In the matter of Punters Show Pty Limited

1. [1]

   HER HONOUR: This is a claim by professional punters, who have appeared as the ‘talent’ on internet thoroughbred racing commentary and sold their own racing products, for monies owed and equitable compensation arising from an arrangement to provide their ‘talent’ to another provider of such services, which arrangement came undone. Whilst the monies owed are said to be some $30,000, the compensation sought is substantial, said to exceed $1.5 million. Neither claim has been proved.

2. [2]

   The first and second plaintiffs, Marc Lambourne and Glenn Pollett, are professional punters and provide horse racing tips and racing commentary to the thoroughbred racing community. They are shareholders in the third plaintiff, Punters Show Pty Ltd. Mr Lambourne is also a director of the company, although was not a director when the events the subject of these proceedings occurred.

3. [3]

   The first defendant, Dallas Baker, is also a shareholder of Punters Show and was sole director at the time of these events. The second defendant, Todd Buckingham, is the founding director and now chief executive officer of the third defendant, TopBetta Holdings Ltd. The fourth and fifth defendants, 12Follow Pty Ltd and Operis Momentus Pty Ltd, are wholly owned subsidiaries of TopBetta; Mr Buckingham was also a director of 12Follow and Operis at the time of these events.

4. [4]

   The plaintiffs were unrepresented at the hearing. Mr Lambourne also appeared for Punters Show, being authorised by the company to do so, and spoke on behalf of Mr Pollett, who supplemented Mr Lambourne’s submissions where thought necessary. The plaintiffs relied on their own affidavits as well as affidavits of two other providers of internet racing products — Bill Saunders of “Hearts Racing” and “Virtual Form Guide” and Paul Daily of “Ratings2Win” — together with a report of forensic accountant, Lauren Cusack. Ms Cusack was asked to express her opinion on the market value of Punters Show, but the value of the company (which she was not able to determine) did not have any ongoing relevance to the claims as pressed. Although the Amended Statement of Claim contained a number of causes of action, the plaintiffs pressed two claims at the hearing:

5. [5]

   Although the defendants had notified voluminous objections to the plaintiffs’ evidence, the defendants withdrew all objections, did not require the plaintiffs’ witnesses for cross-examination, nor did they call any evidence of their own. In this manner, a six-day hearing was reduced to two days. Central to this was the fact that the plaintiffs’ asserted loss as put at the hearing departed markedly from the way in which it had been pleaded and, whilst the defendants did not oppose the plaintiffs’ proceeding to put forward their claim on a different basis, took the position, essentially, that there was no evidentiary basis to support the asserted loss and thus the Barnes v Addy claim failed for that reason alone. The defendants’ assessment of the position was correct.

6. [6]

   The parties chose to conduct themselves without contracts and formalities, said to be a common feature of doing business in the professional punting industry; there was an outline of a proposed agreement but this was little more than notes in bullet point form. The informality of the arrangements between the parties has made it difficult to unravel what occurred.

7. [7]

   Mr Lambourne has been a passionate follower of thoroughbred racing since he finished high school. Whilst studying law, he worked for bookmakers and ultimately chose a career at the racetrack over a career in the law. He obtained a bookmaker’s licence and developed his own betting theories. By 2009, he had become a form analyst and media commentator in the racing industry. His business partner was the second plaintiff, Mr Pollett, who was also an experienced bookmaker and professional punter.

Punters Show

1. [8]

   In 2009, Mr Lambourne met Mr Baker, who was a writer and producer on a new digital platform called “Racenet”, an online data repository for the thoroughbred racing industry. The three men developed a show which was streamed weekly on “Racenet” and became known as “Punters Show”. Mr Baker, who was something of an entrepreneur, suggested they should create their own website to promote and sell their products. Mr Baker incorporated Punters Show on 20 December 2010 with 25 shares issued to each of Mr Lambourne, Mr Pollett and Mr Baker. According to Mr Lambourne, Mr Baker said he could not be a director as he was then bankrupt but would manage everything. Although Mr Lambourne and Mr Pollett were appointed directors, they left it to Mr Baker to run the company. Mr Lambourne and Mr Pollett readily agreed that their talents lay on the racetrack rather than in an office: neither professed any particular skill in accounting, administration or computer technology and, in Mr Pollett’s case, he had owned the same mobile phone for 12 years and was “not interested in becoming technologically advanced”.

2. [9]

   Although Mr Baker did not give evidence, he filed a Defence which essentially admitted this part of the plaintiffs’ pleading. In particular, Mr Baker admitted that Mr Lambourne, Mr Pollett and he agreed to jointly form and conduct a business to produce and broadcast a regular program on internet TV, “Punters Show”; to promote, market and sell products of third parties who would pay a commission to be entitled to sell from the “Punters Show” website; to generate revenue from advertisers; and to generate revenue from Mr Lambourne and Mr Pollett making appearances as ‘talent’ for a fee. Mr Baker agreed that Mr Lambourne, Mr Pollett and he would jointly own directly or indirectly the digital shop front, platform and website; he would manage and administer the marketing promotion and sales of the products as well as collect revenue, deduct fees and account to the vendors of the products on a regular basis; whilst Mr Lambourne and Mr Pollett would devote their time and skill to the production of “Punters Show” broadcasts. Mr Baker agreed that he represented to Mr Lambourne and Mr Pollett that he would supervise and control the financial affairs of the business, including the bank accounts and revenue, and would attend to the distribution to Mr Lambourne and Mr Pollett of revenue generated from their products sold from the digital shopfront.

3. [10]

   In January 2011, Punters Show opened a bank account. According to Mr Lambourne, Mr Baker exercised exclusive control of the bank account. By April 2011, Mr Baker had organised the Punters Show website. Mr Lambourne and Mr Pollett then produced “Punters Show” — now called The Show — exclusively for the company’s website and in support of the company’s digital shopfront. In August 2012, after Mr Baker had been discharged from bankruptcy, Mr Baker became the company’s sole director. The company appeared to be a modest concern in its early days. As at 30 June 2012, its net assets were – $21,364. By 30 June 2013, Punters Show’s net assets were – $19,197.

4. [11]

   By early 2014, Mr Lambourne believed that the company was doing well and, although Mr Baker had told him not to expect to receive revenue for the first 12 months of operations, started to enquire about a distribution of profits. Mr Baker told Mr Lambourne that overheads were too high and they were not selling enough products. As soon as cash flow improved, Mr Baker said that he would give them more money but it took time to start a new business like this; digital media was new but people would take to it soon. By 30 June 2014, the net assets of Punters Show were $42,546, an obvious improvement from the preceding years. Its gross profit was $185,670, also a substantial improvement from previous years. Mr Baker was recorded as having a loan from the company of $92,878.

TopBetta and 12Follow

1. [12]

   On 27 June 2013, TopBetta was incorporated. Mr Buckingham was the sole director and secretary. 12Follow was a subsidiary of TopBetta and operated a website similar to that of Punters Show. Numerous screen shots of the two websites as they appeared throughout 2014 and 2015 were in evidence. The plaintiffs submitted that the website of Punters Show was far superior and contained premium content. It is difficult for me to say from viewing the screen shots, but it does appear that Punters Show’s website had content which 12Follow wished to include in its offering.

2. [13]

   A screen shot of 12Follow’s website on 15 September 2014 bore an icon for Punters Show which, if selected, took the customer to a 12Follow website where payment could be made for Punters Show products such as racing tips. It appears that Mr Baker entered into an arrangement with TopBetta and 12Follow to use 12Follow’s merchant facilities, although it is not clearly precisely when the arrangement began.

3. [14]

   In September 2014, Bill Saunders of “Hearts Racing” approached Mr Buckingham to see whether “Hearts Racing” or “Virtual Form Guide” could be promoted by TopBetta. Mr Saunders met with Mr Buckingham and Brett Walker, TopBetta’s accountant and professional advisor. Although TopBetta was not interested in purchasing services from Mr Saunders, “Virtual Form Guide” was promoted on 12Follow’s website with Mr Saunders to receive 50% commission. This proved unsatisfactory as “Virtual Form Guide” was not given sufficient prominence on 12Follow’s website: whilst other products including a Punters Show product, “There They Are”, were given top billing on the front page of the website, Mr Saunders’ products were not. In November 2014, Mr Saunders terminated the arrangement. The relevance of Mr Saunders’ evidence was, as I understand it, that 12Follow did not itself have premium content and, further, that Mr Walker was TopBetta’s accountant and adviser. As to the former, it appears that a significant source of revenue for both the Punters Show and 12Follow websites was the fees charged to third party suppliers of products advertised and sold via the respective websites. Whether, by making one’s products available for sale through a particular website, the website was thereby provided with content or was simply advertising a third party’s products is not entirely clear.

A proposal by TopBetta

1. [15]

   On 9 December 2014, Mr Baker organised a meeting with Mr Lambourne and Mr Pollett at the offices of the accountants for Punters Show. Mr Lambourne and Mr Pollett were looking forward to the meeting as they had been pressing Mr Baker for some time for some profits to be paid. To their surprise and distress, Mr Buckingham was at the meeting. Mr Pollett objected to his presence, but Mr Baker said that Mr Buckingham had come all the way from Newcastle to help with cash flow issues and they had prepared a presentation to explain the next step that needed to be taken to ‘cash in’ on their hard work thus far. The presentation suggested that Punters Show’s website be redesigned to improve the “billing side of things to be able to streamline packages, direct debit and subscription style payments”. This was said to be “currently in the works by Todd’s team”. A live Saturday morning show was suggested in conjunction with TopBetta, to be broadcast on Punters Show and TopBetta’s websites. The goal of Punters Show was said to be promotion of its products, while TopBetta’s goal was to attract customers. Other projects suggested included 12Follow and preparing to sell the business with the “most logical step [being] piggy-backing on the stock market listing of TopBetta”.

2. [16]

   It appears to have been suggested at the meeting that there should be some sort of relationship or arrangement between Punters Show and TopBetta to the mutual advantage of both. A shareholders agreement was suggested to “take us into the future”. Whatever was intended to be conveyed by the presentation, it failed to impress Mr Lambourne and Mr Pollett, who walked out of the meeting. They had come to the meeting to find out why they weren’t receiving revenue from the business, notwithstanding that it appeared to be doing well, and were met with a proposal to become involved with another company. They were also upset to learn from the company’s accountant that Mr Baker had been drawing $2,000 a week in salary.

3. [17]

   Notwithstanding Mr Lambourne and Mr Pollett’s disinterest in doing business with TopBetta, Mr Baker appears to have pursued the connection. In February 2015, Mr Baker introduced a new product to the Punters Show website called “ProBetta Live” and the product was promoted on The Show. Customers who purchased the product were diverted to the 12Follow website with sales processed through its merchant facilities. Mr Lambourne has found no evidence that the proceeds of sale of “ProBetta Live” were paid into the Punters Show bank account. According to a list of 12Follow products in evidence, “Probetta Live” is a product of 12Follow or TopBetta — as indeed the name suggests — not a product of Punters Show. It does appear that Mr Baker was promoting that product on the Punters Show website, but in the absence of any evidence that there was an agreement that 12Follow would pay Punters Show any commission or fee for promoting its product, it does not seem to me to follow that Punters Show would be entitled to any payment for sales of the product via its website.

‘Backdoor’ listing on ASX

1. [18]

   According to Mr Pollett, in early 2015 Mr Baker repeatedly said to him that they had built up a good business over the last three years but needed to do something big to move to the next level and start “collecting”. This was where TopBetta was said to be able to help them as TopBetta was going to be listed on the stock exchange and would become a high profile company. By working with TopBetta, Mr Baker said that they could expand their client base and make some regular money from getting paid contract fees by TopBetta as they moved towards a market listing.

2. [19]

   In March 2015, TopBetta proposed to become a listed company by a ‘backdoor’ listing. The Australian Securities Exchange (ASX), in its ASX Listing Rules: Guidance Note 12 (2019) at [1.1], explains this concept as follows:

3. [20]

   In March 2015, an announcement was made by Beauty Health Group Limited to the ASX: the company intended to enter into the online social gaming and wagering sector through the proposed acquisition of 100% of the TopBetta Group of companies from Australian social media company OM Group Holdings Pty Limited and to be renamed TopBetta Limited. The company also proposed to undertake a $5 million capital raising and to seek re-quotation of its shares on the ASX. Incoming managing director, Mr Buckingham, was described as having had an extensive career in the sporting and wagering industries with over 15 years’ experience and an experienced team of social gaming, sports, IT and marketing professionals. Since TopBetta was established in 2010, the company’s monthly revenues were said to have increased by approximately 300% from $40,000 per month in July 2014 to $120,000 per month in 2015 and the company had also established strategic alliances with companies including Fairfax Media and Punters Show. The fact that a strategic alliance with Punters Show was listed alongside an alliance with Fairfax Media indicates to me that Punters Show was a prominent provider of professional punting services and content at the time.

Strategic partnership

1. [21]

   In April 2015, Mr Baker encouraged Mr Lambourne to think again about working with Mr Buckingham as, given cash flow would not improve, he was “pretty much our only hope right now”. I note that, by May 2015, Punters Show’s accountants, Stanley & Williamson, had stopped work due to outstanding fees. Mr Lambourne also says that, by April 2015, his personal financial situation had become quite tenuous. Mr Baker suggested that, with Mr Buckingham, they could reduce their overheads, get more efficient revenue collection systems and increased exposure via the listing of TopBetta on the stock exchange. Mr Baker invited Mr Lambourne and Mr Pollett to attend a meeting with Mr Buckingham.

2. [22]

   On 4 May 2005, Mr Lambourne, Mr Pollett, Mr Baker and Mr Buckingham met. According to Mr Lambourne, Mr Buckingham said that he loved the Punters Show brand and did not want to change it; he could organise some regular cash flow for them, and he suggested forming a strategic partnership. Mr Buckingham agreed to pay them a monthly fee to promote TopBetta as the Punters Show had ‘pulling power’ with the public, saying “You guys are personalities but will get even more publicity from your work for the listing.” Mr Buckingham offered to ‘jazz up’ the Punters Show website, cut out the management and merchant facilities expenses, in order to free up Mr Baker from administration so that he could do marketing for Punters Show and 12Follow. Mr Buckingham would collect Punters Show fees through 12Follow merchant facilities, which were said to be better, manage the accounting and report to them on a regular basis. TopBetta would not charge commission for managing the sale of Mr Lambourne and Mr Pollett’s own products. All Mr Buckingham wanted was for them to promote TopBetta in advance of its listing on the stock market. Mr Lambourne and Mr Pollett were amenable to the proposal. According to Mr Lambourne, he said, “That sounds good”.

3. [23]

   As pleaded, the plaintiffs alleged that Mr Buckingham represented at the meeting that if the parties entered into the strategic partnership:

4. [24]

   On 7 May 2015, Mr Lambourne says that he called Mr Buckingham and said, “I’ve worked out I need a minimum income of $104,000 plus GST for the next 12 months before I can consider anything. I also need a lump sum of $30,000 immediately”. Mr Buckingham agreed to this. Mr Lambourne then participated in the filming of an in-depth interview about his career in professional punting, presumably to be used as content.

5. [25]

   In evidence are a steady stream of text messages between Mr Lambourne and Mr Baker. Mr Lambourne was undertaking a renovation on his house and regularly requested funds from Mr Baker to pay his tradespeople. It would appear from the text messages that, generally speaking, Mr Baker responded promptly to these requests by paying funds from the Punters Show bank account to Mr Lambourne. In June 2015, Mr Lambourne requested further funds; Mr Baker replied that he was doing his best but the reality was that funds could not be paid until the end of the week or the weekend, and Mr Lambourne replied that he could not wait that long. Mr Baker then advised that Mr Buckingham was transferring $2,000 to him today. On 24 June 2015, 12Follow paid $2,000 into Mr Lambourne’s bank account. This was the first of a series of payments from 12Follow to Mr Lambourne, apparently in accordance with the agreement to pay him, effectively, an annual salary.

6. [26]

   Some years earlier, Punters Show had entered into a referral agreement with Ratings2Win Pty Limited, agreeing to refer Ratings2Win’s horseracing software to customers. Punters Show issued some $50,000 in invoices to Ratings2Win under this agreement. On 12 July 2015, an administrator manager at TopBetta sent an email to Mr Daily of “Ratings2Win” attaching an invoice from 12Follow for ongoing Punters Show subscriptions. The administration manager explained that Mr Baker had asked him to prepare the invoice “as Punters Show has joined forces with 12Follow. All receipts and payments are now going through 12Follow”. Mr Baker also emailed Mr Daily to see whether the new invoicing arrangement was acceptable. Whilst Mr Daily advised that he had no particular difficulty with transferring the invoicing arrangements to 12Follow, relations between the parties broke down for reasons presently immaterial. The significance of these emails is that 12Follow was proceeding to take over the administrative side of Punters Show’s business as had been discussed at the meeting in May 2015.

7. [27]

   On 21 July 2015, the new Punters Show website became operational and the original website was disconnected, as were the company’s merchant facilities. On 30 July 2015, an agreement was circulated between Mr Baker and Mr Buckingham, entitled “Punters Show Agreement with OM Group”, said to be an initial draft outlining the agreement between the parties. The agreement, which is a series of notes and bullet points, suggested that Punters Show responsibilities would be to provide tipping products and introduce third party products. OM Group would provide billing services, an interface for Punters Show to view client statistics for products and to provide a platform for managing and sending product materials as well as marketing and sales services. Punters Show and 12Follow would each continue to sell their own products through their own websites and OM Group would utilise the websites of both to sell Punters Show products with revenue to be split.

8. [28]

   Mr Pollett says he did not know that Mr Baker was selling Punters Show products from the 12Follow website or that there was any cross-promotion occurring before July 2015. He says he would have put a stop to it if he had known. Nor did he agree to sell Punters Show or any part of its business to Mr Buckingham or his associated companies. This is not entirely consistent with Mr Pollett’s apparent agreement to the proposal put by Mr Buckingham at the meeting on 4 May 2015, but is consistent with Mr Pollett’s non-involvement in the administrative and IT side of Punters Show’s business.

TopBetta moves to IPO listing

1. [29]

   On 26 August 2015, Beauty Health Group Ltd made a further announcement to the ASX advising that its proposed acquisition of the TopBetta Group had been terminated: TopBetta had received an alternate capital raising proposal from another stockbroking firm that would notionally ascribe a higher pre-cash valuation to the TopBetta business and change the intended form of listing from a backdoor listing to an initial public offering (IPO), that being the ordinary capital-raising mechanism by which a company sells its shares publicly for the first time: see generally ASX Listing Rules: Guidance Note 1 (2019).

2. [30]

   In October 2015, Mr Baker, Mr Lambourne and Mr Pollett participated in a day-long photo shoot said to be part of their promotional work for the TopBetta ASX listing, although it rather appears to be for use in The Show and the Punters Show website, being photographs of the three men in various poses.

3. [31]

   On 25 November 2015, TopBetta issued a prospectus for its IPO to raise up to $6 million. TopBetta was said to be the first Australian based wagering operator to combine a standard wagering platform with a “fantasy wagering” platform including the capability of conducting fantasy wagering tournaments. “Fantasy wagering” was explained to me, during the course of the hearing, as being a closed competition in which a competitor would pay a small entry but be given a large value of “fantasy” chips with which to bet on real races, with a large return, in real money, if their fantasy bets were more successful than the other players in the closed competition. The company’s subsidiary, 12Follow, was said to be the first service to use customers’ mobile phones to follow their favourite runners and now offered a mobile content platform with analyst commentary. A subsidiary of the company, Operis Momentus, was described as licensed to conduct business as a bookmaker. The prospectus made no reference to Punters Show, Mr Lambourne or Mr Pollett.

4. [32]

   On 11 December 2015, TopBetta was listed on the ASX, raising $6 million in an IPO which was described in TopBetta’s announcement to the ASX as “heavily oversubscribed”. It is this $6 million which is the focus of the plaintiffs’ claim for equitable compensation, considered further at [85] to [92]. On 3 January 2016, TopBetta made a further announcement to the ASX, advising that it had entered into an exclusive partnership with a new digital platform, EON Sports Radio. The deal was said to also utilise the talent from TopBetta’s “Punters Show” premium content providers to provide unique content to EON Sports Radio. Mr Buckingham was quoted as saying that he was looking forward to the launch of a Saturday morning racing show on EON Sports Radio:

Invoice for $30,000

1. [33]

   On 28 January 2016, Mr Lambourne met with Mr Buckingham and asked about the $30,000 payment. Mr Buckingham asked for an invoice and said he would make sure it was paid within 14 days. On 29 January 2016, Mr Lambourne sent an email to Mr Buckingham saying:

2. [34]

   On 12 April 2016, Mr Lambourne sent an email to Mr Buckingham asking him to drop him a line to let him know “where we are re Punters Show liabilities”. Mr Buckingham replied, “I am looking to settle this before the end of April”. In about April or May 2016, Mr Baker informed Punters Show’s accountants, Stanley & Williamson, that Mr Walker had taken over. In May 2016, Mr Walker took over preparing the accounts and brought everything up to date. On 14 May 2016, Mr Buckingham advised, “The accountant now has the files and is finalising the amounts outstanding”. On 2 June 2016, Mr Walker sent an email to Mr Buckingham in respect of Punters Show: “Here is what they owe currently ($35,000) plus 2015 company tax plus BAS not lodged from June quarter to now”. It appears that Mr Buckingham and Mr Lambourne were progressing TopBetta paying Punters Show’s outstanding bills to its accountants and the ATO, which Mr Baker admitted TopBetta agreed to do at the meeting in May 2015.

Parting ways

1. [35]

   On 6 June 2016, in an edition of The Show, Mr Pollett made a comment about jockey safety with which Racing NSW took issue. Mr Pollett pleaded guilty to conduct prejudicial to the image and/or interests of racing, improper conduct and making comments that were obscene, offensive and abusive on a social media channel. Mr Pollett was fined $10,000 by Racing NSW.

2. [36]

   The plaintiffs say this wasn’t all their fault: The Show was pre-recorded, produced and downloaded by TopBetta; Mr Pollett also says that Mr Buckingham asked him to ‘go easy’ with Racing NSW as he did not want TopBetta employees to lose their jobs if the commissioners gave TopBetta a hard time with its licence. Mr Pollett says that, against his better judgement and because he was worried about people losing their jobs, he did not defend the charges. He says that the penalty was varied in subsequent conversations with Racing NSW such that they waived the outstanding penalty and instead paid his rent and other domestic expenses of some $10,000. The latter seems inherently unlikely.

3. [37]

   On 12 June 2016, Mr Buckingham published an email announcing that Mr Lambourne had been stood down for two weeks. According to Mr Lambourne, Mr Baker reassured him that he need not worry about the announcement, “We need to keep the racing people sweet. This is good stuff for publicity. You are not suspended. Don’t mind the statement. Todd had to do it. There’s no such thing as bad publicity”. Mr Lambourne says he was never in fact stood down and continued to film The Show as usual the following Friday. He also says that, on 12 June 2016, Mr Buckingham called him and said that “the $30,000 would be paid by 30 June for sure”.

4. [38]

   On 5 July 2016, Mr Baker sent a text message to Mr Lambourne asking if he would agree to meet with Mr Buckingham, Mr Pollett and Mr Baker “basically just for Todd to let you know the outcome from an internal point of view from our recent happenings…”. They met on 15 July 2016. Mr Baker gave Mr Lambourne a spreadsheet which set out the revenue earned on all Punters Show products for the year ended June 2016 together with expenses, including Mr Baker’s wages and monies paid to Mr Pollett, Mr Lambourne and others. The spreadsheet indicates that the revenue of Punters Show products processed by 12Follow totalled $769,031 in respect of which expenses of $744,458 had been incurred. Some of the expenses related to employees of 12Follow, or a 15% contribution to their wages. An amount was also deducted for marketing. It appears that the spreadsheet allowed for cost items incurred by 12Follow to be shared with Punters Show in accordance with the agreement circulated on 30 July 2015 but never finalised: see [27]. A text sent by Mr Lambourne to Mr Buckingham at 5.00 pm noted that Mr Buckingham mentioned that their final payment would be this month. The spreadsheet and text suggest that the parties had agreed to part ways and a final accounting of monies owing was being undertaken. Further text messages between Mr Baker and Mr Lambourne indicate that management of Punters Show was effectively handed over to Mr Lambourne: passwords were provided and questions passed back and forwards.

5. [39]

   On 18 or 19 July 2016, Mr Lambourne received the last payment in his bank account from 12Follow. On 19 July 2016, Mr Baker emailed Mr Lambourne a document entitled “Punters Show Termination Agreement” to “separate Punters Show from its direct connection with TopBetta”. It was proposed that Punters Show would be returned to its current ownership, Mr Baker would resign and Mr Lambourne and Mr Pollett would be appointed as directors. TopBetta would pay $100,000 to Punters Show to cover debt still existing being $60,000 tax, $10,000 to accountants and $30,000 to Mr Lambourne. In exchange, 12Follow would continue to provide existing products and retain any revenue generated from those products. The proposed termination agreement was followed by an email from Mr Buckingham to Mr Lambourne proposing to continue to provide the administrative side of the business but to leave Mr Lambourne and Mr Pollett to run the business itself. As part of this proposal, Mr Buckingham advised:

6. [40]

   It should be noted from this email and the “Punters Show Termination Agreement” that the $30,000 payable to Mr Lambourne was characterised as a debt of Punters Show rather than an obligation owed by TopBetta. Mr Lambourne replied, thanking Mr Buckingham for the proposal but asked for clarification of TopBetta’s contribution of significant funds over the last 12 months: “Would you kindly elaborate as the balance sheet at takeover shows only me as a creditor”. Mr Buckingham replied referring to day to day creditors: contractors owed money, telephone and internet, advertising accounts “just off the top of my head”. Mr Buckingham also forwarded Mr Lambourne a list of outstanding accounts as prepared by Mr Walker on 2 June 2016 and noted that the BAS for 2015 needed to be done.

7. [41]

   A meeting was arranged for 26 July 2016 and, on 22 July 2016, Mr Lambourne sent Mr Buckingham an email entitled “Goodwill prior to negotiation” requesting that, as a gesture of goodwill, he pay an attached invoice, which I take to be Mr Lambourne’s invoice for $30,000. Mr Lambourne noted:

8. [42]

   Mr Buckingham replied, expressing confusion at the email and SMS, “What would we be getting for this payment?” Mr Lambourne replied:

9. [43]

   Mr Lambourne replied:

10. [44]

    On 25 July 2016, Mr Lambourne sent an email to Mr Buckingham, clearly drafted with the assistance of a lawyer, essentially making the allegations now the subject of these proceedings and requesting a mediation. Mr Buckingham replied:

11. [45]

    However, Mr Lambourne declined to meet unless the $30,000 was paid. He also pressed for financial information about Punters Show’s business since Mr Baker had been sole director. Mr Buckingham replied attaching financial information in a spreadsheet, noting:

12. [46]

    On 26 July 2016, the day of the scheduled meeting, Mr Baker sent an email to Mr Lambourne encouraging him to attend:

13. [47]

    On 27 July 2016, Mr Buckingham withdrew all previous offers and advised that TopBetta would continue to offer support for Punters Show products on the 12Follow platform until 1 August 2016 at which point Punters Show would need to administer the sending of information to its customers. Punters Show’s technical team was asked to get in touch with TopBetta so that the domain name could be transferred and Punters Show would bill its customers directly. As a gesture of goodwill, TopBetta offered to continue to manage the billing component of any services for one month but requested that any clients be moved to Punters Show’s billing platform during August as they would be removed from TopBetta’s system.

14. [48]

    Mr Lambourne pressed for a full reconciliation and accounting of funds received by TopBetta or Mr Baker as agents or trustees of Punters Show since 21 July 2015. Mr Buckingham replied promptly:

15. [49]

    Mr Lambourne replied:

16. [50]

    On 29 July 2016, Mr Baker sent Mr Lambourne the database for Punters Show and bank statements for the last financial year. In respect of the bank account, Mr Baker said he had used it for personal expenses and preferred to set up a new bank account for Punters Show, “nothing that isn’t accounted for or anything to hide … but just thought that having banking details ‘out there’ … that I’ll no longer be on top of would be preferable to go that way”. Further emails followed to transfer the Punters Show website across to Mr Lambourne. It appears that this was not a straightforward process. Mr Lambourne said that the defendants locked he and Mr Pollett out of the Punters Show shopfront and website, and that they thus turned their attention to developing a new business called “Racing Rant”. But it appears from the emails and text messages in evidence that the plaintiffs were not ‘locked out’ but perhaps did not have the IT capacity to manage the transition.

17. [51]

    On 5 August 2016, an announcement was made on social media that 12Follow had updated its website platform. Further:

18. [52]

    On 10 August 2016, tax returns for Punters Show for the financial years ended 2012 to 2016 were printed by B Walker Accounting as well as tax returns for Mr Baker from 2008 to 2016. Presumably this was part of Mr Baker bringing the company’s accounting obligations up to date before handing over the books and records to Mr Lambourne and Mr Pollett. According to these tax returns and financial statements, Punters Show made a loss in 2012 and 2013, a profit of $26,666 in 2014, a profit of $2,998 in 2015 and a loss of $12,642 in 2016. The figures are different from other versions of the financial statements in evidence. The difference was explained by Mr Walker who, on 24 November 2016, advised Mr Baker:

19. [53]

    On 12 August 2016, a shot of the Punters Show website, which appears to have still been hosted by TopBetta at the time, advised that all business activities of Punters Show were on hold until further notice; Mr Pollett and Mr Lambourne’s products were to be found at RacingRant.com.au; Mr Baker had accepted a new role at TopBetta; and, products provided by other tipsters and professional punters through 12Follow.com.au remained available at that site. On 12 August 2016, Mr Lambourne’s partner, Ms Sutherland, wrote to Mr Baker asking him to resign as a director of Punters Show and for her to be appointed in his place. Mr Baker said that he was happy to stand down as a director once they had met and endeavoured to resolve all matters between them. Mr Lambourne declined to meet until he had been supplied with detailed accounts and had time to have those accounts checked by his advisers.

These proceedings

1. [54]

   There is no communication in evidence between the parties from August to November 2016. On 14 November 2016, Mr Lambourne forwarded draft court documents and asked whether the parties were interested in reaching an amicable settlement. Apparently, Mr Baker forwarded some proposals although these are not in evidence. Mr Lambourne declined to meet until documents had been provided and written undertakings given. On 16 November 2016, Mr Baker forwarded tax returns for Punters Show from 2012 to 2016. Mr Lambourne replied that the documents were meaningless unless there was evidence that the tax returns had been lodged and a Notice of Assessment issued. “There is still no evidence of the $60,000 odd debt to the ATO which both Todd and yourself had asserted was owing, back in June 2016”. Mr Baker invited Mr Lambourne to contact Mr Walker for details of the lodgement dates and ATO debt and advised that Mr Walker was awaiting his call.

2. [55]

   Mr Buckingham also called Mr Lambourne and left a message, to which Mr Lambourne replied by email on 16 November 2016 that he was only willing to meet to discuss matters after being supplied with the documents requested and being paid the $30,000 together with interest calculated from 1 March 2016. I must say that Mr Lambourne’s negotiating style was unusual. On 17 November 2016 these proceedings were commenced.

3. [56]

   On 1 July 2017, 12Follow scaled back its business activities, ceasing the sale of externally sourced racing products. 12Follow’s racing products remained available for purchase. In October 2017, Mr Baker ceased to be a director of Punters Show. Mr Lambourne and Ms Sutherland became directors.

4. [57]

   Mr Lambourne sought $30,000 plus GST from Mr Buckingham and TopBetta, together with interest. In the Amended Statement of Claim Mr Lambourne alleged that on or about 4 May 2015, Mr Buckingham agreed to pay $30,000 plus GST to Mr Lambourne for promotional work done for TopBetta and its associated companies. Mr Lambourne says he complied with all of Mr Buckingham’s requests in relation to this promotional work. Mr Buckingham is said to have advised that he would pay the amount owing to Mr Lambourne as soon as TopBetta became listed on the ASX and Mr Lambourne invoiced him for this amount. Despite numerous promises to cause TopBetta to pay the monies to Mr Lambourne, it is still owing. In July 2016, it is said that Mr Buckingham unilaterally informed Mr Lambourne that neither himself nor TopBetta accepted liability for the debt.

5. [58]

   The claim is made either in contract or on the basis that Mr Buckingham is estopped from denying that there was a binding agreement to that effect. In their Defence — in respect of which no evidence was called — Mr Buckingham and TopBetta contended that an agreement to pay $30,000 to Mr Lambourne formed part of a wider agreement for 12Follow to buy Punters Show’s business, including by paying $30,000 to Mr Lambourne in respect of monies which he said he had lent to the company, on substantiation of the said loan. As the loan was never substantiated and the sale agreement never completed, the monies are not owing.

6. [59]

   The plaintiffs made no written or oral submissions in support of this part of the claim. Doing the best I can with the evidence before the Court, being the unchallenged affidavit evidence of Mr Lambourne and contemporaneous documents, it will be immediately noted that the invoice was inclusive of GST, whilst the relief sought in these proceedings is $30,000 plus GST. Whilst the invoice was addressed to “TopBetta P/L”, it was marked to the attention of Mr Buckingham and emailed to Mr Buckingham at his “TopBetta.com” email address. It seems likely that Mr Lambourne had in mind to issue the invoice to TopBetta, the third defendant.

7. [60]

   The question for determination is whether TopBetta was obliged to pay the invoice, in particular, was there a contract between Mr Lambourne and TopBetta in the terms suggested by Mr Lambourne. Based on the evidence preceding issue of the invoice, Mr Lambourne found himself in a tenuous financial position in April 2015. As part of negotiations with Mr Buckingham and TopBetta, Mr Lambourne sought, as pleaded, the immediate payment of $30,000 “to remedy Lambourne’s then urgent cash flow problems”. The monies were not sought in return for any particular service provided by Mr Lambourne but as part of the overall deal. It seems to me that Mr Buckingham agreed to ensure that TopBetta paid these funds as part of a broader agreement for Punters Show and TopBetta to do business together. There is scant evidence that Mr Lambourne provided services to TopBetta from July to December 2015 beyond the ordinary tasks associated with Punters Show, for which separate remuneration, being a monthly fee, was agreed and paid. There is no evidence pointing to any promotional work done by Mr Lambourne for TopBetta as part of its efforts to list on the ASX: the interview done and photo shoot appear to have been for the promotion of The Show or Punters Show generally and, so far as the evidence suggests, made no mention of TopBetta or its plans to list on the ASX.

8. [61]

   The email from Mr Lambourne attaching his invoice is consistent with the payment being sought as part of Mr Lambourne entering into a venture with Mr Buckingham or TopBetta. Post-invoice contemporaneous communications refer to the $30,000 being a debt of Punters Show, not TopBetta, and one which would be paid by TopBetta as part of the overall deal. In circumstances where the strategic partnership, broader deal or venture did not proceed, and where there is no contract or contemporaneous acknowledgement by Mr Buckingham or TopBetta that they agreed to pay Mr Lambourne $30,000 in the absence of an overall deal, and in the absence of any reliable evidence that Mr Lambourne provided services sufficient to justify the rendering of an invoice for $30,000, I am not satisfied on the balance of probabilities that TopBetta agreed to or is contractually obliged to pay Mr Lambourne the invoiced sum.

9. [62]

   As to the estoppel claim, the elements of promissory estoppel emerge from the judgment of Brennnan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428–9; [1988] HCA 7, where his Honour said:

10. [63]

    Each of these elements must be proved by the plaintiffs. I am not satisfied that there was any representation by Mr Buckingham or TopBetta that, in the absence of the deal between the parties being concluded, Mr Lambourne was entitled to $30,000. Apart from Mr Lambourne’s affidavit, albeit unchallenged, there is no contemporaneous record of any representation by Mr Buckingham or TopBetta to that effect. If Mr Lambourne assumed that had been agreed, there is no evidence that such an assumption was induced by the defendants, or that they knew of it, or that, if they knew, they failed to act or correct any misapprehension on Mr Lambourne’s part. There is no evidence of detriment suffered by Mr Lambourne from having relied on such an assumption or expectation.

11. [64]

    In short, this is not a case where equity would intervene in aid of Mr Lambourne since there is no unconscionability to warrant such intervention: there was simply an agreement which was negotiated but never finalised. Further, there is considerable doubt in this State whether a promissory estoppel can be give rise to a positive obligation to pay: Saleh v Romanous (2010) 79 NSWLR 453; [2010] NSWCA 274 at [74]; Antov v Bokan [2018] NSWSC 1474 at [484]–[488]; Manassen Holdings Pty Ltd v Commercial & General Corp Pty Ltd [2019] SASC 171 at [204]–[217]. Thus, TopBetta is not estopped from denying an obligation to pay the monies nor, by reason of any estoppel, obliged to pay the monies.

12. [65]

    As ultimately put, the plaintiffs claim for equitable compensation was in the nature of a Barnes v Addy claim. The rule in Barnes v Addy (1874) LR 9 Ch App 244 extends liability for breach of trust to third parties in certain circumstances. In Barnes v Addy itself, Lord Selborne LC (with whom James and Mellish LJJ agreed) said, after referring to trustees de son tort and fraudulent participants in breach of trust (emphasis added):

13. [66]

    The emphasised portion is said to give rise to the two “limbs” of Barnes v Addy: “knowing receipt” and “knowing assistance”: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [112]. As the learned authors of Jacobs’ Law of Trusts in Australia (8th ed., LexisNexis, 2016) note at [13-34], the essential characteristic of the first limb is transfer of property in breach of a fiduciary obligation, whilst the second limb deals with assistance by a third party not involving the receipt of property. As Jacobs’ explains, the remedies available on a Barnes v Addy claim include (citations omitted):

14. [67]

    In Simmons v New South Wales Trustee and Guardian (2014) 17 BPR 33,717; [2014] NSWCA 405, Gleeson JA, with whom Beazley P and Barrett JA agreed, summarised what needs to be proved to establish a claim for equitable compensation under the first limb of Barnes v Addy at [88]:

15. [68]

    As to the knowledge of the third party, Gleeson JA relied on Kalls Enterprises Pty Ltd (in liq) v Baloglow (2007) 63 ACSR 557; [2007] NSWCA 191 at [176]; Hancock Family Memorial Foundation Ltd v Porteous (1999) 32 ACSR 124 at 142; [1999] WASC 55; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [268]–[270]; Westpac Banking Corporation v Bell Group Ltd (In Liq) (No 3) (2012) 44 WAR 1; [2012] WASCA 157 at [2130], as establishing, at [90]:

16. [69]

    Gleeson JA also set out the elements of the second limb of Barnes v Addy at [111]–[115]. In short, the elements are:

The pleaded case

1. [70]

   In terms of pleadings, as against Mr Baker, it was said that in making the May 2015 agreement, Mr Baker owed fiduciary duties directly to Mr Lambourne and Mr Pollett in regard to the information which he provided them about the financial state of Punters Show and the advisability of entering into the strategic partnership agreement. It was said that the strategic partnership was equivalent to a disposal by Punters Show of the whole of its business and was comparable to a sale by Mr Lambourne and Mr Pollett of their shares in the company. Mr Baker was said to have full knowledge of the true financial state of Punters Show, and of the advantages to TopBetta and Mr Buckingham of the arrangement which Mr Buckingham and TopBetta proposed. It was said that Mr Baker knew that the goodwill, intellectual property, confidential information and commercially valuable data of the Punters Show business were valuable assets for which companies would be prepared to pay substantial sums to acquire or to licence. It was further said that Mr Lambourne and Mr Pollett were, to Mr Baker’s knowledge, reliant upon him for information concerning the financial state of Punters Show and the advisability of entering into the strategic partnership.

2. [71]

   The plaintiffs claimed that Mr Baker breached his duties to Mr Lambourne and Mr Pollett by encouraging them to enter into the strategic partnership proposal: Mr Baker was said to have misled them about the true financial position of Punters Show and, knowing that the intellectual property, confidential information, data and goodwill of Punters Show were valuable assets, should have advised them that the strategic partnership did not adequately compensate Punters Show for the benefit of those assets. It was said that Mr Baker failed to advise them that the substantial effect of the strategic partnership would be to strip the company of its business and irretrievably transfer it to TopBetta with the consequence that Mr Lambourne or Mr Pollett would “go from being the major shareholders of [Punters Show] … to having no control whatsoever over the business that they had helped establish”.

3. [72]

   Alternatively, the plaintiffs alleged that Mr Baker breached his fiduciary duties to Punters Show in regard to the May 2015 agreement and thereby caused loss and damage. Before the May 2015 agreement was entered into, Mr Baker was said to have revealed the whole of the financial and other confidential information of Punters Show to Mr Buckingham and TopBetta without any attempt to preserve the confidentiality of the information or require any compensation or licence fee from Mr Buckingham or TopBetta. Further, it was said that Mr Baker exercised his powers as a director of Punters Show to cause it to enter into the agreement and “thereby cause it to be stripped of the whole of its business and all of its intellectual property, confidential information and goodwill, without any adequate compensation for the value of those assets”.

4. [73]

   Mr Buckingham was said to have been knowingly involved in the breaches of fiduciary duty by Mr Baker. Mr Baker was said to be aware at all material times that Mr Lambourne and Mr Pollett were dependent on Mr Baker for knowledge and information regarding the financial state of Punters Show, the desirability or otherwise of entering in to the strategic partnership proposal, and that Mr Baker had assumed duties to look after the interests of Mr Lambourne and Mr Pollett in regard to Punters Show. It was alleged that Mr Buckingham was aware that Mr Baker was the sole director and controller of Punters Show and aware that Mr Baker had misled Mr Lambourne and Mr Pollett as to the financial situation of the company and the consequences of entering into a strategic partnership proposal. Further, the plaintiffs alleged that Mr Buckingham knew that Mr Lambourne and Mr Pollett were “most probably entering into the strategic partnership proposal in consequence of the false information Baker had provided to them regarding the financial situation of the company and its business”. Mr Baker was said to have been aware that the assets of Punters Show warranted a substantial price, but he avoided the need to pay any substantial sum for the assets because Mr Buckingham, it was said, knew that Mr Baker had permitted the company to be stripped of its assets without adequate compensation, in breach of his duties to Punters Show and to Mr Lambourne and Mr Pollett by favouring his own interests to those of the plaintiffs.

5. [74]

   So far as TopBetta is concerned, the plaintiffs alleged that, as Mr Buckingham was the controlling mind of TopBetta, his knowledge, belief and intentions are attributed to TopBetta and thus TopBetta knowingly assisted in the breach of duties by Mr Baker. Likewise, it was said that Mr Buckingham was the controlling mind of 12Follow and Operis and Mr Buckingham’s knowledge can be attributed to these companies which thus knowingly assisted in the breaches of duty by Mr Baker. As wholly owned subsidiaries of TopBetta, 12Follow and Operis were said to be involved in the transaction by which the business of Punters Show was transferred to TopBetta and assisted in and performed transactions on behalf of TopBetta in regard to taking over and conducting the business previously conducted by Punters Show.

6. [75]

   There are some problems with the pleaded case.

Fiduciary duties

1. [76]

   The plaintiffs contend that Mr Baker owed fiduciary duties directly to Mr Lambourne and Mr Pollett at the time of the meeting of May 2015. The particulars in support of this allegation, essentially, amount to the proposition that the strategic partnership amounted to a sale of the business of Punters Show, for which substantial sums should have been paid, and Mr Lambourne and Mr Pollett were reliant on Mr Baker to give them information about the financial state of Punters Show and whether to enter into the strategic partnership. At the time, Mr Lambourne and Mr Pollett were shareholders of Punters Show and, as such, had an interest in the net assets of the company via their shareholding. Thus, the capacity in which it would appear that Mr Lambourne and Mr Pollett were said to be owed fiduciary duties by Mr Baker is as shareholders of Punters Show.

2. [77]

   However, directors do not ordinarily owe fiduciary duties directly to shareholders. In Brunninghausen v Glavanics (1999) 46 NSWLR 538; [1999] NSWCA 199, Handley JA, with whom Priestly and Stein JJA agreed, noted at [57]:

3. [78]

   His Honour then reviewed a large number of Australian, Canadian, English and New Zealand cases supporting the existence of various exceptions to the general rule. Then, relying on Hospital Products Ltd v United States Surgical Corporations (1984) 156 CLR 41; [1984] HCA 64, his Honour concluded at [99]–[100]:

4. [79]

   To understand the context of those remarks, and the reasons why a direct fiduciary duty arose in that case, it is necessary to understand its particular facts. I am grateful to Simpson AJA for the following summary of Brunninghausen, drawn from O’Conner v O’Conner [2018] NSWCA 214 at [43]–[47]:

5. [80]

   But this is not a case where Mr Lambourne and Mr Pollett were “at the mercy” of Mr Baker. Between them, Mr Lambourne and Mr Pollett held two-thirds of the company’s shares and thus retained control of the general meeting of the company. They had chosen to leave it to Mr Baker to carry on the day-to-day management of the company. Further, there was no sale of shares to Mr Baker, such that he was in an interested position: rather, the deal, if beneficial, would benefit all the shareholders equally. Mr Lambourne and Mr Pollett retained the full range of remedies for which company law provides, including by suing for breach of duty to the company, if necessary by a derivative suit. It does not seem to me that there is any compelling reason why a fiduciary duty would be owed by a director to the shareholders in this case.

6. [81]

   Even if a direct fiduciary duty to the shareholders had arisen in the circumstances, there is no evidence that Mr Baker breached such a duty. To return to Brunninghausen, Handley JA expressed the content of the duty in that case at [106]:

7. [82]

   Mr Baker, as a director of Punters Show, appears to have perceived that it would be in the interests of the company to join forces with TopBetta, as a result of which he expected that benefits would flow to Punters Show in the form of payment of outstanding debts, regular income to the company’s ‘talents’ being Mr Lambourne and Mr Pollett than was then the case, improved profitability going forward by reason of transfer of the administrative side of the business to an apparently more organised, efficient and substantial operation being 12Follow and TopBetta, together with enhanced profile of Punters Show and its products by being associated with a publicly listed company, TopBetta. Mr Baker’s efforts were directed, it would appear, to achieving benefits to the company and its shareholders. The evidence does not suggest that Mr Baker’s intentions were other than good, nor that he intended to treat the shareholders of the company differently in terms of the benefits sought to be attained through the strategic partnership. The evidence points to a straightforward attempt by a director to improve the financial position of the company or to realise or enhance the value of the company’s assets in the performance of his duties as a director.

8. [83]

   Thus, the claim for equitable compensation by Mr Lambourne and Mr Pollett against Mr Baker fails by reason of an absence of any fiduciary duties being owed to them, or evidence that any such duty was breached. Consequently, the claim against Mr Buckingham, TopBetta, 12Follow and Operis Momentus for being knowingly involved in the breach of Mr Baker’s fiduciary duties owed to Mr Lambourne and Mr Pollett also fails, since Barnes v Addy liability of a third party depends on the existence of a fiduciary duty and that duty being breached by the fiduciary.

9. [84]

   As a director of Punters Show, it may be accepted that Mr Baker owed fiduciary duties to the company. The question is whether Mr Baker breached his fiduciary duties by revealing the whole of the company’s financial and confidential information about its business to Mr Buckingham and TopBetta without any compensation or caused Punters Show to enter into the May 2015 agreement and be stripped of all of its assets for no compensation. As already outlined at [75] and [82], these propositions have not been established by the plaintiffs on the balance of probabilities. Thus the claim for equitable compensation falls at the first hurdle, if I may be permitted to use a racing analogy.

“Trust” property

1. [85]

   Proceeding on nonetheless to consider the claim under the first limb of Barnes v Addy, it will be recalled that it is concerned with the transfer of trust property in breach of a fiduciary obligation. The plaintiffs submitted that trust property includes a bundle of rights: Yanner v Eaton (1999) 201 CLR 351; [1999] HCA 53 at [85]. In this case, it was said that the trust property included Mr Lambourne and Pollett as ‘talents’: Mr Lambourne and Mr Pollett were assets of the company, being ‘talent’ to be exploited with Mr Baker’s assistance. Trust property also included Mr Lambourne and Mr Pollett’s own racing products which were placed under Mr Baker’s control for him to promote and collect revenue which would be held in trust and accounted to them personally; products created by Mr Baker, or with his assistance, which were to be held in trust on the company’s behalf; sales revenues for Mr Lambourne, Mr Pollett and the company which Baker held in trust to be accounted to the beneficiaries in due course. Mr Baker was also said to be the trustee of Mr Lambourne and Mr Pollett’s goodwill. This was said to allow Mr Baker to “open doors” within the industry and to build up a list of top-class industry operators who agreed to list their products on the Punters Show website and added to the overall value and goodwill of the website. The company could no longer make money because its assets, namely Mr Lambourne and Mr Pollett, could no longer be “promoted/sold” though the Punters Show website and through the broadcasting of the televised Punters Show segments because Mr Baker controlled or had allowed control of the website to be transferred to the defendants.

2. [86]

   Although this analysis is strained, to say the least, by applying the terminology of “trust property” to property owed beneficially by a company, in respect of which Mr Baker owed fiduciary duties (applying the language that is used in Barnes v Addy cases without regard to the special meaning it takes on), and by using the idea of “bundle of rights” to instead describe a collection of separate species of property, I will assume, without deciding, that the relevant goodwill and intellectual property falls within the scope of the first limb of Barnes v Addy: see Farah Constructions Pty Ltd v Say-Dee Pty Ltd at [117]–[118] as to this question. Assuming, further, that this property, or some of it, was transferred to 12Follow or TopBetta as part of the strategic partnership, it appears on the evidence that the property was returned to Punters Show when the strategic partnership ended. Mr Lambourne and Mr Pollett are at liberty to continue to work as professional punters, either for Punters Show or any other business, and have done so. Mr Lambourne and Mr Pollett’s own products have not been retained by 12Follow or TopBetta, so far as I can see.

3. [87]

   Mr Baker, Mr Buckingham, 12Follow and TopBetta made considerable efforts to finalise whatever monies might be owing to Punters Show when the strategic partnership ended, although it would appear that little, if anything, was ‘owing’ as the expenses incurred by 12Follow in selling Punters Show products roughly equalled the revenue earned and the deal overall from 12Follow’s perspective might fairly have been described as a loss-leading exercise. Nonetheless further monies were offered by TopBetta including potentially with 12Follow continuing to provide some administrative services to Punters Show going forward. However, no final accounting took place, nor were TopBetta’s offers to make payments of various sums discussed, negotiated or accepted due to Mr Lambourne’s refusal to enter into any discussions unless he was paid $30,000. It is difficult to see in these circumstances how ‘trust property’, if that is what it was, was misapplied by Mr Baker in his capacity as a director of Punters Show or received by the defendants and, even if it was, continued to be retained by the defendants.

Knowledge

1. [88]

   As to the requirement of knowledge by the third party, Mr Lambourne submitted that the Court should infer from Mr Buckingham’s attendance at the meeting in December 2014 that he knew the relevant matters which entitled the plaintiffs to relief under the second limb of Barnes v Addy. As a director of 12Follow, Mr Buckingham would also have known about the revenue shift from Punters Show to 12Follow.

2. [89]

   Mr Lambourne’s affidavit evidence of what happened at the meeting of 9 December 2014 or, perhaps more relevantly, 4 May 2015 does not suggest that Mr Buckingham, or the companies of which he was a director, actually knew that the assets of Punters Show were being transferred to the defendants in breach of Mr Baker’s fiduciary duty to the company, nor that Mr Buckingham wilfully shut his eyes to this or abstained in a calculated way from making inquiries as an honest and reasonable person would make in the circumstances, or knew of facts which would indicate to an honest and reasonable person the existence of the trust and misapplication of trust property. It goes without saying that these are serious matters to be proved by the plaintiff with compelling evidence: Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34; Evidence Act 1995 (NSW), section 140. The requisite knowledge has not be established.

Second limb of Barnes v Addy

1. [90]

   The same problems beset the second limb of Barnes v Addy. Whilst Mr Baker had a fiduciary duty to Punters Show, he did not have a fiduciary duty to Mr Lambourne or Mr Pollett as shareholders of the company. There is no evidence of a dishonest and fraudulent design by Mr Baker but rather, it would appear, there was an attempt to negotiate a partnership or sale between Punters Show and TopBetta which was thought, apparently in good faith, to be to the advantage of Punters Show. There is no evidence that Mr Buckingham or the companies of which he was a director assisted Mr Baker in a dishonest and fraudulent design, nor had the requisite knowledge.

Loss

1. [91]

   As to loss, or perhaps more aptly described as an un-pleaded claim for an account of profits, the plaintiffs claim at the hearing was put on the following basis: the value of TopBetta’s premium content set out in its prospectus was based upon the revenue of 12Follow and the sale of Punters Show products via 12Follow’s website boosted the revenue of 12Follow and thus the attractiveness of the TopBetta stock market listing. Mr Lambourne deposed that, through Mr Baker and Mr Buckingham’s “clever smoke and mirrors type use of cross-branding Punters Show products with 12Follow’s inferior products”, misrepresenting The Show and Punters Show’s other premium products and brand name as being part of the TopBetta Group, and creating the perception that Punters Show and 12Follow/TopBetta were closely allied entities rather than market competitors, Mr Baker and Mr Buckingham caused potential TopBetta investors to buy shares in TopBetta when it was listed on ASX. Further, the strategic alliance between TopBetta and Punters Show allowed Mr Buckingham to pass off Punters Show’s revenue, said to be at least $6 million per annum, as TopBetta’s content revenue; this “masquerade” enabled Mr Buckingham to interest stockbrokers to propose an IPO which raised $6 million as opposed to the lower amounts which the backdoor listing may or may not have raised.

2. [92]

   Mr Lambourne deposed that the spreadsheet provided by Mr Buckingham on 15 July 2016 indicated that Punters Show’s revenues of $769,031 represented 78% of TopBetta’s content-related revenue. Given the premium and high value of the Punters Show products, Mr Lambourne says that Punters Show would have “in reality” contributed about 90% of TopBetta’s “content services” revenue. Mr Lambourne submitted that the fact that TopBetta wrote off its entire content division on 1 July 2017, after its relationship with Punters Show had ended, supported the plaintiffs’ claim that “without Punters Show there is no more content but content’s done its job, it’s got the entity listed”. Mr Lambourne pointed to the deteriorating profit and loss figures for 12Follow from 30 June 2016 to 30 June 2018 where trading income dropped from $986,645 to $42,628. It did appear from Mr Lambourne’s analysis that the revenue of TopBetta fell across all sectors (content, wagering, tournaments) over those years. Notwithstanding this fall in revenue, Mr Lambourne submitted that Punters Show had brought 80% or 90% of content business to TopBetta and its listing enabled a $6 million company to turn itself into a $19 million company post-listing, that figure being based on the current price of its listed shares.

3. [93]

   To make this proposition good, Mr Lambourne extracted Punters Show’s revenue from its tax returns as well as TopBetta’s content revenue from its financial statements. By graphing these two figures from 2012 to 2016, Punters Show revenue exceeded that of TopBetta’s content revenue until 30 June 2015 (of $591,963 and $456,396 respectively) and thereafter Punters Show revenue fell rapidly to $52,618 whilst TopBetta’s content revenue continued to increase to $987,650. Mr Lambourne also compared the revenue of Punters Show to that of 12Follow for the financial year ended 30 June 2016. The Punters Show revenue figures were drawn from the spreadsheet provided by Mr Baker on 15 July 2016 and Punters Show’s bank statements. 12Follow’s revenue figures were drawn from its BAS statements, profit and loss statement and the spreadsheet of 12Follow revenue supplied by Mr Buckingham on 26 July 2016.

4. [94]

   It is not clear how these sources of information were merged by Mr Lambourne and thus whether the revenue figures for Punters Show and 12Follow as merged can be readily compared. Whilst I have no doubt that Mr Lambourne has done his best to extract financial information from the sources available to him, and has compiled this data in a way which makes sense to him, the plaintiffs did not adduce evidence in a proper or reliable form to enable the Court to rely upon Mr Lambourne’s figures. Ordinarily, such evidence would be adduced by way of an expert accounting report served well in advance of a hearing so that the defendants could check the expert’s work and, if thought necessary, cross-examine that expert or call their own expert. Mr Lambourne did complain that the expert report which the plaintiffs had obtained was expensive and that the financial strains of the litigation had been significant. Accepting all of that, Mr Lambourne’s submissions and accompanying aide-mémoires are not evidence.

5. [95]

   In some cases, the Court may be able to readily re-construct the calculations proffered by a party in submissions by examining the financial records in evidence and confirming that the submitted figures are supported by the evidence. This is not such a case as Mr Lambourne has taken financial information from a variety of sources — and indeed different sources in respect of Punters Show on the one hand and 12Follow on the other — and compiled this information by using a methodology which was not revealed and which provided the Court or the defendants with no means to attempt to re-construct the results by reference to the evidence.

6. [96]

   As to the drop in revenue from the sale of Punters Show products, Mr Lambourne submitted that, unbeknownst to him and Mr Pollett, the products had been handed to 12Follow which kept the revenue. Whilst revenue figures for Punters Show calculated by Mr Lambourne from its bank statements and the spreadsheet provided by Mr Baker on 15 July 2016 increased from 2012 ($394,409) to 2016 ($909,795) and thus Punters Show’s products had done better by being promoted on TopBetta’s website, Punters Show had not had the benefit of the increase. “Punters Show revenue was being surreptitiously squirreled away into another processing facility”.

7. [97]

   I take this to be a reference to the fact that the sale of Punters Show products were being processed by 12Follow’s merchant facilities in accordance with the agreement reached in May 2015. It is not clear to me, however, how it is said that 12Follow kept the revenue in circumstances where, once the strategic partnership failed, TopBetta and 12Follow endeavoured to have a final reconciliation of amounts owing but Mr Lambourne declined to participate in a meeting with Mr Baker or Mr Buckingham at which this was proposed to be done. It would have been open to 12Follow to simply pay an amount to Punters Show which was 12Follow’s calculation of any monies owing, but it chose not to do so as it perceived that it would not resolve the dispute. Nor do the plaintiffs, in these proceedings, seek any sum owing on the conclusion of the strategic partnership.

8. [98]

   Mr Lambourne attributed the 300% increase in monthly revenue referred to in the earlier ASX announcement (at [20]) to Mr Baker and Mr Buckingham passing off Punters Show figures as TopBetta’s, or having misappropriated Punters Show’s income from products such as “ProBetta Live” and robsmail.com.au (an online professional punting service offered by Robbie Waterhouse) by causing the sales proceeds to be collected through the 12Follow merchant facilities and selling Punters Show’s products through 12Follow’s infrastructure in direct competition to Punters Show’s own shopfront. There is no evidence to support this apart from generalised assertions in Mr Lambourne’s affidavit.

9. [99]

   As far as I can tell, ProBetta Live and Mr Waterhouse’s product were in fact products of 12Follow, not Punters Show, according to the list of 12Follow products in evidence. Further, the ASX announcement was made in March 2015, before 12Follow took over the administration of the Punters Show website and the sale of its products. Thus it is not clear why any increase in the monthly revenue of TopBetta from July 2014 on was attributable to Mr Buckingham and Mr Baker somehow passing off Punters Show figures as TopBetta’s. Whilst it does appear that the sale of some Punters Show products was completed using 12Follow merchant facilities before the strategic partnership, I do not understand, nor was there evidence establishing, how collecting revenue for Punters Show products by 12Follow’s merchant facilities would have the result of increasing the revenues of TopBetta as at March 2015.

10. [100]

    The plaintiffs claimed to be entitled to “upwards of $1.5 million given that the crystallised gains that were made by listing TopBetta using Punters Show revenue”. Punters Show was said to have brought considerable benefit to TopBetta in enabling it to go from a backdoor listing to an IPO with content services in TopBetta’s financial statements for 30 June 2016 said to have generated income of $1.8 million. Punters Show’s revenue stream was said to have been misappropriated and used to achieve “something quite enormous”, being a successful IPO. The stock market listing would not have been possible without that revenue stream as other parts of TopBetta’s business were said to have been diminishing at the time. The plaintiffs relied on Maguire v Makronis (1997) 188 CLR 449; [1997] HCA 23 at 493–4 (per Kirby J):

11. [101]

    Whilst I have spent some time trying to make sense of the plaintiffs’ submissions as to loss and damage, I confess that I have been defeated. The plaintiffs’ submissions were, with respect, illogical and unsupported by reliable evidence. Accepting for the moment that the revenue derived by Punters Show from its content far exceeded that of 12Follow and that, after entry into the strategic deal, Punters Show’s revenue was encompassed within 12Follow’s revenue, where does that go? There is no reference to Punters Show in TopBetta’s prospectus, and thus it is not obvious that anyone buying shares in TopBetta placed any reliance on TopBetta’s affiliation with Punters Show when deciding to invest in the company. There is no evidence from a single investor which says that they did. Nor was Punters Show’s content revenue $6 million a year, or anything like it. Whilst there is no doubt that Punters Show’s content was a valued and valuable part of TopBetta’s content offering, Mr Lambourne, Mr Pollett and Punters Show had agreed to TopBetta making use of Punters Show’s profile and content at the meeting in May 2015. It is simply not clear why equitable compensation reflecting a portion of monies paid by investors to acquire shares in TopBetta should be paid by TopBetta to the plaintiffs.

12. [102]

    The defendants relied on McCrohon v Harith [2010] NSWCA 67 where McColl JA, with whom Campbell JA and Handley AJA agreed, noted at [122]–[123]:

13. [103]

    This is an apt description of the state of the plaintiffs’ evidence of loss or damage said to support an award of equitable compensation. However, as I mentioned, the Barnes v Addy claim fell at the first hurdle as there was no fiduciary relationship between Mr Baker on the one hand and Mr Lambourne and Mr Pollett on the other; nor was there evidence that the fiduciary duties which Mr Baker owed to Punters Show were breached. Nor were the other elements of the Barnes v Addy claim established.

14. [104]

    For these reasons, I make the following orders:

    1. (1)

       Dismiss the Originating Process filed on 17 November 2016.

    2. (2)

       Order the plaintiffs to pay the defendants’ costs of the proceedings.