?

104 It was not in dispute that the rent owing under the leases to Glen Dhu Farming was offset almost entirely against expenses for interest on the $2.4 million loan and expenses incurred by Glen Dhu Farming in carrying out repairs and improvements to the Glen Dhu, Green Hills and McGuires Marsh properties and interest on the $2.4 million loan.

105 The interest charges are dealt with in the context of the relief to remedy the oppression to the plaintiff from the allocation of the $2.4 million loan to RBS, see paragraphs 149 – 151.

106 The plaintiff submitted that the offset for the expenses for repairs and improvement was wrongful because the repairs or improvements were for the benefit of Glen Dhu Farming, as the tenant of the properties, and the defendants had not established that the repairs or improvements were capital in nature.

107 The first defendant instructed Mr Cooper to allow for expenses incurred by Glen Dhu Farming for improvements to the Glen Dhu, Green Hills and McGuires Marsh properties, to be offset against the arrears in rent owed by Glen Dhu Farming. The offsets for those expenses and interest against the rent owed to RBS were as follows:

(a) financial year ending 2022: the calculated rent owed to RBS was $329,266.66 with offsets totalling $250,897 including $108,480 for interest;

(b) financial year ending 2023: the calculated rent owed to RBS was $342,466.66 with offsets totalling $159,948.74 including a $45,468.74 expense offset for improvements to the properties and $114,480 for interest; and

(c) financial year ending 2024: the calculated rent owed to RBS was $327,891.66 with offsets totalling $518,662.19 including a $320,182.19 expense offset for improvements to the properties and $198,480 for interest.

108 The defendants did not adduce any evidence in chief seeking to explain the expenses. In cross-examination, the first defendant was unable to recall the detail for some of the expenses. However, the first defendant said that a significant component of the expenses associated with the Glen Dhu and Green Hills properties were for substantial improvements to the cottages, such as renovations to the bathrooms, kitchens, fencing and pipeworks, carpentry, welding fabrication, plumbing, painting and roof repairs. The first defendant described the cottages as inhabited by vermin and animal carcases, and said that prior to the renovations the cottages were unliveable. The first defendant also referred to significant expenses incurred in connection with the irrigation system on the Green Hills property.

109 I am not satisfied that the plaintiff has established her case that the offset of the expenses by Glen Dhu Farming was wrongful. There was no dispute that the expenses were actually incurred by Glen Dhu Farming. Mr Cooper evidently was satisfied that the expense offsets were on account of expenses associated with improvements to the properties. As the first defendant explained, the cottages had not previously been sublet and were in need of major renovations to put them in a state where they were able to be sublet. The expenses incurred in connection with the irrigation were similarly an expenditure of a substantial nature and improvement to the property that ultimately was to the benefit of RBS. Based on the evidence given at the trial, I am satisfied that the nature of the improvements were substantial and capital in nature and ultimately to the benefit of RBS.

110 I have already found that the absence of written lease agreements was contrary to the interests of members of RBS as a whole (see paragraph 101 above). The absence of written lease agreements meant there was nothing in writing to deal with obligations in relation to maintenance and repairs, or what was to occur if Glen Dhu Farming carried out improvements in relation to the properties. Glen Dhu Farming undertook and paid for the improvements and took it upon itself to decide to deduct the expenses from the rental owing. However, the expenses were for improvements to the properties that were to RBS’ benefit and, therefore, RBS would have been liable to reimburse Glen Dhu Farming for the expenses. This is a matter to take into account on the question of the appropriate remedy, which is addressed in paragraph 155.

Whether the failure to hold annual general meetings was oppressive?

111 It was not in dispute that there had not been an annual general meeting since the parties became shareholders of RBS in 2021. The Constitution of RBS required there to be an annual general meeting at least once a year, and not more than 15 months after the last such meeting.

112 Since early 2021, the plaintiff had raised the desirability of a shareholders’ meeting to amend the Constitution and adopt a shareholders’ agreement. At a director’s meeting held on 13 July 2023, among other things, it was resolved that RBS would engage solicitors to update the Constitution and draft a shareholders’ agreement. However, no steps were taken to instruct solicitors to prepare an updated Constitution or a draft shareholders’ agreement.

113 The failure to hold a shareholders’ meeting was concerning given the issues that had been raised by the plaintiff regarding the valuations and leases to Glen Dhu Farming and the plaintiff’s lack of involvement in the management of RBS. A shareholders’ meeting would have been an opportunity for the plaintiff to ask questions, raise concerns and obtain information regarding the company’s affairs.

114 Turning to the plaintiff’s other complaint on this topic, the plaintiff contended that a shareholders’ meeting that was meant to take place in July 2023 was “unilaterally changed” to a director’s meeting, which took place on 13 July 2023, and that she was not informed of this change until after the meeting took place.

115 In early 2023, the plaintiff’s former solicitors foreshadowed the plaintiff calling an extraordinary general meeting in the context of having raised the desirability of amending RBS’ Constitution. Mr Cooper took steps to organise a shareholders’ meeting and prepared a draft agenda, which he sent to the plaintiff for her review. He also prepared a “Q&A document” which set out a series of questions that had been raised by the plaintiff, regarding the valuations and rental on the properties leased to Glen Dhu Farming, with proposed responses which were drafted by Mr Cooper.

116 Mr Cooper said, however, that he formed the view that the interpersonal dynamic between the plaintiff and the defendants would not result in a productive meeting and so he decided that the shareholders’ meeting should instead be an in-person meeting with the first defendant, with subsequent circulation of the minutes for the plaintiff’s and second defendant’s approval.

117 On 13 July 2023, Mr Cooper held an in-person meeting with the first defendant.

118 On 28 July 2023, Mr Cooper sent the draft minutes of the meeting, which described the meeting as a meeting of “members”, and a copy of the Q&A document to the plaintiff for her review. The plaintiff said that this was when she was first alerted to the fact that the meeting had taken place in her absence.

119 The draft minutes stated:

Purpose of the meeting:

The purpose of this meeting is to formally table and document matters raised by shareholders individually and collectively for agreement.

Before the resolutions were put to the members, all parties were given the opportunity to raise any concerns or questions regarding the resolutions.

120 The draft minutes relevantly referred to the following agenda items:

(a) director nominations – noting none had been received;

(b) financial reports for the six months prior to 30 June 2021 and 12 months prior to 30 June 2022;

(c) a rent review and director’s suggestion that updated rental valuations be obtained to determine rent payable for the year ended 30 June 2024, with revaluation every three years and CPI applied on an annual basis in between valuations; and

(d) proposed review and update of the Constitution and preparation of a shareholders’ agreement.

121 Mr Cooper subsequently amended the minutes to record the meeting as a director’s meeting, instead of a shareholders’ meeting, and he converted the draft minutes he had prepared, with the same resolutions, to minutes of a director’s meeting and re-attached the Q&A document. The Q&A document was meant to represent the responses of the first defendant, as the director of RBS.

122 On 1 August 2023, Mr Cooper sent the minutes of the director’s meeting to the shareholders, with the attached Q&A document, stating that “[t]hese minutes replace the previous minutes that I circulated and described as Shareholder Meeting Minutes when in fact it was only a Director Meeting [sic] following on from our shareholder comms mentioned above”.

123 The plaintiff was not happy about the change of events and responded to Mr Cooper’s email of 28 July 2023 to say that she did not agree to the resolutions and maintained a request for a shareholders’ meeting.

124 Mr Cooper is to be commended on his efforts to work towards a resolution of the issues raised by the plaintiff and no criticism can be, or is made, of him personally. However, the first defendant as the director of RBS has made no attempts to convene a shareholders’ meeting or to progress the Constitution and draft shareholders’ agreement, having resolved that she would do so in July 2023. Given the disintegration in the relationship and disagreements that had arisen between the shareholders, and the concerns the plaintiff had raised in relation to the leases to Glen Dhu Farming which had occurred without the plaintiff’s knowledge or consent, the failure to hold a shareholders’ meeting is oppressive to the plaintiff.

125 For completeness, something should be said about the plaintiff’s complaint that RBS does not have a bank account. There was no dispute that RBS does not have a bank account. Mr Cooper advised the defendants to pay rent from Glen Dhu Farming into a separate account, and so the first defendant established a sub-account under Glen Dhu Farming’s bank account. There were no issues raised about the propriety of the sub-account.

126 As it turns out, there is a relatively simple explanation for why RBS does not have a bank account. As Mr Cooper explained, the copy of RBS’ Constitution in the company’s records is incomplete and RBS could not open a bank account until it updated its Constitution. This further supports the finding that the failure to hold a shareholders’ meeting is oppressive to the plaintiff and contrary to the interests of the members as a whole.

was the failure to provide financial statements of rbs to the plaintiff oppressive?

127 It was not in dispute that the plaintiff was not provided with “original” financial statements of RBS for the financial years ended 30 June 2023 and 30 June 2024. The defendants submitted, however, that the financial statements were provided to the plaintiff in the course of the proceeding and the issue has been rectified.

128 The defendants further submitted that no complaint was raised regarding the failure to provide the financial statements in any of the three affidavits that the plaintiff provided in the proceeding or in correspondence from the plaintiff’s solicitors before the proceeding was issued. Furthermore, the financial statements for the years ended 30 June 2023 and 30 June 2024 were prepared after the proceeding was issued, and as a result there was no “failure” to provide these financial statements at the time the proceeding was issued.

129 It may be accepted that this issue has been rectified or was not raised to its full extent when the proceeding was commenced. However, underlying the failure to provide the financial statements of RBS to the plaintiff was a disregard for the plaintiff’s interests and a concerning failure to appreciate the need to provide such information to the plaintiff.

Whether the defendants preferred their own interests to those of RBS

130 I am satisfied that in leasing RBS’ properties to Glen Dhu Farming in the circumstances described above, the first and second defendants preferred their own interests to those of RBS. Although the leases were initially regarded as an arm’s length arrangement, the first and second defendants paid insufficient attention to Mr Bevin’s market rental valuation reports and did not appreciate that the rental paid by Glen Dhu Farming did not include an amount for subletting the cottages, which has been retained by Glen Dhu Farming.

131 The absence of written lease agreements meant there was nothing in writing dealing with important matters such as obligations in respect of maintenance and improvements. It further evidences the first and second defendants’ inability, in respect of the leases, to distinguish between their own interests (and their interests in Glen Dhu Farming) and the interests of RBS, with the result that they preferred their own interests over the interests of the plaintiff or RBS as a whole.

Whether the plaintiff was wrongfully excluded from the management of RBS?

132 The issue raised for determination was whether the plaintiff was wrongfully excluded from the management of RBS “in respect of any of the above matters”, being relevantly the allocation of the $2.4 million debt to RBS, the leasing arrangements with Glen Dhu Farming, the failure to notify the plaintiff of annual general meetings and the failure to provide the plaintiff with financial statements.

133 Wrongful exclusion from management may be a form of oppression: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [175]–176.

134 The principal obstacle for the plaintiff on this issue is that the plaintiff had not sought and disavowed any involvement in the management of RBS. Further, the plaintiff did not want or nominate for a directorship. The unchallenged evidence of the first and second defendants was that the plaintiff did not want to be involved in the business of RBS or any farming business, whereas the first and second defendants wanted to continue Richard Pitt’s legacy. The plaintiff’s conduct made clear that the only thing she ever wanted was for her shares to be bought out.

135 It was put in closing submissions that the first defendant’s conduct in failing to address the plaintiff’s concerns in relation to the company was oppressive and the plaintiff was excluded from management and decisions, not because she was not made a director, but because the  defendants made major related-party decisions concerning the leases without anything in writing, for less than market value and for no rental in relation to the cottages. These issues have already been addressed.

Conclusion on oppression

136 As stated above, the allocation of the $2.4 million loan to RBS and treatment of the interest charges on the loan was oppressive to the plaintiff. Furthermore, the leasing of RBS’ properties to Glen Dhu Farming without written leases and at less than market rent was contrary to the interests of members as a whole and oppressive to the plaintiff. Although the issue has partially been rectified, the failure and refusal to account for the rental from subletting the cottages had not been rectified and is oppressive to the plaintiff.

137 Finally, the failure to hold a shareholders’ meeting in circumstances where there were ongoing disagreements between the shareholders on a number of issues, is oppressive to the plaintiff.

what, if any, relief should be granted?

138 The primary relief sought by the plaintiff was an order that the first and/or second defendant purchase her shares or, alternatively, that RBS buy-back the plaintiff’s shares with an appropriate reduction of its share capital. In the alternative, the plaintiff sought an order that RBS be wound up. The plaintiff’s closing submissions did not address the fourth form of relief sought by the plaintiff, the appointment of a receiver, and I regard that as having been abandoned.

139 The defendants submitted that if the Court finds that there was oppression, the Court ought to exercise its discretion not to grant any relief. First, the defendants submitted that the conduct of all parties is a relevant factor: Ubertini v Saeco International Group Spa (No 4) (2014) 98 ACSR 138; [2014] VSC 47 at [494]–496; Exton at [90]–91. The defendants submitted that the plaintiff has contributed to the breakdown in the relationship which is affecting the management of RBS and any lack of confidence in the management of RBS comes from her dislike of the first and second defendants.

140 Secondly, the defendants submitted that relief for oppressive conduct may not be warranted where the oppressive conduct has been cured: Melrob Investments Pty Ltd v Blong Ume Nominees Pty Ltd (2022) 141 SASR 1; [2022] SASCA 29 at [167]–173.

141 Thirdly, the defendants submitted that a winding up order is a remedy of last resort and a less drastic remedy was available and appropriate, namely, a sale of the plaintiff’s shares under the transfer of shares procedure in articles 27 to 38 of the Articles of Association. However, as the plaintiff submitted, a buy out under article 33 or 36 would require there to be a willing purchaser who is prepared to be a minority shareholder, which is unrealistic in all the circumstances.

142 The circumstances presented by the present case are unique. This is not a case where shareholders have invested in the company and find themselves locked in to their investment. This is not a case where shareholders have been removed from, and are no longer able to participate in, the management of the company. The shareholders in this case inherited their shares and the plaintiff, who was dissatisfied with that outcome, has not sought to be involved and wants her shares to be bought out.

143 However, the relationship between the parties has completely broken down and they are unable to have direct communications in relation to RBS. It is not feasible to expect all communications between the shareholders to be routed through a third party, as suggested by the defendants. Furthermore, the person who has been fulfilling the function of an intermediary, Mr Cooper, does not regard it as a workable solution. It is unnecessary to decide whether the plaintiff contributed to the breakdown in the relationship because, for whatever reason, the situation is unworkable.

144 The impugned conduct was not malevolent. The first defendant has endeavoured to give effect to her late brother’s testamentary wishes, however, aspects of the impugned conduct was oppressive to the plaintiff and there is a risk of further disputation between the parties.

145 I am not satisfied that it is appropriate to take the extreme step of winding up RBS for two reasons. First, a winding up order is a last resort and one which ought not be granted if some less drastic remedy is available and appropriate: Re Dalkeith Investments Pty Ltd (1986) 9 ACLR 247 at 252 (McPherson J). Secondly, the first and second defendants opposed a winding up and have demonstrated a strong desire to continue RBS, and I infer Richard Pitt’s legacy. If it were not for that opposition, and to avoid the risks and costs of further disputation between the parties, I would have been prepared to make a winding up order.

146 Having found that there was conduct that constitutes oppression, I would exercise the discretion to order RBS to buy-out the plaintiff’s shares with a commensurate reduction in the share capital. If RBS is unable or unwilling to buy-out the plaintiff’s shares, then a winding up of RBS would seem inevitable.

value of the plaintiff’s shares

147 In exercising powers under provisions analogous to s 233 of the Corporations Act to make appropriate orders where it has found oppressive conduct to have occurred, the Court is not bound to apply any particular principles as to valuation: Crawley v Short (No 2) [2010] NSWCA 97 at 9. The only legal restriction in relation to a share purchase order on the way in which the price may be calculated is that it be a proper exercise of a judicial discretion: United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ASCR 514; [2003] NSWSC 910 at 36.

148 The Court’s task is to fix a price for the plaintiff’s shares that represents a fair value in all the circumstances: Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60 at 102 (von Doussa J) and on appeal Dynasty Pty Ltd v Coombs (1995) 59 FCR 122. As the plaintiff submitted, the plaintiff’s shares should be valued at the date of judgment, without any discount for a minority interest: Ian Allan Byrne v A J Byrne Pty Limited [2012] NSWSC 667 at 70; Mopeke Pty Ltd v Airport Fine Foods Pty Ltd (2007) 61 ACSR 395; [2007] NSWSC 153 at 96; Smith Martis Cork & Rajan Pty Ltd v Benjamin Corp Pty Ltd (2004) 207 ALR 136; [2004] FCAFC 153 at 78.

149 The only valuation evidence before the Court was the expert report of Mr Smith dated 9 May 2025 setting out Mr Smith’s opinion on the market value of the plaintiff’s shares under two scenarios: first, that the $2.4 million loan was a liability of RBS; and secondly, that the $2.4 million loan was not a liability of RBS.

150 Mr Smith’s valuation relied on Mr Bevin’s property valuation reports for the Glen Dhu, Green Hills and McGuires Marsh properties, where Mr Bevin valued those properties, as at 26 September 2024, as follows:

Glen Dhu                $6,350,000

Green Hills                $6,500,000

McGuires Marsh (two thirds)        $2,666,667

Total:                    $15,516,667

151 Under the second scenario and on the basis of Mr Bevin’s valuations as at September 2024, Mr Smith valued the plaintiff’s shares at $5,180,958.

152 The plaintiff submitted that Mr Smith’s valuation should be adjusted to take into account:

(a) the rental for the lease of the properties to Glen Dhu Farming for the financial year ended 30 June 2025 and each month thereafter (pro-rata) until the date of judgment;

(b) the amount retained by Glen Dhu Farming from subletting the cottages until 30 June 2025;

(c) the wrongful offset of interest expenses and expenses incurred by Glen Dhu Farming for repairs and improvements on the properties;

(d) interest on the underpaid rent and rental from subletting the cottages; and

(e) Mr Bevin’s updated valuations as at 23 July 2025 for each of the properties owned by RBS.

153 An order for the sale of shares, by way of remedy for oppression, enables the Court to state the basis on which the shares are to be valued and, in doing so, take into account the consequences of the oppressive conduct established in the proceeding: Fexuto (No 2) at 528.

154 I accept that Mr Smith’s valuation should be adjusted for outstanding rent to the date of judgment and rental from subletting the cottages which has been retained by Glen Dhu Farming.

155 As stated above, the repairs and improvements carried out in relation to the RBS properties were capital in nature and were ultimately to the benefit of RBS, in that the expenditure allowed the cottages to be rented and improvements to be carried out to the properties. I am not satisfied that there should be an adjustment to the value of the plaintiff’s shares because the expenses for the repairs and improvements were to RBS’s benefit and/or RBS would have been liable to reimburse Glen Dhu Farming for the expenses.

156 In relation to unpaid interest, the plaintiff did not provide any evidence or submissions as to what would constitute a reasonable amount for interest on the market rental shortfall or for any delay in payment because rent was paid yearly in arrears. Nor did the plaintiff put forward any interest calculations or nominate a rate at which interest should be calculated, and did not ask Mr Smith to provide an interest calculation. As a result, I am unable to make any finding in relation to interest and there is to be no adjustment to the value of the plaintiff’s shares on that account.

157 In Mr Bevin’s updated property valuations as at 23 July 2025, Mr Bevin increased the valuations for the Green Hills and Glen Dhu properties and decreased the valuation for McGuires Marsh property. The defendants submitted that Mr Bevin’s updated valuations were unreliable and illogical, principally because they relied on limited comparable sales. They did not call any evidence to contradict Mr Bevin’s valuations. Mr Bevin was cross-examined on his updated valuations and reasoning. I am satisfied that Mr Bevin’s updated valuations were well-reasoned and justified, having regard to his assessment of comparable sales and explanations of increased confidence, movements in values and increased replacement costs. Mr Smith’s valuation should be adjusted to take account Mr Bevin’s valuations, as at 23 July 2025 as follows:

Glen Dhu                $6,900,000

Green Hills                $6,725,000

McGuires Marsh (two-thirds)        $2,533,333

just and equitable winding up

158 In light of the findings in relation to the plaintiff’s claim for oppression, it is unnecessary to consider whether RBS should be wound up on just and equitable grounds.

A taking of accounts?

159 In the originating process, the plaintiff sought orders for the taking of accounts and the making of inquiries in respect of the use of assets of RBS for the benefit of the first and second defendants and/or Glen Dhu Farming (the Impugned Transactions). The plaintiff relied on Regal Hastings v Gulliver [1967] 2 AC 134 and the principle that where an officer of a company diverts profits or commercial opportunities for themselves, without the fully informed consent of the company, they hold the benefit of such diversion for the benefit of the company: Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ); Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 at 31, 59.

160 As the defendants submitted, a claim for an account due to a breach of director’s duties must be brought in the company’s name and the plaintiff has not sought leave to bring a derivative action under s 237 of the Corporations Act: Meytor Inc v Queensland Electronic Switching Pty Ltd [2003] 1 Qd R 186; [2002] QCA 269 at [6]–7. As a result, the plaintiff is not entitled to an order for the taking of accounts. However, the effect of the relief granted for the oppression is that the rental from subletting the cottages has been brought to account in the valuation of the plaintiff’s shares.

161 In the plaintiff’s originating application, the plaintiff sought, in the alternative, an order that the first, second and/or third defendants pay any loss and/or damage arising from the Impugned Transactions. This matter was not addressed in the plaintiff’s closing submissions. As already mentioned, the order for the buy-out of the plaintiff’s shares, and the basis on which the shares were valued, takes into account the consequences of the oppression arising from the Impugned Transactions.

conclusion

162 For the foregoing reasons, I would exercise the discretion to make an order pursuant to s 233 of the Corporations Act that RBS buy-out the plaintiff’s shares with an appropriate reduction of capital. The parties are to submit a minute of orders to give effect to these reasons.

| I certify that the preceding one hundred and sixty-two (162) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Neskovcin. |
Associate:

Dated: 31 March 2026

SCHEDULE OF PARTIES

| | VID 622 of 2024 |
| Respondents | |
| Fourth Respondent: | RICHARD PITT & SONS PTY LTD |
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