In the matter of Beverage Freight Services Pty Ltd

The fifth defendant in these proceedings, Beverage Freight Services Pty Ltd (BFS), was incorporated in August 2001. From the time of its incorporation until August 2012, BFS provided freight services to Cadbury Schweppes Pty Ltd and Schweppes Australia Pty Ltd (together, Schweppes).

The founding shareholders of BFS included the first plaintiff, J & E Vella Pty Limited (JEV), the second defendant, Hynadam Pty Ltd (Hynadam) and the fourth defendant, Mechita Pty Ltd (Mechita).

At the time BFS was incorporated, each of its founding shareholders operated its own freight services business. It is common ground that the founding shareholders and/or directors entered into an agreement when BFS was incorporated about the manner in which Schweppes work contracted to BFS would be allocated between BFS shareholders, invoiced and paid (the 2001 agreement). There is a dispute about the parties to and terms of the 2001 agreement and whether the 2001 agreement established a partnership between the shareholders of BFS and/or the persons standing behind those shareholders.

The proceedings arise out of certain events that culminated in a meeting concerning BFS on 28 August 2012, the incorporation of the sixth defendant, Beverage Distribution Australia Pty Ltd (BDA) immediately after that meeting and the subsequent performance by BDA of Schweppes delivery work that had previously been performed by JEV, Hyndam and Mechita through BFS.

There is a dispute about what was resolved or agreed at the meeting on 28 August 2012. The plaintiffs claim that the subsequent events constituted a breach of the 2001 agreement and/or a breach of fiduciary duties allegedly owed by Mr Brian Hobson (the first defendant) and Mr Brett Soper (the third defendant) to the plaintiffs.

For the reasons that follow, the plaintiffs’ claims fail.

As will emerge from the detailed summary of the evidence and findings of fact below, the following persons and entities have played a role in the events giving rise to these proceedings.

The first plaintiff, JEV, was a founding shareholder of BFS and remained a shareholder at all relevant times.

The second plaintiff, Mr Joseph Vella, was a director of JEV at all relevant times. He and his wife, Mrs Elizabeth Vella, each owned 50 per cent of the shares in JEV at all relevant times. Elizabeth Vella is not a party to these proceedings.

Mr Michael Vella is the son of Joseph and Elizabeth Vella. At times relevant to these proceedings, he worked for JEV as a driver and also participated in the management of the business.

Michael Vella became a director of BFS when that company was incorporated in August 2001 and remained a director at all times relevant to these proceedings. It is common ground that, in the events giving rise to these proceedings, he acted as an agent for JEV. Michael Vella is not a party to these proceedings.

The second defendant, Hynadam, was also a founding shareholder of BFS and remained a shareholder at all relevant times. The first defendant, Brian Hobson, was the sole director and a shareholder of Hynadam and a director of BFS at all times relevant to these proceedings.

The fourth defendant, Mechita, was also a founding shareholder of BFS and remained a shareholder at all relevant times. Mechita was owned by the third defendant, Brett Soper, together with his wife Mrs Deborah Soper and his business partner Mr Ralph Sobara. Brett Soper was the manager of Mechita at the time of the relevant events in 2001 and was a director of that company from June 2003 until 17 June 2019. He was also a director of BFS at all relevant times.

BFS was incorporated on 22 August 2001 with six equal shareholders: JEV, Hynadam, Mechita, Alderton Transport Pty Ltd (Alderton Transport), Evermay Pty Ltd (Evermay) and Sterling Freightlines Pty Ltd (Sterling).

Mr Glen Alderton was a director and shareholder of Alderton Transport. Mr Stephen Phillips was a director and shareholder of Evermay. Glen Alderton and Stephen Phillips were appointed as directors of BFS, together with Michael Vella, Brian Hobson and Brett Soper, when BFS was incorporated. Glen Alderton ceased to be a director of BFS on 23 October 2003 and Alderton Transport ceased to be a shareholder of BFS at about the same time. Stephen Phillips ceased to be a director of BFS on 23 September 2010. Although Evermay had no involvement in performing the freight services provided by BFS to Schweppes after that time, it remained a shareholder of BFS. Evermay was deregistered on 10 August 2014.

Glenn Alderton, Alderton Transport, Stephen Phillips and Evermay are not parties to these proceedings.

Sterling was owned jointly by Brian Hobson, Glen Alderton and Stephen Phillips. Sterling ceased to be a shareholder in BFS at some time prior to 2012. Sterling is not a party to these proceedings.

Mr Peter Versluis and Mr Robert Fielding of Risk Connect Australia were engaged in about July 2012 to facilitate discussions between Michael Vella, Brian Hobson and Brett Soper with a view to resolving disputes arising from the business and operations of BFS. Mr Versluis and Mr Fielding produced a discussion paper in advance of a meeting that they facilitated on 28 August 2012 between Joseph Vella, Michael Vella, Brian Hobson and Brett Soper. As the meeting was held at the Ingleburn RSL club, the parties refer to it as the Ingleburn meeting. I shall adopt the same term in these reasons.

The sixth defendant, BDA, was incorporated on 30 August 2012 with Hynadam Nominees Pty Ltd (Hynadam Nominees), Mechita Nominees Pty Ltd (Mechita Nominees) and Coastal Beverage Logistics Pty Ltd (Coastal Logistics) as equal shareholders.

Hynadam Nominees is the seventh defendant in these proceedings. It was incorporated on 30 August 2012. Brian Hobson was (and remains) the sole shareholder of Hynadam Nominees, and he and his son, Mr Brett Hobson, were (and remain) the directors of that company.

Mechita Nominees is the eighth defendant in these proceedings. It was also incorporated on 30 August 2012. Brett Soper was its sole director and one of its shareholders. He ceased to be a director and shareholder on 31 May 2019. Mechita Nominees subsequently changed its name to Accolade Advisory No 1 Pty Ltd in September 2019 and then to McIntyre Holdings NSW Pty Ltd in December 2020, but I will refer to the company as Mechita Nominees in these reasons.

Coastal Logistics is not a party to these proceedings. The company is owned either directly or indirectly by Mr Erron Jameson.

The directors of BDA at the time of its incorporation were Brett Soper, Brett Hobson and Erron Jameson. Neither Brett Hobson nor Erron Jameson are parties to these proceedings. In June 2019, Brett Soper ceased to be a director and Brian Hobson was appointed as a director of BDA.

At all relevant times, Mr Robert Aikin was the Transport Manager for Schweppes with whom Brian Hobson and Brett Soper corresponded in relation to freight services provided by BFS to Schweppes in the period from August 2001 until September 2012.

Because several parties and witnesses share the same surname, and some witnesses have different surnames but share the same first name, I will refer to all persons by their first name and surname in order to avoid confusion.

Each of the witnesses in these proceedings gave evidence about events and conversations that occurred in 2012 or earlier. As the plaintiffs submitted, it is therefore necessary to be mindful of the following well-known observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319 in assessing the evidence of each witness:

The factors referred to by his Honour require primary emphasis on the objective surrounding facts that are either undisputed or established by contemporaneous documents, and the inherent probabilities and improbabilities: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[31] (Gleeson CJ, Gummow and Kirby JJ); Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102 at [77] (Bell P, Leeming JA and Emmett AJA agreeing). Indeed, in any commercial litigation, contemporaneous documents “generally furnish the most reliable source of evidence as to what occurred or, at the very least, provide a generally reliable reference point from which to assess the reliability of witness testimony”. Although the accuracy and reliability of witness testimony must be treated with caution given the fallibility of human memory, witness testimony may still be of value and importance, including by providing evidence of the context in which relevant documents and events must be understood: ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [25]-[29] (Bell P, Bathurst CJ agreeing).

The following observations of Hammerschlag J (as the Chief Judge in Equity then was) in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94]-[96] [1] are apposite in this case:

The parties’ numerous challenges to the credibility of each witness are addressed throughout the summary of evidence and findings of fact below.

Prior to 2001, JEV, Hynadam, Mechita, Evermay and Alderton Transport each operated a freight services business in the beverage freight transport industry. Some of them had a long history of providing freight services to Schweppes. JEV had commenced providing services to Schweppes more recently following Schweppes’ acquisition of the rights to distribute Pepsi products that JEV had been transporting for several years.

In about 2000, Brian Hobson and Michael Vella each became aware that Schweppes wished to have all of its freight services provided by one company rather than contracting with several freight companies. Brett Soper and his business partner Ralph Sobara became aware of this through Brian Hobson. As the plaintiffs submitted, this was a matter of administrative convenience for Schweppes.

In January 2001, Brian Hobson, Brett Soper, Ralph Sobara, Joseph Vella, Michael Vella, Stephen Phillips and Glen Alderton met at Ralph Sobara’s home in Greystanes (the Greystanes meeting).

Brian Hobson and Brett Soper gave evidence of the discussion at the Greystanes meeting in different terms, but there is no material difference between their respective accounts. Joseph Vella agreed with Brett Soper’s account of the meeting. Michael Vella gave evidence of a series of statements that he says were made during the course of the Greystanes meeting, the substance of which does not differ from the evidence of Brian Hobson and Brett Soper in any material respect. In cross-examination, Michael Vella agreed with Brett Soper’s account of the meeting. Brett Soper’s evidence is that:

Joseph Vella then informed those present at the meeting that he wanted Michael Vella to be JEV’s nominated director of the new company. This was followed by a discussion about trailers which is the subject of some dispute that need not be resolved. According to Brett Soper’s account with which Joseph Vella and Michael Vella agreed, the discussion then continued:

The statements that Michael Vella deposed were made at the Greystanes meeting include a statement to the effect that “we will each employ our own drivers for our trucks and make sure that the trucks comply with any contract requirements set out by Cadbury Schweppes as well as any government requirements”. The defendants do not dispute that this was discussed and agreed at the meeting.

In cross-examination, Michael Vella gave some further evidence about the roles of Brian Hobson and Stephen Phillips discussed at the Greystanes meeting. According to his evidence, it was agreed at that meeting that the new company would employ Brian Hobson and Stephen Phillips as the operations manager and financial manager respectively, that the new company would pay their salaries and that they would be answerable to the new company’s board of directors.

Michael Vella gave evidence that it was agreed at the Greystanes meeting that the directors of the new company would make all the major decisions of the company.

Michael Vella also gave evidence that nobody at the Greystanes meeting said anything about the shareholders in the new company guaranteeing the new company’s debts, and nobody asked any questions about the financial capacity of any of the companies that were intending to become the equal shareholders in the new company

In cross-examination, Michael Vella gave evidence that it was his understanding following the Greystanes meeting that the sole purpose of the new company was to create a single entity to receive instructions from Schweppes for the delivery of its products, to provide those delivery services to Schweppes and to invoice and receive payment from Schweppes for those services. The new company was essentially to provide an administrative service to Schweppes to facilitate the existing companies making the Schweppes deliveries. It was agreed at the Greystanes meeting that those existing companies, who would become shareholders in the new company, would continue to own and maintain their own trucks, would be responsible for those trucks and their drivers and would continue to operate as independent entities. Each of the shareholders would independently invoice the new company for any delivery work that the shareholder performed in delivering Schweppes products. The new company would consolidate those invoices and would pay the shareholders for the delivery services they had performed, after retaining a percentage of the amount received from Schweppes to cover the new company’s administration costs. The new company was never intended to make a profit.

Although there was a discussion at the Greystanes meeting about equal allocations of Schweppes work to each shareholder in the new company, there is no evidence that anybody said that the income of the new company would be distributed to shareholders equally. As stated above, each shareholder was to invoice the new company for the deliveries it performed and the new company was to pay that invoice to the shareholder. Michael Vella gave evidence in cross-examination that the Schweppes deliveries were to locations throughout New South Wales and the amount paid by Schweppes for each delivery varied depending on the distance to be travelled and the time required to complete the job. Michael Vella understood that there would be equality of income between shareholders, but only in the sense that he expected that the average monthly amounts paid by BFS to each shareholder in respect of that shareholder’s invoices for freight services were likely to be approximately equal to the average monthly amounts paid to the other shareholders in any given period of several months. There is no evidence that this was discussed, and Michael Vella did not expect that shareholders would make payments to one another to equalise the amounts that BFS paid to them.

BFS was incorporated on 22 August 2001 and Brian Hobson, Brett Soper, Michael Vella, Stephen Phillips and Glenn Alderton were appointed as its directors. Equal shareholdings in BFS were issued to JEV, Hynadam, Mechita, Evermay, Alderton Transport and Sterling. Each of those founding shareholders signed the constitution of BFS. The constitution modified to some extent the replaceable rules which then applied under the Corporations Act 2001 (Cth). The replaceable rules (a copy of which was attached to the constitution) relevantly provided that the business of the company was to be managed by or under the direction of the directors and that resolutions of directors must be passed by a majority of votes cast by directors entitled to vote on the resolution. The constitution did not modify that replaceable rule.

It is common ground that some agreement was made at the Greystanes meeting. There is little dispute about the terms of that agreement. However, the identity of the parties to the agreement is in dispute.

The plaintiffs plead that the agreement was made between:

The defendants plead that the agreement was made between JEV, Hynadam, Mechita and Evermay only.

Notwithstanding the involvement of Glenn Alderton and Alderton Transport in the Greystanes meeting, the plaintiffs and the defendants ignored them as potential parties to the agreement made at that meeting.

The identity of the parties to the agreement must be determined objectively from the surrounding circumstances: Air Tahitii Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429 at [28] (Allsop P and Handley AJA, Hodgson JA agreeing) and the authorities there cited.

On the basis of the evidence referred to at [30]-[40], I find that the agreement made at the Greystanes meeting was an agreement between JEV, Hynadam, Mechita, Evermay and Alderton Transport. Those companies were providing freight services directly to Schweppes at the time of the Greystanes meeting. They owned the trucks and employed the drivers that would be used to provide those services to Schweppes through the new company under discussion at the Greystanes meeting. The proposal that was discussed and agreed was for JEV, Hynadam, Mechita, Evermay and Alderton Transport to continue to own and maintain those trucks and employ drivers and to provide the same services to the new company, which would in turn invoice Schweppes. The new company would receive payment from Schweppes and the existing companies would in turn receive payment from the new company. The new company was not intended to make a profit. Self-evidently, the profit that each shareholder would make from the Schweppes delivery work invoiced to the new company would depend on that shareholder’s costs of doing the work, including wages paid to its drivers and the costs of maintaining its fleet of trucks.

The role of Joseph Vella, Brian Hobson, Brett Soper, Stephen Phillips and Glen Alderton in the agreed arrangements was to be directors of the new company. Their agreed entitlement to be directors of the new company flowed from their existing positions as directors of JEV, Hynadam, Mechita, Evermay and Alderton Transport. In Joseph Vella’s case, his request for Michael Vella to be a director of the new company in his place was not opposed.

The agreement did not touch on the functions of the directors of the new company or how they would discharge their responsibilities. That subject matter was covered by the constitution and the Corporations Act. It was agreed between the putative shareholders of the new company that it would retain Brian Hobson and Stephen Phillips in managerial roles, and that they would report to the directors of the new company. Evidence referred to later in these reasons indicates that the directors did cause BFS to retain Brian Hobson and Stephen Phillips (who was later replaced by Brett Soper) in managerial roles after BFS was incorporated. Although those retainers gave effect to part of the agreement made at the Greystanes meeting, they were separate agreements between BFS (after it was incorporated) with each of Brian Hobson, Stephen Phillips and Brett Soper.

For those reasons, Joseph Vella, Brian Hobson, Brett Soper, Stephen Phillips and Glen Alderton were not parties to the agreement made at the Greystanes meeting. JEV, Hynadam, Mechita, Evermay and Alderton Transport were parties to that agreement. The position of Sterling is unclear. There is some evidence to suggest that its inclusion as a shareholder of BFS was decided upon after the Greystanes meeting. There is no evidence that its inclusion as a shareholder was controversial at the time, and no party directed submissions to the question of whether Sterling was a party to the agreement made at the Greystanes meeting. I do not find it necessary to resolve that question.

As indicated earlier in these reasons, it is convenient to refer to the agreement made between JEV, Hynadam, Mechita, Evermay and Alderton Transport at the Greystanes meeting as the 2001 agreement.

It is common ground that the 2001 agreement included terms to the following effect:

There is a dispute about whether the 2001 agreement included an implied term that the shareholders of the new company would share responsibility equally between themselves for any outstanding debts of the new company. The plaintiffs acknowledged that no such term was expressly agreed, but submitted that “it remains open for the Court to find that the agreed basis of the venture was that the individual directors / shareholders would agree to meet any outstanding debts of BFS equally” having regard to the following matters:

As I understand that submission, the plaintiffs contend that a term should be implied into the 2001 agreement as a matter of fact that the shareholders of the new company would share liability equally between themselves for any outstanding debts of the new company.

I reject that submission. It suffices to say that it was neither necessary to give business efficacy to the 2001 agreement nor so obvious that it went without saying that the directors or shareholders of the new company should be liable for any outstanding debts of the company, contrary to ordinary principles of company law: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 346-347; [1982] HCA 24. Any contrary subjective understanding that Michael Vella may have had at the conclusion of the Greystanes meeting, which was not based on anything said at that meeting, does not make the suggested implied term necessary or obvious. The suggested term contradicts the corporate structure agreed at the Greystanes meeting. Matters that arose in 2012 concerning directors guaranteeing specific obligations or liabilities of BFS in respect of which the relevant creditors required guarantees provide no support for the implication of the much wider suggested term in the 2001 agreement made more than a decade earlier.

For those reasons, I find that the 2001 agreement included no express or implied term that the directors or shareholders of the new company would share liability equally between themselves for any outstanding debts of the new company.

For completeness, I note that the plaintiffs made no submissions in support of their pleaded contention that the 2001 agreement included an express or implied term that each party to the agreement owed the other parties a duty of good faith, mutual trust and confidence and was obliged to devote themselves to the welfare of the business of BFS. There is no evidence that the 2001 agreement included such an express term. The plaintiffs pleaded that a term to that effect was implied “from the nature of the business arrangement to jointly and equally supply freight services to Cadbury Schweppes through the one corporate entity for their joint benefit, from the provisions of the Partnership Act 1892 (NSW), particularly Part 2 Division 3 thereof and custom”. [2]

Without the benefit of submissions addressing this aspect of the plaintiffs’ case, I understand the substance of the plaintiffs’ contention to be that the pleaded term is implied from the nature of the relationship between the parties which the plaintiffs say was a partnership. The suggested implied term, which would require each shareholder to subordinate their individual interests to the interests of BFS, goes far beyond the obligation of good faith that has sometimes been implied in commercial contracts: Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184; (2013) 29 BCL 329 at [144]-[145] (Bathurst CJ, Macfarlan and Meagher JJA agreeing). I have determined that there was no partnership or fiduciary relationship for the reasons explained at [373]–[407] below. I therefore reject the plaintiffs’ contention that the 2001 agreement included an implied term that each party owed the others a duty of good faith, mutual trust and confidence and was obliged to devote themselves to the welfare of the business BFS.

The plaintiffs’ submissions also failed to address their pleaded contentions that the 2001 agreement included express or implied terms to the effect that each of the “partners” was entitled to participate in the management of the business and that all major policy decisions were to be made jointly and consensually by the directors of the new company. There is no evidence that any such terms were expressly agreed. In circumstances where it was agreed at the Greystanes meeting for each shareholder in the new company to appoint one director to the new company, the suggested implied terms were not necessary to give business efficacy to the agreement and were not obvious. It is customary for directors of a company to make decisions by resolution passed by a majority of votes, as provided for in the replaceable rules that the shareholders agreed would govern BFS when they later signed its constitution in August 2001. If and to the extent that the plaintiffs’ pleaded contentions concerning those express or implied terms were pressed, I reject them for those reasons.

The following two further terms pleaded by the plaintiffs appear to have been abandoned by not being mentioned in closing submissions:

If and to the extent that those pleaded terms were pressed, I find that the 2001 agreement did not include express or implied terms to that effect. There is no evidence that the agreement included any such express terms. It is neither necessary nor obvious to imply the terms in circumstances where there is evidence that BFS was not intended to make a profit and the net income or profit earned by each shareholder in carrying out Schweppes deliveries invoiced to BFS would depend on what expenses were incurred by that individual shareholder in conducting its own business. The expenses incurred by each shareholder were unknown to and beyond the control of each other shareholder.

In short, the terms pleaded by the plaintiffs and rejected at [53]-[61] bear no resemblance to the arrangements actually made between JEV, Hynadam, Mechita, Evermay and Alderton Transport at the Greystanes meeting to establish a single corporate interface for Schweppes to deal with for its freight requirements that each of those separate companies wished to continue servicing as part of their separate, ongoing businesses. References in these reasons to the business of BFS are references to the administrative and other activities undertaken by BFS in order to act as that single corporate interface and facilitate its shareholders continuing to perform Schweppes delivery work.

On 10 September 2001, Brian Hobson and Ralph Sobara wrote to Schweppes on BFS letterhead setting out the rates and terms on which BFS offered to provide bulk delivery and stock transfer haulage services to Schweppes. The letter stated:

After setting out the proposed rates and terms, the letter concluded:

It is common ground that BFS supplied freight services to Schweppes under various fixed term contracts from about September 2001 until August 2012.

Schweppes issued work orders to BFS, and BFS then allocated the work to its shareholders or, on some occasions, subcontracted the work to a third party. The allocation of work was determined by Ralph Sobara, Brian Hobson or employees of BFS. Those matters are not the subject of any dispute. I do not find it necessary to resolve the dispute about who was performing the allocation work on a day to day basis at specific times during the period from 2001 to 2012.

The parties adduced evidence directed to the question of whether Schweppes work was in fact allocated equally to the BFS shareholders. That evidence was directed to the plaintiffs’ pleaded claim that Brian Hobson and Brett Soper had breached fiduciary duties allegedly owed to JEV and Joseph Vella by failing to allocate Schweppes delivery jobs, or the “higher net income deriving jobs”, equally between JEV, Hynadam and Mechita. The plaintiffs abandoned that claim during the hearing and it is therefore not necessary to make any findings about whether Schweppes work was in fact allocated equally between the BFS shareholders according to any of the various concepts of equality deployed by the plaintiffs at various times before abandoning that claim. As will become apparent later in these reasons, the ongoing dispute about work allocation was the subject of discussions prior to and at the Ingleburn meeting and the existence of the dispute and the occurrence of those discussions informs my assessment of the evidence about what was said and done at the Ingleburn meeting.

A BFS shareholder to whom work had been allocated sent its own truck and driver to Schweppes’ head office to collect the relevant stock and transport it to the locations required by Schweppes. That shareholder then invoiced BFS for the work completed. BFS invoiced Schweppes for the amounts invoiced by the shareholders plus a 10 per cent margin to cover BFS’s administration costs. Upon receiving payment from Schweppes, BFS paid each shareholder’s invoice issued to BFS in respect of the relevant work. None of those matters are in dispute.

It is common ground that Brian Hobson was responsible for negotiating contract terms and liaising with Schweppes on behalf of BFS, project management, day to day running of BFS, allocating or overseeing the allocation of Schweppes work to the BFS shareholders, legislative compliance, and liaising with truck drivers. The plaintiffs describe this role as operations manager and I will adopt that term in these reasons.

Although it had been agreed at the Greystanes meeting that Stephen Phillips would be retained as the financial controller for BFS, it is common ground that Brett Soper performed that role from about December 2001 and that his duties included preparing and issuing invoices to Schweppes and verification and payment of invoices issued to BFS.

Brian Hobson and Brett Soper operated out of the BFS office located within Schweppes’ head office, which was initially located at Alexandria and later moved to Prospect.

JEV, Hynadam, Mechita and the other BFS shareholders from time to time were not wholly devoted to the Schweppes delivery work through BFS. Each of them continued to operate their own businesses, which included providing freight services to other customers. In the case of JEV, this included freight services provided under the name NSW Freightlines. Michael Vella described the Schweppes delivery work as seasonal, with lower volumes of work in the winter months. He gave evidence that JEV purchased the NSW Freightlines business in order to have another source of work for its trucks. According to Elizabeth Vella’s evidence, JEV acquired the NSW Freightlines business (including six truck trailers, a utility vehicle (a “ute”) and two cars, warehouse racking, forklifts and the NSW Freightlines trading name and client list) in about March 2007. Joseph Vella gave evidence that Mr Bill Kinnane was employed by JEV as General Manager and was responsible for sourcing freight work for JEV through its NSW Freightlines business. Michael Vella gave evidence that, by August 2012, the NSW Freightlines business was more profitable to JEV than its Schweppes delivery work undertaken through BFS.

The evidence tendered in these proceedings included financial statements for BFS for the 2002 to 2013 financial years. Those documents show that BFS earned income of several million dollars each year, all of which was derived from “sales” and almost all of which was expended each year on “transportation costs”. BFS also incurred some expenses for “contract payments” and “management fees” and other miscellaneous matters such as accountancy fees and insurance. BFS’s income and costs are significantly lower in the 2013 financial year than in earlier years, reflecting the cessation of its business after the Ingleburn meeting, as referred to later in these reasons. BFS either earned a modest profit or made a modest loss in each year, which was carried over into the following year. There were no distributions of the modest profits to shareholders. As referred to at [39] above, BFS was never intended to make a profit. No partnership accounts were prepared for BFS.

By August 2012, Sterling and Alderton Transport were no longer shareholders of BFS and Glenn Alderton was no longer a director. Evermay had ceased doing Schweppes delivery work through BFS in about 2010 as a result of certain health problems suffered by Stephen Phillips. ASIC records show that Stephen Phillips ceased to be a director of BFS on 23 October 2010. However, Evermay remained a shareholder of BFS as at August 2012. There is no evidence that any steps had been taken by the active shareholders to request Evermay to transfer or relinquish its shares in BFS, or that any such request had been resisted by Evermay.

Thus, of the original BFS shareholders, only JEV, Hynadam and Mechita were undertaking Schweppes delivery work through BFS by August 2012.

Two companies with similar names to BFS had been established in the period since the incorporation of BFS.

Beverage Logistics Pty Ltd (BLPL) was incorporated on 21 October 2004 with Brian Hobson, Ralph Sobara and Brett Soper as its shareholders and directors. Brett Soper was unsure why BLPL was incorporated but thought that it might have been intended to undertake bulk freight delivery work. Brian Hobson could not recall the reason why BLPL was incorporated, but said that the company had never traded. The plaintiffs do not suggest that BLPL traded. By 2012, the company was no longer in existence, having been deregistered on 12 March 2010.

Beverage Logistics Services Pty Ltd (BLS) was incorporated on 7 February 2011 with Brian Hobson, Brett Soper and Michael Vella as its equal shareholders and directors. There is no evidence and no allegation is made by the plaintiffs that BLS ever entered into any freight contract or operated any business.

Brian Hobson gave evidence in cross-examination that BLS was “possibly” incorporated in February 2011 because “we thought that we were going to have trouble originally with Mr Phillips retiring out of that business”. Brett Soper could not recall why BLS was incorporated but accepted in cross-examination that one the reasons may have been to create an entity that included only the active participants in BFS’s business as shareholders. When it was put to Brian Hobson in cross-examination that, in August 2012, “[t]here was still the issue that his [Stephen Phillips’] shares were on the books, so to speak”, he answered: “Nobody ever raised that issue to me, ever”. I understand Brian Hobson to have been referring to August 2012 when he gave that answer.

In his affidavit sworn on 3 February 2021, Michael Vella deposed that he had a conversation with Brian Hobson in about August 2012 in which Brian Hobson said to him words to the effect that:

In cross-examination, Michael Vella gave inconsistent evidence about the issues that were discussed with Robert Fielding in August 2012. He initially gave evidence that those issues were limited to the matters referred to in Robert Fielding’s discussion paper as operations, allocation, income distributions, lost earnings, warehousing and guarantees, [3] making no reference to Stephen Phillips or Evermay. When it was put to him that he had no recollection of any discussion of Stephen Phillips, Michael Vella abruptly changed his evidence and described Stephen Phillips as “the major reason” for the Ingleburn meeting and the preparatory discussions between Robert Fielding and each of JEV, Hynadam and Mechita in August 2012. I accept the defendants’ submission that this demonstrates Michael Vella’s willingness to change his evidence to suit his understanding of the plaintiffs’ claims and case theory. I reject the plaintiffs’ submission that the inconsistency in Michael Vella’s evidence is explained by his answer in cross-examination that “we” believed that the issue of Evermay’s shareholding in BFS had already been addressed by incorporating a new company. Michael Vella’s evidence that Stephen Phillips was “the major reason” for the August 2012 discussions and the Ingleburn meeting demonstrates that he well knew that the incorporation of a new company did not change anything unless and until the business of BFS was transferred to that new company.

In attempting to explain the nature of the alleged problem concerning Stephen Phillips, Michael Vella said in cross-examination that he “went along with” what Brian Hobson told him and that:

In his affidavit sworn on 4 December 2015, Michael Vella referred to Stephen Phillips leaving BFS in about September 2010. He deposed that two of Evermay’s trucks and drivers were subcontracted to JEV for a period of time thereafter and JEV used those trucks and drivers for JEV to provide Schweppes delivery services through BFS. In relation to Evermay’s continued shareholding in BFS, he deposed that:

Michael Vella’s evidence referred to at [80]-[82] above is inconsistent with his affidavit evidence six years earlier referred to immediately above in which he described Evermay’s continued shareholding in BFS as unproblematic and something that the other shareholders were content to leave unchanged. It is also inconsistent with his evidence referred to at [97] and [160] below that the Ingleburn meeting was arranged after he accepted Brian Hobson’s suggestion that they engage an independent person to facilitate a discussion between them about their dispute concerning the Arndell Park lease as an alternative to Michael Vella proceeding to take what he described as “the legal route”.

As referred to in more detail later in these reasons, the discussion papers created by Robert Fielding prior to the Ingleburn meeting contain no reference to Evermay’s continued shareholding in BFS as a problem or issue that JEV, Hynadam or Mechita wished to resolve. Robert Fielding gave evidence that he could not recall Evermay’s shareholding in BFS having been raised with him as an issue to be addressed and, if it had been raised in any of his discussions with JEV, Hynadam or Mechita, he would have included it in the discussion paper. I accept this aspect of Robert Fielding’s evidence, which was not challenged in cross-examination. The discussion paper, which is set out at [139] below, referred at item 1.11 to the “difficulties encountered by the parties pertaining to Beverage Freight Services Pty Limited” and it is inherently plausible that any issue relating to Evermay would have been included there if it had been raised.

The later iterations of Michael Vella’s evidence referred to at [80]-[82] above are internally inconsistent and also inherently implausible when considered in light of the following objective facts:

I accept Brian Hobson’s evidence that nobody was raising Evermay’s shareholding in BFS as an issue in August 2012 because it is inherently plausible for the same reasons that Michael Vella’s evidence is inherently implausible. As explained later in these reasons, I reject the plaintiffs’ submissions that Brian Hobson was not a credible or reliable witness.

It follows that I reject the plaintiffs’ submission that, if Brian Hobson and Brett Soper had perceived Evermay’s residual presence as a shareholder of BFS as problematic in February 2011, “there is every reason to conclude that they continued to hold that view in August 2012”. The evidence provides no support for that conclusion for the reasons already canvassed above. Whatever difficulties might have been anticipated at the time when BLS was incorporated in February 2011, there is no evidence of any difficulties having subsequently materialised.

For completeness, I note that the plaintiffs did not take the opportunity to put to Brian Hobson or Brett Soper in cross-examination that they held the view in August 2012 that Evermay’s shareholding in BFS was a problem that needed to be addressed. I accept that the plaintiffs were not obliged to do so because there was an agreement between senior counsel for the parties not to take Browne v Dunn points. However, implausible theories that are not put to witnesses are not imbued with weight or credibility that they do not otherwise have merely because there was no obligation to put them to the relevant witnesses.

For all of those reasons, I reject Michael Vella’s evidence referred to at [80]-[82] above and I reject the plaintiffs’ submission that Brian Hobson and Brett Soper viewed Evermay’s “residual presence” as a BFS shareholder as a problem for BFS as at August 2012.

The problems that did exist in August 2012 were disputes between JEV, Joseph Vella and Michael Vella on the one hand and Brian Hobson, Hynadam, Brett Soper and Mechita on the other hand about:

Joseph and Michael Vella had been raising concerns for some time prior to August 2012 about whether Schweppes delivery work was being allocated equally between the BFS shareholders.

During the final hearing of these proceedings, the plaintiffs abandoned their claim that Brian Hobson and Brett Soper breached fiduciary duties allegedly owed to the plaintiffs by not allocating work equally. In those circumstances, it is not necessary to make findings of fact about work allocation prior to August 2012. It suffices to note that the plaintiffs’ allegations were strenuously maintained in the discussions leading up to and during the Ingleburn meeting, as referred to in detail at [130]-[223] and [272] below. As referred to at [151] below, Michael Vella and Joseph Vella believed that Brian Hobson and Brett Soper were greedy and dishonest in the manner they allocated Schweppes delivery work between BFS shareholders. The plaintiffs continued to maintain those allegations in these proceedings, claiming that Brian Hobson and Brett Soper had breached fiduciary duties allegedly owed to JEV and/or Joseph Vella in allocating work, until they abandoned those claims during the final hearing.

It is common ground that BFS began transporting Schweppes bottled water products labelled “H2O to Go” from Albury to Sydney in about March 2012. In June 2012, Brian Hobson and Brett Soper caused BFS to enter into a lease of warehouse premises at Arndell Park in anticipation of that particular line of work expanding. Brian Hobson and Brett Soper guaranteed the obligations of BFS under the lease, and signed the lease as directors of BFS and in their personal capacity as guarantors.

There was a dispute between Michael Vella on the one hand, and Brian Hobson and Brett Soper on the other hand, about whether BFS should enter into the lease and whether Michael Vella should provide a guarantee together with the other two directors of BFS. The plaintiffs contend that this dispute arose before Brian Hobson and Brett Soper executed the lease on behalf of BFS and as guarantors. The defendants initially contended that the dispute arose only after the lease had already been executed, but ultimately accepted that the dispute may have been known to Brian Hobson and Brett Soper when they executed the lease.

It is not necessary to make findings about the order of events. What is relevant for present purposes is that, in August 2012, Michael Vella was very upset because he considered that Brian Hobson and Brett Soper had caused BFS to enter into the Arndell Park lease without his agreement. This was another issue that Michael Vella attributed to greed and dishonesty on the part of Brian Hobson and Brett Soper, as referred to at [154] below.

Michael Vella gave evidence that he had a conversation with Brian Hobson and Brett Soper in about August 2012 in which he complained that they had caused BFS to enter into the lease without his agreement and in circumstances where he did not want BFS to have its own warehouse because JEV already had a warehouse. He told Brian Hobson and Brett Soper words to the effect that “this is not good, this is not right, our friendship’s ending right now. Now it’s going to become legal …”. Brian Hobson suggested that they arrange for an independent person to facilitate a discussion “to help sort it out” rather than taking “the legal route”. Michael Vella deposed that he agreed with Brian Hobson’s suggestion. This led to the meetings with Robert Fielding referred to below at [131] followed by the Ingleburn meeting facilitated by Peter Versluis and Robert Fielding on 28 August 2012.

As referred to in more detail below, the Arndell Park lease, and the question of whether Michael Vella would guarantee the obligations of BFS under the lease, were some of the key topics of discussion at the Ingleburn meeting and in the preparatory meetings leading up to it. It is common ground that, once the Arndell Park lease was signed, it was Brian Hobson and Brett Soper (and not the landlord) who were advocating for Michael Vella to provide a guarantee in addition to the guarantees already given by them.

The plaintiffs submitted that, “in light of how matters subsequently unfolded”, the Court should find that Brian Hobson and Brett Soper caused BFS to enter into the Arndell Park lease “as the first step in a potential plan to exclude the Vellas from the Schweppes business – in this case, by taking advantage of the potentially lucrative ‘H2O to Go’ stream of work”.

I reject that submission and decline to make any such finding. I assume that the plaintiffs’ reference to “how matters subsequently unfolded” is a reference to the incorporation of BDA following the Ingleburn meeting and BDA (rather than BFS) performing Schweppes delivery work thereafter. In light of my findings below about what occurred at and following the Ingleburn meeting, the evidence does not support the inference for which the plaintiffs contend. Moreover, If Brian Hobson and Brett Soper saw the Arndell Park lease as the first step in a potential plan to exclude JEV from the Schweppes business, it is inherently improbable that they would have caused BFS to be the lessee in circumstances where no steps had been taken towards removing JEV as a shareholder and Michael Vella as a director of BFS, and there is no evidence of any such steps being contemplated or discussed at the time that BFS entered into the Arndell Park lease. It is equally improbable that Brian Hobson and Brett Soper would have been pressing Michael Vella to become an additional guarantor under the lease in August 2012. Again, I note that the plaintiffs did not take the opportunity to put to Brian Hobson or Brett Soper in cross-examination that their purpose in causing BFS to enter into the lease was to move towards excluding JEV and the Vella family from the Schweppes delivery work.

I also note that there is a stark inconsistency between:

The plaintiffs’ submissions did not identify any evidence capable of reconciling those inconsistent contentions.

On 2 August 2012, Mr Aikin sent an email to Brian Hobson, Brett Hobson and Brett Soper attaching a document entitled “Beverage Logistics Services –Chain of Responsibility Infringement” (the COR Notice). The document stated:

It was common ground between the parties that the vehicles listed in the COR Notice with registrations commencing with AE, BB, BE and BK were owned by Hynadam, those with registrations commencing with JNE were owned by JEV and those with registrations commencing with MEC were owned by Mechita.

The spreadsheet attached to Robert Aikin’s email bears an “MT Data” logo and is entitled “Trip Report by Vehicle”. According to Michael Vella’s evidence, MT Data was a compliance system that BFS used to track the speed and trip times for JEV, Hynadam and Mechita trucks on Schweppes deliveries. In respect of each trip recorded, the spreadsheet identified the vehicle registration, the start location and time for the trip, the finishing location and time for the trip, the kilometres travelled, any excessive idle time periods, the start and finish time of any breaks during the trip, the maximum speed of the vehicle and any speeding alerts.

Contrary to the plaintiffs’ submission, the spreadsheet did indicate a significantly worse speeding history for JEV trucks than for Hynadam or Mechita trucks. My review of the spreadsheet identified two instances in which Hynadam trucks were recorded as speeding above 110km per hour, 54 instances for Mechita trucks and 71 instances for JEV trucks. As the defendants’ submissions identified, the spreadsheet recorded that speeding alerts had been issued for almost half of the JEV truck speeding incidents exceeding 110km per hour. The spreadsheet recorded no speeding alerts in respect of the speeding incidents for Hynadam or Mechita trucks.

After receiving Robert Aikin’s email, Brian Hobson had a conversation with him about how the data should be interpreted, including whether some trucks were merely having an occasional speed spike when travelling downhill. The outcome of that conversation was that none of the vehicles listed in the email were immediately suspended from doing Schweppes deliveries provided that BFS could confirm that they were speed limited.

Brian Hobson gave evidence that he had been speaking with Michael Vella about speed issues including asking him to slow the JEV trucks down and to get them speed limited for some time prior to August 2012. Michael Vella denies that Brian Hobson spoke to him about these issues prior to August 2012.

On 16 August 2012, Brian Hobson (using Brett Soper’s email account) sent an email to Mr Aikin stating:

The email then set out:

Brian Hobson gave evidence in cross-examination that Detroit was the engine manufacturer. Whilst Hynadam and Mechita had been checking the speed limiter function when the trucks were serviced and could provide certification by a mechanic that the speed limiters complied with Schweppes’ requirements, they had not previously arranged for Detroit to certify the speed limiters as an independent third party. Brian Hobson considered that the nature of the certification that Schweppes was looking for in August 2012 was “a bit of a grey area”. Hynadam and Mechita therefore arranged for arranged for Detroit certification.

Brian Hobson’s email conveys that speed limiters had already been fitted in the Hynadam and Mechita vehicles and that those speed limiters had been checked and were due to be further checked by the engine manufacturer. There was no evidence to the contrary in these proceedings. Brian Hobson’s email provided no such comfort in relation to the JEV vehicles.

On 17 August 2012, Robert Aikin sent an email to Brett Soper (addressed to him and to Brian Hobson) stating:

On 21 August 2021, Brett Soper sent an email to Brian Hobson, Brett Soper, Michael Vella and Elizabeth Vella stating that he had advised Schweppes on the status of speed limiters in the vehicles operating for BFS and setting out the list that he had emailed to Mr Aikin on 16 August 2012 referred to at [109]-[111] above. Mr Soper’s email continued:

In response, Michael Vella immediately sent three emails to Brett Soper in quick succession.

Michael Vella’s first email attached certificates relating to speed limiters in the vehicles JNE011 and JNE001 on 20 and 21 August 2012.

Michael Vella’s second email to Brett Soper stated: [5]

Michael Vella gave evidence that language he used in that email reflected the anger he felt at the time.

Michael Vella’s third email sent to Brett Soper at 2.59pm on 21 August 2012 attached an email that had been sent to Brett Hobson by Mr Luke Glover of NSW Freightlines at 6.55am that morning. Luke Glover’s email stated:

On 22 August 2012, Michael Vella forwarded to Brett Hobson a copy of a “Road Speed Governing Certificate” issued by MTU Detroit Diesel Australia dated 21 August 2012 in relation to JNE010.

Michael Vella sent further emails to Brett Hobson on 22 and 23 August 2012 attaching certificates relating to tests conducted on speed limiters in the vehicles JNE019 and JNE013.

It is plain from Luke Glover’s email referred to above and Michael Vella’s evidence in his affidavit sworn on 23 February 2017 that Brian Hobson liaised with Michael Vella during the period from 21 to 23 August 2012 to coordinate which JEV trucks were temporarily unavailable for Schweppes work while they were being tested at various times on those dates, so that BFS could manage the work with the other available trucks. That is to say, Brian Hobson acted contrary to Robert Aikin’s email dated 17 August 2012 and contrary to Brett Soper’s email dated 21 August 2012 by permitting JEV trucks to continue performing BFS deliveries for Schweppes. As the plaintiffs’ submissions acknowledged, Brian Hobson gave evidence to similar effect.

The plaintiffs submitted that the speed issue raised by Schweppes on 2 August 2012 was not a genuine issue or alternatively was not regarded by Brian Hobson or Robert Aikin as needing to be urgently addressed because Brian Hobson had not previously made any arrangements to have the Hynadam and Mechita trucks “appropriately certified”. On the basis of their submission that the speed limiter issue “was not one which provoked any actual activity on the part of either Mr Hobson or Schweppes until shortly before the mediation on 28 August”, the plaintiffs further submitted:

The plaintiffs’ submissions made much of the fact that the COR Notice referred to “Beverage Logistics Services” rather than “Beverage Freight Services” and that Brian Hobson did not raise any question about this with Robert Aikin at the time. It was submitted that “the only plausible explanation is that prior to August 2012, Mr Hobson (and possibly also Mr Soper) had discussed with Mr Aikin their intention to divert the business of BFS to a new corporate vehicle, and had given Mr Aikin the name Beverage Logistic Services.” The plaintiffs rely on the discussion paper produced by Robert Fielding at the same time, which referred to BLPL (wrongly) as a company in which Michael Vella had a stake, as supporting this conclusion.

I reject all of the plaintiffs’ submissions referred to at [123]-[124] above for three reasons.

First, it is inherently improbable that Schweppes had no genuine concern about vehicles significantly exceeding their speed limit on Schweppes delivery runs. On the contrary, it is plain from the terms of Robert Aikin’s 2 August 2012 email that Schweppes had taken some action about this approximately one year earlier and was taking follow up action with BFS in August 2012. Schweppes’ persistence indicates that it was genuinely concerned about speed limit compliance. Whilst additional action was taken by Brian Hobson and Brett Soper in relation to the Hynadam and Mechita trucks in August 2012, the evidence does not establish that they had taken no action previously. Brian Hobson’s evidence referred to at [111] above identifies the action that had been taken previously. He was not successfully challenged about this in cross-examination.

Second, the “plausible explanation” advanced by the plaintiffs for the COR Notice referring to BLS rather than BFS is fundamentally inconsistent with the plaintiffs’ submission that Brian Hobson and Brett Soper intended to divert the business of BFS to a new corporate entity which excluded JEV and the Vellas. If Brian Hobson and Brett Soper had held that intention when dealing with Schweppes in relation to the speed limiter issues in August 2012 (which was not put to Brian Hobson in cross-examination and which Brett Soper denied), it is inherently improbable that they would have mentioned BLS to Robert Aikin as the potential new corporate entity. As referred to at [78] above, Michael Vella was a director and shareholder of BLS together with Brian Hobson and Brett Soper. The inconsistency within the plaintiffs’ submissions referred to at [123]-[124] above compounds the inconsistency referred to at [101] above. Moreover, if Brian Hobson and Brett Soper intended to divert the business of BFS to a new entity that excluded JEV, it is improbable that they would have invested the time and effort that they did in an attempt to resolve the ongoing disputes with JEV and the Vella family with the assistance of an external facilitator in August 2012. It is also improbable that Brian Hobson and Brett Soper would have facilitated JEV trucks continuing to do Schweppes delivery work after 17 August 2021 if they had held the intention alleged by the plaintiffs. As the defendants submitted, the plaintiffs’ submissions ignore that important fact.

As the plaintiffs submitted, the evidence indicates that neither Brian Hobson nor Brett Soper forwarded the JEV speed limiter certificates on to Schweppes during the two or three business days between 23 August 2012 and the Ingleburn meeting on 28 August 2012. At that time, BFS was continuing to allocate Schweppes work to JEV trucks as referred to above and the BFS shareholders were preparing for the forthcoming “mediation” (to use the plaintiffs’ term) at the Ingleburn meeting. In those circumstances, I do not consider a delay of a few days in passing on the JEV certificates to Schweppes supports an inference on the balance of probabilities that they intended to exclude JEV and the Vellas from the Schweppes work. It became unnecessary for BFS to provide the JEV certificates to Schweppes after the Ingleburn meeting for the reasons explained at [266] and following below.

Third, for the reasons explained at [323] and following below, Brian Hobson and Brett Soper did not owe the pleaded fiduciary duties to the plaintiffs.

It is common ground that tensions between the BFS shareholders led to the engagement of Peter Versluis and Robert Fielding. There is no dispute that Brian Hobson made the initial approach to Peter Versluis. Brian Hobson gave evidence that, at the suggestion of Mr Frank Zonaras (the accountant for BFS), he contacted Peter Versluis in about late July 2012 to see if he was interested in working with the BFS shareholders to explore ways in which they might resolve their disagreements. Peter Versluis was interested, and his involvement in turn led to the involvement of Robert Fielding. Both men are associated with a company or business known as Risk Connect Australia and both of them attended the Ingleburn meeting.

Robert Fielding gave evidence that, between late July and early to mid-August 2012, he had an initial meeting with Brian Hobson, followed by a meeting with Brian Hobson and Brett Soper together with Peter Versluis (which the parties agree occurred on 24 July 2012) and a separate meeting with the Vella family (in about early to mid-August 2012). After those meetings, Robert Fielding created a discussion paper dated 11 August 2012 that he emailed to Michael Vella, Brett Soper, Brian Hobson and Frank Zonaras. There is no dispute between the parties about that sequence of events.

Before addressing the substance of that discussion paper and the subsequent meetings between Robert Fielding and BFS shareholders leading up to the Ingleburn meeting, it is convenient to deal with a submission made by the plaintiffs in relation to the 24 July 2012 meeting between Robert Fielding, Peter Versluis, Brian Hobson and Brett Soper.

After the 24 July 2012 meeting with Brian Hobson and Brett Soper, Peter Versluis sent an email to Brett Soper attaching “some Notes and suggestions” and requested that he “review the attached and provide as much detail as you can”. The name of the attached document referred to in the email was “Risk Questionnaire 250712”. That email, without the attached document, was annexed to Robert Fielding’s affidavit sworn on 15 September 2017, being his second affidavit sworn in these proceedings. The plaintiffs submitted that:

I reject those submissions for two reasons.

First, the submissions assume that the “Risk Questionnaire 250712” was available to be annexed to Robert Fielding’s affidavit sworn more than five years later. That depends in part on whether the email annexed to the affidavit was available at that time in electronic form or only in paper form. The copy of the email annexed to Robert Fielding’s second affidavit bears handwritten annotations at the foot of the page, which tends to suggest that the email was available in paper form at that time. There is no other evidence that would support an inference that the “Risk Questionnaire 250712” was available at the time Robert Fielding’s second affidavit was sworn. If it was not available, then no Jones v Dunkel inference arises from the “failure” to include it in the annexures to the affidavit.

Second, as the defendants submitted, any inference that Brian Hobson told Peter Versluis and Robert Fielding about “the intention to move the business over to a different company, jointly owned with Mr Soper and the Vellas” as early as his first meeting with them in late July 2012, would be contrary to the evidence of Michael Vella and Brian Hobson that it was Robert Fielding and/or Peter Versluis who suggested and promoted the idea of conducting the activities of BFS through a different company. The underlying idea appears to have been that the disputes between the BFS shareholders could be resolved by incorporating a new company with a shareholders’ agreement or rules governing each area of dispute and then conducting the BFS activities through that new company rather than through BFS. That idea is reflected in the discussion paper prepared by Robert Fielding and Peter Versluis which is referred to in more detail below. Michael Vella gave evidence in cross-examination that Robert Fielding had proposed the idea that “we could set up another company with rules that govern all of those matters, all of the six matters you’re worried about” and had then gone through the attributes that the new company could have to ask whether he agreed or disagreed with them. According to Brian Hobson, Robert Fielding said that “it was one way of overcoming the problem if we had a fresh company to share our grievances and set up properly and move forward” and “with new rules for the three of us to move forward with”. Robert Fielding gave evidence that the idea of a new company emanated from Peter Versluis.

Neither Robert Fielding nor Peter Versluis suggested that a new company had been proposed as a solution for anything if the BFS shareholders were unable to resolve the substance of their existing disputes and agree about how they would address those matters in the future through the proposed new company. On the contrary, it is clear from Robert Fielding’s evidence in cross-examination that the new company proposal was dependent on the BFS shareholders and directors agreeing how that new company would be operated, including in relation to allocation of work and ownership and responsibility for trucks.

I also note that the inference that the plaintiffs contend should be drawn from the defendants’ failure to adduce evidence of the “Risk Questionnaire 250712” attachment to the 25 July 2012 email referred to at [133] above (that Brian Hobson told Peter Versluis and Robert Fielding about “the intention to move the business over to a different company, jointly owned with Mr Soper and the Vellas”) exposes the inconsistency within the plaintiffs’ case theory that I have referred to at [101] above.

I return to the draft discussion paper dated 11 August 2012, which bore the names of both Peter Versluis and Robert Fielding. The discussion paper stated:

As I have already mentioned above and as the defendants submitted, it is clear from the discussion paper read as a whole as well as from the evidence of Brian Hobson, Michael Vella Robert Fielding referred to at [136]-[137] above, that the new company proposal that had emanated from Robert Fielding and/or Peter Versluis was inextricably linked to a proposed shareholders’ agreement, policies or rules for the new company that would govern future work allocation and financial distributions and under which the new company would become the owner or lessee of the trucks performing Schweppes delivery work and the employer of the drivers of those trucks and would take on compliance responsibility for the trucks. The listing of those substantive matters in the discussion paper identified them as topics for discussion to see if agreement could be reached. These were substantive matters, and not mere formalities required “to properly formalise the operations of the new company” as the plaintiffs’ submissions suggested. The arrangements proposed by the Vella family concerning trucks, drivers and compliance responsibilities represented a fundamental change from the BFS arrangements referred to at [65]-[73] above.

It is also clear that BLPL was referred to in the discussion paper on the mistaken understanding that Michael Vella, Brian Hobson and Brett Soper were the equal shareholders and directors of that company. [6] In circumstances where Robert Fielding and/or Peter Versluis were the instigators of the new company proposal, the references to BLPL in the discussion paper provide no support for either of the plaintiffs’ inconsistent theories referred to at [101] and [138] above. That is so, regardless of who told Robert Fielding and Peter Versluis about BLPL (or alternatively about “Beverage Logistics Services”, which Robert Fielding may have then wrongly transcribed as “Beverage Logistics Pty Ltd”).

In cross-examination, Brian Hobson accepted that it was possible that he had mentioned BLPL to Robert Fielding as a potential corporate vehicle that could be used for the future operation of the business but said that he had no recollection of doing so and no memory of how BLPL came to be referred to in the discussion paper. Contrary to the plaintiffs’ submissions, there is no inconsistency between Brian Hobson’s acceptance of that possibility and his absence of recollection. The plaintiffs went further and submitted that Brian Hobson’s evidence on this subject was “not merely risible, it demonstrates that Hobson did not treat his oath solemnly and he was prepared to say anything to promote his case narrative.” I reject that submission. It is unfounded and, as the defendants submitted, absurd.

I accept the plaintiffs’ submission that the evidence did not reveal any reason why creating a new company would solve any of the existing disputes between JEV and the Vella family on the one hand and Hynadam, Brian Hobson, Brett Soper and Mechita on the other hand. As I have explained above, the evidence is that a new company was not suggested as a solution by itself. It was raised as a possible way forward in conjunction with a shareholders’ agreement, policies or rules that would address the substance of the existing disputes. There is considerable force in the plaintiffs’ submission that this could have been achieved by creating a new shareholders’ agreement for BFS. The fact that Peter Versluis and/or Robert Fielding were unnecessarily advocating a new company as the starting point for resolving the disputes casts some doubt on their competence as facilitators or mediators claiming experience in the field of finance and insurance (in the case of Mr Versluis) and accountancy (in the case of Mr Fielding). Further doubt about the competence of Peter Versluis arises from his evidence that he attended and facilitated the discussion at the Ingleburn meeting without undertaking any preparation, armed only with “the skill set I would bring there to bring the parties together and try and form some type of resolution” and without any knowledge about BFS, including its assets, liabilities, employees or insurance arrangements which would have been relevant to any resolution of the issues recorded in the discussion paper. Further doubt about the competence of Robert Fielding arises from his failure to ensure that all three directors of BFS signed the minutes of the Ingleburn meeting or resolved to adopt the minutes before they were signed by Brian Hobson. [7] However, the instigation of the new company proposal by Peter Versluis and/or Robert Fielding provides no support for the plaintiffs’ submissions that “[t]he only rational reason to also suggest transferring the business from BFS to another company was to deal with the fact that Steven Phillips’ company Evermay Pty Ltd remained as a shareholder of BFS” and that it must have been obvious to Brian Hobson and Brett Soper that this was the reason for the new company proposal. For all of the reasons already referred to at [74]-[90] above, the evidence provides no support for the contention that Evermay’s shareholding in BFS was the reason for the new company proposal. The plaintiffs’ submission is also inconsistent with Michael Vella’s evidence referred to at [136] above.

As the defendants submitted, the plaintiffs’ submissions ignored the many substantive matters outlined in the discussion paper on which there was no agreement between the BFS directors and their respective companies. Those matters emerge from the evidence of the separate meetings that Peter Versluis and Robert Fielding conducted with each of Brian Hobson, Brett Soper and the Vella family after circulating the discussion paper on 11 August 2012 and the further version of the discussion paper that Robert Fielding then prepared outlining their respective positions about the issues to be discussed at the Ingleburn meeting.

In cross-examination, Michael Vella gave evidence that he recalled having two meetings in his office prior to the Ingleburn meeting. Robert Fielding attended the first meeting. Peter Versluis and Robert Fielding attended the second meeting. Michael Vella gave evidence that, at those meetings, he discussed with Robert Fielding the six matters identified in item 1.11 of the “comments” column in the discussion paper set out at [139] above. He was asked about the substance of each of those six matters and answered without making any reference to Stephen Phillips or Evermay. He gave evidence that those six topics were all of the issues then facing the shareholders of BFS and all of the issues that he discussed with Robert Fielding.

Robert Fielding gave evidence that he and Peter Versluis took notes of each of the meetings he conducted after circulating the discussion paper, yet only the notes of their meeting with Joseph, Elizabeth and Michael Vella were annexed to Robert Fielding’s first affidavit. In cross-examination, he said that he had provided his file containing all of the notes to the defendants’ solicitors and the file had been misplaced by the solicitors. Thus, the notes are no longer available, with the exception of the notes of the meeting with the Vella family that were annexed to his first affidavit.

The plaintiffs’ submissions sought to make much of this. It was submitted that the Court should infer that Robert Fielding’s notes of the meetings with Mr Hobson and Mr Soper would not have assisted the defendants’ case and that the Court could more readily infer that Brian Hobson and/or Brett Soper told Robert Fielding prior to the Ingleburn meeting that they were prepared to “transfer the business of BFS to ‘their own’ company”.

I reject those submissions. The implicit assumption that notes of the meetings with Mr Hobson and Mr Soper were relevant is doubtful because Robert Fielding produced a further version of the discussion paper prior to the Ingleburn meeting in which he recorded the responses of the Vella family, Brian Hobson and Brett Soper to each of the issues listed in the first version of the discussion paper. That further iteration of the discussion paper was annexed to Robert Fielding’s first affidavit. In addition, the second inference for which the plaintiffs contend exposes the inconsistency in the plaintiffs’ case theory referred to at [101] above.

It is common ground that the second iteration of the discussion paper referred to above was provided to the Vella family, Brian Hobson and Brett Soper prior to the Ingleburn meeting and was used by Peter Versluis to structure the discussion at that meeting. It contained the same items with same numbering system as the first iteration of the discussion paper set out in full at [139] above, with three additional columns entitled “Vella”, “Hobson” and “Soper”. Those additional columns identify significant areas of disagreement between the three groups, including in relation to:

Michael Vella gave evidence in cross-examination that he and his parents told Peter Versluis and Robert Fielding at their meeting on 22 August 2012 that they required a “fair share” in the sense that JEV should be earning the same amount of money as the other BFS shareholders for providing the same amount of trucks to do the Schweppes delivery work. They wanted work allocation to be undertaken by somebody independent.

Michael and Joseph Vella believed that Brian Hobson and Brett Soper were dishonest and motivated by greed in the manner in which they were allocating work and managing BFS. Michael Vella believed they were responsible for dishonestly taking something in the order of $100,000 from JEV by the manner in which work had been allocated over the previous 12 months. Elizabeth Vella was aware of those views held by Michael and Joseph Vella.

The plaintiffs submitted that the evidence supports a finding that JEV was not seeking monetary compensation in the sum of $100,000, but was seeking favourable future work allocations to redress the alleged past inequality. In support of that submission, the plaintiffs relied on the manner in which perceived inequality of work allocation had been resolved in 2002 and 2004. The plaintiffs also relied on Michael Vella’s evidence in cross-examination to the effect that Joseph Vella had not told him that he expected JEV would be paid the $100,000 and that Michael Vella did not believe that JEV asked to be paid $100,000 at the Ingleburn meeting and “it would be silly … to think that somebody would pay you that”. The plaintiffs also relied on the evidence of Elizabeth Vella, who was not present at the Ingleburn meeting, that Michael Vella did not want compensation but “[w]e asked for them to - if we could get extra loads to make up for the difference”.

I reject the plaintiffs’ submissions referred to above. I do not consider that events in 2002 or 2004 provide a rational foundation for any inference about the remedy JEV was asking for in 2012 to address what JEV claimed was dishonesty and greed on the part of Brian Hobson and Brett Soper. The plaintiffs’ submissions ignore that the second iteration of the discussion paper circulated to all participants prior to the Ingleburn meeting contained item 1.14, which read (my emphasis): “The directors require equality in the distribution of work and profit distributions, including compensation for lost earnings in prior periods”. The response to item 1.14 in the “Vella” column recorded: “Agree apart from Premises and Guarantee”. The response in each of the “Hobson” and “Soper” columns was: “Require payment on performance then equality. Also require Guarantee.” The plaintiffs’ submissions also ignore Michael Vella’s evidence in cross-examination that, at the Ingleburn meeting and in the context of those responses, Joseph Vella said something like: “Well, what about the $100,000?”. Assuming (without deciding) that JEV and the members of the Vella family did not expect Hynadam and Mechita to pay $100,000 and were willing to accept future favourable work allocations to redress alleged unequal work allocations in the past, there is no evidence that they communicated this to Brian Hobson and Brett Soper prior to or at the Ingleburn meeting.

Michael Vella also gave evidence in cross-examination that he believed that Brian Hobson and Brett Soper had been greedy and dishonest in causing BFS to enter into the Arndell Park lease for the benefit of Hynadam and Mechita and with no benefit to BFS. He and his parents told Robert Fielding and Peter Versluis at their 22 August 2012 meeting that Michael Vella did not want to provide a personal guarantee for BFS’s obligations under that lease and, in fact, they wanted to have the lease “taken away from” BFS.

The plaintiffs submitted that the issues concerning the Arndell Park lease and the guarantee were a “storm in a teacup” because:

I reject that submission. The first part of the submission relies on item 2.13 of the second iteration of the discussion paper, which stated that the Vella interests agreed to all parts of the following proposition: “The Directors to share operational, staff and management responsibility, as well as current and future financial obligations and guarantees equally. The responsibility for each of these functions should be identified and monitored by regular directors meetings.” By itself, that item of the discussion paper provides some support for the plaintiffs’ submission about the status of the Arndell Park lease guarantee issue immediately prior to the Ingleburn meeting. However, the plaintiffs’ submission ignores item 1.11 of that discussion paper, which lists “difficulties pertaining to Beverage Freight Services Pty Limited” including in relation to “Guarantees”. The response of each of “Vella”, “Hobson” and “Soper” in relation to “Guarantees” was “Refusal”, “Required” and “Required” (respectively). More importantly, the plaintiffs’ submission ignores the unequivocal evidence of their own witness, Michael Vella, that he did not want to provide a guarantee for the Arndell Park lease. [8]

The second part of the submission fails to grapple with the obvious effect of two out of three directors of BFS guaranteeing the company’s obligations under the Arndell Park lease. In the event of default by BFS, the landlord would be entitled to make a demand on Brian Hobson and Brett Soper under their guarantees, but Michael Vella would not be liable to the landlord.

The second iteration of the discussion paper does record agreement by each of Michael Vella, Brian Hobson and Brett Soper with items 1.12, 1.13 and 1.15 referred to at [139] above. However, I reject the plaintiffs’ submission that this demonstrates that “the basis upon which all parties entered the 28 August 2012 meeting was the directors were already willing to agree to transfer the Schweppes business from BFS to a new company, jointly owned by Michael Vella, Brett Soper and Brian Hobson.” As the defendants submitted, that contention is a fiction that relies on reading the agreement in relation to items 1.12, 1.13 and 1.15 in isolation from the disagreement recorded in the document about other matters that were fundamental to the business. There is no evidence of any purpose that would have been served by transferring the business of BFS to a new company without the parties having resolved the disputes that were the cause of anger and distrust (at least on the part of Michael Vella). The plaintiffs’ argument that the parties agreed prior to the Ingleburn meeting to transfer the business to a new company because Evermay remained a shareholder in BFS is inherently implausible and is rejected for all of the reasons explained at [74]-[91] above.

I accept the defendants’ submission that by the time of the Ingleburn meeting the relationship between JEV, Hynadam and Mechita as the active shareholders of BDS and the relationship between Michael Vella, Brian Hobson and Brett Soper as the directors of BFS had substantially deteriorated and that there was a high degree of acrimony between those active shareholders and directors. That description of the state of relationship accurately reflects the evidence and the findings set out at [94]-[129] above. I reject the plaintiffs’ submissions to the contrary, which were based on highly selective parts of the evidence and cannot be sustained in light of the whole of the evidence and the findings set out above.

As I have already mentioned, Michael Vella gave evidence that the Ingleburn meeting was organised after he accepted Brian Hobson’s suggestion that they engage an independent person to facilitate a discussion rather than Michael Vella and JEV taking “the legal route” to sort out the dispute relating to the Arndell Park lease. [9] In his affidavit sworn on 4 December 2015, Michael Vella deposed:

That was the whole of Michael Vella’s evidence about the Ingleburn meeting in his 4 December 2015 affidavit and, indeed, the whole of the plaintiffs’ evidence in chief about that meeting.

It was common ground between all of the witnesses who were present at the Ingleburn meeting that it lasted for approximately two hours.

In June 2016, the defendants served affidavits of Brian Hobson, Brett Soper and Robert Fielding. Each of those witnesses gave an account of the Ingleburn meeting.

In their affidavits sworn on 17 and 20 June 2016, Brett Soper and Brian Hobson each denied the conversations recounted by Michael Vella in his 4 December 2015 affidavit about the purpose of the Arndell Park lease and about moving the business of BFS to a new company in order to remove Steven Phillips as an owner.

Brian Hobson gave evidence that Michael Vella had proposed that BFS should purchase JEV’s trucks and he and Brett Soper had opposed that idea, following which there was a discussion about whether JEV’s trucks complied with Schweppes’ requirements, whether work allocation issues were attributable to JEV trucks not turning up for work or not working as they should and whether Michael Vella should guarantee BFS’s obligations under the Arndell Park lease.

Brian Hobson deposed that the following discussion then occurred at the Ingleburn meeting:

Brett Soper also gave evidence that he and Brian Hobson had opposed a suggestion from Michael Vella that BFS should purchase JEV’s trucks. He deposed that a conversation to the following effect took place:

Robert Fielding’s account of the Ingleburn meeting in his affidavit sworn on 16 June 2016 did not include any discussion about the shareholding of Steven Phillips or Evermay. According to Mr Fielding, there was a discussion between Michael Vella and Brian Hobson about the allocation of work in the following terms:

According to Robert Fielding, there was then a discussion (and disagreement) about speed and other compliance issues and the Arndell Park lease and guarantee followed by a discussion to the following effect:

Later that day, Mr Fielding prepared a document styled as minutes of a meeting of the directors of BFS held at 2pm on 28 August 2012. The document records that Brian Hobson, Brett Soper and Michael Vella were present at the meeting and that Joseph Vella, Peter Versluis and Robert Fielding were also in attendance.

The document states that all of the directors consented to the calling of the meeting at short notice.

The document describes the purpose of the meeting as:

The document then continues:

I note that Robert Fielding’s account of what was said at the meeting in his 16 June 2016 affidavit did not include any proposal of or casting of votes on any resolution. As referred to at [221] below, Robert Fielding gave evidence in cross-examination that this was “the summation of what occurred at the meeting” rather than a resolution that was formally put to a vote. This is consistent with the description of the outcome in the minutes as a resolution “[b]y consensus of each director” rather than as a resolution passed unanimously or other language customarily used to describe the outcome of a vote.

The minutes were signed by Brian Hobson. They were not signed by any other director of BFS or by Peter Versluis.

A copy of the minutes of the Ingleburn meeting was annexed to Robert Fielding’s 16 June 2016 affidavit and exhibited to Brian Hobson’s 20 June 2016 affidavit. In his affidavit sworn on 21 August 2017, Brian Hobson gave evidence that he signed them after satisfying himself that they were accurate. Robert Fielding deposed that he arranged for Brian Hobson to sign the minutes and that he then send a signed copy to Michael Vella by post. Michael Vella gave evidence that he had not received the minutes and neither he nor any directors meeting of BFS had approved the minutes.

Joseph and Michael Vella replied to the June 2016 affidavits of Brett Soper, Brian Hobson and Robert Fielding in their affidavits sworn on 30 January 2017 and 23 February 2017 (respectively).

In his 30 January 2017 affidavit, Joseph Vella deposed that he did not have a full recollection of the conversations that occurred at the meeting, but that he could remember certain parts of the meeting. He disputed the account of the meeting given by Brian Hobson, Brett Soper and Robert Fielding. He deposed that he believed that “one of the main agenda items for this meeting was to discuss how to remove Steve Phillips as a director of BFS” and that “[w]e also needed to discuss what was needed to get his company removed as a shareholder” and “what improvements could be made to BFS”. Joseph Vella gave evidence that, early in the meeting, Robert Fielding said:

Joseph Vella deposed that he was not aware of any issues at the time of the Ingleburn meeting concerning JEV trucks requiring upgrades, that he had not been aware of speed limiter issues prior to August 2012 and that he understood from his discussions with Michael Vella prior to the Ingleburn meeting that the speed limiter issues had been addressed.

Joseph Vella described “a bit of anger and frustration by Brian, Michael, myself and Brett at the beginning of the meeting”. He deposed that, after all of the discussion between them, Robert Fielding said: “If you guys can’t work it out together, then either one party or the other has to go”. According to Joseph Vella, there followed a discussion about who might go or “sell out from BFS” during which Brian Hobson referred to health problems and Michael Vella said that, if Brett Soper and Brian Hobson wanted to “pull out” then he would “probably buy you out”. Joseph Vella did not believe that this resulted in any firm agreement being reached. He deposed that the meeting “finished with us all shaking hands in a friendly manner” and that he walked out of the meeting together with Michael Vella believing that they were waiting for Brian Hobson and Brett Soper to get back to them about what each of them wanted to do with BFS as it appeared to him that neither of them wished to continue. He did not recall (although I note that he did not deny) Michael Vella saying words to the effect: “If you won’t do it this way, then we don’t want to be part of BFS anymore. We should get rid of BFS and just do things by ourselves.”

Joseph Vella deposed that he did not recall Michael Vella saying words to the effect of: “why don’t we wind it up”, referring to BFS.

In his 30 January 2017 affidavit, Joseph Vella also deposed that he did not want to leave BFS or stop doing the Schweppes work because it was worth about $1.2 million in revenue to JEV each year. Neither Michael Vella nor Elizabeth Vella expressed the view to Joseph Vella that they wanted JEV to leave BFS.

In his affidavit sworn on 23 February 2017, Michael Vella deposed that Peter Versluis had telephoned him and told him that Robert Fielding wanted to come and ask him some questions about BFS and that everybody’s answers to a questionnaire would be summarised “and then we will meet to discuss what to do going forward”. Michael Vella deposed that:

Michael Vella took issue with the truth of the statements that Brian Hobson, Brett Soper and Robert Fielding deposed were made at the meeting concerning the quality and compliance of JEV trucks.

Michael Vella denied proposing at the meeting that BFS should buy JEV’s trucks. However, he gave evidence that he did suggest that one way of addressing the work allocation issue would be for BFS to own all of the trucks and then each of the shareholders could “take a third share” (referring, as I understand this evidence, to a share of BFS’s revenue that had hitherto been paid on to shareholders in the amounts invoiced by each shareholder to BFS for the Schweppes delivery work actually performed by that shareholder). Michael Vella denied saying: “If you won’t do it this way, then we don’t want to be part of BFS anymore. We should get rid of BFS and just do things by ourselves.” He deposed that: “I did not and would not have said this because JEV and NSW Freightlines did not have the capacity to do the Schweppes job by ourselves, either financially or logistically.” Michael Vella’s evidence about JEV’s capacity was admitted subject to an order limiting its use to evidence of his understanding. There was no evidence of what capacity JEV had to undertake Schweppes delivery work. There was no evidence that would support an inference that JEV lacked the financial or logistical capacity to continue by itself the work that it had been performing for Schweppes through BFS.

Michael Vella deposed:

Michael Vella also deposed that Brian Hobson indicated that he may wish to retire for health reasons, and that Michael Vella had suggested that he and Brett Soper would “pay you out” in that event.

Michael Vella denied saying “why don’t we wind it up” and deposed that those words were said by the Risk Connect representative “in the context of Steven Phillips leaving BFS as shareholder and director”.

In affidavits sworn during the period July to September 2017, Brett Soper, Brian Hobson, Peter Versluis and Robert Fielding, responded to the evidence of Joseph Vella and Michael Vella in their affidavits sworn on 30 January 2017 and 23 February 2017 (respectively).

In his affidavit sworn on 14 August 2017, Brett Soper deposed that he did not recall Steven Phillips being discussed or raised by Robert Fielding at the Ingleburn meeting. Steven Phillips had resigned as a director years before the Ingleburn meeting and his trucks no longer did work for BFS. Brett Soper did not recall Robert Fielding saying “If you guys can’t work it out together, then either one party or the other has to go” or saying anything like that. He deposed that it was Michael Vella who said that the Vellas did not want to be part of BFS and that “we should get rid of BFS” and Joseph Vella had agreed. He was surprised when Michael Vella said this, but he was “also happy because I was sick of working with Michael because he always wanted to complain and argue, and sometimes fight”. He denied that there was any discussion about he or Brian Hobson selling out of BFS or walking away from the Schweppes’ work and denied that Michael Vella mentioned buying them out.

Brett Soper also deposed that the minutes of the Ingleburn meeting accord with his recollection of the meeting, especially the outcome. He gave evidence that he recalled feeling relieved at the end of the of the meeting that he would not have to keep working with Michael Vella.

In his affidavit sworn on 21 August 2017, Brian Hobson also gave evidence that he did not recall Steven Phillips being discussed or raised by Robert Fielding at the Ingleburn meeting. He deposed that he “did not think this was an issue for BFS at the time because Steve Phillips had resigned as being a director years before and his trucks no longer did BFS work.” Brian Hobson also gave evidence that did not recall Robert Fielding saying “If you guys can’t work it out together, then either one party or the other has to go” or saying anything like that. Rather, it was Michael Vella who said that the Vellas did not want to be part of BFS and that “we should get rid of BFS” and Joseph Vella had agreed. Brian Hobson deposed that his health was not good and he did recall saying something about not wanting to “carry on working like this”. However, he did not say that he wanted to retire and he did not mention or agree to selling out of BFS and did not recall Brett Soper offering to walk away. According to Brian Hobson, Michael Vella did not offer to buy them out. As a result of the resolution at the Ingleburn meeting, Brian Hobson thought his association with the Vellas was officially over and “we were all free to go out and compete for the Schweppes work”. He was happy about that because “being involved with Michael Vella had been causing me a lot of stress, which I did not need”.

In his affidavit sworn on 15 September 2017, Robert Fielding recalled there being an argument about who had spent how much on trucks. He recalled Michael Vella suggesting that BFS could own all of the trucks and employ all of the drivers, but that Brian Hobson and Brett Soper disagreed with that suggestion.

Robert Fielding denied saying the words attributed to him by Joseph Vella about moving the business of BFS to a new company in order to remove Steven Phillips as a shareholder: see [178] above. Robert Fielding did not recall any discussion about Stephen Phillips, director’s fees or dividends at the Ingleburn meeting. He deposed that:

Robert Fielding also denied saying: “If you guys can’t work it out together, then either one party or the other has to go”. He added that his role was a facilitation role and it was not for him to tell the parties what to do.

Robert Fielding denied that Brian Hobson mentioned selling out of BFS and did not recall Brett Soper saying anything about walking away or doing other things. He could not recall Michael Vella mentioning buying out Brian Hobson and Brett Soper. He denied that the meeting ended with a possibility of Michael Vella buying out Brian Hobson and Brett Soper.

Robert Fielding agreed with Joseph Vella’s description of the Ingleburn meeting as involving anger and frustration between Brian Hobson, Brett Soper, Michael Vella and Joseph Vella at the beginning, but finishing up with all of them shaking hands in a friendly manner.

In his affidavit sworn on 27 July 2017, Peter Versluis described the discussion as being “wide ranging” and said that he could not recall agreement being reached on any topic. He described the debate as vigorous and animated, and said that harsh and loud tones were used at the start of the meeting. He agreed with Joseph Vella’s description of the meeting involving a bit of anger and frustration between the BFS directors at the beginning, but finishing with them all shaking hands in a friendly manner. He recalled discussion about the issue of BFS buying trucks and that no agreement was reached about that. He recalled vigorous discussion about the issue of whose trucks were or were not compliant with Schweppes’ requirements. He also recalled discussion about work allocation.

Peter Versluis denied recommending that a new company be established or that the business of BFS be moved to a new company. He deposed that he did not recall the name of Stephen Phillips being mentioned at the Ingleburn meeting or any of the prior meetings that he was involved in. If he had been aware of a fourth shareholder, he would have wanted for that person to be contacted in order to ask if they wanted to be involved in the discussions.

Peter Versluis gave the following evidence:

Peter Versluis recalled everyone shaking hands at the end of the meeting after this resolution was passed. He deposed that he did not recall that the resolution to “wind down” BFS included a resolution to establish a new company.

Peter Versluis deposed that he did not specifically recall Michael Vella saying words to the effect that “If you won’t do it this way, then we don’t want to be part of BFS anymore. We should get rid of BFS and just do things by ourselves”. However, he deposed that the effect of those words was said by one of the directors towards the end of the meeting and agreed to by all of the others.

Peter Versluis also gave evidence that he did not recall Brian Hobson saying that he wanted to retire or Michael Vella offering to buy out Brian Hobson’s shares.

The plaintiffs responded with a further round of affidavits of Michael Vella and Joseph Vella.

In his affidavit sworn on 3 February 2021, Michael Vella denied saying at the Ingleburn meeting that the Vellas did not want to be part of BFS and that “we should get rid of BFS” and Joseph Vella had agreed: see [190] above. Michael Vella added: “I did not want to leave BFS at any time and risk losing a share of the Schweppes work, which was very profitable for J&E.” He maintained that it was his understanding that the agreement reached at the Ingleburn meeting was to wind down BFS and set up a new company and contended that “the discussion about any new structure of company was only because of the exit of Stephen Phillips and his company”. Michael Vella introduced, for the first time, his account of Brian Hobson having told him in August 2012 that he had received legal advice and “we have to get Stephen Phillips out of the company altogether. We have to stop paying him dividends if he is not contributing. We should close BFS and start a new company.” I have referred to Michael Vella’s evidence about this alleged conversation at [80] above and rejected it for the reasons explained at [84]-[90] above. Michael Vella disputed that statements to the effect deposed to by Peter Versluis at [200] above were made at the Ingleburn meeting. Michael Vella deposed that Peter Versluis said words to the effect: “We’ve agreed on a course of action to close down BFS and a new company being set up.”

In his affidavit sworn on 3 February 2021, Joseph Vella deposed in response to Robert Fielding’s 15 September 2017 affidavit that he did not recall the parties agreeing to wind down the business and go their separate ways. Joseph Vella made no response to Peter Versluis’ evidence referred to at [200] above.

The plaintiffs had leave to adduce oral evidence in chief from Joseph Vella in relation to specific matters. Joseph Vella was asked during that oral evidence on 6 May 2021 if he recalled whether anything was ultimately agreed upon at the Ingleburn meeting. His answer was that he could not remember. In cross-examination, Joseph Vella could recall meeting Robert Fielding and Peter Versluis at the Ingleburn meeting but had no recollection of having met them together with Elizabeth Vella and Michael Vella a few days before the Ingleburn meeting. He did recall that he believed that Brian Hobson and Brett Soper had been dishonestly diverting more of the profitable Schweppes deliveries to their own trucks and that JEV was claiming lost earnings.

During his short cross-examination, Joseph Vella gave the following inconsistent evidence about the Arndell Park warehouse issue:

Joseph Vella gave the following evidence in cross-examination about Mr Phillips:

Joseph Vella gave the following evidence in cross examination concerning the manner in which the Ingleburn meeting concluded:

In cross-examination, Michael Vella gave evidence that, whilst the directors had agreed at the Ingleburn meeting about the matters recorded in the minutes concerning the proposed new company (as recorded in the paragraph in the minutes commencing “Consensus from each director was achieved …” under the heading “General Discussion”), the directors had not been able to reach agreement about other matters including reimbursement of alleged lost earnings to JEV, the Arndell Park warehouse, the guarantees for that lease, and whether the proposed new company would buy all of the trucks as “a way to guarantee equal earnings”. As to the last matter, Michael Vella gave evidence that Brian Hobson and Brett Soper had rejected his suggestion that the proposed new company own and operate the trucks so as to guarantee equal earnings for shareholders.

Michael Vella gave evidence in cross-examination that he left the Ingleburn meeting with a clear understanding that a resolution had been passed to wind up BFS (and, according to his evidence, transition its business to a new company). He was unable to explain why he failed to mention the winding up resolution in his 4 December 2015 affidavit, but denied that it was because he knew that it may harm the plaintiffs’ claim against Brian Hobson and Brett Soper.

Brian Hobson accepted in cross-examination that his recollection of the Ingleburn meeting was by then, nine years after the event, “pretty poor … to a degree”. He maintained that he had a good recollection that Michael Vella said at the end of the meeting something like: “If you won’t do it this way, then we don’t want to be part of BFS anymore” and “We should just get rid of BFS and just do things by ourselves”. According to Brian Hobson, “everybody had had the yelling and screaming going on, then Michael had the last say and he was very vocal about it. That was – he made it quite clear”. Brian Hobson then said something like: “Well, we can wind BFS up, but Brett and I will continue to do Schweppes work if we can.” In response, Michael Vella “most certainly” said something like: “We will go and work with Schweppes on our own”. There was no discussion that the work would be transferred over to a company equally owned by Brian Hobson, Brett Soper and Michael Vella. Michael Vella “made it quite clear he wanted out”.

It was put to Brian Hobson in cross-examination that he had wanted the Vellas out of BFS before the Ingleburn meeting and he had a plan going into the meeting that he was going to shut down BFS and start up a different company that the Vellas had no involvement in. Brian Hobson denied this, saying: “Them walking away was the biggest headache I’d had”. I note that these propositions put to Brian Hobson are inconsistent with the plaintiffs’ submissions that Brian Hobson and Brett Soper had agreed to transfer the business of BFS to another company equally owned by Brian Hobson, Brett Soper and Michael Vella in order to have BFS’s operations conducted by a company in which Evermay had no shareholding. [10]

Brian Hobson denied that he had tried prior to the Ingleburn meeting to “actively poison” Robert Aikin against the Vellas in relation to the speed limiter issue, saying: “I didn’t have to poison Rob Aikin. He had his access to the data. He’d seen – he was telling me what was going on. I was trying to cover it.”

Brian Hobson gave evidence in cross-examination that he did not know prior to the Ingleburn meeting that the Vellas would decide to leave the BFS business. Whilst they had made suggestions about this over the years because they “were just never happy”, they had never previously made a decision or announcement to leave. They had been agitating their complaints about what they saw as unequal earnings by the three shareholders for years and, according to Brian Hobson, they were always saying that they were losing money yet they always seemed to be the biggest earners.

Brett Soper also acknowledged in cross-examination that he no longer had a good recollection of the Ingleburn meeting nine years earlier. However, he maintained that he did recall Michael Vella saying words to the effect: “If you don’t want to do it this way, then we don’t want to be part of BFS anymore; we should just get rid of BFS and do things by ourselves.” Brett Soper said that he and Brian Hobson were “dumb founded” when Michael Vella said that. He denied that he and Brian Hobson had decided prior to the Ingleburn meeting to “get Vella out of the business” and denied that he failed to send certificates for JEV trucks to Schweppes in August 2012 because he was “intending to poison” Michael Vella’s reputation with Robert Aikin.

Robert Fielding acknowledged in cross-examination that his recollection of the Ingleburn meeting was, by nine years after the event, pretty poor. He gave evidence that there was a lot of animosity during the Ingleburn meeting but it did conclude with the parties shaking hands. There was “a lot going on” at the meeting but “[i]t was pretty much around about the same thing” and “basically, it was all on three points of contention”. Robert Fielding said that:

Robert Fielding was cross-examined about the preparation of the minutes of the Ingleburn meeting. He gave evidence that he had prepared the minutes on the evening of 28 August 2012 or early the next morning and had telephoned Brian Hobson and told him that the minutes needed to be signed. He then saw Brian Hobson – he could not recall where – who signed the minutes. Robert Fielding considered that only one signature was required because “[i]t’s customary on minutes to only have one signature”. He sent a copy of the signed minutes to the Vellas and Brian Hobson said that he would provide a copy to Brett Soper. Later that afternoon, Brian Hobson asked Robert Fielding to set up a company for him.

Robert Fielding made handwritten notes of the meeting of about three or four pages but these were amongst documents that he gave to the defendants’ solicitors that he never received back. The notes were available to him at the time he prepared his first affidavit, yet the notes were not annexed to the affidavit and Robert Fielding was unable to explain any reason for this.

Robert Fielding was cross-examined about the fact that his account of the Ingleburn meeting in his 16 June 2016 affidavit does not refer to any to any resolution being moved or agreed. He gave the following evidence:

As referred to below, Robert Fielding was involved in the establishment of BDA and he is the accountant for BDA. He is not the accountant for Brian Hobson, Hynadam Nominees, Brett Soper or Mechita Nominees. He was asked in cross-examination whether he had seen the affidavits of Brian Hobson and Brett Soper before preparing his own affidavit giving an account of the Ingleburn meeting. He said that he had not seen those affidavits, or the affidavit of any other witness.

It was plain from the cross-examination of Peter Versluis that he has no recollection of what was discussed or resolved at the Ingleburn meeting independently of the minutes of that meeting. He gave evidence that, at the time he prepared his affidavit, he was unable to recall what the topics of the wide-ranging discussion at the meeting were. He did not recall that consensus was achieved in relation to the topics that the minutes refer to as the subject of consensus. Nor did he have a recollection that there was no agreement in relation to the topics in respect of which the minutes state that consensus was not reached. When questioned about the state of his recollection, Peter Versluis simply reverted to a position that the resolution had been reached at the meeting in the terms recorded in the minutes.

As referred to at [219] above, Brian Hobson sought Robert Fielding’s advice about establishing a new company on the afternoon of 29 August 2012 after he had signed the minutes of the Ingleburn meeting. In cross-examination, Robert Fielding gave evidence that Brian Hobson telephoned him that afternoon and asked if he could help him to set up a new company. Robert Fielding asked who the shareholders and directors would be and Brian Hobson said he would need to get back to him about that. In that context, Brian Hobson told Robert Fielding that he and Brett Soper were unable to do all the Schweppes work themselves and needed to enlist help. The following day, Brian Hobson told Robert Fielding that the directors would be Brett Hobson, Brett Soper and Erron Jameson. Robert Fielding asked about the shareholders and advised Brian Hobson that “you should probably put them in a trust”. He gave that advice for reasons that he described as “Tax and structuring, and being able to distribute income, and asset protection”. He denied having any concern that they were exposing themselves to liability by setting up the new company.

In cross-examination, Brian Hobson gave evidence that he and Brett Soper needed to find a third shareholder in order to “pick up the slack” that was created from JEV not being there. They approached Erron Jameson of George McDonald & Sons, which was already a subcontractor to BFS with Schweppes-compliant trucks. Brian Hobson first contacted Erron Jameson on his way home from the Ingleburn meeting and asked him “could he help supply trucks because Michael had left – was leaving the business”. He had a further, separate discussion with Erron Jameson about becoming a shareholder in the new company the next day.

Brian Hobson was unsure whether he had provided the instructions to Robert Fielding in relation to the creation of the new company, or whether this was done by Brett Hobson or Brett Soper. Nothing turns on this. Brian Hobson knew that the instructions had been given to Robert Fielding.

The new company established by Robert Fielding is BDA. It was registered on 30 August 2012 with Brett Hobson, Brett Soper and Erron Jameson as its directors and Hynadam Nominees, Mechita Nominees and Coastal Beverage Logistics Pty Ltd as equal shareholders. As referred to at [222] above, Robert Fielding is the accountant for BDA. In cross-examination, he described BDA as “just a clearing house, to collect the fees to pay to the other companies that own the trust and the property and do the running about”.

On 30 August 2012, Michael Vella sent an email to Brett Hobson and Brett Soper stating:

On 31 August 2012, Brian Hobson (using Brett Soper’s email address) sent an email to Mr Aikin, copied to other Schweppes personnel, which stated:

As the plaintiffs submitted, the use of the words “restructure” and “merger” were not accurate. However, it is clear from the terms of the email, read as a whole, that a new company was being established with different ownership than BFS and that the new company was seeking to do the Schweppes delivery work that was then being performed by BFS. It is also clear from Robert Aikin’s email sent to other Schweppes personnel on 5 September 2012 referred to at [234] below that he understood this.

The plaintiffs submitted that the reference to both BFS and BLS in Brian Hobson’s 31 August 2012 email indicates that he had previously mentioned BLS to Robert Aikin and was “nowhere near candid with the Court about this”. I accept that the references to BLS in both the COR Notice issued by Schweppes on 2 August 2012 [11] and in Brian Hobson’s 31 August 2012 email [12] indicates that it is likely that the existence of BLS had been disclosed to Schweppes prior to August 2012. However, BLS was equally owned by Brian Hobson, Brett Soper and Michael Vella. [13] A finding that Schweppes had been informed about the existence of that company at some time between its incorporation in February 2011 and August 2012 has no rational bearing on any issue in dispute in these proceedings. The plaintiffs’ submissions to the contrary are illogical and unfounded for the reasons already explained at [124], [127] and [136]-[144] above. I do not attribute Brian Hobson’s inability to recall or explain why he had referred to BLS in his 31 August 2012 email [14] to lack of candour, rather than imperfect recollection of events that occurred a decade prior to the trial and would not have appeared to be significant at the time.

In cross-examination, Brian Hobson said he had not copied Michael Vella into his 31 August 2012 email to Robert Aikin because “Michael moved on. He said he wanted to move on, didn’t want nothing to do with us anymore”.

Michael Vella sent a further email to Brett Hobson and Brett Soper on 4 September 2012 stating:

On 5 September 2012, Robert Aikin sent an email to Schweppes personnel, copied to Brett Hobson and Brian Soper, advising that “Beverage Freight Services will have a change of name including an ownership change” from 10 September 2012 and that the “new operating name” would be Beverage Distribution Australia Pty Ltd. The email set out the ABN and ACN for the new company and requested the necessary system changes to allow for processing of invoices issued by BDA from 10 September 2012. The plaintiffs’ submissions sought to make much of the fact that the email referred to a change of operating name. However, the terms of the email, read as a whole, make it clear that BDA is in fact a new company with its own unique ACN and different ownership compared to BFS.

In his affidavit sworn on 4 December 2015, Michael Vella deposed that BFS’s contract with Schweppes had expired in mid-2012 and that Brian Hobson had told him at about that time that the new contract could not yet be signed because Schweppes wanted to make some amendments. Michael Vella deposed that Brian Hobson telephoned him “one day” in September 2012 and told him that BFS had been unsuccessful in renewing the contract and “[w]e’ve got till the end of the week and we’re out of a job. Schweppes doesn’t want BFS to do it anymore and they are going to use MacDonald & Sons.” According to Michael Vella, Brian Hobson told him that he had a letter from Schweppes stating that BFS had been unsuccessful in its tender. Michael Vella deposed that he asked Brian Hobson for a copy of that letter twice but he did not receive a copy.

It is apparent from the timing of the subsequent events to which Michael Vella deposed in his 4 December 2015 affidavit and from his evidence in cross-examination that he places the conversation that he describes with Brian Hobson “one day” in September 2012 as having occurred at some time after his 4 September 2012 email referred to at [230] above and prior to Monday, 10 September 2012.

There is no evidence that, during the period between the conclusion of the Ingleburn meeting and the conversation that he says he had with Brian Hobson between 4 and 10 September 2012, Michael Vella followed up Brian Hobson or Brett Soper to ask about the steps being taken or required to be taken in order to establish the new company that he says they had agreed to establish at the Ingleburn meeting. There is no record of any correspondence and no evidence of any conversation about the establishment of a new company during that period. When asked about this in cross-examination, Michael Vella’s only explanation was: “At that point in time, we – business as usual, there was no reference to – there was no need for the new company, no".

According to Michael Vella’s 4 December 2015 affidavit, when he arrived at work “[t]he following Monday morning” after his conversation with Brian Hobson referred to at [235] above, all of JEV’s trucks that had delivered freight for Schweppes were in JEV’s yard at Minto. Michael Vella deposed that he rang Brian Hobson and had a conversation with him to the following effect:

Michael Vella deposed that he telephoned Robert Aikin at Schweppes on or about 10 September 2012, which must be the same day as the Monday referred to immediately above, for the reasons explained at [236] above. According to Michael Vella, they had a conversation to the following effect:

Michael Vella deposed that he later telephoned Brian Hobson and they had a conversation to the following effect:

In his affidavit sworn on 20 June 2016, Brian Hobson denied having had conversations with Michael Vella the effect referred to at [235], [238] and [240] above.

In his affidavit sworn on 21 August 2017, Brian Hobson deposed that his allocation books showed that two or three of the JEV trucks that he was confident were speed limited stayed on the road for BFS until 7 September 2012 and that JEV trucks did not work for BFS from Monday, 10 September 2012. He could not recall exactly how this had occurred but it was his understanding following the Ingleburn meeting that JEV would stop working through BFS and would approach Schweppes directly to get work. According to Brian Hobson, BFS kept using JEV trucks for a short period because they could not get other trucks in as subcontractors. Brian Hobson deposed that he did not feel the need to respond to Michael Vella’s emails referred to at [228] and [233] above because of the agreement that he says had been reached at the Ingleburn meeting. He thought that, if he responded to the emails, he would just get into another argument with Michael Vella and he did not see the point in doing so because they had all agreed that they did not want to be in business anymore. Brian Hobson gave evidence to the same effect in cross-examination and added that he was personally beginning to pull back from the business at this time and his son was moving into his place. Given the agreement that had been reached at the end of the Ingleburn meeting, Brian Hobson did think it was odd that Michael Vella’s emails referred to them as all being equal shareholders but he did not engage with Michael Vella about this because “[h]e already knew he walked away from the business”.

Robert Aikin gave a very different version of his conversation with Michael Vella in September 2012 than Michael Vella’s version set out at [239] above. In his affidavit sworn on 20 June 2016, Robert Aikin deposed that he received a telephone call from Michael Vella when he was at home after business hours in or about September 2012. He deposed that the conversation was to the following effect:

Robert Aikin does not recall Michael Vella’s response to those requirements that he says he specified but deposed that the conversation ended shortly afterwards and he did not receive any certification or further documentation or correspondence from Michael Vella thereafter.

In cross-examination, Robert Aikin said that he had given the detailed account of the conversation with Michael Vella set out at [243] above based solely on his memory when he swore his 20 June 2016 affidavit, almost four years after the conversation had occurred. He said that he had a clear recollection that Michael Vella said that he did not see a need to get the trucks certified and denied that Michael Vella said that his trucks had in fact been certified. He said that he believed Michael Vella may have asked for a copy of the letter of termination and he had told Michael Vella that there was no such letter.

In his affidavit sworn on 23 February 2017, Michael Vella disputed Robert Aikin’s account of their conversation and maintained that it was in the terms set out in his 4 December 2015 affidavit referred to at [239] above.

By the time he swore his first affidavit on 20 June 2016, Robert Aikin was no longer working for Schweppes. He had resigned from Schweppes in March 2016 and retired one year later.

As referred to earlier in these reasons, Bill Kinnane was the General Manager of JEV’s NSW Freightlines business from 2003 until about 2013. In his affidavit sworn on 17 June 2016, Bill Kinane deposed that he had a conversation with Michael Vella in his office in about September 2012, in the presence of Elizabeth and Joseph Vella. Michael Vella told him that JEV was no longer doing Schweppes work. When Bill Kinnane asked what he meant, Michael Vella said:

Michael Vella gave evidence denying that the conversation deposed to by Bill Kinnane took place.

Each of Joseph and Elizabeth Vella gave evidence that they did not recall the conversation described by Bill Kinnane referred to above. In his affidavit sworn on 30 January 2017, Joseph Vella deposed that he knew of no reason why Michael Vella would have said the words attributed to him by Bill Kinnane because he had discussed with Michael and Elizabeth Vella in August 2012 that they did not want JEV to lose the Schweppes work and that their financial commitments (including paying off the Minto warehouse and equipment) were too high for JEV to survive without the Schweppes work.

In her affidavit sworn on 30 January 2017, Elizabeth Vella deposed that she and Joseph Vella had a meeting with Michael Vella in about the first week of September 2012 (being the week of her birthday which falls on 6 September) in which Michael Vella told them that BFS was being replaced by George MacDonald, JEV was no longer needed and Brian Hobson and Brett Soper were staying on for a short time to “show them the everyday running of the business”. Elizabeth Vella deposed that she was “mortified” by this news and that Joseph Vella expressed concern about how JEV would meet its financial commitments. Elizabeth Vella was of the view that she wanted to JEV to continue doing Schweppes work through BFS because it was worth about $1.2 million in income each year. She had previously had several conversations with Joseph and Michael Vella, including in August 2012, during which they had discussed that they could not afford to lose the Schweppes work. Michael Vella told her at the meeting in the first week of September 2012 that he had tried ringing Schweppes to speak with Robert Aikin but had not been able to get through.

In cross-examination, Joseph and Elizabeth Vella each positively denied that the conversation described by Bill Kinnane occurred. This departed from their affidavits, in which they had each deposed that they did not recall any such conversation. Elizabeth Vella denied that the conversation had occurred on the basis that she would not have had a conversation with Michael and Joseph Vella “in front of the employee” (referring to Bill Kinnane) about the reason why JEV was no longer doing Schweppes work.

The plaintiffs did not adduce any contemporaneous documentary or other objective evidence of JEV’s financial position as at August 2012. As mentioned earlier in these reasons, Michael Vella gave evidence that the NSW Freightlines business was more profitable for JEV than its Schweppes delivery work by August 2012. [15]

Bill Kinnane also deposed to having overhead a conversation between Joseph, Elizabeth and Michael Vella in or about September 2012 in which Joseph Vella told Michael Vella that he “should have made those trucks speed compliant and done what Brian told you” and said “Brian told you to get them fixed you should have done what he said”. According to Bill Kinnane, Michael Vella replied: “This is Brian’s fault not mine.”

Each of Joseph, Elizabeth and Michael Vella denied that any such conversation took place. In his 30 January 2017 affidavit, Joseph Vella deposed that he could not recall ever being angry at Michael “for any apparent delays in obtaining speed limiter compliance certificates”. In her 30 January 2017 affidavit, Elizabeth Vella deposed that she has never heard Joseph Vella speak to Michael Vella in the manner described by Bill Kinnane.

Michael Vella was not shy of demanding information from, and expressing his views to, Brian Hobson and Brett Soper by email, as the correspondence referred to at [117], [228] and [233] above demonstrates. There is no evidence of any email or other contemporaneous document generated by Michael Vella that refers to Brian Hobson having told him that Schweppes had terminated BFS’s contract or seeking a copy of Schweppes’ letter of termination that he says Brian Hobson referred to. Michael Vella was given the opportunity in cross-examination to identify any such contemporaneous document and he was unable to do so.

Robert Aikin gave evidence that, after the 5 September 2012 email referred to at [234] above, BDA provided freight services to Schweppes and was paid by Schweppes for those services. He deposed that he neglected until early 2015 to attend to novating the relevant contracts between Schweppes and BFS to BDA, including a master agreement and several addendums.

The defendants contend that, at the Ingleburn meeting: [16]

The defendants contend that if any partnership existed between JEV, Hynadam and Mechita and/or between Joseph Vella, Brian Hobson and Brett Soper (which is denied), it was dissolved at the Ingleburn meeting. [17]

In reply, the plaintiffs contend that it was resolved at the Ingleburn meeting to wind down BFS at the same time as establishing a new company to carry on the business of the existing partnership. [18]

During the hearing, I raised a question with senior counsel for both parties about who bears the onus of proof in relation to the disputed issues concerning the Ingleburn meeting.

The defendants submitted that there is no dispute that Michael Vella stated at the Ingleburn meeting that he wanted to wind down and cease the business of BFS. The disputed factual issue is “whether there was also a final agreement to migrate the business to a new corporate entity”. It was submitted that the plaintiffs bear the onus of establishing this additional agreement because there is no evidence except their own assertions to support it.

In my opinion, the defendants’ submission artificially separates the plaintiffs’ contention concerning the outcome of the Ingleburn meeting into two separate agreements. In truth, the plaintiffs contend that there was one agreement with two elements, as referred to at [260] above and [272] below.

As the plaintiffs submitted, the defendants contend that the Ingleburn meeting concluded with an agreement limited to the first element, including that the parties to the 2001 agreement would no longer be bound by it and that each of JEV, Hynadam and Mechita was free to seek work from Schweppes. The defendants plead that this agreement had the legal consequences of dissolving the alleged partnership or fiduciary relationship (the existence of which they deny). I accept the plaintiffs’ analysis of the pleaded defence and their submission that it is for the defendants to establish the elements of that defence. I also accept the plaintiffs’ submission that the defendants therefore bear the onus of establishing on the balance of probabilities that the Ingleburn meeting concluded with an agreement to the effect contended for by the defendants.

The defendants have discharged that onus.

For the reasons that follow, I find that Brian Hobson, Brett Soper and Michael Vella, representing Hynadam, Mechita and JEV (respectively), agreed at the Ingleburn meeting to no longer be bound by the 2001 agreement and agreed that they would each be free to seek work directly from Schweppes. Further, they agreed that BFS would be wound up. They did not agree that BFS’s business would be transferred to another company of which they would be directors and equal shareholders. They did not expressly agree on a time frame for the winding up of BFS, but I infer from the nature of its operations that their agreement was formed on the basis of a mutual expectation that some time would be required for BFS to collect payment from Schweppes for invoices that had already been issued but not yet paid and/or for work done but not yet invoiced, and for BFS to make corresponding payments to Hynadam, Mechita and JEV against their invoices issued to BFS. Indeed, that is consistent with the minutes of the Ingleburn meeting which refer to BFS ceasing to trade after creditors had been paid. Contrary to the plaintiffs’ submissions, I do not consider that the use of the term “wound down” rather than “wound up” in the minutes has any significance that detracts from the defendants’ contentions or supports the plaintiffs’ contentions about what was agreed at the Ingleburn meeting.

For the reasons at [76]-[91] and [158] above, I find that Evermay’s shareholding in BFS was not causing any operational or other difficulty for BFS and its active shareholders as at August 2012 and was not the subject of any discussions between the active shareholders or with Robert Fielding leading up to the Ingleburn meeting.

For the same reasons and on the basis of the evidence referred to at [136]-[144] above, I find that the active shareholders and the directors of BFS had not reached any agreement prior to the Ingleburn meeting to transfer the business of BFS to another company. Rather, they had agreed that if they could resolve their existing disputes, they could establish a shareholders’ agreement and constitution for another company that would avoid or at least regulate any future disputes about those matters and transfer the business of BFS to that other company. The other company under contemplation was an existing company in which Brian Hobson, Brett Soper and Michael Vella were equal shareholders. That existing company was BLS, although Robert Fielding’s discussion paper mistakenly referred to BLPL which had already been deregistered.

For the reasons at [159] above, I find that there was a high degree of acrimony at the Ingleburn meeting between Brian Hobson and Brett Soper on the one hand and Michael Vella and Joseph Vella on the other hand. Michael Vella was so upset about the Arndell Park lease that he told Brian Hobson and Brett Soper that “our friendship’s ending right now”. [19] He believed that they had been greedy and dishonest in causing BFS to enter into and pay for the lease for a warehouse that he believed was for the benefit of Hynadam and Mechita and not for the benefit of BFS. [20] On his own evidence, [21] he did not accept the explanations offered by Brian Hobson at the Ingleburn meeting in relation to the Arndell Park lease. Michael Vella was so angry about the way in which Brian Hobson and Brett Soper had handled the speed limiter issue with Schweppes during August 2012 that he had fired off the abusive email to Brett Soper referred to at [117]-[118] above. Michael Vella and Joseph Vella believed that Brian Hobson and Brett Soper had been greedy and dishonest when it came to allocating Schweppes work between JEV, Hynadam and Mechita. They believed that this greed and dishonesty had cost JEV something in the order of $100,000 in the past twelve months alone and they were looking for what they regarded as a “fair share” for JEV going forward and some form of compensation. [22]

Brian Hobson and Brett Soper had very different perspectives about each of these issues: see [149] above. However, contrary to the plaintiffs’ submissions, Brian Hobson and Brett Soper did not go into the Ingleburn meeting with a plan to exclude the Vella family from the Schweppes delivery work. I make that finding for the reasons at [123]-[129], [136] and [140]-[144] above.

The plaintiffs’ closing submissions sought to make much of the fact that Brian Hobson had “forced out” Glenn Alderton and Alderton Transport from BFS in about October 2003. It was submitted that Brian Hobson “was no stranger to orchestrating the exclusion of shareholders of BFS from the Schweppes work”. I assume that the plaintiffs were intending to convey by that submission that Brian Hobson’s conduct in relation to Alderton Transport in October 2003 rendered the plaintiffs’ contentions about what they say occurred at and immediately following the Ingleburn meeting more plausible and that the Court should therefore accept their contentions. I reject that submission. Brian Hobson’s unchallenged evidence was that Glenn Alderton resigned as a director of BFS and Alderton Transport and Sterling both gave up their shares in BFS after Schweppes raised safety concerns as a result of Glenn Alderton falling asleep at the wheel of his truck and crashing on the M4 whilst carrying a full load of soft drinks. Those events have no rational bearing whatsoever on what occurred at the Ingleburn meeting on 28 August 2012.

None of the witnesses suggest that any of the acrimonious disputes referred to at [269] above were resolved during the two hour course of the Ingleburn meeting. The only material issue about which their evidence diverges is whether they agreed at the end of the meeting to wind up BFS and transfer its business to a new company owned by the three active BFS shareholders (according to Michael Vella) or whether they agreed to wind up BFS and go their separate ways with each of them free to seek work from Schweppes (according to Brian Hobson, Brett Soper and Robert Fielding). On that issue, I accept the evidence of Brian Hobson, Brett Soper and Robert Fielding and reject the evidence of Michael Vella and Joseph Vella for the following reasons.

In their first affidavits sworn in June 2016, almost four years after the Ingleburn meeting, Brian Hobson and Brett Soper each gave an account of what was said at that meeting in quite different terms, but the differences were not matters of substance. The effect of the different words that they each recalled was the same. Michael Vella proposed that BFS be wound up and that each of its active shareholders go and work with Schweppes independently of BFS. [23] Their accounts, given independently of one another and in different terms, corroborate one another. Robert Fielding’s account of the meeting in his affidavit sworn on 16 June 2016 is in different terms again and corroborates the substance of the separate accounts given by Brian Hobson and Brett Soper. [24] For the reasons explained below, I regard Robert Fielding as a witness who is independent from Brian Hobson and Brett Soper.

Each of Brian Hobson, Brett Soper and Robert Fielding candidly acknowledged in cross-examination, approximately nine years after the Ingleburn meeting, that their recollection of the meeting was by then quite poor. [25] However, Brian Hobson and Brett Soper each maintained that they had a good recollection of what was said and agreed at the end of the meeting because it had come as a surprise to them. [26] That is inherently plausible in circumstances where Brian Hobson had suggested and arranged the meeting as a facilitated discussion to resolve their disputes and there is no evidence to suggest that he or Brett Soper intended or believed that the meeting would end their business relationship with JEV and the Vella family. As I have already found at [270] above, they did not have any plan to exclude JEV and the Vella family from BFS.

The evidence of Brian Hobson, Brett Soper and Robert Fielding that Stephen Phillips was not discussed or raised at the Ingleburn meeting [27] is inherently plausible for all of the reasons at [74]-[91] above.

I place no weight on the evidence of Peter Versluis for the reasons explained at [223] above.

I reject Michael Vella’s evidence about the agreement that was reached at the conclusion of the Ingleburn meeting for the following reasons.

First, according to Michael Vella, he, Brian Hobson and Brett Soper agreed with a suggestion by the Risk Connect representative (whose name he could not recall) that the business of BFS be moved to “a new company” and that the three of them were “to be the directors and shareholders of the new company”. [28] It is inherently unlikely that Robert Fielding or Peter Versluis made a suggestion in those terms at the Ingleburn meeting given that the discussion paper had already identified an existing company in which the three of them were the directors and shareholders and through which the business of BFS could be conducted if they could resolve their existing disputes and settle on a constitution and shareholders’ agreement to avoid or regulate such disputes in the future. [29]

Second, there is a troubling inconsistency within Michael Vella’s evidence about the Ingleburn meeting. In his first affidavit sworn on 4 December 2015, as mentioned immediately above, he deposed that he, Brian Hobson and Brett Soper had stated that they agreed with a proposal made by the Risk Connect representative (whose name he could not recall) that: “You should move the business to a new company and finish Beverage Freight Services off and that’s the only way to actually remove Steve Phillips as an owner. The three of you to be the directors and shareholders of the new company.” [30] Michael Vella gave evidence to similar effect in his second and third affidavits sworn on 23 February 2017 and 3 February 2021. [31] However, he also gave evidence in his second affidavit that he understood at the end of the meeting that “Brian Hobson and Brett Soper were going to revert back to us with their proposal as to what they wanted to do with BFS. If they wanted to leave BFS, then I understood that J&E may have to buy out their shares”. [32] The notion that BFS was to be “finished off” or wound up and its business transferred to a new company is inconsistent with the notion that Hynadam and Mechita might sell their shares in BFS or that JEV would contemplate purchasing shares in a company that was to be “finished off”. This inconsistency casts doubt on the reliability and credibility of Michael Vella’s evidence about the Ingleburn meeting. However, my principal reason for rejecting his evidence is the implausibility of the evidence in light of the objective facts referred to at [78]-[91] and [278] above and [280]-[282] below.

Third, Michael Vella’s evidence about what was agreed at the Ingleburn meeting was inextricably tied to the notion that it was necessary to remove Evermay as a shareholder of BFS and his evidence that this had been the subject of discussion in August 2012 prior to the Ingleburn meeting. I have rejected that evidence for the reasons explained at [78]-[91] above. I also reject Michael Vella’s evidence that Stephen Phillips and Evermay were discussed at the Ingleburn meeting. That is inherently implausible in circumstances where the BFS directors had ongoing and acrimonious disputes that they were trying resolve, Stephen Phillips and Evermay were not the subject of any such dispute, Stephen Phillips was no longer a director of BFS and Evermay’s shareholding was not causing any difficulty for the three active shareholders of BFS.

Fourth, it is highly implausible that, having failed to resolve any of the disputes referred to at [269] above, the BFS directors agreed at the Ingleburn meeting to go to the trouble of transferring the business of BFS to another company in order to effectively remove Evermay as a shareholder in the business in circumstances where Evermay’s shareholding had no bearing on how the business operated and had no bearing on how the revenue of the business was being passed on to the active shareholders for the Schweppes deliveries that each of them performed. No dividends were being paid to any shareholders. Each shareholder was being paid only for the Schweppes deliveries it actually performed. This was the very reason why the dispute about the allocation of the delivery work between shareholders was significant and had become acrimonious.

The implausibility referred to immediately above is in fact demonstrated by Michael Vella’s own evidence. As referred to at [237] above, when asked in cross-examination about the lack of evidence that he had any communication with Brian Hobson and Brett Soper after the meeting about what was being done or what needed to be done in relation to the “new company” that he says they had agreed to establish, Michael Vella answered: “At that point in time, we – business as usual, there was no reference to – there was no need for the new company, no".

Michael Vella’s evidence is so implausible that I conclude that he made up the notion that Stephen Phillips and Evermay were a problem that needed to be resolved for BFS in August 2012 in order to explain the resolution to wind down BFS at the Ingleburn meeting in a way that supports the plaintiffs’ claims in these proceedings. [33]

I reject Joseph Vella’s evidence about the Ingleburn meeting for the following reasons.

First, his evidence that the removal of Stephen Phillips as a director of BFS was one of the main agenda items for the meeting [34] is implausible having regard to the objective fact that Stephen Phillips had ceased to be a director of BFS in September 2010. His evidence that Robert Fielding stated at an early stage during the meeting that, “[i]f you want to remove Steve Phillips as a shareholder, the best way to do it is to set up a new company with Michael, Brett and Brian to be the directors and shareholders” [35] is implausible for the same reasons explained at [277] to [280] above. I note that, although he gives evidence about the terms of this alleged statement in very similar terms to Michael Vella, Joseph Vella’s evidence that this statement was made early in the meeting is directly contrary to Michael Vella’s evidence which places the alleged statement at the end of the meeting after the discussion about all of the disputed issues. [36]

Second, Joseph Vella’s evidence in his 30 January 2017 affidavit, his 3 February 2021 affidavit and in his oral evidence in chief at the hearing varied between saying that he did not believe any agreement had been reached and deposing that he could not recall any agreement having been reached at the conclusion of the Ingleburn meeting. [37] In cross-examination, Joseph Vella gave evidence that everybody agreed at the Ingleburn meeting to close down BFS and “open” another company and that there was a resolution to cause Mr Phillips to be removed from BFS by winding up BFS and entering into a new company without Mr Phillips. In addition to being highly implausible for the reasons already canvassed, this evidence is directly inconsistent with Joseph Vella’s affidavit evidence and with his oral evidence in chief, given only a very short time earlier, that he could not remember whether anything was ultimately agreed at the Ingleburn meeting. [38] Joseph Vella acknowledged later in his short cross-examination that he did not in fact remember anybody saying at the Ingleburn meeting that they should wind up BFS and enter into a new company. [39] It became plain at that point that Joseph Vella had been falsely claiming in cross-examination to have a recollection of the meeting that he thought would assist the plaintiffs’ claims.

Understood in the context of the genesis of and intention behind the “BLPL” proposal developed prior to the meeting and the conditional consensus in relation to that proposal, [40] the minutes of the Ingleburn meeting are consistent with the evidence of Brian Hobson, Brett Soper and Robert Fielding about what was said and agreed at the Ingleburn meeting. Contrary to the plaintiffs’ submissions, Robert Fielding did explain the inclusion of the paragraph in the “General Discussion” section of the minutes recording that consensus had been achieved in respect of the use of BLPL, shareholder and management agreements and the other matters stated in that paragraph. Robert Fielding’s evidence is set out at [221] above. He said that he “just tried to summarise. These are the bits that we agreed on, these are the bits that we didn’t agree on, and our decision was we were going to go our own way”. That approach to drafting the minutes – recording consensus about matters concerning a future structure for BFS’s business which became otiose due to the failure to achieve consensus about any of the disputed substantive matters concerning the operation of the business [41] – might be considered to be unusual. That is consistent with the unusual nature of the proposal that Michael Vella and Brian Hobson both say emanated from Robert Fielding to transfer BFS’s business to another company in circumstances where this would achieve nothing that could not be achieved by drafting a new shareholders’ agreement for BFS. The only decision or resolution recorded in the minutes, following the general discussion of all of the non-contentious and contentious issues, is that the operation of BFS be “wound down”, its creditors be paid and that it cease trading thereafter. The minutes do not record any resolution or decision to transfer the business of BFS to “BLPL” or any other entity. If the decision to wind down BFS had been coupled with a decision to transfer its business to another company as the plaintiffs contend, it is inherently likely that the minutes would have recorded that second and integral aspect of the decision.

As the plaintiffs submitted, the minutes do not record any consensus or agreement that each of JEV, Hynadam and Mechita would pursue work from Schweppes independently of BFS. However, I do not consider that this casts doubt on the evidence of Brian Hobson, Brett Soper and Robert Fielding that this was discussed and agreed. Given the nature of BFS’s business and the business of each of its active shareholders, it was obvious each of its shareholders would attempt to continue its Schweppes delivery work independently of BFS. Their agreement that they would do so was not a decision that they needed to make together and was not something that needed to be formally recorded in addition to their decision to ”wind down” BFS.

My findings at [266]-[272] above are based on my acceptance of the evidence of Brian Hobson, Brett Soper and Robert Fielding, and my rejection of the evidence of Michael Vella and Joseph Vella, for the reasons explained above.

In accepting the evidence of Brian Hobson, Brett Soper and Robert Fielding after weighing it against all of the contrary evidence and the inherent probabilities and improbabilities in light of relevant objective facts, I have considered and rejected the plaintiffs’ lengthy submissions seeking to impugn the credibility of each of those witnesses.

The plaintiffs submitted that each of the defendants’ witnesses was unable to explain why documents included references to BLPL and BLS and that the “communal inability of the defendants’ witnesses to explain their own words in their own documents demonstrated a lack of candour to the Court”. The plaintiffs further submitted that it was open to the Court to find that the witnesses were unable to explain those matters because they “each formed the view, or were told, that any mention of those companies would harm the defendants’ case (because it would lend credence to the Vellas’ position that the principal purpose of the 28 August 2012 meeting was to agree on the transition from BFS to a different corporate vehicle, so as to effect the removal of Stephen Phillips’ company as a shareholder of the company conducting the Schweppes work)”.

I reject that submission. The references to BLPL and BLS are addressed at [74]-[91], [124], [136]-[144], [158], [229], [231], [278] and [288] above. The plaintiffs’ highly implausible “position”, which I have rejected, derives no support from those references to BLPL and BLS for the reasons already explained.

The plaintiffs submitted that Brian Hobson should not be treated as a witness of reliability or credibility due to his alleged lack of candour and dishonesty in relation to the references to BLS and BLPL in contemporaneous documents, the speed with which Coastal Logistics was incorporated and became a shareholder of BDA following the Ingleburn meeting, the speed with which BDA was incorporated following the Ingleburn meeting, his alleged failure to inform Robert Aikin after the Ingleburn meeting that a new shareholder was being introduced, the detailed account of the Ingleburn meeting given in his 2016 and 2017 affidavits and his poorer recollection of events in cross-examination in 2021 (which the plaintiffs submitted indicated collusion with other witnesses). I have addressed the substance of all of those matters elsewhere in these reasons and none of the issues raised in the plaintiffs’ submissions warrants a finding that Brian Hobson was not a witness of reliability or credibility.

The plaintiffs also submitted that Brian Hobson gave his evidence in a manner that was “cagey” in the sense that “any assent to a question was given hesitantly and with a rising inflection which suggested that he was seeking to anticipate where the question was leading”. That submission does not accord with my observation of Brian Hobson during his cross-examination. He answered questions in a slow and careful manner that indicated to me that he was doing his best to accurately recall the matters he was being asked about, nine years after the relevant events. As I have already mentioned, he accepted candidly and without hesitation that he no longer had a good recollection of those events. It is unremarkable that his recollection in 2021 was poorer than in 2016 and 2017 when he swore his affidavits. To the extent that there was a rising inflection in his answers, this did not indicate to me that he was seeking to anticipate where the question was leading but rather that he was puzzled by the question because it appeared to be peripheral to the issues in dispute. That was a reasonable reaction in my view, particularly in relation to questions concerning BLS and BLPL. Brian Hobson nevertheless answered the questions asked of him, without becoming argumentative or endeavouring to evade the questions by simply proffering information of his choosing.

The plaintiffs submitted that Brett Soper’s evidence was not credible or reliable. That submission invoked essentially the same themes as raised in the plaintiffs’ submissions concerning Brian Hobson referred to at [293] above. I have addressed those themes elsewhere in these reasons. They do not warrant a finding that Brett Soper was not a witness of reliability or credibility. I reject the plaintiffs’ submissions.

The plaintiffs submitted that Robert Fielding was an unsatisfactory witness whose evidence should not be accepted unless it is consistent with the plaintiffs’ evidence, corroborated by contemporaneous documents or against the defendants’ interests. In developing that submission, the plaintiffs submitted that:

I will address each of these eleven submissions in turn.

In relation to the first submission, I accept that it did became clear during Robert Fielding’s cross-examination that some of the evidence he was giving was evidence of a recollection based principally on his usual business practice. That is the case in relation to the example cited by the plaintiffs of Robert Fielding’s evidence concerning the posting of the Ingleburn meeting minutes to JEV after the meeting. As the defendants submitted, to the extent that Robert Fielding’s evidence in cross-examination involved reconstruction, this was clear from his own answers. He did not seek to obscure that. That reflects well, rather than poorly, on his credit.

I reject the plaintiffs’ second submission. On the occasions when Robert fielding gave a “no comment” answer, it is clear from the context of the answer that he was simply conveying that he was unable to offer any explanation for or recall anything about the subject he was being asked about.

I reject the plaintiffs’ third submission. For the reasons explained at [146]-[148] above, Robert Fielding’s explanation that it did not occur to him to instruct the defendants’ solicitors to annexe all of his notes to his first affidavit is plausible. As the defendants submitted, Robert Fielding was not challenged in cross-examination on his evidence that the defendants’ solicitors had misplaced his file containing his notes. [42] I accept, as the plaintiffs submitted in response, that the cross-examiner is unlikely to have had any instructions or other basis for challenging that aspect of Robert Fielding’s evidence during cross-examination. The point is that nothing emerges from the plaintiffs’ submissions that would provide a sound basis for rejecting Robert Fielding’s evidence.

I reject the plaintiffs’ fourth submission. It is plain from Robert Fielding’s evidence in cross-examination that he was not suggesting that the discussion paper did not accurately record what he had been told about BLPL and that the error that he was referring to was the fact that BLPL had already been deregistered, which he had not known and he did not believe Brian Hobson and Brett Soper had known at the time of their meetings in August 2012. [43] Contrary to the plaintiffs’ submission, there was no intention to use another operating company equally owned by Brian Hobson, Brett Soper and Michael Vella unless their disputes concerning work allocation and the Arndell Park lease could be resolved. [44]

I reject the plaintiffs’ fifth submission. As the defendants submitted, the plaintiffs misstate the substance of Robert Fielding’s evidence in cross-examination, which was that there was ultimately no agreement except that the shareholders would each go their own way because, whilst there were some “bits” that they could agree on (including using BLPL), there were other “bits” that they did not agree on. [45]

The plaintiffs’ sixth submission is without substance. There is a vast difference between a suggestion or recommendation that an issue be discussed and a recommendation about what should be done.

I reject the plaintiffs’ seventh and eighth submissions. As the defendants submitted, these go to matters of competence, not credibility. The competence issues have been addressed at [143] and [287] above.

I reject the plaintiffs’ ninth and tenth submissions. The evidence is that it was Brian Hobson who approached Robert Fielding to assist him to establish BDA after the Ingleburn meeting. The plaintiffs’ submission that it was Robert Fielding’s “obvious concern” to do further work for Brian Hobson and Brett Soper immediately after the Ingleburn meeting is unfounded. The tenth submission goes to matters of competence rather than credibility. Reasonable minds might differ about whether an accountant, having facilitated discussions between three shareholders that have concluded in agreement to wind down their company and go their own separate ways, should, immediately after that agreement, accept instructions from two of those shareholders to establish a new company as the vehicle through which they would go their separate ways. Given the agreement that I have found was reached, I do not consider that Robert Fielding was obliged to decline the instructions to incorporate BDA or to incorporate Hynadam Nominees and Mechita Nominees for the purpose of holding shares in BDA. Even if I had taken the opposite view, I would have regarded this as an error of judgment rather than something that cast doubt on the credibility of Robert Fielding’s evidence in these proceedings. I accept the defendants’ submission that Robert Fielding’s role as the accountant for BDA [46] is hardly sufficient motive for him to confect his evidence.

I reject the plaintiffs’ eleventh submission. Given his understanding of the agreement that had been reached at the conclusion of the Ingleburn meeting (which accords with my findings), Robert Fielding had no cause for concern about the incorporation of BDA two days following the meeting. Robert Fielding’s evidence was that he advised that the shares in BDA be held through trustee companies for a range of reasons that are common considerations for accountants advising their clients about the structure of their financial and business affairs. One reason was the ability to distribute income between the trust beneficiaries. Another reason was asset protection. The evidence does not support the plaintiffs’ attempt to extrapolate from this generalised reference to asset protection a concern about potential liability to the plaintiffs arising out of the incorporation of BDA.

The plaintiffs also submitted that the Court should not accept that Robert Fielding was an independent witness for the eleven reasons above (which I have rejected) and for two further reasons.

First, the plaintiffs submitted that “the Court should not seriously expect a man who has behaved in this way, and who has been BDA’s accountant now for 8 ½ years, to give evidence that would harm the interests of a client (BDA) for whom he owes a fiduciary obligation.” I reject that submission. I have already rejected the notion that any aspect of Robert Fielding’s conduct identified in the plaintiffs’ eleven submissions above casts doubt on his credibility as a witness. As I have said above, I accept the defendants’ submission that Robert Fielding’s role as the accountant for BDA is hardly sufficient motive for him to confect his evidence. I note that he is not the accountant for Brian Hobson, Brett Soper or any other company associated with them. [47] The plaintiffs did not elaborate on how any fiduciary obligation owed by Robert Fielding to BDA in his capacity as its accountant (if any) would interfere with his ability to give truthful evidence to the best of his recollection in these proceedings about the events in which he participated in August 2012.

Second, the plaintiffs submitted that “if Mr Fielding was an independent witness the question begs why he did not seek to assess all the evidence given by all parties to these proceedings as opposed to merely responding to the evidence given by Joe and Michael Vella”. I reject the submission that Robert Fielding demonstrated a lack of independence by not reviewing the affidavits of Brian Hobson and Brett Soper before preparing his own affidavits. If he had done so, I have no doubt that this would have been a further factor relied on by the plaintiffs in support of their collusion allegations that I have rejected. What Robert Fielding did was to give his own account of relevant events, without regard to how that account might accord with or differ from the evidence of Brian Hobson and Brett Soper. As the defendants submitted, it is entirely orthodox that they (as the parties choosing to call Robert Fielding) adduced evidence from him specifically responding to the affidavits of Michael and Joseph Vella.

Finally (in relation to Robert Fielding), the plaintiffs referred to evidence that neither Peter Versluis nor Robert Fielding could agree on which of them had introduced the other to the role of facilitating the Ingleburn meeting and the preliminary discussions. The plaintiffs then submitted that if Robert Fielding had introduced Peter Versluis (as Peter Versluis contends), “that tends to suggest (contrary to the emphatic evidence of Mr Fielding and Mr Hobson) that there may have been an undisclosed pre-existing relationship between Mr Fielding and Mr Hobson”. This submission does not rise above the level of speculation. As the defendants submitted, it has an air of desperation. I reject it.

The plaintiffs’ resorted to submitting that evidence given by Brian Hobson, Brett Soper, Robert Fielding (and also Robert Aikin) that contradicted the plaintiffs’ evidence was “self-serving” and therefore lacking in credibility and even suggestive of “collusion” between witnesses. That submission is itself self-serving, and lacks merit for all of the reasons that I have explained elsewhere for accepting the evidence of Brian Hobson, Brett Soper, Robert Fielding and Robert Aikin and rejecting the evidence of Michael Vella, Joseph Vella and Elizabeth Vella in relation to matters material to the determination of these proceedings.

I address the defendants’ specific submissions concerning the credibility of Robert Aikin’s evidence at [327]-[338] below.

In making the findings at [266]-[272] above, I have also considered and rejected the plaintiffs’ submissions to the effect that it is inherently implausible that JEV would have made the “boldly adventurous manoeuvre” of “throw[ing] away” their steady source of work from BFS in order to do work directly for Schweppes which had just suspended JEV’s trucks.

As the plaintiffs submitted, there is no evidence that that Michael, Elizabeth and Joseph Vella had discussed amongst themselves prior to the Ingleburn meeting that JEV would cease to do Schweppes work. However, as the defendants submitted, there is ample evidence that the Vella family members had discussed amongst themselves that they regarded Brian Hobson and Brett Soper as dishonest and greedy. Michael and Joseph Vella each gave evidence that, despite holding that belief, they wanted to stay in business with them. I do not accept that evidence in view of my assessment of Michael Vella and Joseph Vella’s willingness to tailor their evidence in order to support the plaintiffs’ claims [48] and in the absence of any objective evidence of any financial or other imperative for JEV to continue doing Schweppes delivery work through BFS in circumstances where:

Michael, Joseph and Elizabeth Vella each gave evidence to the effect that they regarded the revenue that JEV derived from the Schweppes work as important to JEV. To the extent that this evidence referred to profitability rather than revenue, it did not rise above bare assertion and does not sit comfortably with Joseph Vella’s evidence that he believed Brian Hobson and Brett Soper had been dishonestly diverting more of the profitable Schweppes deliveries to their own trucks [49] and with Michael Vella’s evidence that NSW Freightlines’ business was more profitable for JEV than its Schweppes delivery work by August 2012. [50]

It is important to note that the agreement that I have found was reached at the conclusion of the Ingleburn meeting was not that JEV would “throw away” its Schweppes delivery work or “walk away” from that work, as the plaintiffs’ submissions suggested from time to time. Rather, the agreement was that BFS would be wound down and each of JEV, Hynadam and Mechita would be free to seek Schweppes delivery work independently of BFS. In other words, as the defendants submitted, JEV decided to try to continue its Schweppes delivery work directly.

The plaintiffs submitted that there is no evidence that any of those companies had the ability to “go it alone” and undertake all of the Schweppes work themselves. That is not in dispute insofar as it concerns Hynadam and Mechita. Brian Hobson gave evidence that this was the very reason why he telephoned Erron Jameson immediately after the Ingleburn meeting to ask if he was interested in supplying trucks and approached him the very next day about becoming a shareholder in a new entity. I reject the plaintiffs’ theory that the speed with which Coastal Logistics was established and became a shareholder in BDA following the Ingleburn meeting supports a finding that Brian Hobson and Brett Soper had put restructure plans in place prior to the Ingleburn meeting to exclude JEV and then moved immediately after the meeting “striking swiftly to deliberately blindside the Vellas”. The establishment of private companies and the issue of shares in private companies are not difficult steps and they can be undertaken quickly. That is particularly so in circumstances where Erron Jameson’s company, George MacDonald & Sons, was already a subcontractor to BFS with Schweppes-compliant trucks, as Brian Hobson said under cross-examination. [51] The speed with which Coastal Logistics was incorporated and became a shareholder in BDA has no rational bearing on the parties’ dispute about what had earlier been agreed at the Ingleburn meeting. Contrary to the plaintiffs’ submissions, there was no occasion for the defendants to explain the speed with which they were able to achieve this in order to avoid a Ferrcom inference and I decline to draw any such inference. [52] For the same reason, I decline to draw a Jones v Dunkel inference in respect of the defendants’ “failure” to adduce evidence from Erron Jameson. [53] In addition to the reasons just given, the matters referred to at [123]-[129] above weigh heavily against a finding that Brian Hobson and Brett Soper had planned a restructure excluding the Vellas prior to the Ingleburn meeting.

I reject the plaintiffs’ similar theories in relation to the speed with which BDA was created for essentially the same reasons. The efficiency with which Brian Hobson and/or Brett Soper caused BDA to be established is not an “elephant in the room” as the plaintiffs submitted but merely a reaction to the resolution that I have found was made at the conclusion of the Ingleburn meeting.

As the plaintiffs submitted, there is no evidence that JEV had the ability to undertake all of the Schweppes freight work. However, Robert Aikin’s evidence of his conversation with Michael Vella on or about 10 September 2012, which I have accepted for the reasons explained at [327]-[338] below, demonstrates that Michael Vella believed JEV had a shot at winning some work directly from Schweppes independently of BFS. Contrary to the plaintiffs’ submissions, it is not inherently implausible that Michael Vella decided to take that shot, even if may have been a long shot, rather than continue sitting within BFS believing that his fellow shareholders were responsible for “stitching up” JEV in relation to the speed limiter issue resulting in Schweppes suspending JEV’s trucks. For as long as JEV’s trucks remained suspended, JEV would not earn any income from Schweppes deliveries through BFS.

I have also considered and rejected the plaintiffs’ submissions to the effect that Michael Vella’s conduct after the Ingleburn meeting referred to at [224]-[257] above was inconsistent with him having relinquished JEV’s participation in BFS.

Contrary to the plaintiffs’ submissions, the fact that JEV continued to send trucks to BFS for Schweppes delivery work is entirely consistent with the agreement reached at the end of the Ingleburn meeting that the business of BFS would be wound down and each BFS shareholder would be free to seek work directly from Schweppes. [54] As the defendants submitted, JEV could hardly risk being seen as letting down BFS (and, indirectly, Schweppes) by failing to provide trucks that were required for Schweppes deliveries during the winding down period in circumstances where, according to Elizabeth Vella’s evidence, Michael Vella was attempting at that time to speak directly with Robert Aikin.

Contrary to the plaintiffs’ submissions, I do not consider that the fact that Michael Vella “continued to rail against the lack of parity in allocation of work and did so emphasising to Brian Hobson and Brett Soper that they were equal shareholders” sheds any light on what occurred at the Ingleburn meeting. Michael Vella’s emails sent on 30 August 2012 and 4 September 2012 [55] are entirely consistent with the objective fact that, at that stage, BFS was still providing freight services to Schweppes, and with Michael Vella being determined that JEV should have an equal share of that work. Even if, as the plaintiffs submitted, the emails indicated to Brian Hobson and Brett Soper [56] that Michael Vella had changed his mind, they had no obligation to engage with him about that change of mind.

Significant aspects of Michael Vella’s evidence about the events after the Ingleburn meeting are internally inconsistent and inherently implausible.

First, it is implausible that Michael Vella would have been surprised to find JEV’s trucks used for Schweppes deliveries sitting idle in its Minto yard on Monday 10 September 2012 if Brian Hobson had told him during the previous week that Schweppes had not reviewed BFS’s contract and that BFS had “got till the end of the week and we’re out of a job” as Michael Vella claims. Michael Vella’s evidence that he rang Brian Hobson on Monday 10 September 2012 and asked “What’s going on mate?” is inconsistent with his evidence about the conversation he claims to have had with Brian Hobson the previous week. [57]

Second, there is no evidence that Brian Hobson and Brett Soper benefitted, either directly or indirectly through Hynadam Nominees and Mechita Nominees, from establishing BDA and performing Schweppes delivery work through BDA rather than through BFS. They did not endeavour to do the work that JEV had previously performed through BFS. They brought in Erron Jameson, whose company, Coastal Logistics, became an equal shareholder in BDA together with Hynadam Nominees and Mechita Nominees. It is therefore implausible that Brian Hobson told Michael Vella that “I did it for my son mate”, as Michael Vella claimed. [58]

Given the implausibility of these aspects of Michael Vella’s evidence and my findings at [283] above about his willingness to make up evidence to suit the plaintiffs’ case, I do not accept his evidence that Brian Hobson said the words that Michael Vella attributes to him in September 2012 or that he made the false claim that Schweppes had sent BFS a letter of termination. [59]

As to the conversation between Michael Vella and Robert Aikin on or about 10 September 2012, [60] I prefer the evidence of Robert Aikin. Having regard to my finding that Michael Vella was prepared to make up evidence about the Ingleburn meeting in order to support the plaintiffs’ claims, [61] I do not accept his evidence unless it is corroborated by a reliable and independent source or consistent with the inherent probabilities. Michael Vella’s evidence about his conversation with Robert Aikin is not even corroborated by Joseph or Elizabeth Vella. Although she gives evidence of being “mortified” when Michael Vella told her in the first week of September 2012 that JEV was no longer needed for the Schweppes work and that he had been unable to speak with Robert Aikin, Elizabeth Vella does not give any evidence of Michael Vella having relayed to her the substance of the conversation that he says he later had with Robert Aikin. [62]

I reject the plaintiffs’ submission that it is inherently unlikely that Robert Aikin could recall the conversation in the detail set out in his 20 June 2016 affidavit. It was the first conversation he had ever had with Michael Vella [63] and it is clear from his affidavit that he had a recollection of receiving the telephone call from Michael Vella when he was at home after business hours. Those are two circumstances that would logically set the conversation apart from other conversations that Robert Aikin had at or about this time in the course of his role as Transport Manager for Schweppes. Moreover, as the defendants submitted, it was not put to Robert Aikin in cross-examination that the level of detail in which he recounted the conversation in his 20 June 2016 affidavit was greater than the detail that he could honestly recall at that time. On the contrary, the cross-examiner put to him that his affidavit did set out his recollection of the conversation based on his memory at that time. [64] I accept the defendants’ submission that Robert Aikin is an independent witness. Having resigned from Schweppes in 2016 and subsequently retired, he has no reason to have embellished or tailored his evidence to suit to the defendants in these proceedings. No such reason was put to him in cross-examination.

I reject the plaintiffs’ submissions that Robert Aikin was generally not a credible witness. Those submissions were based principally on the plaintiffs’ illogical theory concerning the reference to BLS rather than BFS in the COR Notice issued by Schweppes on 2 August 2012 and their unfounded contention that it would be unhelpful to the defendants case if it were found that Brian Hobson or Brett Soper had mentioned BLS to Robert Aikin prior to August 2012. [65] Robert Aikin acknowledged that Brian Hobson may have mentioned BLS to him at one time. [66] I reject the plaintiffs’ submission that his evidence that he had made an error in referring in the COR Notice to BLS constituted a “steadfast refusal to come clean” and demonstrated that “he knew that it did not help the defendants’ case to be candid with the Court”, that “he was in the defendants’ camp and was prepared to be dishonest under oath, for the sake of the defendants” and that “he lacked candour and was hardly an independent witness”. That submission is unsupported by any evidence. It is highly implausible that, some years after leaving Schweppes and retiring from the transport industry, Robert Aikin would be prepared to lie to the Court in an endeavour to assist the defendants’ case. As the defendants submitted, the submission is scandalous and ought not to have been made. A Browne v Dunn agreement of the kind that senior counsel for the parties struck in this case [67] is not a licence to make serious allegations of dishonesty against witnesses without any rational basis.

The plaintiffs’ submissions seeking to impugn Robert Aikin’s credibility also attacked various aspects of the manner in which he managed the speed limiter compliance issue. It suffices to say that those submissions did not identify any conduct on the part of Robert Aikin that was inconsistent with the nature of his role or that has any rational bearing on the credibility of his evidence in these proceedings. The matters referred to in the plaintiffs’ submissions demonstrate that Robert Aikin formed certain views and made certain judgments based on his understanding of the MT data mentioned above at [105]. The plaintiffs’ submissions misrepresent the substance of that data, as referred to at [106] above. Contrary to the plaintiffs’ submissions, the evidence does not demonstrate that Robert Aikin was “in their thrall” (referring to Brian Hobson and Brett Soper) or “had some undisclosed antipathy toward the Vella family and/or Michael Vella”.

Finally, in relation to Robert Aikin’s credibility, the plaintiffs submitted that the discrepancy between his evidence and Brian Hobson’s evidence about the number of telephone calls they had each day during the period in which BFS was performing Schweppes delivery work indicates that at least one, if not both of them, “are not being honest with the Court”. I reject the submission that a difference in recollection between the two witnesses about how often they spoke provides a rational basis for discrediting the evidence of either of them about any of the issues in dispute in these proceedings.

The plaintiffs also submitted that Mr Aikin is not an independent witness because, “[i]f he was, it is difficult to comprehend why he would volunteer 30 pages of evidence directed largely against the Vellas”. That submission only needs to be stated to be rejected.

Returning to Robert Aikin’s account of his conversation with Michael Vella, I reject the plaintiffs’ submissions that his account is implausible because, if he had said to Michael Vella that “[y]ou chose not to do anything about” speed limiter compliance breaches or that “[y]ou continued to drive [NSW Freightlines trucks] without providing evidence that the speed limiters had been certified”, Michael Vella would not have given the response described by Robert Aikin to the effect that he (Michael Vella) did not think the GPS reports were accurate and that the NSW Freightlines trucks had not been speeding. Michael Vella would instead have responded that the trucks had been certified and would have offered to immediately send through the certifications that he had already sent to Brett Soper as referred to at [116]-[121] above. The plaintiffs’ submissions are not without logical force. However, Robert Aikin’s evidence about Michael Vella’s response rings true, having regard to the substance of Michael Vella’s response to the same speed limiter compliance issue in his affidavits in these proceedings, which revealed a consistent pattern of Michael Vella responding in the first instance by protesting that there was never any speeding problem with JEV and NSW Freightlines trucks and drivers because those trucks had speed limiters fitted from the time of purchase and only one speeding allegation had ever been brought to his attention relating to a truck doing Canberra delivery runs where trucks speed limited to 100km/h could reach a speed of 115km/h travelling downhill if the driver did not apply the brakes. [68] The fact that Michael Vella had obtained speed limiter compliance certificates for five of JEV’s trucks shortly before the Ingleburn meeting was the second rather than the first element of his response. This was also reflected in the submissions made on behalf of the plaintiffs which described the speed limiter compliance issue as a “false issue” and a “stitch up” and erroneously asserted that the MT data did not demonstrate a worse speeding history for JEV trucks than for Hynadam and Mechita trucks. [69] Robert Aikin’s evidence that Michael Vella said that he “didn’t see a need to get them certified when they were not speeding” it is not inconsistent with Michael Vella’s own evidence that, prior to August 2012, he did not see any need to have his speed limiters certified in circumstances where he did not consider that there was any speeding problem with JEV and NSW Freightlines trucks.

I also reject the plaintiffs’ submission that the conversation is unlikely to have occurred in the terms to which Robert Aikin deposes because JEV, not NSW Freightlines, had undertaken the Schweppes delivery work with additional trucks being provided by NSW Freightlines only when required. As the defendants submitted, the fact that Robert Aikin recalls Michael Vella referring to NSW Freightlines makes it somewhat more likely, rather than less likely, that the conversation occurred in the terms to which he deposes. If his evidence of the conversation were based on reconstruction rather than an actual recollection, one would expect Robert Aikin to have referred to both JEV and NSW Freightlines, having regard to his evidence in cross-examination that he understood that both JEV trucks and NSW Freighlines trucks had been “working under the old BFS”. [70] As the defendants submitted, NSW Freightlines was the growing part of JEV’s business. [71] There is no apparent reason why Michael Vella would not have mentioned it in a conversation concerning potential future work for Schweppes.

As referred to at [243] above, Robert Aikin’s evidence of the conversation included him outlining for Michael Vella several requirements that NSW Freightlines would need to meet “[before] Schweppes would consider NSW Freightlines working for us, either with BFS or separately”. The plaintiffs submitted that the reference to “with BFS or separately” is “puzzling” in circumstances where Robert Aikin’s evidence is that Brian Hobson had already told him that BFS was no longer operating. The plaintiffs submitted that Robert Aikin was unable to explain in cross-examination the inclusion of these words in his account of the conversation and that this rendered his evidence about the conversation implausible. I reject those submissions. Robert Aikin acknowledged in cross-examination that his reference to NSW Freightlines potentially working for Schweppes in the future “either with BFS or separately” involved an element of imprecision on his part. [72] He was plainly referring to a hypothetical possibility of the previous BFS structure being revived in some way. It is the same kind of imprecision that attended Robert Aikin’s reference in cross-examination to “the old BFS” in circumstances where there was no new BFS. [73] It is the very kind of imprecision that is common for non-lawyers when referring to legal entities in general conversation. As senior counsel for the plaintiffs put to Robert Aikin in cross-examination, this was a general conversation and not a legal conversation. [74]

The plaintiffs’ submissions about the conversation between Robert Aikin and Michael Vella also referred to the implausibility of Michael Vella pitching for the whole of the Schweppes work previously performed by BFS. However, as the defendants submitted, Robert Aikin’s evidence of the conversation does not suggest that Michael Vella was pitching for the whole of the BFS work rather than the share of that work that JEV had been doing through BFS.

As referred to at [245] above, Robert Aikin accepted in cross-examination that Michael Vella may have asked him during their conversation for a copy of the termination letter and that Robert Aikin told him there was no such letter. Contrary to the plaintiffs’ submissions, I do not consider that this is “wholly consistent with the plaintiffs’ version of events and equally inconsistent with the defendants’ version”. Questions asked by Michael Vella of Robert Aikin about a letter of termination on about 10 September 2012, by which time Michael Vella knew that JEV’s trucks were no longer required by BFS, are consistent with several possibilities. One possibility is that Brian Hobson told Michael Vella that there was a letter of termination, as Michael Vella claims. Another possibility is that Michael Vella assumed that Schweppes would need to issue a letter of termination if it had ceased using the services of BFS. The Court will not engage in speculation between those possibilities, and the existence of the first possibility does not affect my reasons set out above for rejecting Michael Vella’s evidence that Brian Hobson told him that BFS had received a letter of termination from Schweppes. I also reject the plaintiffs’ submission that there would be no reason for Michael Vella to ask for a copy of the termination letter if, as Robert Aikin deposed, he told Robert Aikin that “we have decided to go our separate ways with Brett and Brian and BFS”. Again, several possibilities arise, some of which are helpful, and some of which are unhelpful, to the plaintiffs’ submissions. Any choice between those possibilities would be an exercise in conjecture. One of the possibilities that is unhelpful to the plaintiffs’ submission is that Michael Vella simply wanted to check the date on which any termination letter issued by Schweppes stated that BFS had ceased or would cease to provide freight services to ensure that JEV received its “fair share” of work until the last day.

The plaintiffs’ submissions sought to downplay the significance of the Court accepting Robert Aikin’s evidence of the conversation on the basis that Michael Vella seeking work from Schweppes would not, by itself, say anything about why he was seeking work from Schweppes, and this would be equally consistent with the Vella family being told that BFS had been “sacked”. However, Robert Aikin’s evidence is that Michael Vella told him that “we have decided to go our separate ways with Brett and Brian and BFS” before stating that “the Vellas want to keep doing the transport work for Schweppes through our own company NSW Freightlines, not BFS”. [75] As the defendants submitted, the statement made by Michael Vella leading into his request for work is fundamentally inconsistent with the plaintiffs’ case and consistent with the defendants’ case about what was agreed at the Ingleburn meeting.

For the reasons at [320]-[338] above, I accept the defendants’ submissions that the events after the Ingleburn meeting referred to at [224]-[257] above are consistent with the evidence of Brian Hobson, Brett Soper and Robert Fielding that the Ingleburn meeting concluded with an agreement that JEV, Hynadam and Mechita would no longer be bound by the 2001 agreement and would each be free to seek work directly from Schweppes and that BFS would be “wound down”. In particular, Robert Aikin’s evidence, that I have accepted for the reasons explained above, establishes that Michael Vella approached him seeking Schweppes work for JEV and saying that “we have decided to go our separate ways with Brett and Brian and BFS”. [76]

In short, for all of the reasons explained above, I feel an actual persuasion that towards the end of the Ingleburn meeting, Michael Vella said words to the effect that if Brian Hobson and Brett Soper would not agree to operate BFS under the new basis that he had proposed, then JEV did not want to be a part of BFS, BFS should be wound up and that JEV would try to work with Schweppes on its own. I am also persuaded that Brian Hobson and Brett Soper expressed agreement with this outcome, adding that they would also seek to continue working with Schweppes and that Michael Vella agreed to this.

In making the findings at [266]-[272] above, I have not found it necessary to make any findings in relation to the competing evidence of Bill Kinnane on the one hand, and Michael, Joseph and Elizabeth Vella on the other hand, concerning conversations after the Ingleburn meeting. To do so would involve an unproductive satellite fact-finding exercise concerning the circumstances in which Bill Kinnane’s employment with JEV ceased in 2013 and whether he had an axe to grind with JEV and the Vella family as the plaintiffs submitted.

Having regard to my findings at [266]-[272] above, I reject the plaintiffs’ characterisation of BDA’s performance of Schweppes delivery work from 10 September 2012 [77] as constituting a diversion of the work from BFS to BDA.

In about 2013, Schweppes was purchased by Asahi. BDA did all of the Sydney bulk freight work until 2015, when Asahi put that work out for tender and Toll was the successful tenderer. BDA then signed a five-year contract with Toll to provide delivery services on a subcontract basis. That contract was terminable on 14 days’ notice.

Having regard to my findings at [266]-[272] above, I reject the plaintiffs’ characterisation of BDA’s performance of Schweppes delivery work as a subcontractor to as constituting a diversion of the work from BFS to BDA.

The evidence included financial statements of BDA for the 2014 financial year (including comparative figures for the 2013 financial year), the 2020 financial year, and some financial years in between. Those statements show that BDA operated in essentially the same manner as BFS referred to at [73] above. That is to say, BDA earned several million dollars of income each year which was derived from “sales”, and almost all of its income was expended on “transportation costs”. BDA incurred some additional expenses of relatively modest amounts for “contract drivers”, “management fees” and accountancy fees and insurance and similar matters. BDA either earned a modest profit or made a modest loss in each year, which was carried over into the following year. There were no distributions of the modest profits to shareholders.

The plaintiffs plead that the 2001 agreement was a partnership or joint venture agreement between:

The plaintiffs plead that each “partner” owed fiduciary duties to each other partner, including: [79]

The plaintiffs plead that Brian Hobson and Brett Soper, in their capacity as directors of BFS, owed the abovementioned fiduciary duties to BFS in addition to the statutory duties under ss 180-184 of the Corporations Act 2001 (Cth). [80]

The plaintiffs plead that, by reason of their management roles as operations manager and financial controller respectively, [81] Brian Hobson and Brett Soper “owed the remaining Partners” fiduciary duties (defined by the plaintiffs as the “Management Duties”): [82]

I note that the alleged management duties are pleaded in the Second Further Amended Statement of Claim in terms that make it clear that they are said to arise by reason of Brian Hobson and Brett Soper being partners in the alleged partnership or joint venture together with their management responsibilities. The Second Further Amended Statement of Claim does not rely on Brian Hobson’s and Brett Soper’s roles as directors of BFS as giving rise to any fiduciary duty allegedly owned to any “partner”. Nor is it pleaded that, as directors of BFS, they owed any fiduciary duty to shareholders of BFS (as opposed to the duties owed to BFS itself referred to at [348] above).

In their Defence to the Second Further Amended Statement of Claim, the defendants deny that the 2001 agreement was a partnership or joint venture agreement. The defendants plead that it was a shareholders’ agreement made orally between JEV, Hynadam, Mechita, Alderton Transport and Evermay. [83]

The defendants deny that JEV, Hynadam, Mechita, Alderton Transport and Evermay owed fiduciary duties to one another and say that their relationship was regulated by the constitution of BFS and the terms of the 2001 agreement. [84]

The defendants accept that Brian Hobson and Brett Soper owed statutory duties under ss 180-183 and 191 of the Corporations Act and fiduciary duties to BFS as directors of BFS, [85] but deny that they owed fiduciary duties or the alleged “Management Duties” to their alleged “partners”. [86]

In the alternative to their denial of any partnership, the defendants plead that any such partnership that may be found to have existed was dissolved under s 32(c) of the Partnership Act upon the occurrence of the following events: [87]

Section 32 of the Partnership Act provides:

The defendants rely on the conduct of Alderton and Glenn Alderton in October 2003 and the conduct of Stephen Phillips and/or Evermay in September 2010 as constituting notice of the intention of those alleged partners to dissolve the alleged partnership at those times.

In their Reply, the plaintiffs do not admit that the conduct of Alderton and Glenn Alderton in October 2003 and the conduct of Stephen Phillips and/or Evermay in September 2010 notified their intention to dissolve the alleged partnership and say that, if such notice was given, a new partnership was formed by the remaining partnership otherwise on the same terms as the existing partnership, and the remaining partners owed to one another the same duties as all of the partners had previously owed to one another. [88]

The plaintiffs also deny that any party to the alleged partnership gave notice of their intention to dissolve the partnership at the Ingleburn meeting on 28 August 2012 and say that it was resolved at that meeting to “wind down” BFS and to establish a new company to carry on the business of the existing partnership. [89] Within this denial, the plaintiffs inserted a definition of the “existing Partnership” as “a partnership, quasi-partnership in the sense described in Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 at [108]-[113], or joint venture agreement)”. [90] In the Second Further Amended Statement of Claim, the plaintiffs had pleaded that a partnership was created by the 2001 agreement, with the partners being the same as the parties to the 2001 agreement. [91] By this definition of “the existing Partnership” in their Reply, the plaintiffs introduced an alternative allegation that BFS was sufficiently closely held to be akin to a partnership and that the directors of BFS owed fiduciary duties to its shareholders in addition to the fiduciary duties the directors owed to BFS. [92] This was not, in truth, a response to the defence that any partnership had been dissolved. It was an amendment to the plaintiffs’ case made through the back door and without leave. However, the defendants took no objection to the introduction of the “quasi-partnership” allegation after the Reply was filed or after the plaintiffs served their written opening submissions in which the plaintiffs set out the passages from Crawley v Short on which they rely and submitted that the relationship between JEV and its co‑shareholders and Brian Hobson and Brett Soper was a fiduciary relationship, irrespective of whether it was a partnership.

I consider that the Reply, read together with the passage from Crawley v Short referred to in the Reply, put the defendants on notice of the plaintiffs’ intention to rely at the hearing on an allegation that Brian Hobson and Brett Soper as directors of BFS owed fiduciary duties to the shareholders of BFS by reason of BFS being a closely held company akin to a partnership. I reject the defendants’ submission, made for the first time in closing submissions, that those claims are outside the scope of the plaintiffs’ pleaded case and must be dismissed for that reason alone. Pleadings are not an end in themselves, but merely a means to the attainment of justice between the parties. In this case, where the defendants were on notice of the claims introduced in the Reply, it would be contrary to well-established authority rejecting the culture of trial by ambush and adversarial tactics to permit those claims to be defeated by the pleading point taken in the defendants’ closing submissions: see Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2022] NSWSC 30 at [22]-[33] and the authorities there cited.

As I have mentioned earlier in these reasons, the plaintiffs abandoned their claims that Brian Hobson and Brett Soper breached their fiduciary duties allegedly owed to the plaintiffs by causing BFS to enter into the Arndell Park lease and by failing to distribute Schweppes work evenly between JEV, Hynadam and Mechita. [93]

The plaintiffs maintained their claims that Brian Hobson and Brett Soper breached their fiduciary duties and “Management Duties” owed to JEV and Joseph Vella and breached the terms of the 2001 agreement above by: [94]

The plaintiffs pleaded that Hynadam and Mechita were “knowingly concerned” in the alleged breaches by Brian Hobson and Brett Soper of fiduciary duties and “Management Duties” owed to the plaintiffs. [95]

The plaintiffs also pleaded that, because BDA entered into the agreement to provide freight services to Schweppes and/or Toll “in place of BFS”, BDA induced the alleged breaches of the 2001 agreement by Brian Hobson and Brett Soper and was also knowingly concerned in their alleged breaches of fiduciary duties and “Management Duties” owed to the plaintiffs. [96] The plaintiffs pleaded the same allegations against Hynadam Nominees and Mechita Nominees on the basis that those companies caused BDA to be incorporated in contemplation of entering into a freight contract with Schweppes and/or Toll “in place of BFS”. [97]

An additional allegation pleaded by the plaintiffs that Hynadam and Mechita breached fiduciary duties that they owed to the plaintiffs by providing BDA with transport services [98] was not mentioned in any of the plaintiffs’ lengthy written submissions or oral submissions. That allegation is therefore taken to have been abandoned.

The plaintiffs claim that, by reason of their conduct referred to at [361]-[363] above, each of Brian Hobson, Brett Soper, Hynadam, Mechita, Hynadam Nominees, Mechita Nominees and BDA are liable to account to the plaintiffs for the advantage they have obtained from BDA performing work for Schweppes and Toll, and hold on constructive trust the benefits they have received from the alleged breaches referred to above. [99]

The plaintiffs also claim that they have suffered loss and damage by reason of the alleged breaches of fiduciary duty and alleged breaches of the 2001 agreement referred to at [361]-[363] above. The plaintiffs particularised their loss as, relevantly, loss of the benefit or opportunity to obtain “the benefit of the one-third share of the ongoing contractual relations with Schweppes Australia since September 2012” and “BFS has lost the benefit of ongoing contractual relationships with Schweppes Australia since September 2012”. [100]

In answer to these allegations, the defendants repeat their contentions referred to above concerning the parties to, and terms of, the 2001 agreement and repeat their denial that the 2001 agreement constituted or gave rise to a partnership, “quasi-partnership” or joint venture. The defendants also repeat their alternative contention that any partnership was terminated pursuant to s 32(c) of the Partnership Act no later than at the Ingleburn meeting. The defendants say that, in August 2012, BFS abandoned the business of providing freight services to Schweppes and Brian Hobson and Brett Soper caused BFS not to renew or renegotiate its contract with Schweppes. The defendants contend that Michael Vella permitted or acquiesced in that course. The defendants deny the alleged breaches of the 2001 agreement, fiduciary duties and “Management Duties” and deny that they are liable to account to the plaintiffs or that the plaintiffs have suffered any loss. [101]

The plaintiffs claim:

All of the plaintiffs’ claims for relief are made for their own benefit and not on behalf of BFS.

As will be apparent from the summary above, the plaintiffs’ pleaded claims that were pressed at the hearing are confined to claims for alleged breaches by Brian Hobson and Brett Soper of the 2001 agreement and/or fiduciary duties and “Management Duties” said to have been owed by Brian Hobson and Brett Soper to their other “partners” or to the BFS shareholders, and claims against Hynadam, Mechita, BDA, Hynadam Nominees and Mechita Nominees for inducing or being “knowingly concerned in” those alleged breaches. In determining those claims, I have considered all of the parties’ extensive submissions, irrespective of whether they are specifically referred to below.

For the reasons explained at [43]-[50] above, I have determined that JEV, Hynadam, Mechita, Evermay and Alderton Transport were parties to the 2001 agreement. Joseph Vella, Brian Hobson, Brett Soper, Stephen Phillips and Glenn Alderton were not parties. The plaintiffs’ claims against Brian Hobson and Brett Soper for breach of contract fail for that reason. The claims that BDA, Mechita Nominees and Hynadam Nominees induced breaches of contract by Brian Hobson and Brett Soper suffer the same fate.

For completeness, I note that the plaintiffs’ submissions made no more than passing references to their claim for damages for breach of contract [102] and failed to identify any term of the 2001 agreement said to have been breached by Brian Hobson or Brett Soper. The claim in contract would have failed for that reason even if I had found that Brian Hobson and Brett Soper were parties to the 2001 agreement.

From pleadings through to the last round of closing submissions, the plaintiffs’ case was marred by obfuscation about who were the parties to the partnership alleged to have been created by the 2001 agreement. [103] Nevertheless, it was clear from the Second Further Amended Statement of Claim that the partners in the alleged partnership were the same as the parties to the 2001 agreement.

It follows from my finding referred to above in relation to the parties to the 2001 agreement that JEV, Hynadam, Mechita, Evermay and Alderton Transport were the only potential members of the alleged partnership created by the 2001 agreement.

The 2001 agreement did not give rise any partnership between JEV, Hynadam, Mechita, Evermay and Alderton Transport. That is because, as the plaintiffs acknowledged in closing submissions, they did not enter into a relationship of carrying on a business in common with a view to profit: Partnership Act, s 1. There was no intention for BFS to make a profit: see [39] and [73] above.

The sole basis on which the plaintiffs submitted that the relationship created by the 2001 agreement was a partnership was that some profits were in fact made by BFS from providing storage facilities to Schweppes and those profits were divided among the participants. That submission relied solely on the evidence of Brian Hobson that BFS leased various premises for storage and Schweppes paid a fee to BFS to store stock on those premises. Brian Hobson gave evidence that those fees were “normally used by BFS to pay various costs of the business, including payment of the rent for storage premises and for accounting fees. Any money remaining after costs of the business were paid was divided among the Companies equally.”

There was no evidence as to whether the storage fees were set by BFS with a view to BFS making a profit, or with a view to generating revenue that would merely go towards covering its costs with surplus amounts resulting from time to time when only revenue unexpectedly exceeded costs. Nor was there any evidence of the amounts or frequency of any the payments to the BFS shareholders. The financial statements for BFS did not record any payment of dividends to the shareholders: see [73] above. I do not regard Brian Hobson’s evidence concerning these payments as supporting a finding that there was a partnership between the BFS shareholders: Partnership Act, s 2(3). In any event, Brian Hobson and Brett Soper were not partners in any such partnership and they are the only defendants alleged to have breached fiduciary duties said to have been owed as partners to their alleged co-partners JEV and Joseph Vella.

For those reasons, the plaintiffs fail in their claims for relief based on alleged breaches of fiduciary duties said to have been owed to them by Brian Hobson and Brett Soper in their capacity as partners in a partnership within the meaning of the Partnership Act.

The plaintiffs’ submissions focussed heavily on whether the relevant relationship was a joint venture, a “quasi-partnership” or one of trust and confidence.

This is misconceived for two reasons.

First, the plaintiffs continued to obfuscate about who were the parties to the relevant relationship alleged to be fiduciary in character. In circumstances where Brian Hobson and Brett Soper are the only parties alleged to have breached any fiduciary duty, the relevant questions are whether those two men owed any fiduciary duty to the plaintiffs, what was the content and scope of any such duty, and whether conduct of which the plaintiffs complain breached the duty. The first two questions fall to be determined at the time of the impugned conduct, namely during the period from 29 August 2012 in which BDA was incorporated and commenced performing Schweppes delivery work (including through the subcontract that BDA entered into with Toll in 2015). [104]

Second, the question whether Brian Hobson and Brett Soper owed any fiduciary duty to the plaintiffs at the relevant time does not turn on whether their relationship could be described as a joint venture, a “quasi-partnership” or as one of trust and confidence: United Dominions Corporation Limited v Brian Pty Ltd (1985) 157 CLR 1 at 10-11 (Mason, Brennan and Deane JJ, Gibbs CJ and Dawson JJ agreeing). In any event, the joint venture pleaded by the plaintiffs was a joint venture created by the 2001 agreement, to which Brian Hobson and Brett Soper were not parties. [105]

As emphasised by Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 (Hospital Products) and by the High Court in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 (White City) the “critical feature” of a fiduciary relationship is that: [106]

Referring to extra-judicial writing of Justice Lehane, the High Court confirmed in White City that references in this context to an undertaking or agreement to act “for and on behalf of” or “in the interests of” another person: [107]

Their Honours continued: [108]

Descriptions of classes of fiduciary relationships, or even specific fiduciary relationships, as involving trust and confidence, dependence or vulnerability, must not be permitted to divert attention from the critical question whether the alleged fiduciary has agreed or undertaken to act for, on behalf of or in the interests of another person (in the reasonably strict sense referred to in White City) in the exercise of a power or discretion that will affect the interests of that other person in a legal or practical sense. Trust, confidence, dependence, vulnerability and influence are important only to the extent that they evidence a relationship suggesting that agreement or undertaking by the alleged fiduciary and a corresponding entitlement for the other party to the relationship to expect that the alleged fiduciary will act in that other party’s interests. [109]

As the defendants submitted, mere vulnerability to breach of contract does not necessarily attract the intervention of equity. A fiduciary relationship may be found to co-exist with a contractual relationship, but the fiduciary relationship in such cases must conform to the express and implied terms of the contract. A fiduciary relationship “cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction”. [110] The application of these principles differs according to the circumstances of each case, including whether the contract is a detailed written contract or an oral contract with few details. However, the principles are the same.

The plaintiffs acknowledged that the critical feature of a fiduciary relationship is an undertaking or agreement by the alleged fiduciary to act for, on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. [111] The plaintiffs’ submissions nevertheless focussed on trust, confidence and vulnerability and failed to address whether Brian Hobson and Brett Soper had agreed or undertaken to act for and on behalf of JEV and/or Joseph Vella in the discharge of their respective roles with BFS. The plaintiffs submitted that: [112]

Putting the outcome of the Ingleburn meeting to one side for the moment, I reject the plaintiffs’ contention that Brian Hobson and Brett Soper owed fiduciary duties to JEV and/or Joseph Vella by reason of their roles and responsibilities within BFS as described in the plaintiffs’ submissions above.

The responsibilities of Brian Hobson and Brett Soper to which the plaintiffs refer involve matters in which they undertook to act for, on behalf of and in the interests of BFS and not for Joseph Vella, JEV or any other shareholder of BFS. As the defendants submitted, Brian Hobson and Brett Soper were directors and employees of BFS. [113] BFS was a corporate vehicle formed by its shareholders in accordance with the 2001 agreement with the objective of each of them continuing to operate their existing businesses delivering freight for Schweppes through one corporate interface (BFS) as a matter of administrative convenience to Schweppes. BFS and its shareholders were subject to its constitution and the 2001 agreement. JEV and each other shareholder had a contractual right under the 2001 agreement to have Schweppes work allocated to it by BFS (through the employee that BFS charged with that responsibility from time to time) on the basis that each shareholder would receive an approximately equal share of that work, provided that the shareholder’s representatives turned up to perform the work. JEV and each other shareholder had equal representation on the board of directors. [114] Brian Hobson (as operations manager) and Brett Soper (as financial controller) reported to that board of directors.

Contrary to the plaintiffs’ submissions, BFS had an obvious interest in performing its contractual obligations to Schweppes. Any breach of those obligations might have resulted in BFS being liable to Schweppes in damages. BFS needed its shareholders to perform the freight services that BFS contracted to provide to Schweppes. The 2001 agreement governed the basis on which the shareholders had agreed to perform those services. BFS therefore had an interest in ensuring that its shareholders were allocated and performed that work in accordance with their 2001 agreement.

As directors of BFS who were also employed to perform the functions identified in the plaintiffs’ submissions, Brian Hobson and Brett Soper did not agree or undertake to perform those functions for, on behalf of and in the interests of JEV. Nor did they agree or undertake to perform those functions for, on behalf of and in the interests of Hynadam, Mechita or any other shareholder of BFS. They agreed and undertook to perform their functions for, on behalf of and in the interests of BFS and were accountable to its board of directors.

As the defendants submitted, JEV was not vulnerable to Brian Hobson and Brett Soper in any relevant sense relating their performance of the functions referred to in the plaintiffs’ submissions. To the extent that Brian Hobson and Brett Soper failed to perform their functions in accordance with applicable legal standards and BFS failed to take action requiring them to do so, JEV had a remedy in the form of a derivative action including for injunctive relief under s 1324 of the Corporations Act in respect of any contravention by Brian Hobson and Brett Soper of their statutory duties as directors of BFS.

As the defendants submitted, the plaintiffs must demonstrate that the fiduciary duties that they seek to superimpose on the corporate and contractual relationships do not alter the intended operation of the contract in the context of the corporate structure. The plaintiffs made no attempt to address that question. They submitted, implicitly if not explicitly, that it was not necessary for them to do so because the 2001 agreement was an oral agreement made in 2001. I reject that submission. There was evidence about the terms of the 2001 agreement and many of those terms were common ground as referred to at [52] above.

I also reject the plaintiffs’ submission that the fact that the 2001 agreement was not reduced to writing “tends towards the conclusion that the relationship was a fiduciary one”. The presence of a comprehensive written commercial contract is a factor that tends against characterising the relationship as including fiduciary duties. Contrary to the plaintiffs’ submission, it does not follow that an oral contract made many years prior to the proceedings “tends in favour of the recognition of a fiduciary relationship”.

As the defendants acknowledged, there are some situations in which a director of a company owes fiduciary duties to a shareholder of the company: Brunninghausen v Glavanics (1999) 46 NSWLR 538; [1999] NSWCA 199 (Brunninghausen) at [100] (Handley JA, Priestley and Stein JJA agreeing). The applicable principles were explained in Warner Capital Pty Ltd v Shazbot Pty Ltd [2020] NSWCA 121 (Warner Capital) at [94]-[99] (Gleeson JA, Macfarlan and Meagher JJA agreeing):

For the reasons already explained above, the circumstances of the present case are far removed from those in Brunninghausen. JEV was not powerless or almost powerless. JEV had, and was entitled under the 2001 agreement to continue to have, a director on the board of BFS. That director was entitled to information, including reports from Brian Hobson and Brett Soper as to the performance of their functions. JEV was not at the mercy of Brian Hobson and Brett Soper performing their functions in a manner inconsistent with JEV’s rights under the 2001 agreement, including in relation to allocation of work. For the reasons already explained, that would be inconsistent with the interests of BFS in complying with its contractual obligations to Schweppes, and JEV had a remedy in the form of a derivative action if Brian Hobson and Brett Soper breached duties owed to BFS.

The plaintiffs placed particular reliance on the judgment of Young JA (with whom Allsop P and Macfarlan JA agreed) in Crawley v Short [2009] NSWCA 410. Referring to his earlier judgment in Glandon Pty Ltd v Strata Consolidated Pty Ltd (No. 3) (unreported, Supreme Court of New South Wales, 4 June 1990), Young JA articulated six principles, including (at [108]):

At [112], Young JA said:

At [118]-[122], Young JA expressed the view that “[t]here will be a variety of situations in which a shareholder or director/shareholder holds a special position where he or she may owe duties to another shareholder.” Young JA identified the “critical question” as being whether, “in all the circumstances, there was a special opportunity for [the director] to act to the detriment of the other shareholders so that he owed a duty to them”. Without being exhaustive, his Honour described the situations in which a director may owe duties to a shareholder as including:

For the reasons explained at [390]-[393] and [397] above, Brian Hobson and Brett Soper undertook to act for, on behalf of, and in the interests of BFS, not JEV or any other shareholder of BFS. They did not derive special knowledge from the discharge of their responsibilities that they were entitled to withhold from BFS and its directors, including the director appointed to the board by JEV.

For the reasons explained at [373]-[378] above, BFS was not in reality a partnership in a corporate guise. The plaintiffs’ submissions are not assisted by their reliance on cases such as Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd [2008] NSWSC 144 in which it was held that the relationship between shareholders and/or directors in a company was, in substance, a partnership.

Nor are the plaintiffs’ submissions assisted by their reliance on various other cases that turn on their own facts which are very different from the facts of the present case. Those cases include Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342, in which the shareholders in the relevant companies looked to those companies alone for their financial rewards and the shareholders had not subscribed to any contract amongst themselves. In the present case, the shareholders of BFS entered into the 2001 agreement that, in conjunction with the corporate structure, governed their establishment and operation of BFS as a single corporate interface to deal with Schweppes in relation to the work that they had each previously performed and intended to continue performing as part of their separate freight businesses. The cases relied on by the plaintiffs also include Gulf Pacific Pty Ltd v Londish [1992] FCA 502. That was a case in which a director of one unincorporated joint venture partner was held to be liable to the other joint venture partner under the second limb of Barnes v Addy (1874) LR 9 Ch App 244 for knowingly assisting in a breach by the director’s company of its fiduciary obligations to its joint venture partner. No such claim was pleaded in the present case.

As the defendants submitted, the term “quasi-partnership” has been criticised as a term that can mislead. It is most commonly used in oppression cases and in winding up cases to refer to a company that has been founded on the basis of a relationship of mutual trust and confidence and a breakdown in that relationship is relied on in support of an application for winding up on the just and equitable ground under s 461(1)(k) of the Corporations Act. [115] As I have already said, the description of a relationship as a “quasi-partnership” in cases concerning alleged breaches of fiduciary duty does not circumvent the application of the principles referred to at [383]-[387] above in determining whether a fiduciary duty is owed and, if so, the content and scope of that duty. The Court of Appeal did not suggest otherwise in Crawley v Short, which was an oppression suit arising out of the acquisition by Mr Crawley’s interests of the shares held by Mr Short’s interests in two companies.

The plaintiffs’ submissions characterise the relationship between JEV on the one hand and Brian Hobson and Brett Soper on the other hand as “a fiduciary one”, but do not articulate the content and scope of the fiduciary duties said to have been owed and breached by Brian Hobson and Brett Soper. As the defendants submitted, the matters relied on by the plaintiffs in characterising the relationship as “a fiduciary one” relate to allocation of work, invoicing and liaising with Schweppes. The plaintiffs’ submissions do not articulate how those matters are said to give rise to a specific fiduciary duty that would be breached by the alleged conduct referred to at [361] above.

For all of those reasons, the plaintiffs have failed to establish that Brian Hobson and Brett Soper owed fiduciary duties to JEV and/or Joseph Vella during the period from the incorporation of BFS until the Ingleburn meeting. Even if I had reached the opposite conclusion, it follows from my findings concerning the Ingleburn meeting at [266] above that any such fiduciary duty would not have continued beyond the Ingleburn meeting and/or would not have been breached by the conduct of Brian Hobson and Brett Soper after the Ingleburn meeting in causing BDA to be incorporated and to provide freight services to Schweppes, including indirectly as a subcontractor to Toll from 2015.

It follows from those conclusions that the plaintiffs have also failed to establish that Hyndam, Mechita, BDA, Hynadam Nominees and Mechita Nominees were “knowingly concerned in” alleged breaches of fiduciary duty by Brian Hobson and Brett Soper. [116]

For all of the foregoing reasons, each of the plaintiffs’ claims for relief set out at [368] above fails.

This is not a case that lends itself to stating the remedies I would have awarded to one or both of the plaintiffs if I had found in their favour in respect of their claims for breach of fiduciary duty. At the conclusion of the final hearing, the plaintiffs had not made an election between their alternative claims for an account of profits and equitable compensation. The plaintiffs submitted, with the concurrence of the defendants, that they should have an opportunity to consider and make that election following any finding in their favour and to then adduce further evidence and submissions. There would be no occasion prior to that election to address the myriad of issues of principal and quantum raised in the parties’ closing submissions concerning the two alternative claims.

The proceedings are to be dismissed for all of the reasons above. The parties’ closing submissions indicated that they wish to be heard in relation to costs.

The orders and directions of the Court are: