1In fixing a fair price for shares under the oppression remedy in s 233(1)(d) of the Corporations Act 2001 (Cth), the court is not constrained by textbook valuation methods and may reconstruct normalised earnings by excluding expenses found to be sham or non-arm's length, adjust net cash for misappropriated funds, and allow for unpaid dividends that would have been payable but for the majority's artificial depression of profits.
2Where a party relies on business records to substantiate company expenses but the records are shown to be fabricated — and the party fails to call available witnesses or provide native-form documents capable of verification — the court may place no weight on those records and draw adverse inferences, particularly where the party has a demonstrated propensity for document fabrication.
3The fact that financial statements have been audited does not preclude the court from looking behind those statements where there is evidence that the underlying records provided to the auditor were themselves fraudulent, as an auditor is ordinarily entitled to rely on management representations and cannot be expected to detect deliberate falsification of source documents.
