In the matter of Quantra Group Limited

1. [1]

   This case concerns the issue of shares by the First Defendant, Quantra Group Limited, which was formerly known as Homes.com.au Limited (the Company). Each of the other parties is a shareholder of the Company.

2. [2]

   The Company was established by the late Mr Pasquale (Pat) Carbone with a view to developing a real estate listing and advertising business to compete with realestate.com.au and domain.com.au. In February 2018, Mr Carbone acquired the domain name of “homes.com.au” (Homes Domain Name) through a related entity that he controlled, Aspromonte Pty Ltd, for the purpose of pursuing this business opportunity.

3. [3]

   Each of the Plaintiffs is a person who subscribed for shares in the Company at a price of $0.6667 per share pursuant to a document called the “First Share Offer” which was dated 18 May 2018.

4. [4]

   Each of the Defendants, other than the Company, is a person to whom shares in the Company were issued at a price well below the price paid by the Plaintiffs. The relevant share issues fall into three main categories:

   1. (1)

      first, the issue of 99,999,999 shares to the Second Defendant, Homes Holdings Pty Ltd (which was controlled by Mr Carbone) at a price of $0.001 per share (the Holdings Share Issues);

   2. (2)

      secondly, the issue of 6,250,000 shares to nine of the Defendants and one of the Plaintiffs, being persons who provided various services to the Company or the associates of such persons, at a price of either $0.001 or $0.02 per share (the Director & Consultant Share Issues); and

   3. (3)

      thirdly, the issue of 11,100,000 shares to nineteen of the Defendants and two of the Plaintiffs at a price of $0.001 per share, pursuant to options granted by the Company to those persons (the Option Share Issues).

5. [5]

   The Plaintiffs contend that these share issues (described in the pleadings as the “Undervalued Share Issues”) were either:

   1. (1)

      contrary to the interests of the members of the Company as a whole; or

   2. (2)

      oppressive to, unfairly prejudicial to, or unfairly discriminatory against the Plaintiffs;

   3. (3)

      within the meaning of s 232 of the Corporations Act 2001 (Cth) (Act).

6. [6]

   In addition to joining the persons to whom shares had been issued at prices below $0.6667 per share, the Plaintiffs joined each of the other shareholders of the Company to the proceeding, on the basis that the relief sought by the Plaintiffs would affect the value of their respective shareholdings.

7. [7]

   With the exception of one Defendant, to whom I will return below, none of the Defendants other than the Company took an active role in the proceeding.

8. [8]

   The primary relief sought by the Plaintiffs is as follows:

   1. (1)

      a declaration that the various “Undervalued Share Issues” were invalid;

   2. (2)

      an order that the Company rectify its register of members by removing the shareholdings issued pursuant to the “Undervalued Share Issues”, and causing to be lodged with the Australian Securities and Investments Commission (ASIC) a notice of correction of the Company’s register; and

   3. (3)

      an order that the consideration paid for the shares impacted by orders (1) and (2) constitutes a debt by the Company to those shareholders who received shares under the “Undervalued Share Issues”, such debt being payable within 14 days of demand being made in writing to the Company.

Preliminary Matters

1. [9]

   Before setting out the relevant factual background, it is necessary to address a few preliminary matters.

2. [10]

   First, other proceedings have been brought by the Plaintiffs in the Commercial List of this Court against the Company and the estate of Mr Carbone (Commercial List Proceedings). In those other proceedings, the Plaintiffs allege that the Company and Mr Carbone made various misleading or deceptive representations to the Plaintiffs prior to their investment in the Company.

3. [11]

   On 14 August 2025, the Defendants in the Commercial List Proceedings filed an application to stay those proceedings until I had made a determination in this proceeding concerning the Plaintiffs’ oppression case. At the parties’ request, I adjourned this stay application to a date to be fixed. This was on the basis that, if the oppression proceeding were able to be heard and determined in a short space of time, the stay application would likely fall away.

4. [12]

   Secondly, at the commencement of the hearing, I granted leave to Aspromonte to appear as an interested person, pursuant to r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW). Aspromonte sought this leave in order to raise a discrete issue in respect of the consequences of the relief sought by the Plaintiffs. Aspromonte served written submissions in respect of this issue in advance of the hearing.

5. [13]

   Given the narrow compass of the issue raised by Aspromonte, I excused its Counsel from attendance at the remainder of the hearing and granted leave for written submissions to be provided by the Plaintiffs in response to Aspromonte, with Aspromonte having leave to put on any submissions in reply. I address the matters raised by Aspromonte when dealing below with the relief sought by the Plaintiffs.

6. [14]

   Thirdly, on 2 July 2025, this matter was set down for hearing on an expedited basis. It was listed for 2 September 2025, on an estimate of two days. During the luncheon adjournment on the second day of the hearing, my Chambers received an email from the Twenty-Fourth Defendant, Ms Catherine O’Toole, stating that she sought a further three weeks to file evidence in this proceeding. She proposed that she file and serve her evidence by 23 September 2025, and that the Plaintiffs have until 30 September 2025 to file any evidence in reply.

7. [15]

   Ms O’Toole had been served, on 11 August 2025, with a copy of the Originating Process, the Plaintiffs’ Points of Claim and the orders made by Brereton J on 2 July 2025 listing the matter for final hearing before me and providing for evidence to be filed in advance of the hearing. She did not file any evidence, or approach the Court seeking any variation of those orders, or take any other active step in the proceeding prior to the commencement of the hearing.

8. [16]

   On the first day of the hearing, the matter was called outside and there was no appearance by Ms O’Toole.

9. [17]

   When the second day of the hearing resumed at 2:00 pm, following the receipt of Ms O’Toole’s email, I inquired as to whether Ms O’Toole was present in Court. There was no appearance by her at that time.

10. [18]

    At the conclusion of the second day of the hearing, the evidence had been completed, without any appearance by Ms O’Toole. The hearing, which had originally been set down on a two-day estimate, was adjourned to the following day, 4 September 2025, at 2:00 pm for closing submissions. I indicated that the hearing would conclude on that day, subject to any application that Ms O’Toole might make.

11. [19]

    Following the adjournment, my Associate sent an email to Ms O’Toole, advising her as follows:

12. [20]

    On the resumption of the hearing on the following day, I again inquired as to whether Ms O’Toole was present in Court, at which time Ms O’Toole announced her appearance and made an application for an extension of time to file evidence in the proceeding. The application was opposed by the Plaintiffs and the Company.

13. [21]

    I refused that application, for the following reasons. First, there was no affidavit evidence in support of the application. Secondly, there was no adequate explanation for the delay in bringing the application. Thirdly, the proposed extension would involve a significant increase in the expense and time required to resolve the proceeding, which was otherwise ready to proceed to closing addresses. Fourthly, the proceeding was being conducted on an expedited basis, in particular, because the Company had given undertakings, on 2 July 2025, not to pay or declare any dividend from the substantial funds which it had received from the sale of the Homes Domain Name pending the determination, in this proceeding, of the issues regarding the Company’s register. Accordingly, any delay in resolving those issues had the potential to cause real prejudice to the shareholders of the Company.

14. [22]

    I indicated to Ms O’Toole that she would be given an opportunity to tender documents, subject to any objection by the other parties. One of the documents which Ms O’Toole tendered was a document headed “Application to Wind Up Homes.com.au Limited… Notes Prepared by Cathy O’Toole”. I informed Ms O’Toole that I would receive the document as a submission, and the other parties did not object to the document being received on that basis. I have had regard to its contents insofar as they are relevant to the matters in issue and are supported by material that is in evidence.

15. [23]

    In addition, Ms O’Toole was provided with the opportunity, in closing address, to respond to the submissions advanced by the Plaintiffs and the Company.

Factual Background

1. [24]

   The material in this section of the judgment is largely drawn from the contemporaneous documents and from matters admitted in the pleadings. I have not addressed any disputed issues of fact in this section of the judgment, which are instead addressed below when dealing with the Plaintiffs’ claims of oppression.

2. [25]

   On 30 November 1995, Aspromonte was incorporated by Mr Carbone. From that time until Mr Carbone’s death on 13 November 2021, Mr Carbone and his wife, Ms Caterina Carbone, were the shareholders and directors of Aspromonte. Ms Carbone is now its sole director.

3. [26]

   On 20 February 2018, the Homes Domain Name was acquired by Aspromonte for a price of $35,000. On 10 March 2018, the Homes Domain Name was registered to Aspromonte.

4. [27]

   On 10 April 2018, the Company was incorporated, with a single issued share which was held by Mr Carbone. Mr Carbone was the sole director of the Company from the time of its incorporation until 1 July 2018. Mr Carbone’s accountant, Mr Frank Bruzzano, registered the Company for Mr Carbone.

5. [28]

   On 26 April 2018, Holdings was incorporated, with Mr Carbone as its sole director and shareholder. Holdings is the trustee of the Homes Holdings Unit Trust.

6. [29]

   On 27 April 2018, Mr Carbone:

   1. (1)

      transferred his one share in the Company to Holdings; and

   2. (2)

      caused the Company to issue a further 19,999,999 shares to Holdings at a price of $0.001 per share.

7. [30]

   As a result, Holdings became the sole shareholder of the Company, owning 20 million shares. The “Change to company details” form recording these transactions was lodged with the Australian Securities and Investments Commission (ASIC) on 30 April 2018.

8. [31]

   The issue of 19,999,999 shares at a price of $0.001 per share equates to a total amount of $20,000 payable in respect of such shares. According to the bank statements of the Company’s account with the Commonwealth Bank of Australia (CBA), an amount of $20,000 was deposited into this account by Aspromonte on behalf of Holdings on 5 July 2018. Mr Bruzzano gave evidence, in cross-examination, that Mr Carbone caused this amount of $20,000 to be paid by Aspromonte because “[t]hat’s where [Mr Carbone] held his money”.

9. [32]

   On around 18 May 2018, the Company issued a document entitled “First Share Offer May 2018” (FSO).

10. [33]

    The FSO included a “Letter from the Chairman”, signed by Mr Carbone. The text of this letter was as follows:

11. [34]

    The Chairman’s Letter was followed by a section commencing “Market Overview”, which set out information regarding the size of the market for online real estate advertising and the opportunity for a “Third Major Competitor” to take market share from realestate.com.au and domain.com.au. The “Conclusion” at the end of the section of the FSO dealing with this business opportunity included the following statements:

12. [35]

    A section of the FSO headed “Disclaimers” included the following statements:

13. [36]

    The FSO also included a section headed “Investor Warning”, which stated as follows:

14. [37]

    The FSO stated that the offer was only being made to sophisticated or professional investors, and further stated that:

15. [38]

    The FSO set out the following information under the headings “Shareholder Structure” and “Financials”:

16. [39]

    The FSO named Mr Carbone as the person who should be contacted about the FSO, and provided his business address, mobile phone number and email address.

17. [40]

    The FSO included an “Application for Ordinary Shares” (Application Form) which was required to be completed by persons applying for shares pursuant to the FSO. The Application Form commenced with the following statement:

18. [41]

    At the end of the Application Form was a section headed “Declaration and Signature”, under which the word “Important” appeared in large, bold font. The declarations which the applicant made by signing the Application Form included the following (emphasis added):

19. [42]

    Each of the Plaintiffs executed an Application Form. Each of the Plaintiffs thereby gave the declarations and made the acknowledgements set out in that form.

20. [43]

    Each of the Plaintiffs made subscription payments to the Company, by instalments, and was issued with shares in the Company at a price of $0.6667 per share. According to the Company’s share register, the Company issued:

    1. (1)

       1,500,000 shares to the First Plaintiff, MG Investment Holdings (Aust) Pty Ltd, on 17 June 2019, and received payments of $600,000 in June 2019 and $400,000 in July 2020;

    2. (2)

       750,000 shares to the Second Plaintiff, Anderson Property Group Pty Ltd, on 15 November 2018, and received payments of $100,000 in November 2018, $200,000 in April 2019 and $200,000 in October 2019;

    3. (3)

       750,000 shares to the Third Plaintiff, Mr Michael Gerace, and his wife, Ms Melissa Gerace (the Fourth Plaintiff), as trustees for the M & M Gerace Superannuation Fund on 7 May 2019, and received payments of $300,000 in May 2019 and $200,000 in October 2019;

    4. (4)

       750,000 shares to the Fifth Plaintiff, Mikmel Pty Ltd (of which Ms Melissa Gerace is the sole director), on 15 November 2018, and received payments of $100,000 in November 2018, $200,000 in April 2019 and $200,000 in September 2020;

    5. (5)

       750,000 shares to the Sixth Plaintiff, STM Capital Pty Ltd, on 30 May 2019, and received payments of $280,000 in May 2019 and $220,000 in August 2020;

    6. (6)

       750,000 shares to the Seventh Plaintiff, North Western Holdings Pty Ltd, on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

    7. (7)

       750,000 shares to the Eighth Plaintiff, Mr Raffaele (Ralph) Gerace (who is Mr Michael Gerace’s brother), and the Ninth Plaintiff, Ms Cinzia Gerace (who is Mr Ralph Gerace’s wife), as trustees for the R & C Gerace Superannuation Fund on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in November 2019;

    8. (8)

       750,000 shares to the Tenth Plaintiff, R & K Developments Pty Ltd, on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

    9. (9)

       750,000 shares to the Eleventh Plaintiff, JRCASA Pty Ltd as trustee for the JRCASA Unit Trust, on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

    10. (10)

        750,000 shares to the Twelfth Plaintiff, Mr Tony Siciliano, and the Thirteenth Plaintiff, Ms Laureen Siciliano (who is Mr Tony Siciliano’s wife), on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

    11. (11)

        750,000 shares to the Fourteenth Plaintiff, Papallo Investments Pty Ltd, on 15 November 2018, and received payments of $100,000 in November 2018, $200,000 in April 2019 and $200,000 in October 2019;

    12. (12)

        750,000 shares to the Fifteenth Plaintiff, Mr Nick Papallo, and the Sixteenth Plaintiff, Ms Katrina (Cathy) Papallo (who is Mr Michael Gerace’s sister), as trustees for the N & C Papallo Superannuation Fund on 16 April 2019, and received payments of $300,000 in April 2019 and $200,000 in October 2019;

    13. (13)

        750,000 shares to the Seventeenth Plaintiff, Lomandra Grove Pty Ltd, on 8 March 2019, and received payments of $100,000 in March 2019 and $200,000 in June 2019 (on 15 September 2020, 450,000 of these shares were forfeited, by reason of Lomandra’s failure to pay the balance of the subscription moneys that were due); and

    14. (14)

        750,000 shares to the Eighteenth Plaintiff, SVVID Pty Ltd, on 19 March 2019, and received payments of $100,000 in March 2019 and $200,000 in July 2019 (on 15 September 2020, 450,000 of these shares were forfeited, by reason of SVVID’s failure to pay the balance of the subscription moneys that were due).

21. [44]

    The FSO was oversubscribed, with the Company issuing some 34.6 million shares pursuant to the FSO to forty-five subscribers at a price of $0.6667 per share, thereby raising more than $23 million in capital.

22. [45]

    On 1 July 2018, Mr Carbone, as sole director of the Company, resolved to approve the increase of the Company’s share capital from 20 million ordinary shares to 100 million ordinary shares. The share register of the Company records 80 million shares being issued to Holdings on that date at a price of $0.001 per share.

23. [46]

    Also on 1 July 2018, the Company entered into an agreement with Aspromonte for the sale of the Homes Domain Name (Sale Agreement). The Sale Agreement was executed by Mr Carbone as the director of each of Aspromonte and the Company. The Sale Agreement provided that, on “Completion” (which was to take place on the date of the Agreement), Aspromonte “shall sell or assign”, and the Company “shall purchase or take an assignment of” the Homes Domain Name for the “Purchase Price”, being an amount of $80,000. Clause 4 of the Sale Agreement provided as follows:

24. [47]

    Also on 1 July 2018, Mr Bruzzano was appointed as a director of the Company.

25. [48]

    At this time, Holdings was the sole shareholder of the Company. However, in June 2018, the Company had commenced receiving moneys from investors which represented the first instalment of moneys paid under the FSO. In particular, between 14 and 21 June 2018, the Company received payments totalling $400,000 from three investors. Those were the only transactions on the Company’s bank account by 1 July 2018 (such that the Company had a bank balance of $400,000 as at that date). As noted at paragraph [31] above, the amount of $20,000 which was paid by Aspromonte in respect of the initial share issue to Holdings was not deposited into the Company’s bank account until 5 July 2018.

26. [49]

    The Homes Domain Name was not registered in the name of the Company until 15 February 2019.

27. [50]

    The FSO stated that the “Current Shareholding” comprised 100,000,000 shares held by Holdings, and 10,000,000 shares held by “Directors, Consultants & Founders”. The FSO further stated that: “[Holdings] and founding consultants and directors retain 110,000,000 shares for the contribution of considerable money, time, effort, research and development of the Homes.com.au intellectual property etc.” (see paragraph [38] above).

28. [51]

    In fact, as at the date of the FSO, only 20,000,000 shares were on issue, all of which were held by Holdings.

29. [52]

    Subsequent to the issue of the FSO, a total of 6.25m shares in the Company were issued to various persons, including directors and employees of the Company, and their associates, as set out below.

30. [53]

    On 2 October 2018, the Company issued:

    1. (1)

       1,000,000 shares to the Twelfth Defendant, NLGA Pty Ltd, at a price of $0.001 per share (that is, for a total amount of $1,000). This entity is controlled by Mr Gregory Vale, who was engaged by the Company in May 2018 to provide legal services in relation to the preparation of the FSO and who subsequently became a director of the Company on 24 August 2020;

    2. (2)

       2,000,000 shares to the Eighteenth Defendant, Ms Vasiliki (Vicky) Bruzzano as trustee for the Queen Bee Trust, at a price of $0.001 per share (that is, for a total amount of $2,000). Ms Vicky Bruzzano is the wife of Mr Bruzzano;

    3. (3)

       1,000,000 shares to the Twenty-Fourth Defendant, Ms O’Toole, at a price of $0.001 per share (that is, for a total amount of $1,000). At this time, Ms O’Toole was an employee of the Company; and

    4. (4)

       250,000 shares to the Tenth Defendant, Lotus Family Investments Pty Ltd as trustee for the Lotus Trust, at a price of $0.001 per share (that is, for a total amount of $250). This company is associated with Ms Kitty Lo, who is a partner of Mr Bruzzano’s accountancy firm, Bruzzano & Associates. 200,000 of these shares were subsequently bought back by the Company for $200.

31. [54]

    On 4 October 2018, the Company issued:

    1. (1)

       250,000 shares to the Fourth Defendant, Mr Antonio Carbone, the Third Defendant, Mr Adrian Atelj, and Mr Angelo Esposito (who is now deceased) (the Triple-A Syndicate), at a price of $0.001 per share (that is, for a total amount of $250). Mr Antonio Carbone is Mr Carbone’s son and Mr Adrian Atelj is Mr Carbone’s son-in-law; and

    2. (2)

       50,000 shares to the Thirty-Ninth Defendant, Ms Maria Bruzzano, at a price of $0.001 per share (that is, for a total amount of $50). Ms Maria Bruzzano is the sister of Mr Frank Bruzzano.

32. [55]

    On 16 October 2018, the Company issued:

    1. (1)

       750,000 shares to the Twenty-Third Defendant, Bella Vetrina Pty Ltd as trustee for the Jacqueline Israel Family Trust, at a price of $0.02 per share (that is, for a total amount of $15,000). Bella Vetrina is an entity associated with Mr Alan Israel, who was a business associate of Mr Carbone and who subsequently became a director of the Company on 7 December 2020; and

    2. (2)

       750,000 shares to the Seventeenth Plaintiff, Lomandra, at a price of $0.02 per share (that is, for a total amount of $15,000). Lomandra is an entity associated with Mr Biagio Marra, who was called as a witness by the Plaintiffs. Mr Marra deposed that he was offered these additional shares by Mr Carbone in August 2018 as payment for financial services provided by him to the Company.

33. [56]

    On 17 June 2019, the Company issued 200,000 shares to the Nineteenth Defendant, Mr Victor (Vic) Lorusso, at a price of $0.001 per share (that is, for a total amount of $200). Mr Lorusso was an employee of the Company, who subsequently became a director on 7 December 2020.

34. [57]

    On 27 November 2020, the Company converted to an unlisted public company and changed its name from “Homes.com.au Pty Ltd” to “Homes.com.au Limited”.

35. [58]

    In late 2020, Mr Carbone instructed Mr Vale (who was, by that time, a director of the Company) to draft option agreements between the Company and various persons. Mr Vale deposed that Mr Carbone said words to the effect that: “The auditors want the option agreements in writing”. Mr Carbone informed Mr Vale of the persons in whose favour these agreements were to be drafted. Mr Vale deposed as follows:

36. [59]

    There are a number of factual issues regarding the circumstances in which, the purposes for which, and the time at which, Mr Carbone offered these options to the various counterparties. These matters are addressed below, when dealing with Ground 3 of the oppression claim.

37. [60]

    On 7 December 2020, Mr Vale sent copies of the executed option deeds to the Company’s external accountants, DLK Advisory, copied to Mr Carbone and Mr Bruzzano (Option Deeds).

38. [61]

    Each of the Option Deeds was stated to be “made on 2 October 2018”. However, the “Option Commencement Date” was defined as “1 July 2020”, with the “Option Period” being defined as “the period commencing on the Option Commencement Date and ending on the date being one hundred and eighty (180) days after the Option Commencement Date”. The “Subscription Price” specified in each of the Option Agreements was $0.001 per share.

39. [62]

    Clause 2 of each of the Option Deeds provided as follows:

40. [63]

    Mr Vale, when sending the Option Deeds to DLK Advisory, also attached a “Notice to Exercise Call Option” executed by each of the counterparties.

41. [64]

    On 10 December 2020, Mr Ben Melin of DLK Advisory responded to Mr Vale’s email attaching the Option Deeds, raising “a couple of quick issues / points”, as follows:

42. [65]

    Mr Vale gave evidence, in cross-examination, that after this email was received, Mr Carbone gave him instructions to amend the Option Deeds in order to address the issues raised by DLK Advisory.

43. [66]

    On 15 January 2021, Mr Vale sent an email to Ms Maria Bruzzano, copied to Mr Bruzzano, attaching an amended form of the Option Deeds (Amended Option Deeds). This email was forwarded, on the same day, by Mr Bruzzano to Mr Peter Jones (who is the husband of Ms O’Toole).

44. [67]

    Each of the Amended Option Deeds continued to state that the Deed was “made on 2 October 2018”. However, in each Amended Option Deed, the following changes were made to the definitions on the first page of the document:

    1. (1)

       the “Option Commencement Date”, which was previously 1 July 2020, was changed to “the date of this Deed” (being 2 October 2018);

    2. (2)

       the “Option Period”, which was previously a period of 180 days from the Option Commencement Date (that is, from 2 July 2020 to 27 December 2020), was changed to “the period commencing on the Option Commencement Date and ending on the date being three (3) years after the Option Commencement Date” (that is, from 2 October 2018 to 2 October 2021).

45. [68]

    Mr Vale gave evidence, in cross-examination, that when these changes were made, none of the Amended Option Deeds was re-executed. Instead, the amended first page, which contained the altered definitions set out above, was inserted as a replacement in the Option Deeds which had already been executed by the Company and the option holders. (Consistently with this evidence, the executed “Notice to Exercise Call Option” which is attached to each of the Amended Option Deeds bears the same date as the corresponding document attached to the Option Deeds which were sent with Mr Vale’s email to DLK Advisory dated 7 December 2020.)

46. [69]

    According to the Company’s share register, a total of 11,100,000 shares were issued between 14 September 2020 and 4 February 2021 as a result of the exercise of options which had been granted by the Company. Each of the following transactions is recorded as having occurred at a price of $0.001 per share, with the “Transaction Type” being “Option Exercise”.

    1. (1)

       On 14 September 2020:

    2. (2)

       On 18 September 2020, 1,000,000 shares were issued to the Eleventh Defendant, Mthree Pty Ltd, in respect of which an amount of $1,000 was paid.

    3. (3)

       On 4 February 2021:

47. [70]

    As discussed below, when dealing with Ground 3 of the oppression case, there was a dearth of evidence regarding the nature of any relationship between a number of these counterparties and the Company.

48. [71]

    On 13 November 2021, Mr Carbone died.

49. [72]

    On 1 December 2021, Ms Daniela Atelj, Mr Carbone’s daughter, was appointed as a director of the Company.

50. [73]

    In 2022, a whistleblower complaint was made to the Company’s auditors, Stannards Accountants and Advisers (Whistleblower Complaint). Ms O’Toole stated, in the course of oral submissions, that she and her husband, Mr Peter Jones, made this complaint. The Whistleblower Complaint related to the options, the shares which had been issued pursuant to those options (Option Shares), and the integrity of the Company’s register.

51. [74]

    On 16 March 2022 and 17 March 2022 respectively, Mr Bruzzano and Mr Vale signed the financial statements of the Company for the year ended 30 June 2021 (FY21 Accounts), thereby declaring that the FY21 Accounts gave a true and fair view of the financial position of the Company as at 30 June 2021 and of its performance for the year ended on that date.

52. [75]

    The FY21 Accounts recorded that, in FY21, 11,100,000 shares in the Company had been issued as a result of “Options Exercised”, with an amount of $11,100 being paid in respect of those shares. Relevantly, Note 10(c) to the FY21 Accounts stated as follows:

53. [76]

    On 26 July 2022, Stannards issued their audit report in respect of the FY21 Accounts, expressing a qualified audit opinion in respect of the Company’s financial statements. The “Basis for Qualified Opinion” was stated to be as follows:

54. [77]

    On 27 July 2022, DLK Advisory sent an email to shareholders of the Company, copied to the directors of the Company. The email was stated to be sent on behalf of the Company Secretary, Mr Vale, and described the material attached to the email as being “information from the Board of Directors of [the Company] pertaining to this evening’s AGM”. The attachments were:

    1. (1)

       a letter to shareholders which was signed by Mr Vale and dated 27 July 2022;

    2. (2)

       a copy of Stannards audit report of 26 July 2022;

    3. (3)

       a copy of the FY21 Accounts; and

    4. (4)

       a copy of the Company’s share register.

55. [78]

    The letter to shareholders was in three parts.

56. [79]

    The first part was headed “Whistleblower Disclosure” and stated as follows:

57. [80]

    It appears that the Company did not receive, as a result of this request, a response from any member indicating that there was any inaccuracy in the Company’s register (see paragraph [87] below).

58. [81]

    The second part of the letter was headed “Audit Report”. In this section, Mr Vale noted that, due to the Whistleblower Complaint, there had been a delay in receiving the audit report on the FY21 Accounts, and identified that Stannards had, as a result of the Whistleblower Complaint, issued a qualified audit opinion (which was quoted in part). This section of the letter concluded with the following request:

59. [82]

    The final section of the letter was headed “Homes Holdings Unit Trust Shareholding” and read as follows:

60. [83]

    On 29 November 2022, Ms Daniela Atelj sent an email to the shareholders of the Company, copied to its directors, attaching a notice of the Annual General Meeting of the Company, which was to be held on 21 December 2022 (the 2022 AGM).

61. [84]

    This email attached a letter to shareholders from the Company Secretary, Mr Vale, which was dated 29 November 2022. This letter referred to the forthcoming 2022 AGM and included, under the heading “Items of Business”, the following statements:

62. [85]

    The Notice of the 2022 AGM set out the text of two resolutions relating to the “Selective Capital Reduction” that was described in Mr Vale’s letter, as follows:

63. [86]

    The Notice of the 2022 AGM was accompanied by an Explanatory Statement in relation to the proposed Resolutions. This document repeated statements that Holdings had, in consultation with the directors of the Company, “decided, as a gesture of goodwill, to reduce its shareholding in the Company by 11,100,000 Shares for nil consideration, which will result in the percentage of shares held in the Company by the other Shareholders increasing”. The Explanatory Statement did not contain any reference to the options, or the shares issued on the exercise of the options, or the Whistleblower Complaint.

64. [87]

    On 17 December 2022, the Company sent a letter to shareholders, advising them that, due to “the time of year, proximity to the holiday period, and difficulties in attendance”, the 2022 AGM was being postponed from 21 December 2022 to 25 January 2023.

65. [88]

    On 20 December 2022, Ms Daniela Atelj signed the financial statements of the Company for the year ended 30 June 2022 (FY22 Accounts), thereby declaring that the FY22 Accounts gave a true and fair view of the financial position of the Company as at 30 June 2022 and of its performance for the year ended on that date.

66. [89]

    The Notes to the FY22 Accounts contained reference to:

    1. (1)

       the issue of 11.1m shares in FY21 as the result of “Options Exercised”, in return for payment of $11,100 (Note 11(a));

    2. (2)

       the “Whistleblower Complaint” (Note 23), in respect of which the following statements were made (emphasis added):

    3. (3)

       the proposed Selective Capital Reduction, with the following statements being made under the heading “Subsequent Events” (Note 20):

67. [90]

    On 20 December 2022, being the same day as Ms Atelj signed the FY22 Accounts, Stannard issued their audit report in respect of the FY22 Accounts, which provided an unqualified audit opinion. This report included the following statements under the heading “Whistleblower Complaint”:

68. [91]

    On 25 January 2023, the 2022 AGM was held. The minutes of this meeting record that when the Chairperson (Ms Daniela Atelj) proposed the resolutions for the Selective Capital Reduction, Mr Peter Jones “requested answers to questions relevant to the resolutions he had provided to the Company prior to resolutions being put to the vote” and that Mr Vale “provided answers to those questions”. The minutes also record that a “disruption then occurred as it was discovered that Mr Jones had been recording the Meeting on his mobile device” and that Mr Jones was requested to leave the meeting, which he did. The resolutions were then put to a vote.

69. [92]

    The first resolution was passed by Holdings, and the second resolution was passed by more than 75% of the shareholders of the Company.

70. [93]

    As a result, on 25 January 2023, the shareholding of Holdings in the Company was reduced from 100,000,000 shares to 88,900,000 shares.

71. [94]

    On 20 November 2023, Ms Atelj sent an email to shareholders of the Company, attaching a Notice of the Annual General Meeting to be held on 14 December 2023 (2023 AGM). The Notice was signed by Mr Vale on behalf of the directors of the Company.

72. [95]

    The Notice identified that the business of the 2023 AGM included the following matters (emphasis in original):

73. [96]

    The Notice of the 2023 AGM was accompanied by an Explanatory Statement, which provided the following explanation for this further proposed capital reduction:

74. [97]

    The directors of the Company unanimously recommended that shareholders vote in favour of the resolutions. The Explanatory Statement recorded that:

75. [98]

    The 2023 AGM was held on 14 December 2023 and both resolutions were passed, with Holdings voting in favour of the first resolution, and more than 75% of the shareholders of the Company voting in favour of the second resolution.

76. [99]

    As a result, on 14 December 2023, the shareholding of Holdings in the Company was further reduced from 88,900,000 shares to 18,900,000 shares.

77. [100]

    On 16 May 2025, the Company issued a Notice of an Extraordinary General Meeting to be held on 10 June 2025 at 11:00am (2025 EGM).

78. [101]

    The Notice of the 2025 EGM stated that:

    1. (1)

       “The Company has entered into an agreement with CoStar UK Limited on 12 May 2025 (Agreement) to sell the domain names ‘homes.com.au’ and ‘homes.au’ and the Australian registered trade mark number 1958436”;

    2. (2)

       “Under the Agreement, the Company will be paid A$22,800,000 (Purchase Price) for the domain names and trade mark”; and

    3. (3)

       “Subject to satisfaction of certain conditions, completion of the Agreement is currently scheduled for 26 June 2025.”

79. [102]

    The Notice described the business of the 2025 EGM as follows (emphasis in original):

80. [103]

    The 2025 EGM was held on 10 June 2025. Each of the resolutions was put to a vote and 100% of shareholders voted in favour of both resolutions.

81. [104]

    There was a factual dispute in the affidavit evidence regarding what was said at the 2025 EGM and, in particular, whether certain statements were made regarding a proposal for the Company to invest in a “fintech” venture. It is unnecessary to address this dispute because, as noted below, the Plaintiffs confirmed in closing address that they did not press the ground of oppressive conduct relating to the 2025 EGM.

82. [105]

    On 11 June 2025, the Company changed its name from “Homes.com.au Limited” to “Quantra Group Limited”.

83. [106]

    This proceeding was commenced on 30 June 2025, when the Originating Process was filed in Court and orders were made by Black J for short service.

84. [107]

    On 2 July 2025, orders were made by Brereton J for the matter to be heard on an expedited basis over two days on 2 and 3 September 2025, and the Company gave the following undertaking to the Court:

85. [108]

    In addition, an order was made, by consent, for the Company to provide a copy of its register of members to the Plaintiffs’ solicitors by 4pm on 7 July 2025. This was done.

Issues for Determination

1. [109]

   The Plaintiffs identified, in opening submissions, five grounds of oppressive conduct as follows:

   1. (1)

      Ground 1: the issuing of two tranches (totalling approximately 100 million) of shares in the Company to Holdings for inadequate consideration;

   2. (2)

      Ground 2: the issuing of 6,250,000 shares in the Company to directors and associates of the Company for inadequate consideration;

   3. (3)

      Ground 3: the issuing of 11,100,000 shares in the Company to various option holders who were associated with the Company or its directors for inadequate consideration;

   4. (4)

      Ground 4: a proposal by the Company to undertake a future type of business inconsistent with the stated purpose for which the Company was founded; and

   5. (5)

      Ground 5: the Company failing to provide its register of members to the Plaintiffs despite their requests.

2. [110]

   In opening submissions, the Plaintiffs acknowledged that, following the commencement of the proceedings, a copy of the Company’s share register had been provided to them, such that the only remaining issue in respect of Ground 5 was an issue of costs.

3. [111]

   In closing address, the Plaintiffs confirmed that Ground 4 was not pressed.

4. [112]

   Accordingly, the only substantive issues remaining for determination are Grounds 1 to 3, each of which relates to the various “Undervalued Share Issues”.

5. [113]

   Those grounds do not raise, and the Amended Points of Claim do not make, any allegation that the Company engaged in misleading or deceptive conduct by reason of any statements made in the FSO or any statements made by Mr Carbone to the Plaintiffs, or that the Plaintiffs had relied on any such statements in subscribing for shares in the Company. Allegations to that effect are made in the Commercial List Proceedings.

6. [114]

   The Amended Points of Claim do include (at paragraphs [87(c)] and [88(b)]) allegations that the Holdings Share Issues were contrary to the interests of members of the Company as a whole, or oppressive to, or unfairly prejudicial to, or unfairly discriminatory against, the Plaintiffs, including because the Holdings Share Issues:

7. [115]

   In the Defence to the Amended Points of Claim (at paragraph [20(b)]), the Company pleaded as follows in response to allegation of non-disclosure regarding the Holdings Share Issues:

8. [116]

   In addition, the Company pleaded as follows (at paragraph [27(a)]) in response to the Plaintiffs’ allegations concerning the Director & Consultant Share Issues:

9. [117]

   In closing address, I raised with Senior Counsel for the Plaintiffs whether it was necessary to determine any issue as to whether misrepresentations were made (either by the FSO or by Mr Carbone on behalf of the Company) prior to their investment in the Company. I have set the exchange out below, at some length, in order to indicate how the case was put and the issues that the Court was called upon to resolve:

10. [118]

    It is undesirable that, unless necessary to resolve this matter, I express any view regarding factual matters which are in dispute in the Commercial List Proceedings.

11. [119]

    For those reasons, I have focussed below on the pleaded allegations concerning the “Undervalued Share Issues” and have, in determining those allegations, considered the extent of the disclosure made in the FSO regarding those share issues.

12. [120]

    I have not, however, addressed various other factual issues which arose on the affidavit evidence regarding the dealings by the Plaintiffs with Mr Carbone prior to their investment in the FSO, or regarding the matters upon which the Plaintiffs relied in deciding to subscribe for shares in the Company on the terms of the FSO.

13. [121]

    In respect of the Option Share Issues, the Company did not advance an allegation that there was any disclosure to shareholders, either in the FSO or at any time prior to the exercise of the options, of the existence of the options. However, the Company pleaded the steps which were taken following the receipt of the Whistleblower Complaint, including the resolutions for the Selective Capital Reduction, which were proposed by the Company and approved by its shareholders, and pleaded that:

14. [122]

    In opening written submissions, the Company referred to the events leading up to the Selective Capital Reduction and submitted that:

15. [123]

    It is therefore necessary, when addressing the issue of shares pursuant to the exercise of options and, in particular, the question of relief for any such oppressive conduct, to deal with the steps taken by the Company following the Whistleblower Complaint, the disclosures made to shareholders, and the resolutions passed by the shareholders to reduce the Company’s capital by cancelling 11,100,000 of the shares held by Holdings.

Relevant Principles

1. [124]

   Section 232 of the Act provides as follows:

2. [125]

   The language and history of ss 232 and 233 indicate that these provisions are to be read broadly, and any judge-made limitations are to be approached with caution: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [72] per French CJ.

3. [126]

   A member is entitled to rely on conduct engaged in prior to their becoming a member. Being a member at the commencement of the oppression proceeding is sufficient to establish standing: Strategic Management Australia AFL Pty Limited v Precision Sports & Entertainment Group Pty Ltd [2016] VSC 303 at [153] (Sifris J); Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 6) [2014] WASC 278 at [58]-[86] (Kenneth Martin J).

4. [127]

   In New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86 at 96, the Court of Appeal (Street CJ, Kirby P, Hope JA) observed, in relation to the predecessor provision of s 232, that:

5. [128]

   Their Honours cautioned (at 102) that:

6. [129]

   In Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Ltd (No 3) [2015] NSWSC 1639 at [84], Sackar J observed (citing Goozee v Graphic World Group Holdings Pty Ltd [2002] NSWSC 640 at [41]-[44] per Barrett J) that:

   1. (1)

      the test whether conduct is contrary to the interests of members as a whole is objective, and is to be determined by reference to whether the conduct adheres to accepted standards of corporate behaviour or is in accordance with how reasonable directors would act in attending to the affairs of the company; and

   2. (2)

      the decision of what is contrary to the interests of the members as a whole directs attention not to the interests of the persons who are, in fact, the members for the time being, but rather on the interests of an individual hypothetical member.

7. [130]

   In Exton v Extons Pty Ltd (2017) 53 VR 520; [2017] VSC 14 at [39], Sifris J observed, from a review of the authorities, that “the better view is that s 232(d) is separate and distinct from s 232(e) and that a breach may not necessarily involve commercial unfairness” (see also Turnbull v National Roads and Motorists’ Association Ltd [2004] NSWSC 577 at [32] per Campbell J).

8. [131]

   In Tzavaras v Tzavaras & Sons Pty Ltd [2023] NSWCA 168 at [74], the Court of Appeal (Gleeson and Adamson JJA, Griffiths AJA) adopted the following summary of the relevant principles by Stevenson J in Munsterman v Tayward; Rayward v Munstermann [2017] NSWSC 133 at [22] (citations omitted):

9. [132]

   The Plaintiffs acknowledged that they bear the onus of establishing unfairness (citing Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 at [24] (Tamberlin J)).

10. [133]

    In BBHF Pty Ltd v Sleeping Duck Pty Ltd & Ors [2024] VSC 320 at [446], Delany J said that:

11. [134]

    In Falkingham v Peninsula Kingswood Country Golf Club [2015] VSCA 16 at [86]-[88], Whelan JA (with whom Warren CJ and Beach JA agreed) made the following observations regarding Young JA’s reasoning in Crawley v Short [2009] NSWCA 155:

12. [135]

    Having regard to those authorities, the same considerations which found the equitable defences of delay, acquiescence and laches are relevant to the statutory cause of action for oppression, even if the equitable doctrines themselves are not directly relevant: see In the matter of Scientific Management Associates Pty Ltd [2019] NSWSC 1643 at [282] (Rees J).

Ground 1: Issue of 100m shares to Holdings

1. [136]

   The Plaintiffs pleaded (Amended Points of Claim at [86]) that Holdings paid no or inadequate consideration to the Company for:

   1. (1)

      the issue of 19,999,999 shares to Holdings on 27 April 2018; and

   2. (2)

      the issue of 80,000,000 shares to Holdings on 1 July 2018.

2. [137]

   The particulars to this allegation were as follows:

3. [138]

   The Plaintiffs pleaded (Amended Points of Claim [87]-[88]) that the Holdings Share Issues were contrary to the interests of the members of the Company as a whole within the meaning of s 232(d) of the Act, or alternatively, oppressive to, unfairly prejudicial to, or unfairly discriminatory against the Plaintiffs within the meaning of s 232(e) of the Act, by reason that the Holdings Share Issues:

   1. (1)

      caused the Company to issue capital at a price that was significantly lower than the “Market Price” (being $0.667 per share), thereby depriving the Company of the full capital it could otherwise have raised if the shares had been issued at the “Market Price” and causing the Company detriment;

   2. (2)

      had the effect that, upon prospective members acquiring shares under the FSO, the value of the shares acquired would immediately be worth considerably less than the “Market Price” given the issue of a significantly large number of shares at a price significantly lower than the price at which the prospective members acquired their shares, such that the overall value of the shares issued fell below the “Market Price” to the detriment of the prospective members;

   3. (3)

      were not disclosed to prospective members by the FSO (insofar as the price at which the shares would be issued to Holdings would be or was $0.001 per share);

   4. (4)

      enabled Mr Carbone, through his control of Holdings, to exercise control over the Company to the detriment of prospective members whose voting power was diluted by the shares issued under the First Undervalued Share Issues such that Mr Carbone, through his control of Holdings, acquired majority control of the Company without contributing any, or any significant, amount of capital, in contrast to those prospective members who acquired shares in the Company and paid $0.667 per share; and

   5. (5)

      constituted an improper use by Mr Carbone of his powers as a director of the Company for his own personal benefit which caused both the Company and its members detriment.

4. [139]

   In their written submissions, the Plaintiffs framed their contentions in relation to payment for the First Undervalued Share Issues as follows:

5. [140]

   A fundamental premise of the Plaintiffs’ allegations in respect of Ground 1 is that, at the time when Mr Carbone caused the Company to issue 99,999,999 shares to Holdings at $0.001 cents per share, the shares in the Company had a “Market Value” of $0.6667 cents per share. This is, in turn, based on the proposition that the FSO, which was dated 18 May 2018 and had offered 30,000,000 shares at $0.6667 per shares, was oversubscribed.

6. [141]

   I am not satisfied that this premise is established, by reason of the following matters.

7. [142]

   First, at the time of the issue of 19,999,999 shares to Holdings on 27 April 2018, the Company had paid up capital of $1.00 and did not have any assets.

8. [143]

   The substance of the transaction set out at paragraph [29] above was that Mr Carbone transferred sole ownership of a $1.00 company, which had been established less than two weeks earlier, from himself to an entity which he controlled, and committed that entity to pay $20,000 of capital into the Company.

9. [144]

   There was no “market” for shares in the Company at this time. It is nonsensical to suggest that the 19,999,999 shares in the Company which were issued to Holdings on 27 April 2018 had a “Market Value” of $0.6667 as at the date of that transaction. That is equivalent to suggesting that an investor as at that date would willingly agree to buy a $1.00 company for $13.334m.

10. [145]

    Secondly, at the time of the issue of a further 80,000,000 shares to Holdings on 1 July 2018, the Company had $20,000 in net assets, being the amount that was payable by Holdings to the Company in respect of the April 2018 share issue.

11. [146]

    According to the audited financial statements of the Company for the year ended 30 June 2019, the only items on the balance sheet of the Company as at 30 June 2018 (being the day before the issue of 80,000,000 shares to Holdings) were the receivable of $20,000 and an amount of $400,000 which had been received from investors pursuant to the FSO and was described as “Monies held in trust – Escrow capital”.

12. [147]

    The FSO represented that the Company would be developing a real estate listing business using the Homes Domain Name.

13. [148]

    The issue of 80,000,000 shares to Holdings occurred in order for the Company to acquire the Homes Domain Name. The Plaintiffs’ proposition that the shares issued to Holdings for $0.001 could have been “sold … at the market rate of $0.6667” must assume that the transaction by which Holdings acquired those 80 million shares did not proceed, which in turn must assume that the Company did not acquire the Homes Domain Name. It therefore amounts to a proposition that informed investors would have been willing to pay $53.336m to acquire 80 million shares in a company which had, as at the date of investment, $20,000 in assets and a business plan which it was unable to implement.

14. [149]

    The Plaintiffs submitted that an alternative course to issuing 80 million shares to Holdings, which would have been adopted by a reasonable board of directors of the Company, would have been to use the cash which had been received from investors under the FSO to pay the purchase price for the Homes Domain Name (being $80,000). The thrust of the submission was that the Company was able, for a relatively small outlay of the capital which it had already received from investors by 1 July 2018, to obtain the Homes Domain Name without diluting the shareholdings of those persons who were subscribing for shares on the terms of the FSO.

15. [150]

    This submission involves an assumption that Mr Carbone would have been willing to cause Aspromonte to sell the Homes Domain Name to the Company for $80,000 in cash.

16. [151]

    It is true that the Sale Agreement specified that the Purchase Price for the Homes Domain Name was $80,000. However, the consideration paid for the Homes Domain Name was not $80,000, but 80 million shares in the Company, which were issued to Holdings. These shares, combined with the existing 20 million shares held by Holdings, meant that Mr Carbone would continue to hold a substantial majority of shares in the Company after the issue of shares pursuant to the FSO.

17. [152]

    A common theme which emerged from those who gave evidence in the proceeding was that Mr Carbone was a person who passionately believed in the business opportunity that he was promoting. There were references to his “vision” for the Company and his “enthusiasm” for and commitment to the business opportunity associated with the exploitation of the Homes Domain Name. Mr Carbone appears to have used the term “true believers” to describe those who shared his “vision” for the Company.

18. [153]

    Another common theme from the Plaintiffs’ own witnesses was that Mr Carbone had put a significant amount of time and effort into developing this business opportunity for the Company. For example:

    1. (1)

       Mr Michael Gerace accepted that Mr Carbone came up with the business opportunity and “was spending loads of time trying to develop the concept, talking to people, trying to basically put together a business plan that he thought might make a lot of money for everyone”; and

    2. (2)

       Mr Marra agreed that this was “a big project for [Mr Carbone] and something that was preoccupying him at the time”.

19. [154]

    There is no reason to doubt that, as stated in the FSO, Mr Carbone believed the business opportunity had the potential to generate tens of millions of dollars in revenue per annum. It is unlikely that, having spent significant time and effort developing this valuable business opportunity, he would have agreed to cause Aspromonte to sell the Homes Domain Name to a company in which he had only a minority interest, in return for a cash payment of $80,000.

20. [155]

    A further critical element of the Plaintiffs’ allegations in respect of the Holdings Share Issues is that these share issues “diluted” the voting power of the persons who invested pursuant to the FSO, and “enabled” Mr Carbone to acquire “majority control” over the Company “without contributing any, or any significant, amount of capital”, in circumstances where the prospective shareholders were not informed by the FSO that “the price at which the 100m shares would be issued to [Holdings] would be or was $0.001 per share”.

21. [156]

    These propositions are not established, having regard to the terms of the FSO.

22. [157]

    The FSO disclosed that:

    1. (1)

       following the “completion of” the offer made pursuant to the FSO, “there will be a total of 140 million shares issued” in the Company;

    2. (2)

       the 30 million shares being offered pursuant to the FSO at a price of $0.6667 per share represented a 21.43% interest in the Company;

    3. (3)

       the other 110 million shares, representing 78.57% of the Company, would be held, either directly or indirectly, by “the founders”;

    4. (4)

       100 million of those 110 million shares would be held by Holdings, with the other 10 million being held by “Directors, Consultants & Founders”; and

    5. (5)

       Mr Carbone was the sole director of Holdings and held a substantial interest in the trust of which Holdings was the trustee.

23. [158]

    It was plain from those disclosures that the shares offered pursuant to the FSO represented a minority interest in a company which would be controlled by Mr Carbone.

24. [159]

    The issue of shares to Holdings on 27 April 2018 and 1 July 2018 did not “dilute” the voting power of any person since, as at both dates, Mr Carbone controlled 100% of the shares in the Company. Instead, the issue of shares pursuant to the FSO diluted Mr Carbone’s voting power, in the manner stated in the FSO, in return for the Company receiving some $20m of capital.

25. [160]

    Further, the FSO disclosed that the 110,000,000 shares which had been issued to Holdings and to “Directors, Consultants & Founders” had been issued at $0.001 per share. In particular, the FSO stated that the “Current Issued Capital” was 110,000,000 shares and the balance sheet in the FSO recorded that the Company had “Paid Up Capital” of $110,000. It was a simple matter of arithmetic to identify that this equated to $0.001 per share.

26. [161]

    In cross-examination, Mr Michael Gerace was taken to these figures in the FSO, and agreed with the following propositions:

27. [162]

    This issue was again raised later in the cross-examination:

28. [163]

    Similarly, Mr Marra agreed that the issue of 110m shares at $0.001 per share was disclosed in the FSO:

29. [164]

    The Plaintiffs pointed out that, as at the date of the FSO (being 18 May 2018), only 20,000,000 shares were on issue, and that no payment was deposited into the Company’s bank account in respect of those shares until 5 July 2018. Accordingly, the statements in the FSO to the effect that the “Current Issued Capital” was 110,000,000 shares and that there was “Paid of Capital” of $110,000 “as at 18 May 2018” were incorrect.

30. [165]

    In addition, the Plaintiffs submitted that the figure attributed to “Intangible Assets” in the balance sheet in the FSO ($73,303,334), and therefore to the total net assets of the Company as at 18 May 2018 ($73,323,334) was “unjustifiably aspirational”, and noted that the Company did not own, or have an agreement to buy, the Homes Domain Name as at that date.

31. [166]

    There were also various statements by the witnesses who were called on behalf of the Plaintiffs to the effect that they did not read the FSO because they trusted Mr Carbone. (I note that there is no allegation in this proceeding that the Plaintiffs, or their decision-makers, did not read, or disregarded, the statements made in the FSO, by reason of some oral representation made to them by Mr Carbone.)

32. [167]

    For the reasons given at paragraphs [113]-[119] above, it is unnecessary and undesirable to express any view on whether the Company engaged in misleading conduct in relation to the FSO, or whether the Plaintiffs (or any of them) suffered loss as a result of any such conduct.

33. [168]

    The critical issue for present purposes is whether the FSO disclosed that persons who subscribed for the 30 million shares being issued pursuant to the FSO at a price of $0.6667 per share were investing in a share of a minority stake in a company that would be controlled by Mr Carbone and, in particular, that 100 million shares were being issued at a price of $0.001 per share to an entity which Mr Carbone controlled.

34. [169]

    As set out above, the Plaintiffs accepted in their closing address that:

35. [170]

    I am satisfied that disclosure to this effect was made in the FSO, as acknowledged by each of Mr Michael Gerace and Mr Barra.

36. [171]

    The offer in the FSO was only open to sophisticated investors, who were “strongly advised” to seek appropriate advice on the offer contained in the FSO, and who were required to acknowledge, in the Application Form, that they had read the FSO. It does not matter, for the purposes of the oppression claim, whether some investors chose to sign the Application Form in circumstances where they had not in fact received or read the FSO. The question for determination is whether, viewed objectively, the Company’s conduct was oppressive, and this question requires consideration of the matters which were disclosed to prospective shareholders by the issue of the FSO, rather than the subjective reasoning processes of those shareholders.

37. [172]

    Having regard to the matters set out above, I reject the Plaintiffs’ allegations that the issue of shares in the Company “enabled” Mr Carbone to “acquir[e] majority control” over the Company, and “diluted” the “voting power” of those who subscribed for shares pursuant to the FSO, and that the FSO did not disclose to such persons that “the price at which the shares would be issued to [Holdings] would be or was $0.001 per share”.

38. [173]

    It also follows, from the findings set out above, that the Plaintiffs have failed to establish their allegations that the Holdings Share Issues were contrary to the interests of the members of the Company as a whole or were oppressive.

39. [174]

    Even if I had determined that those allegations were established, I would not have granted the relief sought by the Plaintiffs, having regard to the following matters.

40. [175]

    First, after 11.1 million of the shares held by Holdings were cancelled for nil consideration in January 2023, a further 70 million of those shares were cancelled for nil consideration in December 2023. The result is that Holdings currently holds 18.9 million of the total 68.9 million shares on issue (or 27.43% of the issued capital), and the persons who have acquired shares in the Company at a price of $0.6667 per share pursuant to the FSO hold 32.85m of the remaining shares (or 47.68%).

41. [176]

    It follows that the persons who subscribed for shares pursuant to the FSO currently hold, between them, significantly greater voting power and a significantly greater share of the Company (47.68%) than had been indicated in the FSO (which had stated that they would hold 21.43% of the Company when the offer under the FSO was completed).

42. [177]

    Secondly, if the remaining 18.9 million shares held by Holdings were cancelled, in return for the Company owing an amount of $0.001 per share as a debt to Holdings, the result would be that the trust established by Mr Carbone would be left holding no interest in the Company, and would receive only $18,900 in respect of the shares previously held in the Company, in circumstances where Mr Carbone:

    1. (1)

       contributed $20,000 of capital to the Company;

    2. (2)

       caused Aspromonte to transfer the Homes Domain Name to the Company;

    3. (3)

       developed the business opportunity which the Company pursued; and

    4. (4)

       devoted several years of time and effort to pursuing that opportunity, which has ultimately resulted in the Company being able to achieve a sale of the Homes Domain Name for $22.8m.

43. [178]

    Thirdly, and relatedly, any such relief would involve cancelling the consideration paid by the purchaser for the sale of the Homes Domain Name pursuant to the Sale Agreement (namely, the shares issued to Holdings), in circumstances where the Homes Domain Name cannot now be returned to the seller.

44. [179]

    The effect of the Plaintiffs’ contention is that the Company should retain the full benefit of the increase in the value of the Homes Domain Name which it purchased from Aspromonte (in circumstances where that increase in value since 2018 was largely as the result of the efforts of Mr Carbone), while the trust established by Mr Carbone loses the benefit of the increase in the value of the shares which were issued as the consideration for Aspromonte’s transfer of the Homes Domain Name to the Company. Again, that would be an unfair result.

45. [180]

    For those reasons, Ground 1 of the oppression claim is not established and, in any case, I would not have ordered any relief in respect of that ground.

Ground 2: the Director & Consultant Share Issues

1. [181]

   As set out in paragraphs [53]-[56] above, the Director & Consultant Share Issues involved the issue of a total of 6,250,000 shares to various persons, including some who provided services to the Company as directors, as employees, or as legal or financial professionals. Subsequently, 200,000 of those shares were cancelled, such that there remain 6,050,000 of those shares on issue.

2. [182]

   All but 200,000 of those shares were issued in October 2018, at around the same time as shares were first issued to persons who subscribed for shares pursuant to the FSO. The remaining 200,000 shares were issued to Mr Lorusso in June 2019.

3. [183]

   4,750,000 of those shares were issued at a price of $0.001 per share (with total capital of $4,750 being paid). The remaining 1,500,000 shares were issued at a price of $0.02 per share (with total capital of $30,000 being paid).

4. [184]

   The Plaintiffs pleaded (Amended Points of Claim at [94]) that the Director & Consultant Share Issues were contrary to the interests of members of the Company as a whole within the meaning of s 232(d) of the Act, because they:

   1. (1)

      were transactions between associates of Mr Carbone, directors of the Company or previous directors of the Company or employees of the Company and as such not at arm’s length;

   2. (2)

      were transactions under which shares were issued for no or inadequate consideration;

   3. (3)

      diluted the value of all the other members’ shareholding in the Company (other than those issued to Holdings) by the issuing of a significantly large number of shares at a price significantly lower than the price at which the existing members had acquired their shares, such that the overall value of the shares issued fell below the “Market Price” to the detriment of the existing members;

   4. (4)

      further diminished the voting power of members other than Holdings or associates of the directors or employees of the Company;

   5. (5)

      were imposed on the Company to its detriment and its members for the benefit of Mr Carbone and associates of its directors or employees;

   6. (6)

      diminished the ability of the Company to raise capital efficiently by offering those shares to the market at “Market Value” or for real consideration;

   7. (7)

      devalued the Company’s share capital and, correspondingly, the shareholdings of its members thereby reducing their proportional claims to future earnings; and

   8. (8)

      had no reasonable commercial justification other than to advance the interests of the Board of Directors of the Company or Mr Carbone.

5. [185]

   Further, the Plaintiffs pleaded that the Director & Consultant Share Issues were oppressive to, or unfairly prejudicial to, or unfairly discriminatory against, the plaintiffs within the meaning of s 232(e) of the Act, because they:

   1. (1)

      further diluted the value of all the Plaintiffs’ shareholding in the Company by the issuing of a large number of shares at a price significantly lower than the price at which the Plaintiffs had acquired their shares, such that the overall value of their shares declined further below the “Market Price” to the detriment of the Plaintiffs;

   2. (2)

      enabled Mr Carbone, though his control of Holdings, and the directors and employees of the Company, to exercise control over the Company to the detriment of the Plaintiffs whose voting power was diluted by the shares issued under the Undervalued Director Share Issues;

   3. (3)

      provided preferential treatment to Mr Carbone’s associates and associates of the directors and employees of the Company through allowing them to acquire a large shareholding in the Company for no or inadequate consideration where the Plaintiffs had paid “Market Price” for their shares; and

   4. (4)

      constituted an improper use by Mr Carbone and the directors of the Company of their powers as directors of the Company for their own personal benefit or the personal benefit of their associates which caused the Plaintiffs detriment.

6. [186]

   In response to these allegations, the Company pleaded, inter alia, that:

   1. (1)

      at the time that investors were asked to subscribe for shares in the Company, they were informed that 10,000,000 shares would be issued to directors, consultants and founders; and

   2. (2)

      6,250,000 shares were issued to directors, consultants and founders “for consideration of services connected with their service as directors and the establishment of [the Company] and its ongoing business activities including acquiring the [Homes] Domain Name and advising on the content of the FSO”.

7. [187]

   The FSO stated that the “Current Issued Capital” comprised 100,000,000 shares issued to Holdings and 10,000,000 shares issued to “Directors, Consultants & Founders”. It further stated that:

8. [188]

   In addition, the “Statement of Financial Position” for the Company as at 18 May 2018, which was included in the FSO, indicated that the “Paid up Capital” was $110,000 and therefore indicated that the 110,000,000 shares retained by Holdings and “founding consultants and directors” were issued for this amount (representing $0.001 per share).

9. [189]

   The FSO did not disclose the identity of the “founding consultants and directors”. As at the date of the FSO, Mr Carbone was the only director of the Company.

10. [190]

    Nor did the FSO disclose any further details regarding the services provided, or to be provided, by the “consultants”, or the nature and extent of any contribution which those consultants had made to the Company’s “intellectual property etc.”

11. [191]

    If an investor had any questions about the identity of the directors and consultants, or the nature of the services which they had provided or would provide to the Company, or the price at which shares were being issued to such persons, the investor could have contacted Mr Carbone at the email address or mobile phone number specified in the FSO. There is no evidence that any query was raised with Mr Carbone about any such matter.

12. [192]

    Mr Marra accepted in cross-examination that, if he had read the FSO carefully, he would have realised that the 110 million shares issued to Holdings and “Directors, Consultants & Founders” were issued for $0.001 per share (see paragraph [163] above), and also made the following concessions:

13. [193]

    No shares had in fact been issued to any directors or consultants as at the date of the FSO. However, the important point for present purposes is that potential investors were informed that a pool of 10 million shares, at a price of $0.001 per share, were “retained” for “consultants and directors”. The FSO indicated the extent of the interest to be held by persons who took up the offer in the FSO at a price of $0.6667 per share (namely, 21.43% of the Company), on the basis that these 10,000,000 shares were “retained” for the “founding consultants and directors”.

14. [194]

    As matters transpired, 6,250,000, rather than 10,000,000, shares were issued to persons who might be described as “consultants and directors”. It follows that (prior to the issue of the Option Shares, which are addressed below) the voting power of the persons who purchased shares under the FSO was, in fact, greater than had been indicated in the FSO, as follows:

15. [195]

    There was evidence regarding the services provided by a number of the persons to whom these shares were issued.

16. [196]

    First, on 2 October 2018, 1,000,000 shares were issued at $0.001 per share to a company associated with Mr Vale (namely, NLGA). Mr Vale had been retained in the first half of 2018 to provide legal services to Mr Carbone and the Company. Those services included drafting parts of the FSO, and drafting, and providing advice on, company documents. Mr Vale gave evidence that he issued a costs agreement, and issued a bill for legal services to the Company in around May 2018, but that, around the time this invoice was issued, Mr Carbone said to him words to the following effect:

17. [197]

    Subsequently, around the end of May or early June 2018, Mr Bruzzano told Mr Vale that Mr Carbone was “going to issue you 1,000,000 ordinary shares in [the Company]”.

18. [198]

    Mr Vale gave evidence that he did not thereafter issue any invoices for legal work undertaken with respect to the Company, as he understood that, in accordance with the arrangement proposed by Mr Carbone, he was being compensated for his services by receiving shares in the Company.

19. [199]

    On 24 August 2020, Mr Vale was appointed as a director of the Company. On 7 December 2020, he was appointed as company secretary.

20. [200]

    The Plaintiffs did not, in submissions, refer to any evidence that (other than by shares being issued to NLGA) any payment was made by the Company to Mr Vale for legal services provided by him since 2018 (such as drafting, and engaging in correspondence with the accountants about, the Option Deeds), or for his services as an officer of the Company since 2020.

21. [201]

    Secondly, on 2 October 2018, 2,000,000 shares were issued at a price of $0.001 per share to Ms Vicky Bruzzano as trustee for the Queen Bee Trust. As noted above, Ms Vicky Bruzzano is Mr Bruzzano’s wife.

22. [202]

    Mr Bruzzano deposed that, in around early 2018, Mr Carbone explained his business proposal for the Company to Mr Bruzzano, who had been Mr Carbone’s accountant for many years, and asked Mr Bruzzano “to be a part of it”. Mr Carbone subsequently asked Mr Bruzzano to be a director of the Company, saying words to the following effect: “You need to be with me. The finances of [the Company] are going to get complicated, and I will need your constant help, Frank, this will be big.” Following these conversations, Mr Bruzzano agreed to be a director of the Company.

23. [203]

    Mr Bruzzano gave evidence that he understood his role as director would be to support Mr Carbone as the Company developed and that, in relation to payment for his services as a director, Mr Carbone said words to the following effect: “You are going to get shares in [the Company]”.

24. [204]

    In addition, Mr Bruzzano gave the following evidence in cross-examination:

25. [205]

    Mr Bruzzano became a director on 1 July 2018, and remains a director. The Plaintiffs did not refer, in submissions, to any evidence that he has (other than through the provision of shares) been paid any amount for acting as a director of the Company over the past seven years. While the Company’s financial statements contain references to payments being made to Mr Bruzzano’s firm (which relate to invoices issued for accounting work), the financial statements do not refer to any payments being made for directors’ fees.

26. [206]

    Thirdly, on 2 October 2018, the Company issued 1,000,000 shares at $0.001 per share to Ms O’Toole. In her submissions, Ms O’Toole referred to services which she and her husband, Mr Jones, had provided to the Company. In particular, she referred to:

    1. (1)

       an email which she sent to Mr Jones on 9 May 2018, which attached a number of options for the Company’s logo; and

    2. (2)

       an email from Mr Jones to her on 29 December 2017 attaching a discussion paper for the proposed “homes.com.au” business strategy.

27. [207]

    Mr Bruzzano deposed that, in early 2018, Mr Jones, who was an associate of Mr Carbone, was assisting him “with researching this business idea”. Further, Mr Vale deposed that Mr Jones was an associate of Mr Carbone, who “was responsible for the documentation relating to [the Company] and its set-up as a company”. Mr Vale gave evidence, in cross-examination, that the material in the FSO was “principally prepared by Peter Jones and his wife, [Catherine] O’Toole", and that Mr Jones was emailing Mr Vale “fairly regularly” with instructions regarding the Company’s business in 2018.

28. [208]

    The Plaintiffs referred to the financial statements of the Company for the year ended 30 June 2019, which recorded that consulting fees of $246,600 were paid to Pajtas Pty Ltd, which was identified as a “company in which Mr P Jones and Ms C O’Toole have an interest”. A further amount of $200,000 was paid to this entity in the financial year ended 30 June 2020, and a further $209,944 in the financial year ended 30 June 2021.

29. [209]

    The Plaintiffs submitted that this demonstrated that “not all services provided by founders or consultants were being provided on terms that there'd be no actual consideration paid for them”. However, Mr Jones and Ms O’Toole appear to have been, unlike Mr Vale and Mr Bruzzano, employees of the Company.

30. [210]

    Based on the evidence outlined above, it does not appear that the shares issued to Ms O’Toole in October 2018 were for, or were only for, services provided by herself and her husband as employees, but were issued (to adopt the language of the FSO) “for the contribution of … time, effort, research and development of the Homes.com.au intellectual property etc.” Ms O’Toole submitted as follows:

31. [211]

    Fourthly, on 16 October 2018, the Company issued 750,000 shares to an entity associated with Mr Marra (Lomandra) at a price of $0.02 per share. Mr Marra deposed that he was offered these shares by Mr Carbone in August 2018 “in payment for setting up a white labelled finance business for [the Company] with Australian Finance Group Limited called ‘Homes Finance’ in around late 2018”.

32. [212]

    Mr Marra gave the following evidence in relation to this transaction:

33. [213]

    Mr Marra also stated in cross-examination that the reason that he was offered shares at $0.02 per share was not only because he “had provided some services to the company”, but also because he “was going to be providing ongoing services with [his] financial services licence”.

34. [214]

    Fifthly, on 17 June 2019, the Company issued 200,000 shares to Mr Lorusso, at a price of $0.001 per share (that is, for a total amount of $200). Mr Lorusso was an employee of the Company, who became a director on 7 December 2020. He subsequently resigned as a director on 13 November 2021.

35. [215]

    Mr Bruzzano gave the following evidence, in cross-examination, regarding his discussions with Mr Carbone concerning the issue of these shares to Mr Lorusso:

36. [216]

    Finally, on 16 October 2018, the Company issued 750,000 shares to the Twenty-Third Defendant, Bella Vetrina as trustee for the Jacqueline Israel Family Trust, at a price of $0.02 per share. This company was associated with Mr Alan Israel, who was a business associate of Mr Carbone and who subsequently became a director of the Company on 7 December 2020. Mr Bruzzano gave the following evidence regarding his discussions with Mr Carbone concerning the issue of these shares:

37. [217]

    There was no affidavit evidence, or evidence given in cross-examination, regarding the nature or extent of any services provided by:

    1. (1)

       Ms Maria Bruzzano, who is Mr Bruzzano’s sister, and who received 50,000 shares at $0.001 per share (Mr Bruzzano stated, in cross-examination, that his sister had provided services to the Company, but the nature or value of those services was not the subject of any other evidence by him);

    2. (2)

       Ms Kitty Lo, who is a partner of Mr Bruzzano’s firm, and who is associated with Lotus, which received 250,000 shares at a price of $0.02 per share (200,000 of which were subsequently bought back by the Company); or

    3. (3)

       Mr Antonio Carbone, Mr Adrian Atelj and Mr Angelo Esposito (who were styled the Triple-A Syndicate), who received 250,000 shares on 4 October 2018 at a price of $0.001 per share. (As noted above, Mr Antonio Carbone is Mr Carbone’s son and Mr Adrian Atelj is Mr Carbone’s son-in-law.)

38. [218]

    The Company submitted that the decision in Pacific Dairies Limited v Orican Pty Ltd [2019] VSC 647 at [55] demonstrated that the issue of shares as consideration for directors’ fees does not necessarily amount to oppression. In response, the Plaintiffs pointed out that, in Pacific Dairies, there was evidence to satisfy the Court that the directors’ fees were owing; that the company had been advised to issue a conversion to equity rather than incur a liability; that the fees were agreed between the company and the directors; and that the conversion rate was based on the quoted share price at the time and was appropriate.

39. [219]

    In the cited passage, Sifris J made the following observations:

40. [220]

    The Plaintiffs submitted that, in the present case, there was no evidence of any attempt by the Company, or by the persons to whom the 6,250,000 shares were issued, “to assess a fair value for any services that were provided”. The Plaintiffs contended that, in those circumstances, there was no basis for the Court to conclude that the issue of this “sweat equity” was justified.

41. [221]

    As Mr Carbone is deceased, there is no evidence available as to his purpose in issuing these shares, or the matters which he took into account in determining that the issue of the shares was in the best interests of the Company.

42. [222]

    It is apparent, from the evidence summarised above, that various persons to whom these shares were issued provided services which were of value to the Company, including legal services, financial services, services as officers of the Company, and services in relation to the development or implementation of the Company’s business strategy.

43. [223]

    It is not surprising that records were not kept detailing the extent of the services provided, in circumstances where, insofar as evidence of the terms discussed with Mr Carbone is provided by, in particular, Mr Vale, Mr Bruzzano and Mr Marra, the arrangement appears to have been that the shares were provided not only for past services, but also for future services. Given that was so, there was no need for the person receiving the shares to keep records of how many hours of services they performed for the Company, or details of the nature of the services performed on each such occasion.

44. [224]

    Further, as Mr Bruzzano pointed out, there was uncertainty, at the time of entering into this arrangement, regarding the extent of services which the Company would require in the future (see paragraph [205] above). Therefore, unlike in the Pacific Dairies case, there was no ascertainable quantum of fees for their services, to which a conversion rate could be applied.

45. [225]

    Nonetheless, as in Pacific Dairies, it is equally the case here that the arrangement entered with, for example, Mr Vale and Mr Marra involved those service providers accepting “risky” shares in substitution for the payment of money for their services.

46. [226]

    I am not satisfied that the Plaintiffs have established that the decision of Mr Carbone to cause the Company to issue shares to directors and consultants was contrary to the interests of members as a whole, in the sense that it was a decision which no board of directors, acting reasonably, would have made.

47. [227]

    A reasonable director of a start-up company may well conclude that it is in the best interests of the company for it to offer equity to persons who have made, or are thought to be able to make, a valuable contribution to the company’s success, thereby both securing the services of such persons and giving them an investment in the company, and an incentive to commit their time and effort to the company’s realisation of its business strategy.

48. [228]

    The Plaintiffs have not established that, in the circumstances of the Company, the decision to proceed with the Director & Consultant Share Issues was a decision which no reasonable director in Mr Carbone’s position would have made. Mr Carbone’s decision has, to some extent, been borne out by subsequent events. For example, Mr Vale and Mr Bruzzano have remained committed to the Company, including serving as officers for a number of years, leading up to the successful sale of the Homes Domain Name for $22.8m, without apparently being paid for those services.

49. [229]

    There is, as noted above, an absence of evidence regarding the nature or extent of the services provided by a number of the persons who received shares through the Director & Consultant Share Issues, or of any arrangement with Mr Carbone regarding the provision of services by them, or of any understanding on his part that such persons would or might provide valuable services to the Company. The extent of the shareholdings held by those persons are relatively limited. Lotus, Ms Maria Bruzzano and the Triple-A Syndicate were issued with 550,000 shares, 200,000 of which were the subject of a subsequent buy-back. The remaining 350,000 shares represent only 0.5% of the 68.9m shares currently on issue. Further, the Plaintiffs did not advance any submissions regarding the Director & Consultant Share Issues by reference to each of the individual recipients. Instead, they submitted that all such shares should be cancelled.

50. [230]

    Given the evidence summarised above regarding the circumstances in which these shares were issued to directors and consultants, the Plaintiffs have not established that each of these transactions was not at arm’s length, or was for inadequate consideration; or that these arrangements were to the detriment of the Company, or had no reasonable justification other than to advance the interests of the directors at the time (Mr Carbone and Mr Bruzzano); or that these arrangements constituted an improper use by the directors of their powers for the benefit of themselves or their associates and the detriment of the Company (see Amended Points of Claim, [94(a), (b), (e), (h)], [95(c)-(d)]).

51. [231]

    Further, as regards the allegations that the Director & Consultant Share Issues diminished the voting power of other members, diluted the value of other members’ shareholding in the Company and reduced the proportional claims of other members to future earnings (see Amended Points of Claim, [94(c)-(d), (f)-(g)], [95(a)-(b)]), each of the persons who subscribed for shares in the Company pursuant to the FSO, was informed by the FSO that following the completion of the fundraising, there would be 140 million shares in the Company on issue, representing:

    1. (1)

       30 million shares issued at a price of $0.6667 per share pursuant to the FSO; and

    2. (2)

       110 million shares issued at a price of $0.001 per share, including 10 million shares being retained by consultants and directors in return for their services to the Company.

52. [232]

    Given the disclosure of those matters, I am not satisfied that there was commercial unfairness in the Director & Consultant Share Issues, such as to amount to oppressive conduct. That is particularly so in circumstances where fewer shares were in fact issued (6.25m) than had been stated in the FSO (10m), and where the price at which some of those shares were issued (namely, $0.02 per share) is higher than had been indicated in the FSO ($0.001 per share).

53. [233]

    For those reasons, I find that the claims in respect of the Director & Consultant Share Issues have not been established.

54. [234]

    Even if those claims had been established, I would not have granted the relief sought by the Plaintiffs, which would have involved cancelling all of the remaining 6,050,000 shares, with the holders of those shares being left with a claim against the Company for the amount of capital paid for those shares.

55. [235]

    Such relief would have involved, for example;

    1. (1)

       Mr Bruzzano and Mr Vale being left with claims of, respectively, $2,000 and $1,000 against the Company in circumstances where each of them has provided services as an officer of the Company over a number of years, and Mr Vale had provided legal services to the Company, without any fees apparently being paid in respect of such services; and

    2. (2)

       Ms O’Toole being left with $1,000 for the contribution which she and Mr Jones made to the development of the Company’s business strategy in the FSO.

56. [236]

    In contrast, the shareholders who had invested pursuant to the FSO (which stated that 10 million shares would be retained for directors and consultants in recognition of their time and effort) would not be required to share any of the upside from the implementation of the Company’s business strategy and the sale of the Homes Domain Name for $22.8m with those persons who had (in return for equity in the Company) contributed their time and effort to the development and realisation of that strategy. That would be an unfair result.

57. [237]

    For those reasons, Ground 2 of the oppression claim is not established and, in any case, I would not have ordered any relief in respect of that ground.

Ground 3: the Option Share Issues

1. [238]

   The Plaintiffs’ pleading regarding the bases on which the Option Share Issues were contrary to the interests of the members of the Company as a whole, or were oppressive to, unfairly prejudicial to or unfairly discriminatory against the Plaintiffs, was substantially the same as the corresponding pleading in respect of the Director & Consultant Share Issues (see paragraphs [185]-[186] above). However, the pleading in respect of the Option Share Issues relied on a further matter, namely, that the Company “had not offered Option Shares at a price of $0.001 per share to its existing shareholders, other than the Option Holders”.

2. [239]

   In response, the Company contended that:

   1. (1)

      the issue of the options was for a proper purpose and was not oppressive conduct;

   2. (2)

      any alleged oppression resulting from the issue of the Option Shares is not continuing, by reason of the subsequent cancellation of the corresponding number of shares held by Holdings; and

   3. (3)

      the Plaintiffs acquiesced in the course adopted by the Company to address the concerns which had been raised regarding the Option Shares, such that it is now not open to the Plaintiffs to complain of oppression.

3. [240]

   The Option Shares were a particular focus of Ms O’Toole’s submissions. She and Mr Jones were not granted options, despite their long-standing involvement with the Company. They were the persons who made the Whistleblower Complaint to the auditors regarding the Option Shares. Ms O’Toole sought to advance a number of contentions to the effect that there had been fraudulent conduct in respect of the issue of the Option Shares. I did not permit such submissions to be advanced, in circumstances where no such issue was pleaded in the case, and where no such allegation was put to Mr Bruzzano and Mr Vale in cross-examination. In those circumstances, to allow such allegations to be advanced in closing submissions would have involved fundamental unfairness to the persons who were the subject of those allegations. For those reasons, I do not consider any such allegation below.

4. [241]

   There is limited evidence regarding the circumstances in which, and basis on which, Mr Carbone determined to cause the Company to issue options to the grantees.

5. [242]

   Evidence was given by (or on behalf of) only three of the twenty-one persons who received options.

6. [243]

   First, Mr Vale, whose entity NLGA was granted an option for 1,000,000 shares in the Company, gave evidence that, in the middle of 2018, the following conversation took place between himself and Mr Bruzzano:

7. [244]

   Mr Vale was unable, in cross-examination, to recall any explanation given by Mr Carbone for the issue of the options to Mr Vale:

8. [245]

   It is difficult to see the benefit to the Company in issuing options to NLGA in the middle of 2018 when, on Mr Vale’s own evidence, the Company had already come to an arrangement to issue 1,000,000 shares to NLGA in return for his legal services (and given that he was not asked to become, and did not become, a director for another two years thereafter).

9. [246]

   Secondly, Mr Bruzzano, whose wife was granted, as trustee for the Queen Bee Trust, an option for 1,400,000 shares, deposed that in around the middle of 2018, Mr Carbone said that:

10. [247]

    Again, it is difficult to see the benefit to the Company in entering into this arrangement, in circumstances where, on Mr Bruzzano’s own evidence, he had agreed to be a director of the Company on the basis that he received 2,000,000 shares (which were issued to his wife as trustee of the Queen Bee Trust). There was no suggestion in Mr Bruzzano’s evidence that he had expressed the view that 2,000,000 shares represented inadequate compensation for his services as a director, or that the option for a further 1,400,000 shares represented compensation for some other services which he provided.

11. [248]

    Thirdly, Mr Michael Gerace deposed that Mr Carbone “offer[ed] me an option to acquire shares at $0.001 sometime around my appointment as a director for my services as a director, in lieu of remuneration and I accepted that offer”. Mr Michael Gerace was appointed a director of the Company in 2020. It was put to him in cross-examination that there was an oral option agreement in around 2018, which preceded the written agreement, but he denied that this was the case:

12. [249]

    There was no evidence regarding Mr Carbone’s discussions with any of the other persons who received options, including regarding the reason for the issue of those options. There was no evidence as to any relationship between the following option holders and the Company who, instead, appear to have had a personal relationship with Mr Carbone:

    1. (1)

       Mr Adrian Atelj (who is Mr Carbone’s son-in-law);

    2. (2)

       Mr Antonio Carbone (who is Mr Carbone’s son);

    3. (3)

       Cattalini Investments Pty Ltd – this entity is associated with Ms Anna Cattalini, who is Mr Carbone’s sister;

    4. (4)

       Alera Pty Ltd – Mr Bruzzano gave evidence that the director of this entity is Mr Frank Cutri, who was Mr Carbone’s solicitor;

    5. (5)

       Joielle Pty Ltd – the directors of this entity are Mr Frank Carbone (who is Mr Carbone’s brother) and Mr Georgina Carbone;

    6. (6)

       Mthree Pty Ltd – the director of this entity is Mr Michael Miroshnik. Mr Bruzzano gave evidence that he introduced Mr Miroshnik to Mr Carbone for the purpose of investment in some of Mr Carbone’s property developments;

    7. (7)

       Aljuva Pty Ltd – Mr Bruzzano gave evidence that the director of this entity, Mr Robert Canceri, was Mr Carbone’s surveyor and was involved in property developments with Mr Carbone;

    8. (8)

       Wanda Holdings Pty Ltd – the director of this entity is Mr Anthony Doumit. Mr Bruzzano gave evidence that he could not recall whether he had been introduced to Mr Doumit by Mr Carbone, but that he “may have” spoken with him;

    9. (9)

       Mr Ugo Morvillo – Mr Bruzzano gave evidence that Mr Morvillo worked at a real estate firm called Citywide Commercial, which had a role in projects undertaken by Mr Carbone;

    10. (10)

        Nurse Pty Ltd – neither Mr Bruzzano nor Mr Vale could recall any dealings with this entity. The Plaintiffs pleaded, and the Company admitted, that the director of this entity was Mr Roy Spagnolo, who was a personal friend of Mr Carbone;

    11. (11)

        Oakdale Superannuation Pty Ltd – the directors of this entity are Mr Pasquale (Pat) Sergi and Ms Anna Sergi. Neither Mr Bruzzano nor Mr Vale could recall meeting Mr Sergi. The Plaintiffs pleaded, and the Company admitted, that Mr Pat Sergi and Ms Anna Sergi were personal friends of Mr Carbone; and

    12. (12)

        Ms Joanne Tabone, Mr Mario Tabone, Mr Licio Millia and Mr Rocco Granata – neither Mr Bruzzano nor Mr Vale could recall meeting any of these persons. The Plaintiffs pleaded, and the Company admitted, that each of them was a personal friend of Mr Carbone.

13. [250]

    In cross-examination, Mr Bruzzano gave the following evidence regarding the process by which the identity of the option holders was determined:

14. [251]

    Mr Bruzzano acknowledged that there was no document recording any discussion by the Board regarding the respective entitlements or qualifications for entitlements of the option grantees.

15. [252]

    Given Mr Michael Gerace’s evidence that Mr Carbone did not offer him any options until 2020, and given that there is no written evidence of any option agreement prior to late 2020, there is good reason to doubt that the option agreements were entered in October 2018 (as stated in the Option Deeds), even if there had been some discussions between Mr Carbone and each of Mr Bruzzano and Mr Vale by that date.

16. [253]

    Further, according to Mr Bruzzano’s and Mr Vale’s accounts in their affidavits of their conversations with Mr Carbone regarding these options, there was no discussion regarding the terms of such options. It is difficult to see how, in those circumstances, there could have been any binding agreement until the written deeds were executed in late 2020.

17. [254]

    Additional irregularities about the Option Deeds which were identified in the Plaintiffs’ opening written submissions, and were not addressed by the Company in its submissions or evidence, include that:

    1. (1)

       there is an Option Deed with the Eleventh Defendant, Mthree Pty Ltd, which is purportedly dated 2 October 2018, but this entity was only incorporated on 12 March 2020; and

    2. (2)

       there is an Option Deed with Mr Angelo Esposito, which appears on its face to be signed by Mr Esposito in September 2020, but Mr Esposito had died on 31 August 2019.

18. [255]

    Those matters give rise to significant doubt as to whether the Option Deeds record, as they purport, the terms of arrangements that had been reached in 2018 and were subsequently documented two years later.

19. [256]

    It is unnecessary to resolve these issues, given the findings made below.

20. [257]

    Even if those issues regarding the authenticity of the Amended Option Deeds were put to one side, it is difficult to discern, from the terms of those agreements, the commercial rationale for the Company to enter into a raft of option agreements for the issue of 11,100,000 shares at $0.001 per share, in circumstances where the Company’s offer of 30,000,000 shares at $0.6667 per share had been oversubscribed.

21. [258]

    The Amended Option Deeds do not contain, as one would expect, any terms requiring the option holder to provide services to the Company for a certain period of time, or any performance hurdles, or any other conditions for the exercise of the options (other than that the option be exercised by the provision of a notice of exercise within the defined Option Period, together with the payment of the Subscription Price of $0.001 per share).

22. [259]

    According to the terms of the Amended Option Deeds (and assuming their authenticity), each of the option holders was, on 2 October 2018, provided with an option, which could be exercised any time in the three-year period commencing on that date, by proffering a payment of $0.001 per share, without any obligation on the grantee to provide any services to the Company, of any type, for any period of time.

23. [260]

    Further, whereas there was disclosure in the FSO regarding the issue of shares to directors and consultants for their services (and disclosure, via the Statement of Financial Position in the FSO, of the amount of capital paid in return for the issue of shares to those persons and Holdings), there was no disclosure in the FSO that any options would or might be issued, let alone regarding the number of shares for which options would be issued, or the strike price, or the persons (or types of person) to whom those options would be issued, or the rationale for the issue of options.

24. [261]

    Having regard to those matters, I am satisfied that the issue of the 11,100,000 Option Shares at a price of $0.001 per share was oppressive to, unfairly prejudicial to, or unfairly discriminatory against the Plaintiffs, each of whom subscribed for shares in the Company pursuant to the FSO at a price of $0.6667 per share. In particular, I am satisfied that this conduct involved commercial unfairness, given that the issue of the Option Shares:

    1. (1)

       diluted the value of the Plaintiffs’ shareholding in the Company;

    2. (2)

       provided preferential treatment to the option holders (a number of whom appear to be related to or associates of Mr Carbone) who were able to acquire shares at a price 1/666th of the amount paid by the Plaintiffs;

    3. (3)

       did not result in any discernible benefit to the Company or have any reasonable commercial justification; and

    4. (4)

       was not the subject of any disclosure to shareholders (until after the Whistleblower Complaint was made).

25. [262]

    In circumstances where I have determined that the pleaded claim for oppression has been established in respect of the Option Shares, it is unnecessary to consider any of the other various factual matters raised by Ms O’Toole regarding the circumstances in which those shares were issued (particularly since, as noted above, those matters were not put, in cross-examination, to the directors of the Company who gave evidence in the proceeding, namely, Mr Michael Gerace, Mr Vale and Mr Bruzzano).

26. [263]

    The Company contended that, by reason of the Selective Capital Reduction, any oppressive conduct in issuing the Option Shares did not have any continuing effect.

27. [264]

    A single instance of oppression is sufficient to constitute a basis for relief: Spence v Rigging Rentals WA Pty Ltd [2015] FCA 1158 at [137] (Gilmour J). Further, it is not necessary that the oppressive conduct continue to exist at the time of the trial: Strategic Management Australia AFL at [147] (Sifris J). However, in order to invoke the exercise of the court's discretion, the single past act would need to be so serious as to equate to a continuing present state of affairs: Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279 at 289 (Derrington J).

28. [265]

    Consistent with the principle that the purpose of relief is to terminate the effects of oppression, relief will generally be inappropriate as a matter of discretion if there is no continuing oppression: see, for example, Backoffice Investments at [182].

29. [266]

    As set out at paragraphs [82]-[86] above, the Company informed shareholders, after the Whistleblower Complaint was made in respect of the 11,100,000 Option Shares, that Holdings had “decided to reduce its shareholding in the Company by the number of options issued as a gesture of goodwill”. Resolutions to cancel 11,100,000 of Holdings’ shares in the Company for nil consideration, and to reduce the capital of the Company by 11,100,000 shares, were subsequently passed by Holdings and by more than 75% of the Company’s shareholders.

30. [267]

    The Company tendered signed proxies evidencing that most of the Plaintiffs voted in favour of the Selective Capital Reduction (and there was no evidence that any of the remainder voted against it).

31. [268]

    The Plaintiffs submitted that there was no statement, in the Explanatory Statement which was provided to shareholders in relation to the resolutions, that the cancellation of 11,100,000 shares in the Company which were held by Holdings was proposed as a means of addressing concerns regarding the issue of the 11,100,000 Option Shares. The lack of any such express connection between those matters in the Explanatory Statement appears to have resulted from legal advice received by the Company. Mr Vale gave the following evidence in cross-examination concerning this Explanatory Statement:

32. [269]

    While no such express disclosure was made in the Explanatory Statement, I am satisfied that the Plaintiffs were aware, when voting in favour of the resolutions, that the cancellation of 11,100,000 shares held by Holdings was linked to, and proposed as a means of dealing with, the questions which had been raised regarding the 11,100,000 Option Shares, having regard to the following matters.

33. [270]

    First, the proposal to reduce the number of shares held by Holdings was initially raised in a letter to shareholders dated 27 July 2022. This letter referred to the Whistleblower Complaint, and expressed the Company’s view that all options were “validly issued”, but stated that “as a gesture of goodwill”, Holdings had determined to reduce its shareholding in the Company “by the number of options issued” (emphasis added) (see paragraphs [77]-[82] above).

34. [271]

    Accordingly, there was an exact correspondence, which was drawn to the shareholders’ attention, between the number of Option Shares which had been issued and the number of shares of Holdings which were to be cancelled. Further, the cancellation was proposed by Holdings in the context of, and as a response to, concerns being raised about the Option Shares.

35. [272]

    Secondly, Mr Michael Gerace engaged in email correspondence with the directors of the Company, after he received the Notice of the 2022 AGM which was sent to shareholders on 29 November 2022, and which contained the resolutions for the Selective Capital Reduction and attached the Explanatory Statement (see paragraphs [83]-[86] above). In particular:

    1. (1)

       on 30 November 2022, Mr Michael Gerace wrote to Ms Atelj, copying Mr Bruzzano, stating that he had received a “few call[s] from Shareholders expressing concern regarding the Selective Capital Reduction”, because they “had a[n] understanding that the shares to be relinquished would be distributed on a pro-rata basis” and they “will take issue with a lot of smaller option holders receiving the benefit of this Capital Reduction”, such that they “likely … will be voting against it”;

    2. (2)

       on 1 December 2022, Mr Bruzzano replied that the “capital reduction (which is equivalent to the options issued) will place each shareholder back to the same equity position just prior to the share issue via options”; and

    3. (3)

       also on 1 December 2022, Mr Michael Gerace forwarded this email chain to Mr Rocco Papallo, who is the director of the Sixth Plaintiff, STM Capital Pty Ltd.

36. [273]

    It is plain from the correspondence set out above that Mr Michael Gerace understood that there was a link between the Selective Capital Reduction and the issues which had been raised in respect of the Option Shares, and that he was informed that the Selective Capital Reduction, which was “equivalent to the options issued”, had been proposed so as to “place each shareholder back to the same equity position just prior to the share issue via options”. Mr Michael Gerace and Mr Papallo, having received this information, proceeded to vote the shares which they controlled in favour of the Selective Capital Reduction.

37. [274]

    In particular, Mr Gerace confirmed, in cross-examination, that he and his wife (being the Third and Fourth Plaintiffs) voted in favour of the Selective Capital Reduction, and that he caused the First and Second Plaintiffs to vote in favour of the Selective Capital Reduction. He gave the following evidence:

38. [275]

    Thirdly, Mr Marra confirmed, in cross-examination, that he caused the Seventeenth Plaintiff, Lomandra, to vote in favour of the Selective Capital Reduction, because he considered it an appropriate way in which to redress the issues which had been raised in relation to the Option Shares:

39. [276]

    In their opening written submissions, the Plaintiffs disputed the Company’s contention that the effects of any oppressive conduct associated with the Option Share Issues had been addressed by the Selective Capital Reduction, and referred to the following matters:

    1. (1)

       “the Option Holders continue to hold the shares that they have, in effect, been gifted”; and

    2. (2)

       “the Option Holders have since [the Selective Capital Reduction] remained as shareholders with voting rights and the power to appoint directors to the Company”.

40. [277]

    The principal effects of the issue of the Option Shares, so far as the Plaintiffs were concerned, were to diminish their voting power and to dilute the value of their shares by the issuing of 11,100,000 shares at $0.001 per share. These effects were addressed by the cancellation of the precise number of shares which had been issued pursuant to the options for nil consideration. As Mr Bruzzano explained to Mr Michael Gerace in his email of 1 December 2022, the effect of cancelling 11,100,000 shares in the Company held by Holdings was to put the other shareholders back in the same position as they were prior to the issue of any Option Shares.

41. [278]

    It is the case that, following the implementation of the Selective Capital Reduction, the persons to whom the options were issued continued to hold the Option Shares. However, the outcome, as far as other shareholders was concerned, was the same as if the 11,100,000 shares held by the option holders had been cancelled, and Holdings had then distributed 11,100,000 of its own shares to the option holders in the same proportion as the Option Shares which they had previously held. This may explain why shareholders were informed that Holdings had decided to reduce its own shareholding in the Company by the number of the Option Shares in order “to honour Pasquale Carbone’s memory”. Holdings appears to have been of the view that Mr Carbone wanted the option holders to have the shares which had been issued to them and therefore, rather than cancelling those 11,100,000 shares, the appropriate response to the issues raised regarding the options was to cancel the same number of shares held by the trust which Mr Carbone had established.

42. [279]

    This issue was raised with the Plaintiffs in closing address, as follows:

43. [280]

    The position would obviously have been different if I had determined that, as the Plaintiffs contended, the issue of 99,999,999 shares to Holdings constituted oppressive conduct, and that those shares should be cancelled. In those circumstances, it would have been no answer to the claim regarding the Option Shares that 11,100,000 of the shares held by Holdings had previously been cancelled for nil consideration.

44. [281]

    However, I have determined that the issue of 100 million shares to Holdings did not constitute oppressive conduct, and that none of Holdings’ remaining 18,900,000 shares should be cancelled. In circumstances where 11,100,000 of Holdings’ shares have previously been cancelled in order to address the concerns which had been raised about the validity of the 11,100,000 Option Shares, and the shareholders (including all or most the Plaintiffs) agreed to this course of conduct, there is no further step necessary to remedy the effects of the oppressive conduct on the Plaintiffs. If the Court were to order the cancellation of the 11,100,000 shares held by the option holders, this would, when combined with the Selective Capital Reduction, result in twice the number of shares being cancelled as were issued pursuant to the options, with the result that the Plaintiffs’ position was (in terms of, for example, voting power) better than it had been before any of the Option Shares was issued.

45. [282]

    The conclusions set out above do not depend on any finding of acquiescence or delay. Instead, the critical point is that, by reason of the matters set out above, there is no continuing effect of oppressive conduct.

46. [283]

    For those reasons, although I have found that the issue of the Option Shares amounted to oppressive conduct, I have determined that the relief sought by the Plaintiffs in respect of this conduct should not be granted.

47. [284]

    The Plaintiffs have failed to establish any of their claims for relief.

48. [285]

    It follows that the proceeding must be dismissed, with costs.

49. [286]

    I will provisionally make an order that the Plaintiffs pay the Company’s costs, as agreed or assessed. (I will not make an order in respect of the costs of any other Defendant, given that the only other Defendant who played an active part was Ms O’Toole, who was self-represented.) This provisional order will take effect seven days after the date of this judgment unless any party notifies the other parties and my Associate in writing that some other order is sought, specifies the order and provides a brief statement of the grounds for it, in which event the order will not take effect and I will make directions to deal with costs.

50. [287]

    Accordingly, I make the following orders:

    1. (1)

       The proceeding is dismissed.

    2. (2)

       Provisionally order that the Plaintiffs pay the costs of the First Defendant, as agreed or assessed. This order will take effect seven days after the date of this judgment unless any party notifies the other parties and the Associate to Nixon J in writing that some other order is sought, specifies the order and provides a brief statement of the grounds for it, in which event the order will not take effect and directions will be made to deal with costs.

    3. (1)

       List the Notice of Motion filed by the Defendants on 14 August 2025 for directions before Nixon J at 9:15am on 2 October 2025.