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Once the two owners of a Yatala fabrication company or the partners in a Milton engineering consultancy stop working together, the dispute is really about the exit price. We reach that price in a way the opposing expert has to engage with, not dismiss.
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Most Brisbane shareholder and partnership disputes finish with one side buying out the other, and that buy-out needs a price that will hold. We value the shares with and without a minority discount, at every date the case requires, add back what any oppressive conduct took out, and explain the reasoning so it stands up in the Supreme Court of Queensland.
Two shareholders in a Yatala steel fabrication company who now communicate only through lawyers, a Milton engineering consultancy where one of three partners wants to leave, a Chermside family company whose working siblings have quietly stopped paying dividends to the sibling who is not on the payroll: matters like these seldom end in a winding up. They end with one party buying out the other. Sections 232 and 233 of the Corporations Act 2001 allow the Court to intervene where a company's affairs are conducted oppressively or unfairly, and the remedy ordered most often is a purchase of the aggrieved member's shares by the other members or by the company.
The purchase order cannot be made without a price, and the price is a matter of judgement, not arithmetic. The basis of value, the valuation date and whether a minority discount applies all follow from the conduct the Court finds proved, not from how valuers usually work. A valuation that would satisfy a lender or an auditor can unravel in cross-examination if it took for granted answers the Court had not yet given.
The position is no different before proceedings start. A buy-out under a shareholders agreement, the dissolution of a partnership and an expert determination each turn on a disputed value between owners who have fallen out. Plenty of Brisbane disputes go to mediation first, through a private mediator or, for some small business matters, the Queensland Small Business Commissioner, and a figure from a valuer neither party controls is often what moves the parties to a negotiated exit. If it does not, that figure becomes the main evidence before the Supreme Court of Queensland.
Our clients are shareholders, partners and their lawyers across Brisbane, from closely held companies at Acacia Ridge, Rocklea and Wacol to professional firms in the Eagle Street legal and finance precinct. We act for one party, as an expert jointly appointed by both, or as the determining expert whose decision the parties have agreed to accept.
A certified valuer will listen to your situation and answer any questions you may have, at no cost.
The lawyers argue, and the Court decides, whether the conduct was oppressive. The valuer's task is to understand how each possible finding moves the value, because the movements are substantial.
Section 232 is engaged where the conduct of a company's affairs, an act or omission, or a members' resolution is contrary to the interests of the members as a whole, or is oppressive to, unfairly prejudicial to or unfairly discriminatory against a member. Unfairness is assessed objectively in a commercial sense; dishonesty is not required. Typical grievances include removal from management, work redirected to a related company, director pay well above market, no dividends for years, financial information withheld, share issues that dilute the minority and related-party deals on generous terms.
In an ordinary sale, a minority holding in a private company is worth less per share than the company as a whole, because the holder cannot control it and cannot easily sell. In oppression proceedings courts have frequently refused that discount, on the basis that a member driven out by the majority should not have to gift the majority a further benefit. A quasi-partnership history, the way the member acquired the shares and whether the conduct forced the exit all affect the result. We report both values and the difference between them.
The starting point is the hearing or the date of the order. If the conduct has run the company down, that date rewards whoever ran it down, so a party may argue for an earlier date such as the day of exclusion or the day the claim was filed. Another option is a current valuation with the lost value added back. In practice the valuer is usually asked for figures at two or more dates.
If value has been extracted, the valuation may need to restore it: directors' pay above the market rate for the job, shown by salary benchmarking rather than opinion; work and margin moved to another entity; rent, management fees and related-party loans reset to arm's length terms; private expenses paid by the company. These adjustments usually move the figure more than the choice of method, and each is challenged separately.
If the constitution or a shareholders agreement sets a price formula, pre-emptive rights or a compulsory transfer mechanism, that clause controls a contractual buy-out, and the first step is to work out exactly what it asks for: fair value or market value, at what date, determined by whom. In oppression proceedings the Court's power under section 233 is not limited by the agreement, so the formula is evidence the Court weighs, particularly where the minority claims the formula was itself part of the unfair treatment.
The techniques are the ones used for any private company; the difference in a dispute is that both sides test every input. A trading company is normally valued mainly through the income approach, applying a capitalisation rate or multiple supported by comparable evidence to the earnings it can maintain once the accounts are normalised. The majority will say earnings and the multiple are lower, the minority will say both are higher, so each input needs a documented source rather than a judgement call.
Forecasts the controlling party produced after the falling out are treated with the caution they deserve; we form and state our own view of them rather than adopting them. The asset approach moves to the front where the company holds land or investments, where trading is in decline, or where the Court is comparing a winding up with a buy-out and needs to know which leaves the minority better off. Past share transfers, offers received and buy-ins by other members are relevant market evidence, though a related-party deal or a price set by an untested formula carries less weight, and the minority often says a low historical price was part of the oppression.
A Brisbane partnership dissolution raises the same questions in a different setting. Under the Partnership Act 1891 (Qld), unless the partnership deed provides otherwise, each partner's entitlement on dissolution depends on what the partnership assets are worth, and for a professional firm the biggest asset is usually goodwill. Whether that goodwill stays with the firm or leaves with the partner who is going decides most splits in accounting, law, engineering, medical and dental practices, from firms near Eagle Street to clinics around the Herston and Woolloongabba hospital precincts.
Shareholder dispute valuations that collapse usually do so for one of these reasons, and most of them arise before any figure is calculated.
Who reads the report sets its depth, not the size of the business. A figure for two partners negotiating in good faith needs less than one that the opposing expert, a mediator and ultimately a judge of the Supreme Court of Queensland will examine line by line.
Each dispute report records who instructed us and the questions put, the facts we assumed and the documents we saw, then walks from those facts to each conclusion so a reader new to the matter can follow it. If more than one basis or date is requested, the figures sit side by side and the difference is explained. Limitations, including documents a party failed to produce, are stated in plain view. We write expecting another expert to search the report for its weakest point, because in a dispute someone will.
For the Supreme Court of Queensland and the District Court of Queensland the report meets Chapter 11 Part 5 of the Uniform Civil Procedure Rules 1999 (Qld), which puts the expert's duty to the Court ahead of any duty to the client; in the Federal Court it follows that Court's expert evidence practice note. The certified valuer who signs it attends experts' meetings, contributes to joint reports setting out what is agreed and what remains in issue, and gives evidence, concurrently with the opposing expert if the Court so directs. We also review the other side's report as consultants, pointing out unsupported assumptions and useful lines of cross-examination, and we act as the determining expert where both parties have agreed in advance to accept the result.
Will you confer with the other expert and then give evidence on this report in the Supreme Court of Queensland, side by side with them if the Court directs? A valuer unwilling to be cross-examined on their own opinion is of little help once the case is under way.
Talk your situation through with a certified valuer before you commit to anything, at no cost.