Fitzroy River Limited Liability Company v Richard Scott Tucker as joint and several administrator of Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement)
[2025] WASCA 118
•5 AUGUST 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: FITZROY RIVER LIMITED LIABILITY COMPANY -v- RICHARD SCOTT TUCKER as joint and several administrator of YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) [2025] WASCA 118
CORAM: MITCHELL JA
VAUGHAN JA
MUSIKANTH J
HEARD: 23 JULY 2025
DELIVERED : 28 JULY 2025
PUBLISHED : 5 AUGUST 2025
FILE NO/S: CACV 29 of 2025
BETWEEN: FITZROY RIVER LIMITED LIABILITY COMPANY
Appellant
AND
RICHARD SCOTT TUCKER as joint and several administrator of YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Respondent
ANTHONY JAY EDWARD MISKIEWICZ as joint and several administrator of YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Second Respondent
DAVID CHRISTOPHER OSBORNE as joint and several administrator of YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Third Respondent
TLP4 AUSTRALIAN HOLDINGS PTY LIMITED
Fourth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: HILL J
Citation: RE YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 094 819 717) [No 2] [2025] WASC 109
File Number : COR 167 of 2024
Catchwords:
Corporations - Deed of company arrangement - Appeal against grant of leave to transfer shares under s 444GA of Corporations Act 2001 (Cth) - Valuation of shares - Whether shares had nil residual value such that transfer did not prejudice interests of members - Expert evidence as to value - Turns on own facts
Expert opinion evidence - 'Non-specific' hearsay versus 'specific' hearsay - Expert valuation evidence relying on particular comparable sales to infer value of property in issue - 'Specific' hearsay - Need for proof of underlying facts by direct evidence or admissible documentary evidence
Evidence - Effect of failure to object to evidence at time of tender
Legislation:
Corporations Act 2001 (Cth), s 444GA
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | M J Sims SC & T C Webb |
| First Respondent | : | P R Edgar SC & S P Tomasich |
| Second Respondent | : | P R Edgar SC & S P Tomasich |
| Third Respondent | : | P R Edgar SC & S P Tomasich |
| Fourth Respondent | : | J C Hewitt |
Solicitors:
| Appellant | : | Fairweather Litigation |
| First Respondent | : | Lavan |
| Second Respondent | : | Lavan |
| Third Respondent | : | Lavan |
| Fourth Respondent | : | Clayton Utz (Sydney) |
Case(s) referred to in decision(s):
Automasters Australia Pty Ltd v Bruness Pty Ltd [2004] WASCA 229
Auxil Pty Ltd v Terranova [2009] WASCA 163
Clack v Murray [2018] WASCA 120
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
English Exporters (London) Ltd v Eldonwall Ltd [1972] 1 Ch 415
Gregory v Federal Commissioner of Taxation [1971] HCA 2; (1971) 123 CLR 547
Hankinson v Brookview Holdings Pty Ltd [2004] WASCA 279
Hevi Lift (PNG) Ltd v Etherington [2005] NSWCA 42
Hughes v National Trustees, Executors and Agency Company of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134
Hull v Thompson [2001] NSWCA 359
Jones v Sutherland Shire Council [1979] 2 NSWLR 206
Keith v Gal [2013] NSWCA 339
Kipoi Holdings Mauritius Limited v Kirman and Brauer as joint and several administrators of Tiger Resources Limited (subject to deed of company arrangement) [No 4] [2024] WASCA 145
Lang v The Queen [2023] HCA 29; (2023) 97 ALJR 758
Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705
McKay v Commissioner of Main Roads [2013] WASCA 135
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Re Montecatini's Patent Application (1973) 47 ALJR 161
Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) (ACN 094 819 717) [No 2] [2025] WASC 109
Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) [2025] WASC 57
Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158
Steffen v Ruban [1966] 2 NSWR 662; (1966) 84 WN (Pt 1) (NSW) 264
Stockl v Rigura Pty Ltd [2004] NSWCA 73
Stone v Farrow Mortgage Services Pty Ltd (in liq) [1999] NSWCA 435
Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418
TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim [2016] NSWCA 68; (2016) 91 NSWLR 439
The Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346
Wright v Municipal Council of Sydney [1916] NSWStRp 52; (1916) 16 SR (NSW) 348
Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40
REASONS OF THE COURT:
On 28 July 2025, we ordered that this appeal be dismissed for reasons to be published later. These are our reasons for dismissing the appeal.
Overview
The appellant (Fitzroy) holds approximately 20% of the issued shares in Yeeda Pastoral Company Proprietary Limited (Yeeda). Yeeda runs a pastoral operation in the Kimberley region of Western Australia and is the parent company of several wholly owned subsidiaries. Yeeda's subsidiaries include Kimberley Meat Co Pty Ltd (KMC) which owns and operates an abattoir located in the north of Western Australia (Abattoir).
In late February 2024, the first, second and third respondents were appointed as joint and several administrators of Yeeda and its subsidiaries (including KMC).
On 30 July 2024, Yeeda's creditors resolved that Yeeda and its subsidiaries should enter into five interdependent deeds of company arrangement (DOCAs). The proponent of the DOCAs was the fourth respondent (TLP4). The DOCAs, which were executed on 16 and 17 August 2024, contain several conditions precedent. One of those conditions is that the court make an order, pursuant to s 444GA of the Corporations Act 2001 (Cth) (Act), for leave to transfer all issued shares in Yeeda (Shares) to TLP4.
On 31 October 2024, the first, second and third respondents as deed administrators (Deed Administrators) filed originating process in the General Division of this court seeking such an order.
On 1 April 2025, the primary judge made an order granting leave to transfer the Shares to TLP4 together with ancillary orders. Her Honour relevantly did so on the strength of a finding to the effect that the transfer of the Shares to TLP4 would not unfairly prejudice the interests of the members of Yeeda because there was no residual value in the Shares.[1]
[1] Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) (ACN 094 819 717)[No 2] [2025] WASC 109 (Further reasons) [106] read with [65] and [95].
Fitzroy, which had appeared by counsel in the proceedings before the primary judge as an interested party with leave to be heard, now appeals her Honour's orders. It advances a single ground of appeal boiling down to this: the primary judge incorrectly found that the Deed Administrators had adduced admissible evidence concerning the value of the Abattoir and impermissibly relied on such evidence in concluding that the transfer of the Shares would not unfairly prejudice the interests of Yeeda's members. There is otherwise no challenge to any ruling or finding of fact made by the primary judge.
The Deed Administrators and TLP4 each seek to uphold the primary judge's orders on grounds not relied upon by her Honour.
Leave to appeal
Fitzroy contended that it did not require leave to appeal against the orders of the primary judge. According to Fitzroy, its position was the same as the appellant in Kipoi;[2] having not been a party to the primary proceedings but having participated as an interested non-party with leave to be heard under r 2.13(1) of the Supreme Court (Corporations) Rules 2004 (WA).
[2] Kipoi Holdings Mauritius Limited v Kirman and Brauer as joint and several administrators of Tiger Resources Limited (subject to deed of company arrangement) [No 4] [2024] WASCA 145 [448] ‑ [463].
The Deed Administrators made no submissions as to whether Fitzroy required leave to appeal.
Leave to appeal was not required.[3]
[3] Kipoi [455] - [456] (Vaughan JA, Mitchell JA relevantly agreeing at [228]).
Section 444GA
Section 444GA forms part of pt 5.3A of the Act. The object of pt 5.3A is reflected in s 435A which relevantly reads:
The object of this Part … is to provide for the business, property and affairs of an insolvent company to be administered in a way that:
(a)maximises the chances of the company, or as much as possible of its business, continuing in existence; or
(b)if it is not possible for the company or its business to continue in existence—results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
The legal principles applicable to an application under s 444GA were examined in Kipoi.[4] It is unnecessary for present purposes to repeat those principles save to emphasise that:[5]
(1)The key consideration, posed by s 444GA(3), is that the court must be satisfied that the proposed transfer would not unfairly prejudice the interests of members of the company.
(2)Assuming the court is so satisfied, there is a residual discretion as to whether to grant leave to a deed administrator to transfer shares in the company.
(3)The discretion must be exercised having due regard to the object of pt 5.3A, as set out in s 435A, of the Act.
[4] Kipoi [280] - [291]; [297] (Vaughan JA, Mitchell JA relevantly agreeing at [228]).
[5] Kipoi [287].
The proceedings below and the primary judge's reasons
The reasons for the orders challenged by Fitzroy were published by the primary judge on 7 April 2025: Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) [No 2] [2025] WASC 109 (Further reasons).
The Further reasons are to be read with reasons published by her Honour on 27 February 2025:[6] Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) [2025] WASC 57 (Initial reasons).
[6] Further reasons [4].
The Initial reasons were delivered following a two-day hearing, on 12 and 13 February 2025. Several affidavits were tendered into evidence at the hearing, and two deponents were cross-examined by then senior counsel for Fitzroy:
(a)Ms Nadine Marke of RSM, co-author with Mr Justin Audcent (also of RSM) of an independent expert report dated 10 December 2024 relating to the value of the shareholders' residual equity in Yeeda and its subsidiaries (including KMC); and
(b)Mr Anthony Jay Edward Miskiewicz, one of the Deed Administrators.
No other deponents were cross-examined.
One of those other deponents was Mr Timothy Michael McKinnon, a director of LAWD Pty Ltd (LAWD) and certified valuer. On 3 January 2025 Mr McKinnon had deposed to an affidavit to which two reports dated 17 April 2024 were attached:
(a)a report relating to the value of Yeeda's pastoral leases (Pastoral leases valuation report); and
(b)a report relating to the value of the Abattoir (Abattoir valuation report).
Mr McKinnon and Josh Ledingham, also a director of LAWD and certified valuer, were the co-authors of both reports.
Fitzroy did not object to the reception of the Abattoir valuation report, though it did later advance submissions as to the weight of some of its contents. More will be said about this later.
In the Initial reasons, her Honour noted as follows:[7]
(1)The court was not satisfied there was any admissible evidence before it as to the value of the pastoral leases which comprised a significant asset of Yeeda.
(2)Because of this, the court was unable to draw any conclusion as to whether there was any residual value in the equity of Yeeda or whether it would be unfairly prejudicial to Fitzroy or the other Yeeda shareholders to grant leave to transfer the Shares to TLP4.
(3)The court's preliminary view was that the Deed Administrators should be granted leave to re-open their case to address various issues identified in the Initial reasons.
[7] Initial reasons [4].
After delivering the Initial reasons and hearing from the parties, her Honour, on 5 March 2025, granted leave to the Deed Administrators to file and serve any further affidavits and/or expert reports. The topics to be covered by any further material were to be:
(a)whether there was any residual value in the Shares (including the prospect of the Shares obtaining some value within a reasonable time);
(b)the value of the pastoral leases held by Yeeda; and/or
(c)the transactions referred to in the Pastoral leases valuation report and Abattoir valuation report.
Between 13 and 19 March 2025, the Deed Administrators filed seven further affidavits in accordance with her Honour's orders: four open affidavits of Mr McKinnon, two confidential affidavits of Mr McKinnon, and a further affidavit of Ms Marke.[8]
[8] Further reasons [6].
On 21 March 2025, Fitzroy filed (a further set of) written submissions.[9] In those submissions, Fitzroy indicated it had not been able to give instructions to continue to resist the Deed Administrators' application 'in light of the further evidence' and sought to be formally excused from attendance at the final hearing scheduled for 27 March 2025.[10] Nonetheless, Fitzroy proceeded to highlight what it described as 'some serious deficiencies' in the further evidence.[11]
[9] Fitzroy's submissions on Deed Administrators' further evidence (21 March 2025) (Blue AB 146 ‑ 157).
[10] Fitzroy's submissions on Deed Administrators' further evidence (21 March 2025) [5] (Blue AB 148).
[11] Fitzroy's submissions on Deed Administrators' further evidence (21 March 2025) [6], [16] ‑ [30] (Blue AB 148, 151 ‑ 157), Further reasons [14].
The hearing then resumed on 27 March 2025. Fitzroy was not present at the resumed hearing, having been granted leave not to be in attendance.[12] Nor was any oral evidence adduced at that hearing, and judgment was reserved at its conclusion.
[12] Further reasons [7].
On 1 April 2025, her Honour relevantly made the following orders:
1.Pursuant to section 444GA(1)(b) of the [Act] for the purpose of satisfying the condition precedent in clause 6.1.10(a) of the deed of company arrangement executed by [Yeeda], the [Deed Administrators], and TLP4 on 16 August 2024, the [Deed Administrators] have leave to transfer all of the issued shares (Shares) held by the Members in Yeeda to TLP4 (or its nominee).
2.Pursuant to section 447A(1) of the Act and section 90-15(1) of the Insolvency Practice Schedule (sch 2 of the Act), an order that any of the Deed Administrators may, jointly or severally, in their capacities as Deed Administrators of Yeeda:
(a)execute on behalf of the members any share transfer forms and any other documents ancillary or incidental to effecting the transfer of Shares referred to in Order 1; and
(b)enter or procure the entry of the name of TLP4 or its nominee into the share register of Yeeda in respect of all Shares transferred to TLP4 or its nominee in accordance with Order 1.
Her Honour's reasons for making those orders are reflected in the Further reasons. In those reasons, her Honour among other things noted that:
(1)The court had, in the Initial reasons, concluded that the Deed Administrators had not discharged their onus of establishing the transfer of the Shares would not unfairly prejudice the interests of members because, at that stage, the Deed Administrators had not proved the facts of the comparable sales relied upon by the authors of the Pastoral leases valuation report and had, therefore, not adduced any admissible evidence as to the value of Yeeda's pastoral leases.[13]
(2)The parties accepted that the 'same criticism' also applied to the valuation of the Abattoir.[14]
(3)The question now for determination was whether, considering the further evidence subsequently introduced by them, the Deed Administrators had:
(a)discharged their onus of proving the comparable sales referred to in the Pastoral leases valuation report, and in an updated valuation report by Mr McKinnon dated 18 March 2025 relating to Yeeda's pastoral leases'; and
(b)consequently, adduced admissible evidence of the value of the Yeeda pastoral leases and of the Abattoir.[15]
[13] Further reasons [11] read with [2]. See also Initial reasons [101] - [102].
[14] Further reasons [12].
[15] Further reasons [14] read with [13].
After referring to authorities,[16] engaging with the evidence,[17] and addressing various alleged 'discrepancies' identified by Fitzroy,[18] the primary judge concluded:
(1)The Deed Administrators had 'now' adduced admissible evidence of each of the comparable sales referred to in the Pastoral leases valuation report.[19]
(2)On that basis, the value of the Yeeda pastoral leases was not more than $30.25 million, and between $24.2 million and $27.225 million in a liquidation scenario.[20]
(3)The Deed Administrators had also adduced admissible evidence to support the conclusion in the Abattoir valuation report as to the value of the Abattoir of $7.5 million.[21]
(4)Consequently, the Deed Administrators had discharged their onus and proved that there was a 'very significant' shortfall between the assets and liabilities of Yeeda (of at least $66 million) and, therefore, there was no residual value in the Shares.[22]
(5)There was no reasonable prospect that the Shares would obtain some value within a reasonable period.[23]
[16] Further reasons [17] ‑ [18]: English Exporters (London) Ltd v Edonwall Ltd [1973] 1 Ch 415, Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370 and Clack v Murray [2018] WASCA 120.
[17] Further reasons [19] - [61], [66] - [91].
[18] For example, Further reasons [27] - [31], [35] - [39], [43] - [48], [58] - [60].
[19] Further reasons [62].
[20] Further reasons [63].
[21] Further reasons [94].
[22] Further reasons [95].
[23] Further reasons [101].
Her Honour went on to note that Fitzroy had not sought an adjournment to enable it to undertake a more detailed review of the material filed by the Deed Administrators and had the opportunity to appear at the hearing to oppose the making of orders but chose not to do so.[24] The primary judge also observed that there was no dispute that the only alternative to completion of the DOCAs was that Yeeda would go into liquidation,[25] that in a liquidation there was likely to be a lower return to creditors (who had voted in favour of the DOCAs), and that the DOCAs presented the 'best opportunity for the continued operation of the business'.[26]
[24] Further reasons [103].
[25] Further reasons [104].
[26] Further reasons [105].
Ultimately, her Honour concluded that the relief sought by the Deed Administrators was consistent with the objects of pt 5.3A of the Act, as set out in s 435A,[27] that the transfer of the Shares to TLP4 would not unfairly prejudice the interests of Yeeda's members,[28] and that the court should exercise its discretion to make the orders sought.[29]
[27] Further reasons [105].
[28] Further reasons [106].
[29] Further reasons [106].
The Abattoir and Abattoir valuation report
Noting its centrality to Fitzroy's ground of appeal, it is convenient to turn to the evidence relevant to the valuation of the Abattoir.
Relevantly, the evidence relied upon by the Deed Administrators for that purpose was the Abattoir valuation report. According to the report, 2019 was the 'only profitable period' for the Abattoir based on financial information provided, and KMC was not 'operational' as at the date of the report,[30] with the workers engaged to maintain the operations of the Abattoir having departed after the voluntary administration commenced.[31]
[30] Abattoir valuation report 2 (Green AB 356).
[31] Abattoir valuation report 2 (Green AB 356).
Indeed, according to Mr McKinnon, the Abattoir was also not operational as recently as March 2025 having then showed 'significant signs of deterioration, with visible wear and tear'.[32] Relevantly, the authors of the Abattoir valuation report opined that the Abattoir was worth $7.5 million.[33] This figure was arrived at based on two methodologies: Capitalisation of Net Operating Income (NOI Capitalisation method) and a Direct Comparison - Productive Unit method (Productive Unit method). Each method yielded precisely the same result.
[32] Affidavit of Timothy Michael McKinnon sworn 18 March 2025 (Third McKinnon affidavit) [46] (Green AB 553).
[33] Third McKinnon affidavit [34] (Green AB 549).
In applying the NOI Capitalisation method, the operating income for the Abattoir was identified. The identified operating income was then multiplied by a multiplier/factor to arrive at a market value, the multiplier being a 'capitalisation' rate considered to reflect the relative risk associated with the business.[34] A multiplier of 2.5 was adopted for the purposes of the Abattoir valuation report.[35] According to Mr McKinnon a multiplier of 2.5 was, for reasons expressed by Mr McKinnon,[36] 'appropriate' based both on his experience in valuing and advising on meat processing facilities in Australia, and on his inspection of the Abattoir.[37]
[34] Third McKinnon affidavit [37] read with [34] (Green AB 549 ‑ 550).
[35] Third McKinnon affidavit [42] (Green AB 552).
[36] Third McKinnon affidavit [43] - [44] (Green AB 549).
[37] Third McKinnon affidavit [42] (Green AB 552).
In this connection, we note the authors of the report had earlier acknowledged that the multiplier of 2.5 was below the 'evidence provided',[38] but that they had 'particular regard to a new operator which would need to find end-user markets, procure livestock and source a viable way to remove renderable materials'.[39]
[38] Abattoir valuation report 46 (Green AB 400). The primary judge appears to have inferred that the expression 'evidence provided' referred to certain comparable sales referred to earlier in the Abattoir valuation report: Further reasons [68].
[39] Abattoir valuation report 46 (Green AB 400).
The Productive Unit method is not clearly described in the Abattoir valuation report. However, its general tenor can be distilled from the following features of an explanation given by LAWD in the context of the Pastoral leases valuation report which was likewise jointly prepared by Messrs McKinnon and Ledingham and dated 17 April 2024:[40]
Units of productive value deduced from sales serve as common denominators, which enable the value of one property to be methodically compared with another.
…
The Productive Unit Approach correlates the attributes of the subject property to the sales evidence attributes that underpin its rate per equivalent as analysed, to ascertain an appropriate productive unit dollar rate to apply to the subject property equivalent.
(emphasis added)
[40] Further reasons [20], referring to the Pastoral leases valuation report, Affidavit of Timothy Michael McKinnon sworn 3 January 2025 [9], [11] (Green AB 351).
In applying the Productive Unit method, for the purposes of valuing the Abattoir, the authors of the Abattoir valuation report multiplied a figure of 200 by a figure of $37,500 to arrive at an overall valuation of $7.5 million.[41]
[41] Abattoir valuation report 47 (Green AB 401).
The figure of '200' represented the number of head of cattle per day.[42] In arriving at that figure, the authors explained as follows:[43]
We understand that the [A]battoir can process up to 50,000 per head annum and is licensed for 77,000 head (albeit not built to such capacity), however we have adopted a sustainable processing capacity of approximately 40,000 head per annum (approximately 200 head per day based on approximately 200 processing days as advised). The facility has a greater 'as built' throughput capacity, however we have relied upon the historical numbers and capability to ascertain a sustainable throughput. LAWD have relied upon a throughput that underpins the continued use of the facility as an abattoir. (emphasis added)
[42] Abattoir valuation report 47 (Green AB 401).
[43] Abattoir valuation report 1 (Green AB 355).
As the primary judge observed, no evidence was adduced to challenge or contradict this opinion.[44]
[44] Further reasons [70].
According to the Abattoir valuation report, the figure of $37,500 was arrived at following a comparison of certain 'market evidence'.[45] In this connection, the authors of the report recorded[46]
[t]he market evidence detailed earlier has been compared with the subject property. We have analysed the sales evidence on a rate per head of daily turnover basis, and have considered the nature, condition and location of each property.
This approach contains a high degree of value [judgment] when sites are not directly comparable in one or a number of variables.
Considering this, we have applied a large stock (cattle) rate of $37,500 per head per day, processing approximately 200 units per day on a productive unit basis.
(emphasis added)
[45] Abattoir valuation report 47 (Green AB 401).
[46] Abattoir valuation report 47 (Green AB 401).
We infer that the expression 'sales evidence' (in the second sentence of the first paragraph quoted above) was intended by the authors to be a reference to the 'market evidence detailed earlier', with the 'market evidence' being, in turn, a reference to five abattoir sales discussed previously in the report.
A summary of salient information relating to those earlier sales was reflected in a table forming part of the report, under a subheading 'Summary of Comparable Sales' (summary table) which reads as follows:[47]
[47] Abattoir valuation report 43 (Green AB 397). See also Further reasons [67].
More extensive data about each sale was set out in the pages preceding the table[48] under a heading 'Sales Evidence' and subheading 'Meat Processing Facility Sales'.[49]
[48] Abattoir valuation report 38 - 42 (Green AB 392 - 396).
[49] Abattoir valuation report 38 (Green AB 392).
The reasons of the primary judge relating to the Abattoir valuation evidence
In the Further reasons, her Honour correctly observed:[50]
(1)Because KMC had secured debts of $6,818,931, no amount achieved upon any sale of the Abattoir would be available for payment to Yeeda in a liquidation scenario unless the value of the Abattoir was greater than those secured debts.
(2)Further, given the disparity between Yeeda's own assets and liabilities, the Abattoir would need to be valued at more than $55 million in a liquidation scenario to have any impact on the issue as to whether there was any residual value in the Shares.
(3)The court was not required to reach any concluded view as to the precise value of the Abattoir.
(4)Rather, the question for the court was whether there was any residual value in the equity of Yeeda.
[50] Further reasons [65].
As noted earlier, the primary judge relevantly found that the Deed Administrators had adduced 'admissible' evidence to support the conclusion in the Abattoir valuation report as to the value of the Abattoir of $7.5 million.[51]
[51] Further reasons [94].
Her Honour's process of reasoning leading to this conclusion may be derived from what appears at [64] - [93] of the Further reasons. Relevantly, her Honour summarised the two different methodologies deployed in the Abattoir valuation report highlighting aspects of their application.[52]
[52] Further reasons [66] - [72].
One of those aspects was the 'large stock rate' (of $37,500) adopted for the purposes of valuing the Abattoir. In this connection her Honour observed as follows:[53]
While the large stock rate adopted by LAWD is significantly lower than the rates of the comparative transactions, the [Abattoir valuation] report provides an explanation for this. In their [ie LAWD's] view, a lower rate is appropriate given the nature, condition, and location of the Abattoir compared to the other properties. The [Abattoir valuation] report highlights the smaller land area of the Abattoir (only 9.99 hectares) and the substantial capital investment required to address a number of issues with the Abattoir, including issues with its fire suppression system, the removal of render, and compliance with the licensing requirements under the Environmental Protection Act 1986 (WA). The cost of installing a render plant is likely to be in the order of $9 million - $10.2 million.
[53] Further reasons [71]. References omitted.
Before turning to the specific evidence adduced by the Deed Administrators relating to the comparable sales, the primary judge noted three important matters: First, not all the transactions mentioned in the Abattoir valuation report were used as comparable sales for each methodology. Secondly, because application of each method independently yielded a valuation of $7.5 million, the Deed Administrators would have discharged their onus if there was admissible evidence to support either method. Thirdly, although the comparable sales identified in the report referred both to small stock (sheep and goats) and large or big stock (cattle), the 'throughput rate' for big stock was the relevant comparator for the purposes of the valuation because the Abattoir only processed cattle.[54]
[54] Further reasons [72].
Her Honour then separately addressed aspects of the Abattoir valuation report, as supplemented by further evidence given by Mr McKinnon on 18 March 2025,[55] relevant to each of the five earlier abattoir sales discussed in the report: Australian Lamb Company, V & V Walsh, Tabro Meats, Darling River Meats, and Hilltop Meats.[56]
Australian Lamb Company
[55] Third McKinnon affidavit (Green AB 540 - 614).
[56] Further reasons [73] - [91].
The primary judge was not satisfied the Deed Administrators had adduced the necessary evidence to prove the relevant details of this sale.[57] Nonetheless, her Honour accepted that the evidence concerning the sale was admissible 'as evidence of broad market background' to the extent it was relied upon as demonstration of interest in processing facilities such as the Abattoir.[58]
Darling River Meats
[57] Further reasons [75].
[58] Further reasons [75].
Her Honour accepted the Deed Administrators had adduced evidence which proved the relevant details of this transaction, having observed however that only small stock (sheep and goats) was processed at the relevant abattoir.[59]
Hilltop Meats
[59] Further reasons [88] read with [86].
After noting the key features of this transaction and certain evidence given by Mr McKinnon in relation to it, her Honour concluded that the evidence before her was sufficient to prove the underlying facts relating to this transaction for the purpose of the Productive Unit method of valuation.[60]
V & V Walsh
[60] Further reasons [91] read with [89] - [90].
The primary judge noted that relevant details for this transaction were that the sale occurred in February 2022 for $117 million and the daily capacity of this abattoir was 292 head of big stock (ie cattle) at a productive unit rate of $115,000.[61]
[61] Further reasons [76].
Her Honour went on to observe that the offer relating to this abattoir had been made for the purchase of a percentage of equity in the various entities comprising the V & V Walsh group, had included a call and put option for the remaining equity in the group exercisable within five to 10 years after completion of the initial purchase, and that the price for the purchase of the remaining equity was to be calculated at the time any exercise of the option occurred.[62]
[62] Further reasons [77].
The primary judge accepted the evidence of the offer was admissible. This was because, according to her Honour, the offer had to Mr McKinnon's knowledge been followed by a 'concluded contract' and, as such, the offer was evidence of the real value of the enterprise value of the V & V Walsh entities as at January 2017 including the abattoir.[63] In effect, the primary judge appears to have accepted that the information in the Abattoir valuation report concerning the V & V Walsh sale was derived from Mr McKinnon's engagement by the National Australia Bank to provide a valuation for first mortgage security purposes in relation to the acquisition of this abattoir, and because Mr McKinnon had become 'familiar with the abattoir and its operations' as a result of this engagement.[64]
[63] Further reasons [78].
[64] Further reasons [79].
The primary judge was not satisfied that the Deed Administrators had adduced evidence of the basis of the calculation of the net operating income (NOI) multiple for this transaction, as contained in the Abattoir valuation report. This was because her Honour considered the offer that had been made relating to this abattoir was 'for the purchase of shares in several entities comprising the V & V Walsh group', and 'there [was] no specific apportionment for' the abattoir.[65]
[65] Further reasons [80].
Nonetheless, her Honour was satisfied there was sufficient evidence to prove the underlying facts of this sale for the purposes of the Productive Unit method valuation.[66] This was because, as the primary judge explained:[67]
Mr McKinnon's evidence and his knowledge of this abattoir provides a basis for his opinion as to its daily capacity and daily productive unit rate. The matters which Mr McKinnon has taken into account in his assessment are clearly set out in the [Abattoir valuation] report, including this abattoir's location and existing contracts which underpin the throughput at the facility.
Tabro Meats
[66] Further reasons [81].
[67] Further reasons [81].
The primary judge noted this sale had occurred in February 2022 for $43.5 million.[68]
[68] Further reasons [82].
Her Honour also recorded that the Deed Administrators had accepted that they had not adduced 'any direct evidence' of the sale price set out in the Abattoir valuation report.[69] That said, her Honour noted that Mr McKinnon had given evidence that he had been engaged by a potential purchaser of this abattoir, had inspected it, had reviewed its operations, and had thus become familiar with the abattoir and operations of Tabro Meats.[70]
[69] Further reasons [83].
[70] Further reasons [84].
Ultimately, the primary judge accepted there was sufficient evidence to prove the underlying facts of this sale too for the purposes of the Productive Unit method valuation relating to it.[71] This was because, as her Honour explained:[72]
Given his personal knowledge of this abattoir, I accept that there is evidence supporting Mr McKinnon's opinion as to its daily capacity and daily productive unit rate. The matters which Mr McKinnon has taken into account in his assessment are set out in the [Abattoir valuation] report, including this abattoir's location and the relevant accreditations for this facility.
The primary judge's conclusions
[71] Further reasons [85].
[72] Further reasons [85].
Having undertaken her analysis of the evidence relating to each of the above sales, her Honour accepted that:
(1)The Deed Administrators had adduced evidence of both Mr McKinnon's experience in valuing meat processing facilities (including abattoirs), and of his knowledge of the property and operations of each of the (three) comparable sales used for the Productive Unit method valuation in the Abattoir valuation report, namely Hilltop Meats, V & V Walsh and Tabro Meats.[73]
(2)Mr McKinnon's evidence, to the above effect, had provided a factual basis for the opinions expressed in the Abattoir valuation report as to both the daily capacity and daily productive unit rate per head for the transactions relating to Hilltop Meats, V & V Walsh and Tabro Meats.[74]
[73] Further reasons [92].
[74] Further reasons [93].
In the latter respect, her Honour went on to note that the opinions expressed in the Abattoir valuation report had been based on the authors' analysis of the sales evidence 'as well as the nature, condition, and location of each property', with the report having specifically acknowledged the approach had a high degree of value judgment 'when sites are not directly comparable in one or a number of variables'.[75]
[75] Further reasons [93].
Ground of appeal
Fitzroy's ground of appeal reads as follows:
1.The primary judge erred in law at [64] ‑ [95] of the [Further reasons]:
(a)in finding that the [Deed Administrators] had adduced admissible evidence of the comparable sales used for the valuation of [the Abattoir] owned by [KMC], a wholly owned subsidiary of [Yeeda], sufficient to support the conclusion as to the value of the Abattoir;
Particulars
(i)The [Productive Unit method] involves analysis of sales evidence for properties the subject of comparable transactions and comparison with the subject property.
(ii)The sale price is an essential element of the sales evidence for properties used for the [Productive Unit method] valuation.
(iii)For two of the three properties relied on for the [Productive Unit method] valuation of the Abattoir, there was no admissible evidence of the sale price.
(b)and holding that the transfer of the shares in Yeeda (Shares) would not unfairly prejudice the interests of Yeeda's members, without adequate admissible evidence as to the value of the Shares.
Particulars
(i)The primary judge found that the transfer of the Shares would not unfairly prejudice the interests of members of Yeeda because the Shares had no residual value.
(ii)To arrive at this conclusion, there needed to be an admissible valuation of the Abattoir which was missing.
(emphasis added)
Despite the presence of the words 'sufficient' and 'adequate' in pars (a) and (b) of its ground, Fitzroy's ground was ultimately concerned with admissibility not weight.[76] That is, the appeal ground depended on a proposition to the effect that in concluding that the Shares had no residual value, the primary judge relied upon a 'view' about the value of the Abattoir that was 'inadmissible in its entirety'.[77]
[76] Appeal ts 31, 37. Compare Kipoi, [542] - [548].
[77] Fitzroy's written submissions on appeal [4] (White AB 9). Emphasis added.
Moreover, Fitzroy's challenge was confined to the admissibility of the evidence relating to but one aspect of only two of the comparable sales referred to in the Abattoir valuation report: the sale price for each of V & V Walsh and Tabro Meats.[78]
Expert valuation evidence and hearsay: applicable legal principles
[78] Fitzroy's written submissions on appeal [33] - [35] (White AB 19 - 20).
Fitzroy's ground of appeal falls to be considered against the backdrop of the principles which govern the admissibility of evidence about comparable sales specifically relied on by an expert in reaching an opinion as to the value of a particular asset.
The principles were summarised by Megarry J in English Exporters (London) Ltd v Eldonwall Ltd,[79] who concluded that such an expert may:[80]
(1)Express the opinions he or she has formed as to values even though substantial contributions to the formation of those opinions have been made by matters of which the expert has no first-hand knowledge.
(2)Give evidence as to the details of any transactions within the expert's personal knowledge, in order to establish them as matters of fact.
(3)Express an opinion as to the significance of any transactions which are or will be proved by admissible evidence (whether or not given by the expert) in relation to the valuation with which the expert is concerned.
(4)Not, however, give hearsay evidence stating the details of any transactions not within his or her personal knowledge in order to establish them as matters of fact.
[79] English Exporters (London) Ltd v Eldonwall Ltd [1973] 1 Ch 415.
[80] English Exporters (423).
Megarry J's summary was referred to with approval by this court in Clack,[81] with his reasons in English Exporters having previously been approved by this court's predecessor in Pownall v Conlan Management Pty Ltd.[82]
[81] Clack [52] (Martin CJ, Buss P & Murphy JA).
[82] Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370, 374 (Ipp J, Malcolm CJ agreeing).
In Pownall, Ipp J had also highlighted the distinction between two types of hearsay in the context of expert valuation evidence involving comparable transactions: non-specific hearsay and specific hearsay. As his Honour explained:[83]
(1)Non-specific hearsay consists of 'information obtained by a valuer from others, relating to particular transactions', which forms part of the valuer's general experience, knowledge and expertise.[84] 'Hearsay information of this kind may be used by a valuer, for example, to give a general exposition of the subject, to assess market trends, or to determine whether a particular transaction is aberrant or consistent with overall market conditions'.[85]
(2)Specific hearsay, on the other hand, consists of evidence of particular comparable transactions that are used to infer the value of the property that is directly in issue.[86] Evidence of this kind cannot be used by the valuer unless otherwise proved by direct evidence. [87]
[83] Pownall (374 - 375) (Malcolm CJ agreeing).
[84] Pownall (374), referring to Pattenden, 'Expert Opinion Evidence Based on Hearsay' [1982] Crim LR 85 (Pattenden) (95).
[85] Pownall (374), referring to English Exporters (421).
[86] Pownall (375), referring to Pattenden (93).
[87] Pownall (375).
Ipp J's reasoning was cited with approval by this court in Clack.[88] The court in Clack also approved Megarry J's earlier observations, in English Exporters, to the following effect concerning what was later termed 'specific hearsay':[89]
[D]etails of comparable transactions upon which a valuer intends to rely in his evidence must, if they are to be put before the court, be confined to those details which have been, or will be, proved by admissible evidence, given either by the valuer himself or some other way.
[88] Clack [53] ‑ [54].
[89] Clack [49] citing English Exporters (422).
It may therefore be accepted, as Fitzroy correctly submits, that where an expert valuer relies on specific comparable transactions to infer the value of a particular asset, those transactions must be proved:
(a)by direct evidence given by the valuer, if the valuer has personal knowledge of the transaction; or
(b)by direct evidence of another witness having such personal knowledge; and/or
(c)by admissible documentary evidence proving the relevant details of the transaction.
The mere fact that an expert opinion may in part be based on inadmissible hearsay does not necessarily mean the entirety of the expert's opinion must be rejected. As Ipp J observed in Pownall, where expert evidence 'contains a mixture of objectionable hearsay and legitimate material, obviously there may be instances where the evidence will be trimmed, with the objectionable material being discarded so that the legitimate evidence remains'.[90]
[90] Pownall (376). For a useful illustration of this approach see Automasters Australia Pty Ltd v Bruness Pty Ltd [2004] WASCA 229 [32] (Steytler J, Murray & Wheeler JJ agreeing).
The relevant principles were summarised by his Honour as follows:[91]
(1)Expert opinion based entirely on inadmissible evidence is itself inadmissible and there is no discretion to admit it.
(2)On the other hand, where the expert opinion is based only partly on inadmissible testimony and that inadmissible testimony can readily be ascertained and discarded, the opinion should be admitted subject to weight.
(3)However, the evidence should be excluded where the expert opinion is based on a combination of admissible and inadmissible material, and it is impossible to determine:
(a)what conclusions are based on the expert's own observations and what conclusions are based on what the expert has been told; or
(b)to what degree the expert has been influenced by the hearsay material.
[91] Pownall (377 - 378). See also Steffen v Ruban [1966] 2 NSWR 662; (1966) 84 WN (Pt 1) (NSW) 264, 269.
To the above may be added the observation that if no objection is taken to expert evidence, and such evidence is already before the court, the issue is not one of admissibility but rather one of weight,[92] noting these questions will often overlap when it comes to expert evidence.[93]
The evidentiary deficiencies according to Fitzroy
[92] Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 [86] (Heydon JA); Hevi Lift (PNG) Ltd v Etherington [2005] NSWCA 42 [27] (McColl JA, Mason P & Beazley JA agreeing); Kipoi [542] (Vaughan JA, Buss P & Mitchell JA agreeing).
[93] Kipoi [542] (Vaughan JA, Buss P & Mitchell JA agreeing), referring to Lang v The Queen [2023] HCA 29; (2023) 97 ALJR 758 [221].
The gravamen of Fitzroy's complaint is that:[94]
(1)The sale price for each comparable sale relied upon by the authors of the Abattoir valuation report was an essential element of the '[p]roductive [u]nit [r]ate' used for the purposes of applying the Productive Unit method of valuation adopted by those experts.
(2)However, there was no admissible evidence before the primary judge of the sale price achieved with respect to either the V & V Walsh sale transaction or the sale transaction relating to Tabro Meats.
(3)Admissible evidence of each of those sale prices was necessary, otherwise the experts' evidence relating to those prices was 'inadmissible specific hearsay'.
[94] Fitzroy's written submissions on appeal [31] - [32] read with [40] (White AB 19 - 20). Emphasis added.
The proposition reflected in (1) above rested on the premise that the productive unit rate for each comparable sale was the sale price divided by the daily capacity (or throughput) rate of the abattoir in question.[95]
[95] Fitzroy's written submissions on appeal [29] (White AB 18), appeal ts 24 ‑ 25. Fitzroy did not challenge the admissibility of the daily capacity (or throughput) rate identified by the experts in connection with any of the comparable sales: appeal ts 25.
Although there was no express statement in the Abattoir valuation report confirming the correctness of the formula inherent in the premise, a simple application of the formula confirmed its accuracy at least in relation to the productive unit rate determined by the experts for Tabro Meats. That much was readily accepted by the Deed Administrators.
Indeed, at the appeal hearing, the Deed Administrators also conceded that the formula was 'one way' of getting to a productive unit rate which the experts had determined for Hilltop Meats.[96] However, the Deed Administrators took issue with the formula's application in the context of the V & V Walsh transaction for reasons to which we will return.
[96] Appeal ts 38-39, it having emerged that a productive unit rate of $86,600 (for Hilltop Meats) had been inserted into the summary table instead of the figure of $75,800 which had appeared earlier in the Abattoir valuation report in the context of more extensive data relevant to that abattoir.
As will be recalled, although the primary judge was satisfied there was sufficient evidence to prove the underlying facts of the V & V Walsh transaction for the purposes of applying the Productive Unit method relating to that sale, her Honour had not been satisfied that the Deed Administrators had adduced evidence of the basis of the calculation of the NOI multiple (for the purposes of applying the NOI Capitalisation method). This was because the relevant offer had been made for the purchase of shares in several entities comprising the V & V Walsh group, and there was no 'specific apportionment' for the abattoir in question.[97]
[97] Further reasons [80].
Fitzroy submits the primary judge ought to have relied upon the same reasoning for the purposes of considering the experts' application of both methods.[98] Moreover, according to Fitzroy:
(a)the offer relating to V & V Walsh had been expressed as being 'indicative', 'non-binding', and subject to various conditions;
(b)although Mr McKinnon deposed to having had personal knowledge of the relevant property, he did not depose to having had personal knowledge of the sale, including, relevantly, the sale price; and
(c)the Deed Administrators adduced no other evidence to prove the sale price.[99]
[98] Fitzroy's written submissions on appeal [36] (White AB 21).
[99] Fitzroy's written submissions on appeal [37] (White AB 21).
Thus, according to Fitzroy, there was no admissible evidence of the sale price relating to the V & V Walsh transaction, and the primary judge erred in finding that the Deed Administrators had adduced sufficient evidence to prove the underlying facts of this sale for the purposes of applying the Productive Unit method.[100]
[100] Fitzroy's written submissions on appeal [37] ‑ [40] (White AB 21 ‑ 22).
With respect to Tabro Meats, Fitzroy contended the documentary evidence adduced by the Deed Administrators did not prove the sale price of $43.5 million referred to in the Abattoir valuation report, and there was no admissible evidence of the sale price for this comparable sale.[101] The Deed Administrators accepted the correctness of this proposition both before her Honour and on appeal.[102]
[101] Fitzroy's written submissions on appeal [34] (White AB 19 ‑ 21).
[102] Deed Administrators' written submissions on appeal [36] (White AB 43).
As noted earlier, the primary judge had nonetheless accepted there was sufficient evidence to prove the underlying facts of this sale too for the purposes of applying the Productive Unit method of valuation relating to it.[103] Fitzroy contends that her Honour erred in doing so.[104]
[103] Further reasons [85].
[104] Fitzroy's written submissions on appeal [39] read with [34] and [38] (White AB 20 ‑ 21).
Fitzroy contends the Abattoir valuation report was inadmissible in its entirety.[105] This was because, according to Fitzroy:
(a)there was no admissible evidence of the sale price relevant to V & V Walsh and Tabro Meats in circumstances where the 'sale price' was an 'essential element' in determining the productive unit rate for each comparable property (for the reasons discussed earlier);[106] and
(b)in applying the Productive Unit method, the experts reached their opinion by relying not only upon the sales transaction relating to Hilltop Meats but also the sale transactions relating to V & V Walsh and Tabro Meats.[107]
[105] Fitzroy's written submissions on appeal [47] read with [42] (White AB 22 - 23).
[106] Fitzroy's written submissions on appeal [39] read with [37] (White AB 21).
[107] Fitzroy's written submissions on appeal [42] (White AB 22).
Therefore, and in circumstances where the Deed Administrators adduced no other admissible evidence as to the value of the Abattoir, [108] the court could not, according to Fitzroy, have reached a view on whether the Shares had any residual value, or whether the transfer of the Shares to TLP4 would unfairly prejudice the interests of the members of Yeeda.[109]
Disposition - ground of appeal
V & V Walsh
[108] Fitzroy's written submissions on appeal [50] (White AB 24).
[109] Fitzroy's written submissions on appeal [50] (White AB 24).
As noted earlier, with respect to the V & V Walsh transaction the Deed Administrators took issue with the application of the formula which Fitzroy contended the experts had adopted in determining the productive unit rate for each comparable sale (ie sale price divided by daily capacity (or throughput) rate).
As will be recalled, the summary table records the sale price and productive unit rate relevant to that transaction as $117,000,000 and $115,000, respectively.[110] That said, according to Fitzroy, the experts had apportioned the recorded sale price ($117,000,000) to arrive, instead, at a figure of $33,580,000 in circumstances where V & V Walsh had processed both big stock and small stock and where only the former was relevant for the purposes of any valuation of the Abattoir.[111]
[110] See [42] above.
[111] Appeal ts 26 - 28.
According to Fitzroy, the adjusted sale price figure of $33,580,000 was reflected in an earlier section of the Abattoir valuation report in the context of more extensive data relating to the V & V Walsh abattoir. The relevant entry read as follows:[112]
[112] Abattoir valuation report 39 (Green AB 393).
We note the above entry appeared immediately below a section headed 'Comment' where the discussion concluded with the following statement:
Conversations with the owner indicated the value of the 'V&V Walsh' abattoir to be in the vicinity of $100 million'.[113] (emphasis added)
[113] Abattoir valuation report 39 (Green AB 393).
As a matter of simple arithmetic, $33,580,000 divided by 292[114] yields a quotient of $115,000.[115]
[114] ie the daily capacity (or throughput) rate determined by the experts for 'big stock'.
[115] ie the 'big stock' productive unit rate relevant to V & V Walsh recorded in the summary table.
At the appeal hearing, the Deed Administrators effectively contended that the nature of the expert's inquiry, in adopting the Productive Unit method, was to 'find the productive unit rate'.[116] However, in doing so the experts were not, according to the Deed Administrators, 'merely' undertaking a comparable sales inquiry given a sales price was 'useless' in an abattoir environment (such as that of V & V Walsh) which had 'mixed use'.[117]
[116] Appeal ts 38.
[117] Appeal ts 39.
Further, in the Deed Administrators' submission, the primary judge had correctly found that Mr McKinnon's evidence and knowledge of the V & V abattoir provided a 'basis for his opinion as to its daily capacity [or throughput rate] and daily productive unit rate'.[118] Accordingly, a sale price was 'not necessary'; rather, Mr McKinnon 'chose' both the daily capacity (or throughput) rate and the productive unit rate with respect to V & V Walsh.[119] Put another way, Mr McKinnon had, according to the Deed Administrators, 'divined' a sale price of $33,500,000 (adjusted for 'big stock') for the purposes of the V & V Walsh transaction 'by applying a $115,000 productive unit rate', '[w]ithout reference to the sale price and solely from his experience and knowledge of the … property, the same way that he divined the daily [capacity or throughput] rate …'.[120]
[118] Further reasons [81] (emphasis added), appeal ts 40.
[119] Appeal ts 40.
[120] Appeal ts 49.
We are unable to accept these submissions for at least the following reasons.
First, as the Deed Administrators correctly observe, the focus of the task inherent in the Productive Unit method of valuation was to 'find the productive unit rate'. That much is clear from the manner in which the authors of the Abattoir valuation report expressed their ultimate conclusion relating to the valuation of the Abattoir applying this method; ie:[121]
Considering this, we have applied a large stock (cattle) rate of $37,500 per head per day, processing approximately 200 units per day on a productive unit basis.
Our Productive Unit calculation is summarised below:[122]
[121] Abattoir valuation report 47 (Green AB 401).
[122] Emphasis added.
However, as the authors of the report also explained[123] they had, in arriving at a productive unit rate of $37,500 for the Abattoir:
(a)'[a]nalysed the sales evidence' (being, as we have inferred, the 'market evidence' relating to the five abattoir sales discussed earlier in the report) and compared that sales evidence with the Abattoir on a rate per head of daily turnover basis;
(b)considered the nature, condition and location of each property; and
(c)noted their approach contained a high degree of value judgment 'when sites were not directly comparable in one or a number of variables'.[124]
[123] Abattoir valuation report 47 (Green AB 401).
[124] Emphasis added.
It is thus in our view plain, from their own explanation, that the reckoning of a productive unit rate for the Abattoir was the product of the experts' analysis of comparable sales and stated features each property or site to which each such sale related.
Secondly, the significance of sales data to the application of the Productive Unit method would seem to us further underscored not only by the authors' extensive references to sales data throughout the report (eg 'Summary of Comparable Sales',[125] 'Abattoir Sales Summary',[126] and 'Sales Evidence' and 'Meat Processing Facility Sales'),[127] but also by their statement to the effect that in arriving at their opinion of value, they had '… in particular … investigated recent sales of comparable properties (as previously detailed)'[128] (emphasis added).
[125] Above the summary table.
[126] Heading of the summary table itself.
[127] Immediately before the provision of extensive data relating to the properties the subject of each comparable sale.
[128] Abattoir valuation report 43 (Green AB 397).
Thirdly, it would seem to us unlikely that the authors would have chosen to deploy a substantively different method of valuation, in applying the Productive Unit method of valuation for the purposes of the Abattoir, to that which they had on the same day adopted for the purposes of valuing Yeeda's pastoral leases and had termed the 'Productive Unit Approach'. As noted earlier, the 'Productive Unit Approach', described by the authors in the Pastoral leases valuation report, had involved deducing '[u]nits of productive value … from sales'[129] (ie not the other way around as the Deed Administrators suggest) correlating 'the attributes of the subject property to the sales evidence attributes that underpin its rate'.[130] Indeed, the section in the Abattoir valuation report which purports to provide an 'overview' of the application of the Productive Unit method to the Abattoir is itself headed 'Direct Comparison - Productive Unit Approach'[131] (emphasis added).
[129] Emphasis added.
[130] See [36] above.
[131] Abattoir valuation report 47 (Green AB 401).
Fourthly, and perhaps most fundamentally, there would seem to us to be an inherent lack of utility in calculating (as an 'end point') a notional sales price for any 'comparable' property after first divining (from an unknown source) a productive unit rate and then multiplying it by a daily throughput rate. Not only does such an approach find no textual support within the Abattoir valuation report itself, but the exercise would serve little if any purpose in a context where, ultimately, the relevant comparator (for the purpose of determining a value for the Abattoir based on the Productive Unit method) would appear to have been the productive unit rate itself. In any event, we consider there would have been little if any need for the authors to have referred extensively to comparable sales evidence if it had not been necessary to identify a sale price (as a 'starting point') for each comparable transaction for the purposes of applying the Productive Unit method.
Having regard to the above matters, the inescapable inference is that:
(a)the sale price relating to each 'comparable sale' was, as Fitzroy correctly submits, an 'essential element' of the productive unit rate relevant to the abattoir to which that sale related; and
(b)each such rate was, in turn, necessary for the purposes of determining the corresponding productive unit rate for the Abattoir and, ultimately, its value reckoned according to the Productive Unit method.
It necessarily follows that in deploying the Productive Unit method, the authors of the Abattoir valuation report relied on specific comparable sales to infer the value of the asset directly in issue; ie the Abattoir.
The Deed Administrators were, accordingly, obliged to prove the sale price relevant to the V & V Walsh transaction by direct evidence, given by either or both of the report's authors, or another witness having such personal knowledge, and/or by admissible documentary evidence proving the relevant details of the transaction.[132]
[132] Compare Pownall (375).
There was no challenge to Fitzroy's submission that the offer relating to V & V Walsh had been expressed as being 'indicative', 'non-binding', and subject to various conditions. Nor did any respondent dispute Fitzroy's contentions to the effect that Mr Kinnon did not depose to having had personal knowledge of the sale, including, relevantly, the sale price. Nor was issue taken with Fitzroy's submission that the Deed Administrators adduced no other evidence to prove the sale price relating to the V & V Walsh transaction.
It follows, in our view, that the 'evidence' concerning the sale price relating to the V & V Walsh transaction in the Productive Unit method of valuation was legally inadmissible. The primary judge erred in concluding that Mr McKinnon's evidence and knowledge of the V & V Walsh abattoir provided a basis for his opinion as to its productive unit rate, and in concluding that Mr McKinnon's evidence was sufficient to prove the 'underlying facts' of the sale relating to the transaction for the purposes of applying the Productive Unit method of valuation.[133]
Tabro Meats
[133] Further reasons [81].
As noted earlier, the Deed Administrators accepted there was no admissible evidence of the sale price relating to the Tabro Meats transaction.
While conceding that without proof of the relevant sale price the productive unit rate for Tabro Meats was derived from inadmissible hearsay, the Deed Administrators nonetheless submitted that the opinion as to valuation based on the Productive Unit method of valuation (and the Abattoir valuation itself) was not entirely inadmissible.[134] In short, the Deed Administrators contended that the information relating to Tabro Meats was capable of 'severance' from the report.[135]
[134] Deed Administrators' submissions [36] - [37] (White AB 43 - 44).
[135] Deed Administrators' submissions [39] (White AB 43 - 44).
The difficulty with this submission is that once it is accepted the 'evidence' of the sale price relating to V & V Walsh was legally inadmissible, and was an 'essential element' of its corresponding productive unit rate, it necessarily follows there could have been no admissible evidence of that productive unit rate.
That consequence, coupled with the Deed Administrators' concession concerning the inadmissibility of the authors' evidence of the sale price (and, therefore, also the productive unit rate) relating to Tabro Meats, means there remained only one transaction, involving an abattoir processing 'big' or 'large' stock, for which legally admissible evidence of a sale price (and therefore a productive unit rate) had been adduced: Hilltop Meats.
It is in our view difficult to see how any expert adopting a method of valuation premised on 'direct comparison' might have reasonably considered a single transaction to be a sufficient dataset for the purposes of any reliable application of such a method.
Conclusionary remarks - ground of appeal
As noted earlier, Fitzroy did not object to the reception of the Abattoir valuation report into evidence. To the contrary, then senior counsel for Fitzroy informed the primary judge, unequivocally, that there were no objections to the trial bundle.[136] Mr McKinnon's affidavit sworn 3 January 2025 verifying the Abattoir valuation report was part of the trial bundle. As such the affidavit (and the Abattoir valuation report) was received into evidence, without any objection as to its admissibility, as exhibit 23.
[136] Hevi Lift (PNG) Ltd v Etherington [2005] NSWCA 42 [80] (McColl JA, Mason P & Beazley JA agreeing); Kipoi [542] - [545] (Vaughan JA, Buss P & Mitchell JA agreeing).
As no objection was taken to the Abattoir valuation report, it might be thought that the only issue for this court ought to be the weight to be given to the opinion.[137]
[137] Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 [86] (Heydon JA); Kipoi [542] (Vaughan JA, Buss P & Mitchell JA agreeing).
In this respect it is necessary to distinguish between the significance of the non-objection to the admissibility of the Abattoir valuation report for the purposes of trial and for the purposes of appeal. For the purposes of trial, it is commonly said that, once expert evidence is tendered without objection, it is admissible for all purposes.[138] That can only be taken so far. The better view as to the effect of the admission, without objection, of inadmissible evidence in a civil case is that expressed by Gibbs J in Hughes v National Trustees, Executors and Agency Company of Australasia Ltd:[139]
There are no doubt some cases in which inadmissible evidence, having been admitted, may be treated as evidence for all purposes; for example, where one party by his conduct at the trial has led the other to believe that evidence, although hearsay, may be treated as evidence of the facts stated, and the other in reliance on that belief has refrained from adducing proper evidence, the former party is precluded from objecting to the use of the evidence to prove the facts stated. However, in general it is the duty of a judge to reach his decision on evidence that is legally admissible, and to put evidence only to those uses which the law allows. When a statement is admitted, not as evidence of its truth but simply as original evidence, the mere fact of its admission cannot enable it to be given an additional probative value which the law denies it.
See also Jones v Sutherland Shire Council,[140] Ritz Hotel Ltd v Charles of the Ritz Ltd[141] and Auxil Pty Ltd v Terranova.[142]
[138] See eg TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim [2016] NSWCA 68; (2016) 91 NSWLR 439 [205] (Leeming JA, Beazley P & Emmett AJA agreeing).
[139] Hughes v National Trustees, Executors and Agency Company of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134, 153.
[140] Jones v Sutherland Shire Council [1979] 2 NSWLR 206, 219.
[141] Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158, 170 - 171.
[142] Auxil Pty Ltd v Terranova [2009] WASCA 163 [61] - [63].
Hence why, in some cases, it is said that expert evidence - admitted without objection - can carry no weight where in fact inadmissible for want of exposed reasoning.[143] This also explains why, where expert evidence is uncontradicted and not challenged in cross-examination, it nevertheless may not be accepted where the assumptions on which it is founded are not established: Hull v Thompson.[144]
[143] Hevi Lift (PNG) Ltd v Etherington [2005] NSWCA 42 [80] (McColl JA, Mason P & Beazley JA agreeing); Kipoi [542] - [545] (Vaughan JA, Buss P & Mitchell JA agreeing).
[144] Hull v Thompson [2001] NSWCA 359 [21] (Rolfe AJA, Sheller JA & Davies AJA agreeing) (approved in Keith v Gal [2013] NSWCA 339 [4], [130], [156]).
The admission at trial, without objection, of inadmissible expert evidence in a civil case has implications for the grounds that may be advanced on appeal. A trial judge does not make an error of law in accepting the tender of inadmissible evidence to which no objection is made.[145] However, it may be permissible - depending on the appellant's conduct at the trial - to contend on appeal that it was not open as a matter of law to accept the expert opinion. A ground to that effect was upheld in Kipoi in circumstances where the appellant argued at trial that 'no weight' should be given to purported valuation evidence because of the witness's lack of any relevant expertise.[146] Ordinarily, however, in a civil case it will be untenable for an appellant who did not object at trial to the admission of expert evidence to pursue a ground on appeal to the effect that the trial judge erred in law in admitting the expert opinion in evidence as it was inadmissible. The appellant will be bound by the conduct of its case at trial.[147]
[145] Auxil Pty Ltd v Terranova [2009] WASCA 163 [60] (Buss JA, Miller JA agreeing).
[146] Kipoi [537] - [579] (Vaughan JA, Buss P & Mitchell JA agreeing).
[147] See generally Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40 [65] ‑ [67] (Buss P, Murphy & Vaughan JJA).
The point is well illustrated by the decision of this court's predecessor in Hankinson v Brookview Holdings Pty Ltd.[148] In that case an accountant gave expert evidence quantifying a claimant's damage as a result of a breach of a contractual restraint of trade. The opinion was based on an examination of the claimant's books and records. Those materials were not tendered at trial. At trial there was no objection as to the admissibility of the accountant's evidence. On appeal it was alleged that the accountant's opinion was inadmissible as the underlying facts had not been proved. In the alternative it was asserted that, if the opinion was admissible, no or negligible weight should have been placed on the opinion as it was based on hearsay evidence. Both grounds were rejected.
[148] Hankinson v Brookview Holdings Pty Ltd [2004] WASCA 279.
Wheeler J (Simmonds J agreeing) referred to Suttor v Gundowda Pty Ltd[149] and Coulton v Holcombe.[150] It was said that, had objection been taken, it was clear from the course of the trial that the claimant would have been likely to have produced the underlying records.[151] Her Honour also referred to the reasons of Gibbs J in Re Montecatini's Patent Application.[152] There, in relation to a failure to verify books and statements on which an accountant had based his views, his Honour observed that so far as a party sought to raise this as an issue on appeal 'by failing to make early objection to the evidence … [the party must] be taken not to have insisted upon any requirement that the records be tendered or that their contents be proved in some other way'.[153] E M Heenan J thought that, in the circumstances of the case, the failure to object constituted a waiver of the right to object to admissibility.[154]
[149] Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418.
[150] Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1.
[151] Hankinson v Brookview Holdings Pty Ltd [11] - [12].
[152] Re Montecatini's Patent Application (1973) 47 ALJR 161, 169.
[153] Hankinson v Brookview Holdings Pty Ltd [12].
[154] Hankinson v Brookview Holdings Pty Ltd [43] (see also [44]).
In the present case Fitzroy did not object to the Abattoir valuation report being received in evidence. However, in its initial written submissions Fitzroy contended that there were material deficiencies in the Deed Administrators' valuation evidence such that the evidence 'should be given very little weight'.[155] Fitzroy also expressly raised a contention that Mr McKinnon did not depose to having personal knowledge of the values of the comparable properties referred to in the LAWD reports.[156] And, after the primary judge raised the evidentiary issue in the Initial Reasons (albeit in the context of the pastoral leases) and the Deed Administrators were given leave to file and serve further affidavits going to the transactions referred to in the Abattoir valuation report, Fitzroy submitted that[157]
in relation to four of the five comparative sales referred to in the [Abattoir valuation report], Mr McKinnon does not depose to having personal knowledge of the sale, and the other evidence relied on is either inadmissible or otherwise problematic, such that it should not be accorded much, if any, weight. (emphasis added)
[155] Fitzroy's initial submissions filed 27 January 2025 [8] (Blue AB 102).
[156] Fitzroy's initial submissions filed 27 January 2025 [16] (Blue AB 104).
[157] Fitzroy's further submissions filed 21 March 2025 [22] (Blue AB 154).
Fitzroy made the latter submission in a context where it had also contended that 'the remaining question for the Court is whether the [Deed Administrators] have now adduced admissible evidence of the comparable sales referred to in the [Abattoir valuation report] and the [Pastoral leases valuation report]'[158] (emphasis added). Accordingly, while at one juncture the opposition was advanced in terms of weight, it was also put in terms of admissibility.
[158] Fitzroy's further submissions filed 21 March 2025 [12] (Blue AB 150).
The further hearing before the primary judge was conducted on the basis that it was necessary for the Deed Administrators to address the matter from the perspective of admissibility notwithstanding the earlier admission of the Abattoir valuation report into evidence without objection. The Deed Administrators did not contest the hearing proceeding in that manner. The Deed Administrators were provided with ample opportunity to deal with the admissibility point insofar as the primary judge's orders of 5 March 2025 permitted them to adduce further affidavit evidence.
In the circumstances, while ordinarily the question of the admissibility of the underlying facts for the purpose of the Abattoir valuation report could not have sustained a successful appeal given the admission into evidence of the report without objection, we are satisfied that this is not an ordinary case. In the unusual circumstances of the present case Fitzroy's failure to object to the admissibility of the Abattoir valuation report does not preclude it pursuing its single ground of appeal.
The practical consequence of our conclusion that the evidence of the V & V Walsh sale price was legally inadmissible, coupled with the Deed Administrators' concession that there was no admissible evidence of the Tabro Meats sale price, means that the material before the primary judge relating to those matters carried no weight at all as a matter of law.
In circumstances where no weight could be attached to that evidence, where each sale price was an 'essential element' of the productive unit rate for each corresponding abattoir, and where no adequate dataset remained for the purposes of any reliable application of the Productive Unit method, there was in our view no evidence before the primary judge capable of supporting a conclusion as to the value of the Abattoir by application of that method. It necessarily follows that we would uphold Fitzroy's single ground of appeal.
Notices of contention
As noted earlier, the Deed Administrators and TLP4 each sought to uphold the primary judge's orders on grounds not relied upon by her Honour. They sought to do so relying on propositions reflected in their respective notices of contention.
According to the Deed Administrators, the primary judge's finding that the transfer of the Shares to TLP4 would not unfairly prejudice the interests of Yeeda's members[159] was in any event supported by other sufficient evidence even in the absence of admissible evidence as to the value of the Abattoir.
[159] Further Reasons [106].
To similar effect, TLP4 contended that that there was admissible evidence to support the value of the Abattoir without the need for admissible evidence of the comparable sales used for the Productive Unit method to support the Abattoir's value nor to use such evidence to sustain the primary judge's finding that that there was no residual value in the Shares. This too was said to be because of other admissible evidence supportive of both conclusions.
Ground 1 of TLP4's notice of contention
As noted above, the Abattoir valuation report adopts two methods of analysis, each of which produces a valuation of $7.5 million for the Abattoir. The first (ie the NOI Capitalisation method) involved a capitalisation of net operating income, multiplying the assessed $3 million net annual operating income which could be generated by the Abattoir by a factor of 2.5 to arrive at the market value.[160] The second (ie the Productive Unit method) was a 'direct comparison - productive unit' approach, which inferred the value of the Abattoir from comparable sales of other processing facilities.[161] As has been seen, the primary judge relied on the second method, finding that there was evidence of each of the comparable sales used to assess value applying that approach.[162]
[160] Third McKinnon affidavit [37] (Green AB 550).
[161] Abattoir valuation report 47 (Green AB 401).
[162] Further reasons [92] - [94].
In our view, the valuation of $7.5 million can be supported by the NOI Capitalisation method, which does not involve using information about the sales of other processing facilities as 'specific hearsay' as that term was employed in Pownall. The NOI Capitalisation method provides an alternative admissible basis upon which the primary judge's finding as to the value of the Abattoir can be supported, and upon which the appeal should be dismissed.
Using the NOI Capitalisation method, the valuers assessed the annual net operating income of the Abattoir by multiplying a 'processor margin' of $75 per head of cattle by an annual throughput of 40,000 cattle. This resulted in an assessed net operating income of $3 million.
The basis on which the net operating income of the Abattoir was assessed is explained in Mr McKinnon's third affidavit sworn 18 March 2025 (Third McKinnon affidavit):[163]
[163] Third McKinnon affidavit 12 (Green AB 551).
38In my experience, the historic per head processor margin for cattle through a meat processing facility is between $50 and $100 a head. For the purposes of the valuation of the abattoir, a mid-point of $75 was adopted. This is greater than the margins historically attained by the abattoir, which in 2019 was $48.57 EBITDA per head (which, on my review of the abattoir's previous operations, was its most successful year).
39The [Abattoir valuation report] adopts an annual throughput capacity of 40,000 head. This reflects the 'as built' capacity of the abattoir. I was informed that historically the [Abattoir] did not, on average, reach that annual level of throughput, but did achieve that level in 2019. This information is consistent with discussions with management when I inspected the property previously, as outlined above at paragraph 35, and confirmed when I inspected the property again in 2025.
40 Following those discussions and inspections of the [Abattoir], I understood:
40.1 the kill line has capacity for 300 head per day and the chillers have capacity for between 250 and 300 head per day; and
40.2 the boning room has capacity for 150 head per day (based on the blast freezers), however, some chilled product can be stored on site as well.
41 Therefore, we adopted 40,000 head, which is based on approximately 200 head per day working on a 9-month processing calendar given the wet season and shut down, or 180 head per day on a 10-month processing calendar. In my experience, I verily believe that anyone purchasing the [Abattoir] would need to operate it at that level, otherwise it would not be operationally viable, and any purchaser would be looking to obtain that margin or more, specifically as the facility focused on cull cows / bulls and there were record prices available at the time.
Fitzroy makes no complaint about the valuers' assessment of the annual net operating income of the Abattoir.
The valuers multiplied the $3 million assessed annual operating income of the Abattoir by a factor of 2.5 to arrive at a valuation of $7.5 million. The Third McKinnon affidavit explains the role of this multiplier:[164]
The multiplier is a 'capitalisation' rate, which, put simply, reflects the relative risk associated with the particular business. For example, a meat processing facility with a high multiplier would be expected to regularly return the expected income with little risk. This might apply where the facility has a proven track record of performance as well as future income sources (such as ongoing clients and markets as well as an ongoing source of livestock to process). Conversely, a facility with a low multiplier would be expected to have more risk in returning the expected income. This might be because the facility has a poor history of performance or no certain future income sources available.
[164] Third McKinnon affidavit [37] (Green AB 551 - 552).
The Abattoir valuation report indicates that, in ascertaining a capitalisation rate/multiplier, regard was given to the sales of the Australian Lamb Company, V & V Walsh and Hilltop Meats processing facilities.[165] The introduction to the section of the Abattoir valuation report setting out the sales evidence states that the sales 'do provide a range of evidence, and set the parameters, upon which' the valuers have 'based the assessment of' the Abattoir.[166] The Abattoir valuation report states that the values have been 'compared with the subject'.[167] However, the capitalisation rate/multiplier assessed for those transactions were 9.78, 6.5 and 3.5 respectively. The valuers did not simply apply the multipliers for those transactions to the valuation of the Abattoir. Rather, as explained in the Third McKinnon affidavit:[168]
[165] Abattoir valuation report 45 (Green AB 399).
[166] Abattoir valuation report 38 (Green AB 392).
[167] Abattoir valuation report, p 45 (Green AB 399).
[168] Third McKinnon affidavit (Green AB 552).
42 The [Abattoir valuation report] adopts a multiplier of 2.5. Based on my experience in valuing and advising on meat processing facilities in Australia and my inspection of the abattoir, I consider that this is an appropriate multiplier.
43 While a multiplier of 2.5 is below the range of multipliers (the range being 3.5 to 9.5) that may be adopted for meat processing facilities (based on my experience), it is an appropriate multiplier to adopted (again, based on my experience) given:
43.1 the underperformance and location of the [Abattoir];
43.2 the [Abattoir] is currently non-operational; and
43.3 any purchaser would need to procure cattle to process and markets to sell to as well as dealing with the renderable waste materials from processing.
44 In effect, the multiplier of 2.5 reflects the risk associated with the operations of the [Abattoir]. While the valuation adopted an annual capacity of 40,000 head, the abattoir did not, on average, reach that annual level of throughput (apart from in 2019), and the average margin adopted for the calculation ($75 a head) is greater than what the abattoir had achieved previously. Accordingly, the normalised annual [net operating income] of $3,000,000 is a theoretical calculation of the abattoir's [net operating income] based on 'best case' numbers, but does not reflect the reality of the abattoir's past performance. To account for this in calculating the market value from the [nett operating income], a lower multiplier is appropriate.
In our view, the valuers' approach based on the NOI Capitalisation method did not involve the impermissible use of particular comparable transactions to infer the value of the Abattoir.
The valuers' assessment of the appropriate multiplier was rather based on their own evaluation of the particular risks facing a purchaser of the Abattoir, having regard to the particular features of that business. While the specified transactions involving other processing facilities informed the valuers' assessment, the valuers did not use those transactions to infer the value of the Abattoir. The multiplier adopted by the valuers for the Abattoir was well below the multiplier attributed to any of the sales of other processing facilities to which they had regard. It was based on the particular features of the Abattoir to which the valuers referred, which were not features of the processing facilities that were the subject of the other transactions.
While the valuers used the evidence of other sales to form a view of the range of multipliers reflected in the market, they did not apply that range to determine the value of the Abattoir but rather made their own evaluation of the appropriate multiplier for the Abattoir.
The fact that the valuers had regard to the higher multiplier reflected in the sale of other processing facilities in adopting a much lower multiplier for the Abattoir does not involve the use of evidence of past sales as specific hearsay as explained in Pownall. To adopt the distinction drawn by Edelman J in The Pilbara Infrastructure Pty Ltd v Economic Regulation Authority,[169] it was a permissible use by a valuer of particular transactions in order to make general conclusions about market trends rather than the impermissible use of particular transactions to infer the value of the property in issue.[170]
[169] The Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346 [268].
[170] In an apparent reference to Pownall, Edelman J's published reasons include the phrase 'to infer directly the value of the property in issue' [268] (emphasis added). We note, however, that in Pownall, Ipp J had deployed the expression 'to infer the value of the property that is directly in issue' (375) (emphasis added). Ipp J's phraseology is in our view generally consistent with the approach of Gordon J in Wright v Municipal Council of Sydney [1916] NSWStRp 52; (1916) 16 SR (NSW) 348, 366; a decision from which Megarry J, in turn, drew support in English Exporters (see Clack [50]). We would accordingly favour the approach reflected in the reasons of Ipp J (with which Malcolm CJ had agreed).
In oral submissions, senior counsel for Fitzroy in effect accepted that the critical question was whether, in applying the NOI Capitalisation method, the valuers in this case had:[171]
(a)valued the Abattoir by adjusting the multiplier inferred from the other transactions to take account of the differences between the processing facilities which were the subject of those transactions and the Abattoir and then applied that multiplier to the assessed net operating income of the Abattoir; or
(b)evaluated the multiple of annual net operating income capacity which a purchaser would be willing to pay having regard to the particular features of the Abattoir while also having regard to trends indicated by other sales in the market.
[171] Appeal ts 74 - 75.
The former case would involve inferring the value of the Abattoir from specific transactions which would need to be proven before the valuers' opinion was admissible or could be given any weight. The latter use of evidence of other transactions would not involve the impermissible use of specific hearsay. In our view, when the valuers' report is considered as a whole in light of the Third McKinnon affidavit, it can be seen that the valuers adopted the latter permissible approach in assessing value based on the capitalisation of net operating income.
Ground 1 of TLP4's notice of contention is established to the above extent.
The Deed Administrators' notice of contention, and ground 2 of TLP4's notice of contention
Further, even if Fitzroy is correct in contending that there was no admissible evidence sufficient to support a conclusion as to the value of the Abattoir, the other evidence adduced at trial proved that the transfer of the Shares under the DOCAs would not unfairly prejudice the interests of Yeeda's shareholders.
In the present case, where there were no competing valuations or significant credit-based findings and most of the evidence was documentary, this court is in as good a position as the primary judge to assess the question posed by s 444GA of the Act. Senior counsel for Fitzroy properly accepted this to be the case.[172]
[172] Appeal ts 37.
Determining whether the proposed transfer of the Shares to TLP4 with no payment to the Yeeda shareholders would unfairly prejudice their interests does not require the court to reach a conclusion as to the specific value of Yeeda's assets. In the present case, where it is common ground that liquidation is the only alternative to implementation of the DOCAs, it is sufficient for the court to conclude that there would be no return to Yeeda's shareholders in the liquidation scenario. If that is proven, then the transfer provided for in the DOCAs would not deprive Yeeda's shareholders of anything that they might otherwise receive.
Senior counsel for Fitzroy indicated that Fitzroy did not cavil with the Deed Administrators' assessment that the total liabilities for which Yeeda was responsible were at least $110 million.[173] In the circumstances of the present case, the court can be satisfied that the proposed transfer of Yeeda shares would not unfairly prejudice Yeeda's shareholders if it can infer that the shareholders would receive no distribution in the event of a liquidation. For that purpose, it would be sufficient for the court to infer that liquidators would not obtain more than $110 million in the sale of the assets of Yeeda and its subsidiaries in a liquidation scenario. Even putting aside the evidence attributing a particular value to the Abattoir, that is the inference we draw from all of the other evidence adduced before the primary judge considered as a whole.
[173] See the table set out at Initial reasons [89] and appeal ts 18.
In our view, that inference should be drawn from the sale process which was in fact undertaken by the Deed Administrators from April to July 2024. In an unchallenged finding, the trial judge described that process as 'extensive'.[174] We agree with that assessment. The Deed Administrators engaged sales agents to assist in seeking urgent expressions of interest for the acquisition and/or recapitalisation of Yeeda and its subsidiaries. The sales agents undertook an 'extensive outbound enquiry campaign' and placed advertisements in:[175]
32.1 print media, being: Australian Financial Review, The Australian, The Land, QCL, Farm Weekly and the Stock Journal; and
32.2 internet listings, being : Elders on-line, Realestate.com, Domain, Commercial Real Estate and REIWA.com.
An information memorandum was provided to 82 parties by the sales agents.[176]
[174] Initial reasons [107].
[175] Non-confidential affidavit of David Osborne sworn 31 October 2024 [31] - [35] (Green AB 10).
[176] Non-confidential affidavit of David Osborne sworn 31 October 2024 [35] (Green AB 10).
The results of that process were the subject of the following unchallenged findings by the primary judge:[177]
[177] Initial reasons [18] - [21].
As a result of this process:
(a)82 parties sought and were provided with a copy of an information memorandum;
(b)seven non-binding indicative offers were received on about 17 May 2024, which sought to acquire or recapitalise the entirety or a material component of the Yeeda group. The [Deed Administrators'] assessment of these bids was that they ranged in value from $7 million to $70 million;
(c)five of these bidders advanced to stage two of the sales process, which required best and final offers to be submitted by 19 June 2024; and
(d)four formal bids were received on or around this deadline.
In addition to this formal process, the [Deed Administrators] received a confidential deed of company arrangement (DOCA) proposal from a third party who did not participate in the sales process. The [Deed Administrators] also facilitated the conduct of an accelerated due diligence on certain assets owned by the Yeeda group for three parties, none of whom made a formal offer.
As a result of this process, the [Deed Administrators] formed the view that only one bidder had provided a strong, feasible, and detailed proposal, namely the proposal received from TLP4. TLP4's proposal included an offer for the ongoing funding of the operations of the Yeeda group, until the earlier of the termination of the five interdependent DOCAs for each of the Yeeda group companies (TLP4 DOCAs) or their completion. The [Deed Administrators] negotiated with TLP4 to increase the value of their offer from $52.80 million to $55.81 million. …
None of the offers, bids, or proposals received by the [Deed Administrators'], including those made by TLP4 and Fitzroy, resulted in any return to or payment being made to Yeeda's shareholders.
The primary judge rejected the submission that conclusions about the value of Yeeda's shares could be drawn from the DOCA process:[178]
First, in relation to the Fitzroy proposal, as a matter of law, an offer that does not result in a concluded contract is not evidence of value [Gregory v Federal Commissioner of Taxation [1971] HCA 2; (1971) 123 CLR 547, 562].
Second, while the TLP4 DOCAs resulted in a concluded contract, this cannot be the offer against which the counterfactual is to be assessed. In my view, it is not possible on a s 444GA application to rely solely on the transaction for which the approval is sought, as evidence of the market value of the shares or assets of the relevant company for the purpose of the counterfactual. If this were the case, there would not be a need to adduce expert evidence (or in fact, any evidence at all) on a s 444GA application. The proposed DOCA would, without more, stand as evidence of the position being advanced by the deed administrators. To adopt such a position would give s 444GA(3) of the Act and the court, in the exercise of its discretion, effectively no work to do. This argument must be rejected.
[178] Initial reasons [104] - [105].
As an abstract statement, the first of these statements of principle is expressed in too absolute terms. In Auxil Pty Ltd v Terranova,[179] Buss JA (Miller JA agreeing) derived the following general principles from a detailed analysis of the authorities:[180]
First, the general rule of admissibility is that an unaccepted offer to purchase land is not admissible as 'direct evidence' of its value.
Secondly, the general rule does not exclude evidence of an unaccepted offer in each and every case.
Thirdly, where evidence of an unaccepted offer to purchase land is sought to be tendered, the purpose for which the tender is made should be ascertained and analysed.
Fourthly, although an unaccepted offer to purchase land is not admissible as 'direct evidence' of its value, the evidence may be admissible, in a particular case, for limited or general purposes.[181]
[179] Auxil Pty Ltd v Terranova [2009] WASCA 163.
[180] Auxil [46] - [49]. Specific examples of permissible uses were given at [50].
[181] See also McKay v Commissioner of Main Roads [2013] WASCA 135 [24] (Murphy JA, Martin CJ & Buss JA agreeing).
While we would not place any significant weight on the terms of the specific proposal advanced by Fitzroy in the circumstances of the present case, the unaccepted proposals received by the Deed Administrators considered collectively are relevant in a limited way. The fact that various proposals were received in the Deed Administrators' process, and none of the proposals advanced came anywhere close to providing value that would produce a return to Yeeda's shareholders in a liquidation scenario, tends to support the inference that there is no prospect of a liquidator receiving offers that would produce such a return.
We do not agree with the primary judge's observations in the second paragraph quoted at [146] above.
We accept that a transaction in a deed of company arrangement will not be evidence from which a conclusion about the value of a company's shares can be drawn in every case. However, we do not accept that an inference as to the absence of unfair prejudice to shareholders can never be drawn from a process leading to the making of a deed of company arrangement, or that valuation evidence of each of the company's significant assets is required in every case. The inferences which can properly be drawn will depend on a careful assessment of all of the circumstances of the case, including the nature and extent of the marketing campaign, the response to it, the terms on which a transfer of shares is proposed and the relationship between the contracting parties. But the price actually obtained for an asset after proper steps have been taken to market the asset may provide proper - and often at times particularly cogent - evidence of the true market value of the asset.[182]
[182] See Stone v Farrow Mortgage Services Pty Ltd (in liq) [1999] NSWCA 435 [4] (Hodgson CJ in Eq, Meagher JA agreeing); [73] - [76] (Cole AJA, Meagher JA agreeing); Stockl v Rigura Pty Ltd [2004] NSWCA 73 [31] - [39] (Palmer J, Mason P & Ipp JA agreeing).
In the present case, the Deed Administrators undertook an extensive marketing campaign which produced a number of responses. While the timeframe for the marketing campaign was more constrained than might be most conducive to obtaining the best price, that is also likely to be the case in a liquidation scenario.
The marketing campaign that was undertaken resulted in a transaction which was broadly equivalent to the acquisition of all of the Yeeda shares, with the discharge of the company's liabilities, for $55.8 million. That fell far short of the at least $110 million required to discharge Yeeda's liabilities in a liquidation scenario, even leaving the costs of the sale and liquidation out of account. The value of the highest non-binding indicative proposal received by the Deed Administrators was only $70 million.
There are of course differences between the transaction provided for in the DOCAs and the process of selling the assets of Yeeda and its subsidiaries which would be undertaken by a liquidator. A liquidator would not be in a position to sell Yeeda's shares but rather would be required to sell its assets. But there is no evidence to suggest that the marketing process which a liquidator might undertake of Yeeda's assets would be significantly superior to that in fact undertaken by the Deed Administrators.
The inference which we draw from evidence of the marketing process undertaken by the Deed Administrators is that there is no realistic prospect that a sale price of all of Yeeda's assets by a liquidator would be sufficient to provide any return to Yeeda's shareholders in a liquidation scenario. The Deed Administrators' extensive marketing campaign produced various responses all of which fell tens of millions of dollars below Yeeda's liabilities. The effective price paid by TLP4 for all of Yeeda's shares represented only about half of Yeeda's conservatively assessed liabilities. The extent of the disparity between the returns even suggested by the responses to the Deed Administrators' marketing campaign and those required to discharge Yeeda's liabilities and liquidation costs is enormous.
Even if the responses to the Deed Administrators' marketing campaign do not support a finding as to a particular value of Yeeda's assets, they indicate that it is fanciful to think that more than $110 million plus liquidation costs would be obtained from the sale of Yeeda's assets in a liquidation scenario.
There is no valuation evidence positively suggesting that the value of Yeeda's assets in a liquidation scenario might exceed $110 million plus liquidation costs, so as to produce any return to shareholders in that scenario.[183] Putting aside the valuers' opinion as to the value of the Abattoir in the Abattoir valuation report, the other evidence tends to support the inference we would draw from the Deed Administrators' marketing process. There is no challenge to the primary judge's findings that the value of the other assets of Yeeda and its subsidiaries is between $55 million and $66 million less than the relevant liabilities. There is no valuation evidence suggesting that the Abattoir (which is not currently operating, produced operating losses in all but one of its assessed operating years, is in a remote location, and requires significant further capital expenditure to resume operations) might bridge that gap.
[183] While senior counsel for Fitzroy referred to a report prepared by Deloitte Financial Advisory Pty Ltd for an investor in Yeeda, the opinions in the report were not verified by oath or affirmation, the authors of the report disclaimed having conducted a valuation (Green AB 457 and 483) and predicted that the realisation of assets in a liquidation scenario would only produce between $54.3 million and $37.5 million (Green AB 482).
In our view, the proper inference to be drawn from all of the evidence considered as a whole is that there is no realistic prospect of Yeeda's shareholders receiving any return in a liquidation of that company and its subsidiaries. It is common ground that liquidation is the only viable alternative to implementation of the DOCA. In these circumstances, we are satisfied that the transfer of all of the shares in Yeeda to TLP4 without any payment to Yeeda's shareholders will not unfairly prejudice the interests of those shareholders.
Having regard to that finding and all of the circumstances of the case, it is appropriate to exercise the court's discretion under s 444GA of the Act to grant leave to transfer all issued shares in Yeeda to TLP4.
Disposition - notices of contention
For the above reasons, the primary judge's order granting leave to transfer all of the shares in Yeeda to TLP4 was correct. We would uphold the Deed Administrators' notice of contention and grounds 1 and 2 of TLP4's notice of contention to that extent.
Orders
For the above reasons, which differ from those adopted by the primary judge, on 28 July 2025 we ordered that the appeal be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JE
Associate to the Honourable Justice Musikanth
5 AUGUST 2025
2
25
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