Henderson v Executor Trustee Australia Ltd - [2005] SASC 477

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
In the Estate of PHYLLIS MARY RONDAHL
HENDERSON v EXECUTOR TRUSTEE AUSTRALIA LTD & ORS
Judgment of The Full Court
(The Honourable Justice Debelle, The Honourable Justice Sulan and The Honourable Justice Anderson)
13 December 2005
SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - PROBATE AND LETTERS OF ADMINISTRATION
Administration pendente lite - dispute as to which of three wills is true will - administrator appointed to hold shares of deceased in company - company subject to takeover offer - potential beneficiaries of shares disagree whether to accept or reject takeover offer - whether administrator entitled to vote the shares at meeting of shareholders - held, administrator should not vote shares - appeal dismissed.
Corporations Act 2001 (Cth) s 9, s 257, s 438A, Part 5.3A; Supreme Court Rules 1987 (SA) R 104.13; Court of Probate Act 1857 (UK) s 70, referred to.
In the Estate of Hanna (1881) 7 VLR (IP & M) 44; Knox v MacKinnon (1888) 13 App Cas 753, applied.
Bellew v Bellew (1865) 164 ER 1437; Borlands Trustee v Steel Brothers & Co Ltd [1901] 1 Ch 279; Butt v Kelson [1952] Ch 197; Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12; Coopers Brewery Limited v Lion Nathan Australia Pty Ltd [2005] SASC 334; Coopers Brewery Limited v Lion Nathan Australia Pty Ltd [2005] SASC 400; Duffy v Super Centre Development Corporation Ltd [1967] 1 NSWR 382; Greenway v McKay (1911) 12 CLR 310; Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405; Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409; Re Bevan (deceased) [1948] 1 All ER 271; Re Manchester & Milford Railway Company; Ex parte Cambrian Rail Company (1880) 14 Ch D 645; Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207; Re Newdigate Colliery Ltd [1912] 1 Ch 468; Re Newdigate Colliery Ltd [1912] 1 Ch 468; Re Oakes [1917] 1 Ch 230; Tomkinson v Hersey (1983) 34 SASR 181; Whittle v Keats (1866) 35 LJ (P&M) 54, considered.

In the Estate of PHYLLIS MARY RONDAHL
HENDERSON v EXECUTOR TRUSTEE AUSTRALIA LTD & ORS
[2005] SASC 477
Full Court: Debelle, Sulan and Anderson JJ

DEBELLE J. This is an appeal from orders of a judge of this Court made on 25 November 2005, the effect of which is to direct an administrator pendente lite (“the administrator”) not to exercise voting rights in respect of shares held by him.
The issues in this appeal required urgent consideration. As will be seen, the appeal was in respect of orders made by Perry J on 25 November. Those orders concerned the ability of the administrator to vote at a meeting of shareholders to be held on 7 December. The Court heard the appeal on Friday 2 December, and on Monday 5 December it announced its decision. By a majority (Debelle and Anderson JJ, Sulan J dissenting) the Court granted leave to appeal but dismissed the appeal. The Court was not then in a position to publish detailed reasons but, given the imminence of the meeting on 7 December and the desirability of the parties having an understanding of the reasons for its decision, the members of the Court published brief summaries of their reasons. These are the detailed reasons for my decision.
A Disputed Will
In 1991 and until her death on 5 September 2002, Phyllis Mary Rondahl (“the testatrix”) held shares in Coopers Brewery Limited (“Coopers”). At the date of her death, the testatrix held 114,292 shares. That holding represents some 8.5 per cent of the issued shares in Coopers.
The testatrix made a number of wills in her lifetime. Her last three wills were made in 1991, 1992 and 1993.
On 14 November 2002 probate of a will made by the testatrix on 27 August 1993 (“the 1993 will”) was granted to the defendant Mary Phyllis Henderson (“Mrs Henderson”), the sole executor named in the will. To all intents and purposes Mrs Henderson is the sole beneficiary under that will. The only other person who benefits under the will is a great niece who receives a gift of jewellery. In response to a citation from the Probate Registry, the probate was surrendered to the Registrar in April 2003.
On 30 April 2003 Executor Trustee Australia Ltd (“the Trustee Company”) instituted this action seeking orders revoking the grant of probate of the 1993 will and pronouncing for the force and validity of a will made on 24 December 1992 (“the 1992 will”) or, in the alternative, in favour of a will made by the testatrix on 4 September 1991 (“the 1991 will”). The Trustee Company and Mrs Henderson are the joint executors named in both the 1991 will and in the 1992 will.
The Gift of the Shares in Coopers
In each of her three wills, the testatrix made bequests of her shares in Coopers. In both the 1991 will and the 1992 will the testatrix divided her shares in Coopers between five of her nephews and nieces including Mrs Henderson. The other four nephews and nieces were William Thomas Cooper, Maxwell Cooper, Timothy James Cooper and Beth Berry, who for convenience I will call “the four nephews and nieces”. In the 1993 will the testatrix not only appointed Mrs Henderson as sole executor and trustee of her estate, but also gave the residue of the estate to Mrs Henderson. The effect of the gift of the residue to Mrs Henderson was that she gave all her shares in Coopers to Mrs Henderson.
In this action, the Trustee Company alleges that the 1993 will is invalid on the ground that the testatrix lacked testamentary capacity and on the further ground that the testatrix did not know and approve of the contents of the will. Mrs Henderson is defending the claim. She alleges that two medical practitioners reported in writing that they believed that the testatrix had testamentary capacity to make her will, which was drawn by the solicitor for the testatrix. Mrs Henderson also counterclaims for an order pronouncing for the force and validity of the 1993 will or, in the alternative, for the 1992 will.
On 2 July 2003 this Court directed that citations be served upon certain beneficiaries under the 1991 will and the 1992 will. On 12 November 2003 those beneficiaries obtained leave to intervene in the proceedings. The interveners are the four nephews and nieces. The interveners adopted the allegations of the Trustee Company and supported the orders it seeks in the action. By order made on 4 November 2005 the four nephews and nieces were joined as plaintiffs in the action.
The issues in this appeal stem from two events. The first is the contest between the parties as to which of the three wills made by the testatrix is her true will. The other is an offer announced on 1 September 2005 by Lion Nathan Ltd (“Lion Nathan”) that it proposed through its subsidiary Lion Nathan Australia Pty Ltd (“Lion Nathan Australia”) to takeover the shares of Coopers.
An Administrator is Appointed
After the death of the testratrix no person was registered as the holder of her shares in Coopers. It appears that dividends payable in respect of those shares were paid into the trust account of Mrs Henderson’s solicitor. On 13 September 2005, after Lion Nathan had announced the takeover offer, Mrs Henderson applied to this Court for an order that an administrator pendente lite be appointed to hold the shares of the testatrix in Coopers. In her affidavit in support of the application, Mrs Henderson deposed to the dispute as to which of the wills of the testatrix was the true will and also to the takeover offer. She deposed also to the intention of the Board of Coopers to call a meeting of shareholders to amend the Articles of Association of Coopers to remove all reference to Lion Nathan Australia, which amendment could have the effect of defeating the takeover offer by Lion Nathan. I will later refer in more detail to that meeting. Mrs Henderson sought an order that a person independent of the parties to this action be appointed, pending the determination of the issues in the action, with power to exercise the voting rights attached to the shares. She also stated that she proposed to express to the administrator her views as to how those voting rights should be exercised. In addition, she sought an order that the administrator have power to exercise the voting rights in respect of shares and to retain or sell the shares according to his opinion as to what was in the best interests of the estate and subject to the directions of the court.
By orders dated 22 and 27 September, Perry J appointed Mr J R Hart administrator of the 114,292 shares held in Coopers by the estate of the testatrix. Mr Hart was the administrator proposed by Mrs Henderson. Perry J also ordered that the administrator be registered as the holder of the shares but that he be restrained from dealing with the shares in any way or from exercising the voting rights of the shares without first obtaining an order of the Court.
The Administrator Applies to Vote
On 23 November 2005 the administrator applied for orders varying the orders of Perry J made on 22 and 27 September 2005 to enable him to exercise the voting rights attached to the shares at two meetings of the shareholders of Coopers. Those meetings were Extraordinary General Meetings to be held on 29 November 2005 and on 7 December 2005. As will be seen, the date for the first meeting was later changed to 7 December 2005. I will later refer in more detail to the intended business of these meetings.
The Application is Refused
On 25 November 2005 Perry J refused the application in respect of the meeting called on 29 November. The parties had indicated that, if such an order was made, there was a possibility that they may be able to achieve a common position as to the administrator’s role at the second meeting on 7 December. Perry J therefore adjourned consideration of that part of the application which related to that meeting. Perry J published ex tempore reasons for his decision. By notice dated 28 November 2005 Mrs Henderson appealed to this Court against that decision. Lest the orders made by Perry J are interlocutory orders, Mrs Henderson has also applied for leave to appeal. Given the imminence of the two meetings, this Full Court was urgently convened.
That brief overview of the facts does not spell out in sufficient detail the terms of the three wills nor the events which have followed the announcement of the Lion Nathan bid for shares in Coopers. Those facts are set out below. I deal first with the terms of the three wills and then the events associated with the Lion Nathan bid. I will then note the questions which led to the administrator’s application dated 23 November 2005.
Although Mrs Henderson did not state in her affidavit how she proposed to direct the administrator how to vote, it is abundantly clear from submissions made on her behalf that she seeks to do all that is necessary to sell her shares at the highest available price. Equally, it is clear that the four nephews and nieces oppose the takeover and wish existing shareholders to retain control of Coopers.
The Structure of the Wills
The 1991 Will
By the 1991 will, the testatrix appointed the Trustee Company and Mrs Henderson as joint executors and trustees of her estate. By cl 3 of that will the testatrix made bequests of certain items of her personal estate, including her shares in Coopers. The bequests in respect of the shares were
·her A class shares to her cousin Geoffrey Day Thomas Cooper and, if he should predecease her, to his son James Cooper. At her death the testatrix held no A class shares;
·25,000 shares to each Beth Berry, William Thomas Cooper and Mrs Henderson;
·25,000 shares, including certain B class shares identified by the testatrix, to Maxwell Cooper; and
·other identified B class shares to her great‑nephew Timothy James Cooper
By cl 5 of the 1991 will she directed her trustees to pay substantial legacies to a number of beneficiaries. One was a legacy of $100,000 to Mrs Henderson.
By cl 7 of the 1991 will the testatrix directed the trustees to divide the residue of her estate into six equal parts to be divided equally between five nephews and nieces provided they were living at her death, with the sixth part being paid to named beneficiaries. The five nephews and nieces who shared in the residue were the four nephews and nieces (Maxwell Cooper, William Thomas Cooper, Beth Berry and Elizabeth Banks) and Mrs Henderson. If any of them should have predeceased the testatrix, the children of those beneficiaries were to take the share the parent would have taken. All five nephews and nieces survived the testatrix.
The 1992 Will
By her 1992 will the testatrix appointed the Trustee Company and Mrs Henderson as joint executors and trustees of her estate. By cl 4 and cl 5 of the 1992 will she divided certain items of personal estate between William Thomas Cooper, Maxwell Cooper and Mrs Henderson.
By cll 6, 7 and 8 she bequeathed her shares in Coopers in three parcels, namely,
·35,000 shares to be divided equally between William Thomas Cooper and Mrs Henderson;
·35,000 shares, including certain identified B class shares, to Maxwell Cooper; and
·the balance of her shares, including other identified B class shares, to Timothy James Cooper.
By cl 9 of the 1992 will the testatrix gave directions to her trustees as to payments out of the residue of her estate of substantial pecuniary legacies. Those legacies were similar to those made in the 1991 will but a few alterations were made. The pecuniary legacy of $100,000 to Mrs Henderson remained. As to the balance of the estate remaining after the payment of the pecuniary legacies, the testatrix directed that it should be paid to Mrs Henderson and, if Mrs Henderson did not survive the testatrix, to any child or children of Mrs Henderson.
The 1993 Will
By cl 2 of the 1993 will the testatrix appointed Mrs Henderson the sole executor and trustee of her will. By cl 3 she gave an item of jewellery to her great niece. By cl 4 she gave the whole of the residue of her estate, which included all her shares in Coopers, to Mrs Henderson. In the event that Mrs Henderson did not survive the testatrix, Mrs Henderson’s husband was appointed the sole executor and trustee and the residue of the estate was bequeathed to two children of Mrs Henderson.
The contrast between the terms of the 1993 will and her two previous wills is striking in a number of respects. For present purposes, it is sufficient to note that the shares in Coopers held by the testatrix are divided among four or five nephews and nieces (including Mrs Henderson) in the 1991 will and in the 1992 will but they all go to Mrs Henderson under the 1993 will.
The Articles of Association
Before referring to the takeover bid by Lion Nathan, it is necessary to notice some of the provisions in the Articles of Association of Coopers. Those Articles contain restrictions on the transfer, and the registration of transfers, of shares in Coopers. Save where there is a transfer of shares inter vivos or by a testamentary disposition to a member’s relative, a person proposing to transfer shares must give a Transfer Notice to the company. The Transfer Notice initiates a procedure whereby the shares must be offered by the directors first to an existing member or a member’s relative. If no member or member’s relative is willing to purchase all or any of the shares, the remainder must be offered to the trustees of the Coopers Superannuation Fund. If the trustees of the fund are not willing to purchase all or any of the shares, Article 49 requires that they must be offered to Lion Nathan Australia. Any unsold shares remaining may then be offered to any person. The Articles contain provisions for fixing the value of shares which may be transferred between the vendor and the purchaser. The entitlement of Lion Nathan Australia to purchase has been described as the “third tier pre‑emptive right of purchase”. Part of the history relating to Lion Nathan Australia’s third tier pre‑emptive right of purchase is set out in the judgment of this Court in Coopers Brewery Ltd v Lion Nathan Australia Pty Ltd [2005] SASC 400.
The effect of Article 44 of the Articles of Association is that, if there is a change in control in any member, that member is deemed to have offered to sell all of its shares to the other members. Lion Nathan Australia is not a member of Coopers. On its face Article 44 does not apply to it. However, it is necessary to have regard also to regs 6, 7 and 8 of the Memorandum of Association of Coopers. Those regulations provide:
6.     A special resolution:-
(a)     altering or omitting Articles 38 to 54 (inclusive) or 143 of the Articles of Association of the Company; or
(b)     purporting to amend or delete an existing article or insert a new article, which is inconsistent with the rights granted to Lion Nathan Australia Pty Limited (ACN 008 596 370);
does not have any effect unless and until the consent of Lion Nathan Australia Pty Limited (ACN 008 596 370) is obtained.
7.A special resolution altering or omitting regulation 6 of the Memorandum of Association of the Company, does not have any effect unless and until the consent of Lion Nathan Australia Pty Limited (ACN 008 596 370) is obtained.
8.Regulations 6 and 7 of this Memorandum of Association will cease to have effect on a Change in Control (as that term is defined in Article 44 of the Articles of Association as at the date of adoption of this Regulation) of Lion Nathan Australia Pty Limited (ACN 008 596 370) or if Lion Nathan Australia Pty Limited (ACN 008 596 370) and its related bodies corporate cease to be substantial brewers of beer.
In the action in this Court entitled Coopers Brewery Ltd v Lion Nathan Australia Pty Ltd Coopers sought a declaration that there had been a change in the control of Lion Nathan Australia. It relied on the fact that a Japanese brewer, Kirin Brewing Co Limited, had acquired approximately 45 per cent of the shares in Lion Nathan, the publicly listed company of which Lion Nathan Australia is a wholly owned subsidiary. On 2 September 2005 Perry J held that Kirin Brewing Co Limited had acquired a relevant interest in more than 40 per cent of the issued shared capital of Lion Nathan Australia within the meaning of Article 44 so that there had been a change of control of Lion Nathan Australia within the meaning of reg 8: Coopers Brewery Ltd v Lion Nathan Australia Pty Ltd [2005] SASC 334. Lion Nathan Australia appealed to the Full Court against that decision. The Full Court dismissed the appeal on 19 October: Coopers Brewery Ltd v Lion Nathan Australia Pty Ltd [2005] SASC 400. On 16 November Lion Nathan Australia applied for leave to appeal to the High Court of Australia.
The Takeover Bid
On 1 September 2005 Lion Nathan publicly announced that it intended to make an offer to takeover the shares in Coopers. The price offered by Lion Nathan was $260 per share. That price was almost six times the price of $45.01 offered by Coopers in 1993 as the price to buy-back shares in the company.
By letter dated 2 September 2005 the Board of Coopers stated that it had not yet considered the offer and asked shareholders not to act on the offer until Coopers published its Target Statement. In that letter the Board also informed shareholders that it had been successful in the action Cooper Brewery Ltd v Lion Nathan Australia Pty Ltd and that the shareholders of Coopers were entitled to amend the Articles of Association of Coopers to remove Lion Nathan Australia’s third tier pre‑emptive right of purchase.
A Meeting to Amend the Articles is Called

By letter dated 21 September 2005 the Board of Coopers informed shareholders that more than five per cent of shareholders had requisitioned a meeting of shareholders to consider and, if thought fit, approve amendments to the Articles of Association of Coopers to remove references to Lion Nathan Australia. If carried, the effect of the resolution would be to remove the third tier pre‑emptive right of purchase of Lion Nathan Australia. Another effect of the resolution would be to defeat the Lion Nathan takeover bid. The letter gave notice that the meeting had been called for 20 October.
On 28 September 2005, Lion Nathan Australia commenced proceedings in the Federal Court of Australia seeking to restrain the holding of the Extraordinary General Meeting on 20 October 2005. As a consequence of orders made by the Federal Court the meeting was adjourned to a date to be fixed. On 18 November 2005 the Federal Court ordered that the meeting be reconvened. On the same day the Board of Coopers reconvened the meeting for 29 November. A later order of the Takeovers Panel required that the meeting be postponed to 7 December 2005.
A Bidding War
On 30 September 2005 Lion Nathan sent its Bidder Statement to shareholders of Coopers.
On 15 November the Board of Coopers published its Target Statement recommending to shareholders that they reject the offer. The statement said, among other things,
·that the offer did not reflect the full control value of Coopers;
·that the offer was not fair and reasonable; and
·that Coopers was offering to buy-back up to 15 per cent of the shares and thereby provide an alternative means by which shareholders could sell their shares.
On the same day, 15 November, the Board of Coopers gave notice of an Extraordinary General Meeting of the shareholders of the company to be held on 7 December 2005. The purpose of the meeting was to pass a special resolution to amend the Articles of Association to enable Coopers to buy-back shares in the company and to approve the buy-back offer. The price for the shares in the buy‑back offer was $260 per share.
On 21 November Lion Nathan increased its offer to purchase the shares in Coopers from $260 per share to $310 per share.
A Summary of Relevant Facts
The factual background against which the administrator applied for directions permitting him to exercise the voting rights attaching to the Coopers shares might be shortly stated.
1.On 1 September 2005 Lion Nathan announced a takeover offer to acquire the shares in Coopers for a price of $260. On 30 September it sent shareholders in Coopers its Bidder Statement.
2.On 15 November Coopers published its Target Statement advising shareholders not to accept the offer and announcing a proposal to amend its Articles to enable a buy‑back of 15 per cent of its shares at a price of $260 per share.
3.On 21 November Lion Nathan increased its takeover offer to $310 per share.
4.On 7 December 2005 two important meetings of shareholders will be held.
(a)At the first meeting the motion before the shareholders is to remove all reference to Lion Nathan Australia from the Articles of Association of Coopers. That will effectively remove the third tier pre‑emptive rights of Lion Nathan Australia to purchase shares in Coopers. The practical effect of the motion, if carried, will be to preclude Lion Nathan from becoming a shareholder in Coopers. As it is a resolution to amend the Articles of Association, this resolution is a special resolution which will be carried only if at least 75 per cent of the votes cast by members entitled to vote are in favour of the resolution. The administrator’s assessment is that the voting rights attached to the shares now registered in his name will be critical to the outcome of that voting.
(b)The second meeting will consider a motion which, if carried, will enable Coopers to implement its buy-back offer of 15 per cent of the shares in Coopers. This goal would be effected by carrying a special resolution to amend the Articles of Coopers to authorise the buy-back offer and a second ordinary resolution to approve the buy-back offer pursuant to s 257C(1) of the Corporation Acts 2001 (Cth).The special resolution to amend the Articles to authorise the buy-back offer will also require 75 per cent of the votes of members entitled to vote. The effect of the second resolution, if carried, is that Lion Nathan’s offer will lapse unless it is varied by Lion Nathan. That is a consequence of the fact that Lion Nathan’s offer contains conditions that there must be no change to the Articles of Coopers and that there must be no prescribed occurrences. The takeover offer defines “prescribed occurrences” to include entry by Coopers into a buy-back arrangement.
5.The testatrix made three wills in 1991, 1992 and 1993. In this action, the Court will determine which of those three wills is the true will of the testatrix.
6.The terms of each the 1991 will, the 1992 will and the 1993 will differ as to the disposition of shares in Coopers held by the testatrix. In the 1991 will and in the 1992 will, the shares are divided between the four named nephews and nieces and Mrs Henderson. In the 1993 will Mrs Henderson is given all of the shares.
7.The testatrix held a total of 114,292 shares in Coopers which represents 8.5 per cent approximately of the issued capital of Coopers.
8.In consequence of the orders of Perry J made on 22 and 27 September 2005, the administrator is registered as the holder of the shares formerly held by the testatrix but has no power to vote unless directed by this Court to do so.
The Administrator’s Application
In his affidavit sworn in support of the application dated 23 November to be able to exercise the voting rights attached to the shares in Coopers the administrator expressed his views as to balancing the interests of the parties to this action in respect of the first meeting to be held on 7 December to alter the Articles of Coopers to remove all reference to Lion Nathan Australia.
29.At present, shareholders of Coopers can sell their shares, in accordance with the Articles, to such members as are prepared to pay the agreed price or fair value for the shares or failing that, to the Coopers superannuation fund or failing that, to Lion Nathan.
30.In determining fair value for the shares the auditor appointed by Coopers is likely to be required to have regard to the fact that Lion Nathan, being a party entitled to acquire these shares, is prepared to pay $310 a share for them. In this regard see page 78 of JRH1. To exclude this fact from consideration would be to ignore a relevant consideration, namely the amount which an eligible potential purchaser is willing to pay for the shares.
31.On or about 28 September 2005, KPMG fixed the fair market value of class C Coopers shares at $260 per share. This value took into account Lion Nathan’s first offer of $260 per share. KPMG further assessed that if it was to exclude Lion Nathan’s first offer from consideration, the value of class C shares would be $190 per share. In this regard see page 22 of the Coopers target statement at page 115 of JRH1.
32.In seeking to oppose the First Resolution, shareholders against the First Resolution may argue that:
32.1If the First Resolution is approved and Lion Nathan is precluded from becoming a member of Coopers, then the auditor will not be required to have regard to the price offered by Lion Nathan in determining fair value.
32.2If the Articles are amended to remove Lion Nathan’s third tier pre‑emptive rights and Lion Nathan’s entitlement to be registered as a member of Coopers, Coopers’ shareholders who wish to sell their shares may receive a substantial discount to the value they would have received if Lion Nathan was able to acquire the shares.
33.In seeking to pass the First Resolution the shareholders in favour of the First Resolution may argue that:
33.1It is not in the interest of Coopers to have a competitor (Lion Nathan) on the share register.
33.2It is not fair that acquiring shareholders should have to pay a premium over what would otherwise be fair value when this premium only reflects the value available to a competitor.
34.However, in my view, under the existing Articles, members of Coopers can prevent Lion Nathan from attaining membership by offering to purchase any shares offered at the asking price or at fair value as determined by the auditor. It is only if existing shareholders, and then the Coopers superannuation fund, are not willing to pay selling shareholders the asking price or what the auditor assesses is the fair value, that Lion Nathan has any possibility of becoming a member of Coopers.
35.Having considered the submissions of each party it is my assessment that there is potential for prejudice whichever way I vote.
36.If I vote against the First Resolution, and the pre‑emptive provisions in the Articles which allow Lion Nathan to become a member of Coopers remain, the Second Lion Nathan Offer may be accepted by some shareholders. However, this will only result in Lion Nathan becoming a member if no other member of Coopers, or the Coopers superannuation fund, agree to purchase the shares at the asking price or at the fair value as fixed by the auditor.
37.If Lion Nathan was to become a member of Coopers this would be likely to prejudice the interveners, as the interveners assert a strong desire that Lion Nathan not become a member of Coopers.
38.If I vote in favour of the First Resolution, and the pre‑emptive provisions in the Articles which allow Lion Nathan to become a member of Coopers are removed, Lion Nathan will be unable to become registered as a member of Coopers and all Coopers shareholders will be precluded from accepting any Lion Nathan offer. This may result in detriment to the defendant in that she has asserted a strong desire to accept the proposed Second Lion Nathan Offer.
39.I consider that balancing the interests of the respective parties to this litigation favours my seeking to maintain the status quo with respect to the Articles until the Court adjudicates on all relevant issues, including both the dispute as to the validity of the wills of the deceased, and the determination of any appeal against the decision of the Full Court of the Supreme Court in Coopers Brewery Ltd v Lion Nathan Australia Pty Ltd [2005] SASC 400.
40.I do not consider that I should try to predict how the deceased would have voted and act in accordance with that prediction. Quite apart from the difficulty of obtaining satisfactory evidence to be able to assert confidently how the deceased would have voted, it is my understanding that my appointment does not necessarily require me to act as the deceased would have acted, but rather to seek to protect the relevant portion of the estate comprising the Coopers Shares whilst the validity of the various wills is determined by the Court.
41.I do not consider that I should exercise the right to vote attaching to the Coopers Shares in a manner which would prevent those ultimately entitled to the Coopers Shares from accepting or not accepting any takeover offer which has or may be made by Lion Nathan. Although, the failure of the First Resolution to be passed might enable the Lion Nathan offer to be accepted, it is also possible that Lion Nathan might not be registered as a member of Coopers and that there will be a further opportunity to convene an EGM of shareholders of Coopers to alter the Articles once these proceedings have been resolved and the proper beneficiaries determined. If the First Resolution is passed it is likely to have the effect of precluding any Lion Nathan offer for all time and the current status quo will be lost.
It is unnecessary to deal with the second meeting on 7 December as the parties informed Perry J that there was a possibility they might be able to achieve a common position as to the administrator’s role at that meeting. On the hearing of the appeal there was no suggestion to the contrary.
The Reasons of Perry J
Perry J expressed his reasons for dismissing the application of the administrator in these terms:
16The administrator has made a genuine attempt to set out relevant considerations to assist the Court in determining the application. He has marshalled the various considerations and materials which bear on the decision to be made. I accept that the view which he ultimately offers is a view which he genuinely holds as to how the balancing out of the interests of the respective parties should best be approached.
17In his affidavit, he concedes that whichever way he might vote, there is potential for prejudice to the interested parties on one side or the other.
18He offers the view, based largely on economic considerations relative to his opinion as to the likely effect on the value of the shares, that he should be permitted to vote against the resolution. This would preserve the position of Lion Nathan, if the motion was to be lost, as the holder of a third-ranking pre-emptive right to purchase shares.
19The difficulty I have in accepting that view as determinative of the application, is that clearly there are other considerations involved which do not relate entirely to the question of the value of the shares or preservation of the value of the shares. In any event, it is impossible to say whether the long-term value of the shares would best be preserved by voting one way or another on the resolution in question.
20It is clear from the material that has been brought into court that commercial opinion from experienced persons as to that aspect of the matter is by no means unanimous. For example, the directors of Coopers clearly take a different view.
21Putting aside economic considerations, I do not think that it would be right for the Court to sanction a particular exercise of the voting rights attached to the shares when:
·       the ultimate beneficiaries of the shares cannot at this stage be identified;
·       the views between those who might possibly succeed to the shares, as to how the voting rights should be exercised, differ markedly; and
·       voting on the shares could irreversibly and adversely affect some of the interested parties.
22I point out also, that the present situation would have been avoided if the parties to the action in which the validity of the various wills is to be resolved, had proceeded with those proceedings in a timely fashion. The plaintiffs and the defendants have each blamed the other for the delays in bringing the proceedings which were commenced in April 2003, to trial. However, it does not matter who might be said to be to blame. The fact remains that the defendant has always had the ability to seek orders to push the matter along.
23In that sense, the present situation is a product of her own failure to do so.
24I have carefully considered the arguments put by counsel, but I have reached the firm view that, in all the circumstances, it would not be proper to allow Mr Hart to participate in the meeting of 29 November or to vote with respect to the resolution that is to be considered by that meeting.
SOME PRELIMINARY CONSIDERATIONS
No Evidence of Likely Voting
It must be emphasised at the outset that the Court does not know how votes will be cast at the meetings on 7 December. There is no evidence before the Court about that fact nor should there be. The Court will not make any assumptions as to how votes of shareholders other than the protagonists in this action might be cast at the meeting. Mrs Henderson seeks an order permitting the administrator to vote so as to defeat the motion to amend the Articles and thereby enable her to accept the Lion Nathan offer. The four nephews and nieces oppose that course and it is reasonable to infer that their attitude stems from the view that the takeover offer should not be accepted. There is evidence that the Board of Coopers is opposed to the takeover. There may well be shareholders who support or oppose the view of the Board. These are not relevant considerations. The Court’s decision will turn only on the relevant legal principles.
It cannot be too strongly emphasised that a court will not lightly make an order to prevent a person from exercising the voting rights attached to shares in a company. There are a number of reasons for that. One is that such an order has the potential to alter the balance as between shareholders in the company. However, too much emphasis should not be given to this factor as plainly there might be a number of reasons why some of the shareholders entitled to vote might not vote or, if intending to vote and not having sent a proxy, they fail for one reason or another to attend the meeting. In short, other factors may alter the balance between shareholders. That is no more than a recognition of the ordinary contingencies of life.
It was contended for Mrs Henderson that, if it stands, the order of Perry J affects the voting at the meeting of shareholders by removing some 8.5 per cent of the votes. A special resolution is a resolution that has been passed by at least 75 per cent of the votes cast by members entitled to vote: s 9 of the Corporations Act 2001. It was said that the consequence of removing this parcel of 8.5 per cent of the votes would be that the number of votes required to carry the special resolution will be reduced from at least 75 per cent of the votes to at least 68.625 per cent of the votes, with a corresponding increase in the numbers of votes required to defeat the resolution. That contention is not correct. It is based on flawed arithmetic. The percentage of votes required to carry the special resolution will depend on the number of members entitled to vote who in fact vote at the meeting. The removal of 8.5 per cent of the votes has the consequence that the special resolution will be carried if at least 75 per cent of the votes actually cast at the meeting are in favour of it. If all of the other members of Coopers vote at the meeting, that is to say, if all of the remaining 91.5 per cent of the members vote, the special resolution will be carried if at least 68.625 per cent vote in favour of it. However, it will be defeated if more than 22.875 per cent vote against it. In short, the removal of the parcel of 8.5 per cent of the shares results in a reduction in the number of votes required to defeat the resolution as well as in the number of votes required to carry it. However, to fix on a percentage is a meaningless exercise because the Corporations Act requires at least 75 per cent of those who vote at the meeting to vote in favour of the resolution. Another matter to be weighed against the contention that an order dismissing the appeal removes some 8.5 per cent of the votes is the fact that, but for the appointment of the administrator, no person had any entitlement to exercise the voting rights of the shares held by the testatrix.
For these reasons, the removal of 8.5 per cent of the shares from voting will have an effect upon the shares but that effect should not be over‑estimated. What is relevant for present purposes is that whatever the effect may be, it will not be as substantial an effect as permitting the administrator to vote in favour or against the motion to amend the Articles at the first Extraordinary General Meeting. As the administrator acknowledged in his affidavit, whatever way he might vote there is potential for prejudice to the interested parties on one side or the other.
A Potential Loss
One issue was to what extent the successful carriage of the motion to amend the Articles to remove all references to the name Lion Nathan Australia and its third tier pre‑emptive rights might affect the financial interests of Mrs Henderson and any other shareholder who might wish to accept the Lion Nathan offer. That will in part depend on whether the shareholders also carry the second resolution to approve the amendment to the Articles to enable the buy-back offer to proceed. On any view, if the motion to amend the Articles to delete all reference to Lion Nathan Australia is carried and the motion to amend the Articles to allow the buy-back offer to proceed is also carried, shareholders wishing to accept the Lion Nathan offer will lose at least $50 per share, that is to say, the difference between the bid of $310 by Lion Nathan and the buy-back price of $260. It might be necessary also to have regard to the fact that the buy-back offer proceeds on the footing that the price of $260 will be paid over a period of time. If the second resolution to enable the buy-back offer to proceed is not carried, the loss will be even greater. There was some debate whether in that event the shares would fall in value to $190 or some other figure. It is not necessary for the Court to determine that question. It is sufficient to note that, on any view, the value of the shares will fall from the offer price of $310 to a substantially lower value.
Two Qualities of Shares

It was implicit in the submissions on behalf of Mrs Henderson and the administrator that the benefit of holding shares in the company is to be measured in financial terms only in that shares provide an entitlement to dividends and potential capital gain if the value of the shares increases. That contention overlooks another important quality of a share in a company. It is correct that a share has the potential to provide financial benefits. As Farwell J noted in Borlands Trustee v Steel Brothers & Co Ltd [1901] 1 Ch 279 at 288, a share is not a sum of money but is the interest of the shareholder in the company measured in terms of money. But the benefit of holding shares in a company is not confined to potential financial profit. It includes also the capacity to exercise control over the company, either alone or in combination with other shareholders, by exercising the voting rights attached to the shares in general meetings of the shareholders. As Professor Gower noted in Modern Company Law (4^th ed) at 401:
Nor must this emphasis on the proprietary and financial aspects of a shareholder’s rights obscure the important fact that his shares cause him to become a member of an association with the right to take part in its deliberations by attending and voting at general meetings.
There will be instances where a shareholder might believe that his best interests are served by retaining control, even if the price for retaining control is to forego capital gain, even a substantial capital gain. It is not necessary to explore all of the reasons why a shareholder might act in that way but one obvious reason is that a shareholder might take the view that in the long term the financial rewards will equal or better the price offered for his or her shares. The issues in this appeal provide an example of these two qualities of a share and how shareholders may justifiably have different views whether to accept an offer for their shares substantially in excess of their value before that offer and so make a substantial capital gain or, instead, reject the bid and seek to retain control of the company.
The Role of the Administrator
The power to appoint an administrator pendente lite in Supreme Court Rule 104.13 is modelled on the terms of s 70 of the Court of Probate Act 1857 (UK). The appointment can only be made where there is an action pending in which there are issues as to the grant of probate. If no such action is pending, the Court may appoint a receiver to get in and manage the assets of the estate until the persons entitled to the estate are determined. The jurisdiction and its history was explained by Lord Greene MR in Re Bevan (deceased) [1948] 1 All ER 271 at 272 ‑ 273 in these terms:
For a very long time – indeed from shortly after the passing of the Court of Probate Act 1857, which gives power to the court to appoint an administrator pendente lite – it has been the settled practice of the Probate Division to follow the practice of the Chancery Division in the matter of appointing a receiver pendente lite. If it were not so, the result would be unseemly racings to go to one court or the other and the possibility of a conflict between the two courts, the Probate Court refusing an administration pendente lite and the unsuccessful applicant immediately going to the Chancery Division and getting a receiver appointed. It was to avoid that happening that this practice was instituted as long ago as 1865. I might refer to the decision of Sir JP Wilde, in Bellew v Bellew, a probate action where the deceased possessed no real estate, but had an unexpired term of a lease and cash and bonds of various kinds, an estate of ₤24,000 in value. The plaintiff and several of the parties cited applied in the Chancery Division for the appointment of a receiver. The defendants moved the Court of Probate for an administrator pendente lite. Sir JP Wilde gave a judgment in which he pointed out that in the Probate Court an application for the appointment of an administrator required some special circumstances to be shown. He said:
“I take it, therefore, that it is plain that the practice of the Ecclesiastical Courts and of this court [ie, the Court of Probate] has been only to grant administration pendente lite in cases where necessity for the grant is made out.”
He went on to say that the proper thing to do was to go to the Chancery Court in that case, and he refused the application to himself because there was pending an earlier application to the Court of Chancery which had ample jurisdiction to deal with the matter. He said:
“It would be improper to depart in this case from the practice hitherto followed in this court, and I therefore refuse to appoint an administrator pendente lite. I have taken some pains to ascertain whether the rule of the Court of Chancery with regard to the appointment of a receiver is wider than the rule of this court with regard to the appointment of an administrator pendente lite, and I think that it is. The rule of the Court of Chancery appears to be, that wherever there is a bona fide suit pending, the court will appoint a receiver quite irrespective of the condition of the estate, or of the person who has the actual possession of it, on the ground that while the suit is pending there is no one legally entitled to receive or to hold the assets, or to give discharges. I wish to give notice that I shall in future assimilate the practice of this court to that of the Court of Chancery, and that I shall grant administration pendente lite wherever the Court of Chancery would appoint a receiver; for I do not think it right that a party suing in this court should be put to the inconvenience of making an application to the Court of Chancery when it is in the power of this court to assist him.”
There the practice for the future was laid down by Sir JP Wilde, and it is a practice which has been followed since. (Citations omitted)
Observations to a like effect were made in Re Oakes [1917] 1 Ch 230. The appointment of an administrator pendente lite is, therefore, analogous to the appointment of a receiver.
There is a distinction between a receiver and a receiver and manager. The latter has the power to manage the property in respect of which he has been appointed: Re Manchester and Milford Railway Co; Ex parte Cambrian Railway Co (1880) 14 Ch D 645 per Jessel MR at 653; Re Newdigate Colliery Ltd [1912] 1 Ch 468 at 472. An administrator, like a court‑appointed receiver, is a caretaker of the assets until the persons entitled to them are ascertained: Re Bevan (deceased) (supra) at 272. The powers of each are more limited than those of a receiver and manager. In Duffy v Super Centre Development Corporation Ltd [1967] 1 NSWR 382 at 383 – 384 Street J drew a distinction between a privately appointed receiver and a receiver appointed by the court. He said:
To some extent the privately appoint receiver, particularly in current commercial practice, makes an effort to restore the financial prosperity of the company whose affairs he has been appointed to administer by a debenture holder. A Court appointed receiver does not fill the same position. He is not so much what might be described as a company doctor, but rather his function is that of a company caretaker. His function is not so much to restore profitability. It is rather to preserve those assets of the company upon which its fortunes may be dependent and to preserve its potentiality for earning profits in the future.
Those remarks have been criticised in Meagher Gummow and Lehane, Equity Doctrines and Remedies (4^th ed) at [28-040]. Counsel for Mrs Henderson relied on that passage submitting that in this case the administrator was under a duty to preserve the value of the shares in Coopers held by the estate. The submission seeks to draw too much from the remarks of Street J. It is true that a receiver appointed by the court is a caretaker. However, when considering the duty to preserve the assets, in this case the shares held by the estate, it is necessary to consider all the relevant facts. In Duffy v Super Centre Development Corporation Ltd, the dispute was between minority and majority shareholders in the company. Preservation and enhancement of the value of the shares would ultimately benefit both. By contrast, in this case the potential beneficiaries have different views whether the best interests of shareholders are served by accepting the Lion Nathan bid or rejecting it. In other words, there is no rule of thumb of universal application which governs the powers and duties of an administrator which can be applied by the court when called upon to give directions to the administrator. Plainly, each case will depend upon its own individual facts and circumstances.
There is not, in my view, any prescribed role for an administrator pendente lite. The role of such an administrator will vary according to the circumstances in which he is appointed and the purpose for which he is appointed. The fact that R 104.13(3) provides that the administrator is subject to the control of the Court and must act under its direction serves to emphasise that proposition. As Griffiths CJ said in Greenway v McKay (1911) 12 CLR 310 at 315:
The general jurisdiction of the court to make limited grants of administration is well known, and arises from the necessity of the case.
Those limited grants of administration include the appointment of an administrator pendente lite. In Williams, Mortimer & Sunnucks, Executors Administrators & Probate (18^th ed) at paras 24 – 49 the object of appointing an administrator is explained in these terms:
The object of such a grant is to ensure that the estate of the deceased is managed and preserved for the benefit of those found to be entitled thereto.
The duty of an administrator pendente lite is, therefore, to get in the assets of the estate and manage and preserve them for the benefit of those found to be entitled to those assets.
Although an administrator is not a trustee, the duty to manage and preserve the assets for the benefit of those found to be entitled to them is similar to that aspect of a trustee’s duty which requires the trustee to act impartially as between the beneficiaries: Knox v MacKinnon (1888) 13 App Cas 753 at 768. An administrator like a trustee, therefore, cannot prefer the interests of one class of beneficiaries over another. The administrator is able to manage and deal with the assets of the estate where the potential beneficiaries agree and the court gives directions to do so: Whittle v Keats (1866) 35 LJ (P&M) 54. However, where the potential beneficiaries cannot agree and the course of conduct proposed by the administrator might adversely affect one or more of those beneficiaries, the court will, as a general rule, give directions which will preserve the status quo: In the Estate of Hanna (1881) 7 VLR (IP & M) 44.
It was contended on behalf of both Mrs Henderson and the administrator that the duties of the administrator are the same as those of an administrator appointed under Part 5.3A of the Corporations Act 2001 (Cth). The contention misconceives the role of an administrator pendente lite. As is apparent from the terms of ss 437A to 437F of the Corporations Act, an administrator appointed under Part 5.3A controls the company’s business, property and affairs and may carry on that business and manage its property and affairs and, in doing so, may perform any function and exercise any power that the company or any of its officers could perform or exercise. The duty of that administrator is to investigate the company’s business, property, affairs and financial circumstances and form an opinion whether it would be in the best interests of the creditors of the company for the company to execute a deed of company arrangement, for the administration to end, or for the company to be wound up: s 438A of the Corporations Act. It will have been noticed that it is the interests of the creditors of the company to which such an administrator must have regard when determining which course should be adopted.
There is a manifest difference between the role of an administrator under the Corporations Act and the role of an administrator pendente lite. An administrator appointed under the Corporations Act has wider powers than that of an administrator pendente lite. He can, if necessary, carry on and manage the business of the company. His powers and duties are more akin to those of a receiver and manager than an administrator pendente lite. There are, no doubt, other reasons for distinguishing the duties. The submission that the duties are the same must be rejected.
Mr Hoile, counsel for Mrs Henderson, contended that a grant of administration pendente lite will only be made, among other things, to protect the estate from potential loss arising from the absence of a personal representative. He called in aid para 395-260 of vol 24 of Halsbury’s Laws of Australia and the decisions at note 7 including Greenway v McKay. Mr Hoile sought to elevate that purpose into one which imposed a duty on the administrator to realise the assets of the estate, in this case the shares in Coopers, at the highest price available. The references in Halsbury and in Greenway v McKay to protecting the estate from potential loss means no more than that the administrator has a duty to get in and preserve the assets of the estate. That duty cannot be elevated to secure the highest price for the shares since that would be to prefer the interests of one potential group of beneficiaries over another. There will be cases where it is plain that the interests of all potential beneficiaries are the same and the only issue is who those beneficiaries will be. In that case the court may readily be able to give directions to realise the asset at its highest value. In other cases, and this is one, the beneficiaries will have differing views as to how particular assets of the estate will best be administered. In that case, unless the beneficiaries consent, the court may not be in a position to direct the sale at the highest possible value.
THE ISSUES IN THE APPEAL
No Beneficial Interest until Probate
An important consideration affecting the issues in the appeal is that beneficiaries under a will do not attain any enforceable interest in any asset of the estate until the personal representative has finalised the executorial or administrative duties to the point where the asset is or can be released for the purposes of the trusts directed for it: Commissioner of Stamp Duties (Qld)v Livingston (1964) 112 CLR 12. The proposition must apply a fortiori where the grant of probate of a will is subject to challenge. Thus, neither Mrs Henderson nor the four nephews and nieces have a beneficial interest in the shares. As the grant of probate of the 1993 will is subject to challenge, Mrs Henderson has no legal interest in the shares as the executor of that will.
As Perry J said, until the residue is ascertained, Mrs Henderson has no interest in any specific part of the residue under the 1993 will, which includes the shares in question. The effect of the surrender of the grant to the Registrar of Probates is to deny her capacity to deal with any of the assets, either as executor or trustee, and to deny her any ability to claim any interest in any part of the residue. Her rights, either as executor on the one hand or as a beneficiary on the other, remain suspended until the contest of the wills is resolved. It is not possible to say that she or any other of the beneficiaries under the other wills has any right to the shares until the contest as to which of the three wills is the true will is resolved in this action.
The Best Interests of the Estate
It was submitted on behalf of Mrs Henderson that it was in the best interests of the estate that the administrator should be permitted to vote the shares against the motion to amend the Articles. The submission begs the question as to what course of conduct will in fact be in the best interests of the estate, that is to say, whether the best interests of the estate requires the preservation of the opportunity to sell the shares at the best available price. The submission is also flawed in that it assumes that the administrator must act so as to obtain the highest value for the shares. The submission overlooks two important facts. First, it overlooks the fact that in each of her three wills the testatrix made a different disposition of her shares in Coopers and, depending on which of the three wills is the true will of the testatrix, the potential beneficiaries will change. Secondly, it overlooks the fact that there is a dispute among the potential beneficiaries as to what action is in the best interests of shareholders of Coopers. Finally, it fails to have regard to the principle than an administrator must not act in a way which will prefer the interest of one potential class of beneficiaries over another.
The position might also be tested by assuming that the Court will find that the 1993 will is the true will of the deceased and assuming also that, instead of wishing to accept the takeover offer, Mrs Henderson seeks to vote in favour of the motion to amend the Articles to remove the name of Lion Nathan Australia and defeat the takeover. To all intents and purposes Mrs Henderson is the sole beneficiary under the 1993 will. In those assumed facts, it cannot be said that she would have believed that her best interests were served by voting against the motion to amend the Articles. It is apparent, therefore, that the expression “the best interests of the estate” begs a number of questions. In truth, it means the best interests of each of the potential beneficiaries. Reference to the best interests of the estate does not assist the resolution of the issues in this appeal.
The administrator must act impartially as between the potential beneficiaries. He cannot prefer the interests of one class of potential beneficiaries over another. In this context, it is relevant to note the principle that, where all beneficiaries are ascertained and are of full age and capacity and are absolutely entitled to the full beneficial interest, they are able to direct a trustee who holds shares in a company on trust for them as to the exercise of the voting powers attached to those shares: Butt v Kelson [1952] Ch 197. Had the Court already determined the question as to which of the three wills of the testatrix was the true will but the administrator still held the shares, the beneficiary or beneficiaries entitled to the shares under that will would have been able to direct the administrator as to how to exercise the voting rights attached to the shares. Although the administrator is not a trustee, consideration of that principle serves to emphasise why, at a time when there is a dispute as to which of the three wills is the true will and there is a dispute between the beneficiaries as to how the voting rights should be exercised, the administrator should not exercise the voting rights which could have the potential to prefer the interests of one of the two groups of protagonists in this action.
Counsel for the administrator submitted that an order directing the administrator not to vote is tantamount to directing him to prefer the interests of the four nephews and nieces over the interests of Mrs Henderson. There are two reasons why that submission cannot be accepted. First, as explained earlier in these reasons, the fact that no one will be exercising the voting rights has no other consequence than to remove a parcel of shares, albeit a significant parcel, from voting. The result is no different from the position which would have obtained had the testatrix died on the morning of the meeting. The resolution will be carried if at least 75 per cent of those entitled to vote do vote in favour of the motion. Secondly, the fact that no one will be exercising the voting rights attached to the shares has quite a different consequence from that which would exist if the voting rights were exercised one way or the other.

The duty of the administrator to manage and preserve the estate for the benefit of those found to be entrusted to it focuses attention on two aspects of the issues in this appeal. The first is that, until the Court determines which is the true will of the testatrix, it is not possible to know who will be the beneficiaries of the estate of the testatrix. The second is that views differ between the potential beneficiaries as to how the voting rights attached to the Coopers shares should be exercised. In this case, the best interests of the estate are the best interests of the potential beneficiaries. Mrs Henderson believes that the best course is to oppose the motion to amend the Articles and accept the Lion Nathan offer of $310 per share. The four nephews and nieces believe that it is better for shareholders in Coopers to vote in favour of the motion, refuse the Lion Nathan offer and retain control of the company. If the administrator were to exercise the voting rights and vote to defeat the motion to amend the Articles, it is likely that the Lion Nathan takeover bid will succeed. In that event, the administrator will be acting contrary to the wishes of the four nephews and nieces and in a way which does not preserve the benefit of the shares as they perceive that benefit. By the same token, if he were to vote in favour of the motion and the motion is carried, the takeover would be defeated and Mrs Henderson would believe that the administrator had acted in a way which does not preserve the benefit of the shares as she perceives that benefit. In short, if the administrator were to vote one way or the other he would not be acting impartially as between the potential beneficiaries. He would be preferring the interests of one group over the interests of the other. If the administrator does not vote, he does not prefer the interests of one potential beneficiary over another.
Conclusion
The question whether or not the administrator should be directed to vote these shares must be determined by a reference to the circumstances in which he was appointed. Those circumstances may be briefly summarised in these terms.
1.There is a dispute as to which of the three wills of the testatrix is the true will of the testatrix. One consequence of that dispute is that there are competing claims as to who is beneficially entitled to the shares in Coopers held by the testatrix.
2.The administrator holds the shares of the testatrix in Coopers knowing that, until the Court decides which is the true will of the testatrix, it is not possible to determine who has the beneficial interest in the shares.
3.The potential beneficiaries who are litigating the issue as to which is the true will have different views as to how to vote at the first meeting of Coopers and whether the Lion Nathan offer should be accepted. In other words, they have different views as to how the administrator should manage and preserve the shares for their benefit until the Court determines who is entitled to those shares.
4.As noted a little earlier, neither Mrs Henderson nor the four nephews and nieces has a beneficial interest under any of the wills until the Court decides which is the true will and until the personal representative has finalised the executorial or administrative duties under that will to the point where the asset is or can be released for the purposes of the trusts directed for it.
5.Before the administrator was appointed, no person was able to exercise the voting rights attached to the shares in Coopers held by the testatrix.
There is nothing, either express or implied, in the orders that Perry J made on 22 and 27 September 2005 appointing the administrator to the effect that directions would necessarily be given at some later stage permitting the administrator to exercise the right to vote and directing him how to vote. Paragraph 3 is the relevant part of the order. It states:
Upon his appointment becoming effective the administrator be at liberty to take all steps necessary to obtain registration of the Coopers shares into his name as administrator but that subject thereto he be restrained from in any way dealing with the Coopers shares or any rights attaching thereto including exercising any voting rights attached to the shares or selling, encumbering, transferring (as the term is defined in Article 39 of the Articles of Association of Coopers Brewery Limited), creating any right in relation to the Coopers shares or otherwise dealing with the Coopers shares without first obtaining an order of the Court.
It is clear that para 3 expressly restrains the administrator from exercising the power to vote in respect of the shares without first obtaining an order of the Court.
If the potential beneficiaries had agreed how the voting rights attached to the shares should be exercised, the Court could have directed the administrator to vote in accordance with this agreement. Failing agreement, the Court is not in a position to give any directions as to how the voting rights attached to the shares should be exercised. To do so would prefer the interests of one group of potential beneficiaries over another.
Equally, the Court is not in a position to permit the administrator to exercise the voting rights in respect of at least 25,000 shares in a manner requested by Mrs Henderson. Whichever will is admitted to probate as the true will of the testatrix, Mrs Henderson will be entitled to an interest in at least 25,000 shares. However, if the Court did not allow the administrator to vote the remaining 90,000 shares in dispute but allowed Mrs Henderson to direct the administrator how to vote in respect of the 25,000 shares she will get in any event, this would distort the voting in that persons who might be entitled to the interest in the 90,000 shares would be denied a vote.
Expressed another way, to permit the administrator to exercise the voting rights attached to these shares by voting in opposition to the motion to amend the Articles of Coopers would, in the particular circumstances of this case, presume that Mrs Henderson will succeed in this action and that the four nephews and nieces will fail. There is plainly no ground for making such an assumption. The dispute as to which is the true will has the consequence that none of the claimants has a beneficial interest under any of the wills.
In his reasons for judgment, Perry J likened the capacity in which the administrator holds the shares to that of a stakeholder. He said:
11As for the position of the administrator pendente lite, he does not hold the shares on trust or in any other capacity for anyone else. No trust could arise until the administration of the estate is complete, and that will not occur until the dispute as to the wills is resolved. In the meantime, the administrator holds the shares in much the same capacity as a stakeholder, until the entitlement to the shares has been determined by the resolution of the litigation over which will is to be held valid.
With respect, that reasoning is correct. First, the administrator does not hold the shares on trust for any person, nor could he, given that there is as yet no finding as to which is the true will. Secondly, for the reasons already expressed, none of the claimants has a beneficial interest in the shares. Thirdly, given that the role of the administrator is to manage and preserve the shares for the benefit of those found to be entitled to them, and given the dispute between the potential beneficiaries as to how the shares should be voted, a direction to vote or not to vote has the potential adversely to affect the interests of one or other of the competing claimants to the beneficial interest. The administrator’s submission that he is not a stakeholder but his role is akin to that of a trustee betrays a misconception of his true position.
The administrator has had regard to what each potential beneficiary will gain or lose and what will be preserved by voting. He says that, after balancing the interests of the respective parties, he believes that he should seek to maintain the status quo with respect to the Articles until the Court determines which is the true will of the deceased and the High Court determines the application for leave to appeal from the decision of the Full Court in Coopers Brewery Ltd v Lion Nathan Australia Pty Ltd and, if leave is granted, the appeal.He says that, in doing so, he is protecting the Coopers shares. He goes on to state that he believes he should not exercise his vote to prevent those ultimately entitled to the Coopers shares from accepting or not accepting any takeover offer.
Central to the administrator’s thinking is the preservation of the status quo. That requires determination of what is, in fact, the status quo. The administrator believes that it is to retain the Articles of Association of Coopers in their present form until all issues before this Court or the High Court have been determined. If he votes against the resolution and the resolution is defeated, there is a real likelihood that Lion Nathan will succeed with its takeover offer. That will depend on whether there are sufficient shareholders who wish to take up the offer so as overwhelm the first and second tier pre‑emptive rights provided by the Articles. If Lion Nathan succeeds, then the status quo will not only be quite significantly altered but also be altered in an irreversible manner.
The administrator misconceives what is in fact the status quo. Had the administrator not been appointed, no person would have been able to exercise the voting rights in respect of the shares held by the testatrix. That was the position before the administrator was appointed and that is what should truly be regarded as the status quo. The fact that there is a dispute as to which is the true will of the testatrix with the consequential dispute as to who are the beneficiaries who will ultimately acquire interest in those shares, coupled with the fact that the two sets of competing beneficiaries have different views on the question whether to accept the Lion Nathan bid, serves to underline the fact that the appointment of the administrator should not alter the fact that no person was able to vote the shares in the estate.
The inescapable fact is that, immediately prior to the appointment of the administrator, no person was able to exercise the voting rights attached to the shares held by the testatrix. The appointment of the administrator did not alter that. Nor did the appointment of the administrator signal that those rights might be exercised. The order appointing the administrator expressly prevented him from exercising the voting rights unless leave of the Court had first been obtained. The reason why no person was able to exercise the voting rights lay in the fact that there was a dispute as to which of the three wills of the testatrix was her true will. If the order appointing the administrator had not been made that position would have continued to exist. The order appointing the administrator did no more than cause a person to be entered on the Register of Shareholders as the person holding the shares. The appointment in no way altered the fact that a dispute existed as to who was beneficially entitled to the shares. Neither the fact that a bid has been made for the shares in Coopers nor the fact that a meeting has been called to consider a resolution to alter the Articles of Coopers alters the position that the dispute as to who is beneficially entitled to the shares continues and that no person has such an interest in the shares, either to exercise the voting rights or to give directions to the administrator. I repeat, if they agree to do so, Mrs Henderson and the four nephews and nieces are at liberty to direct the administrator how to vote. As Perry J noted in his reasons, there is a likelihood that they will achieve a common position to instruct the administrator how to vote at the second meeting of shareholders which will consider the resolutions necessary to put the buy-back arrangements in place. However, while a dispute continues to exist as to which is the true will of the testatrix and who are her true beneficiaries, it is not possible in the absence of agreement to exercise the voting rights attached to the shares. The Court has no alternative but to maintain the position that no person may exercise those rights.
For these reasons, I agree with the orders made by Perry J. Mrs Henderson and the administrator failed to demonstrate any satisfactory ground for interfering with them.
It was contended for Mrs Henderson that Perry J has in paras 22 and 23 placed some reliance on the fact that the present situation is the result of Mrs Henderson not exercising her right to expedite the prosecution of this action. I disagree. His Honour has expressly stated in para 22 that he was not persuaded by the complaint of either party for the delay in bringing the action to trial. As an afterthought he adds that Mrs Henderson could have taken steps to expedite the hearing of the action, so that the present situation is a product of her failure to do so. The purpose of that comment is not entirely clear. I do not understand it to qualify his conclusion in para 22. If I am wrong in that and the trial judge has had regard to the fact that Mrs Henderson was in some way at fault, he has had regard to an irrelevant consideration. However, that error does not require that his decision be reversed.
It was submitted on behalf of both Mrs Henderson and the administrator that Perry J had erred in substituting his judgment for the commercial judgment of the administrator contrary to the well established principle that a court will not, as a general rule, pronounce on the commercial prudence of a decision but determine only whether the decision maker, for example a trustee or administrator, is acting lawfully: Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 441 – 442 and Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207 at 232. The submission misconceives the duties of an administrator pendente lite and must fail. It fails also for the reason that Perry J did not pronounce upon the commercial prudence of voting the shares. Instead, he recognised that there were competing views as to the commercial prudence of shareholders accepting the Lion Nathan offer on the one hand or rejecting it and seeking to retain control of the company on the other.
The issues in this appeal involve questions of general principle relating to the duties of an administrator. In addition, they are plainly of considerable importance not only to the parties to this action but to other shareholders in Coopers. It is appropriate, therefore, to grant leave to appeal from the decision of Perry J. However, for the reasons already given I dismiss the appeal.
The Costs of the Administrator
As Mrs Henderson has failed on this appeal, she must pay the costs of all respondents. The Court made such an order. There was an issue whether the administrator should not also be liable for costs of the respondents, or at least, liable for his own costs. The administrator had properly applied to Perry J for directions permitting him to vote. If any party chose to appeal, the proper role for the administrator, generally speaking, will be to abide the order of the Court. In this appeal, the administrator was a protagonist, contending that Perry J had erred. The administrator justified his position by stating that he saw his duty to be to put again to this Court what he had put before Perry J. With some hesitation, the Court accepted that explanation and did not order the administrator to share in the liability for the costs of the respondent. It ordered that the costs of the administrator be paid out of the estate. In future, administrators should be aware that, once a court has ruled on an application by an administrator for directions, generally speaking, the proper course for an administration would be to abide the order of the court if one of the parties should appeal. If the administrator adopts a partisan approach he might, depending on the outcome, be liable for the costs of other parties.
For all of these reasons, I would grant leave to appeal but dismiss the appeal.
Addendum
Since preparing these reasons, I have had the advantage of reading the reasons of Sulan J. With respect, the example he gives of a court failing to make an order which over‑rides the interests of one group of potential beneficiaries indicates no more than that there might be an extreme case where the court is compelled to conclude that, notwithstanding the views of one group of potential beneficiaries, there is no alternative but to make an order contrary to their views because there is no realistic alternative. This is not such a case. The example identified by Sulan J does no more than illustrate that each case must be considered on its own facts.
SULAN J. The issue that arose upon this application was whether the administrator pendente lite should be permitted to exercise voting rights attaching to 114,292 shares, representing approximately 8.5 per cent of the capital of Coopers Brewery Limited (“Coopers”) at an Extraordinary General Meeting of Coopers to be held on 7 December 2005. I shall refer to those shares as “the Coopers shares”. The resolutions to be voted upon seek to amend the Articles of Association (“the Articles”) of Coopers, the effect of which, if approved, would bring to an end a takeover offer made by Lion Nathan Australian Pty Ltd (“Lion Nathan”) to purchase shares in Coopers at a price of $310 per share.
If the Articles are amended, Lion Nathan would be prevented from making a successful offer to purchase shares in Coopers at any price. The Articles authorise the directors of Coopers to refuse to register any transfer of a share, if they are of the opinion that it is not desirable to admit the proposed transferor to membership (Article 54). The Article further provides that the directors must refuse to register any transfer of a share where, in accordance with Article 143, that person may be required to retire as a member. The amended Article 143 would provide:
No member, shall without the consent in writing of the Directors be interested as a shareholder, partner, director, manager, lender or otherwise in any concern carrying on any business in competition with the Company, or having interests inconsistent with those of the Company, and if it shall be proved to the satisfaction of the majority of the Directors that any member has committed a breach of this clause they may serve him with notice in writing requiring him to retire from or otherwise determine his interest in such concern and stating that in the event of non-compliance with such requisition within twenty-eight days his shares will be liable for sale by the Company in like manner as if the offending member had given notice of desire or intention to transfer his share in manner prescribed by Article 40.
The Article, as presently promulgated, is in the same terms save that, for the purpose of the Article, Lion Nathan and any related body corporate of Lion Nathan is deemed not to be a concern carrying on business in competition with Coopers, or having interests inconsistent with those of Coopers. This part of the Article is to be removed, with the consequence that any future offer by Lion Nathan to purchase shares must be rejected, as Lion Nathan is a competitor of Coopers.
The administrator pendente lite was appointed on the application of Mary Phyllis Henderson (“the appellant”). The appellant is the sole beneficiary of the Coopers shares under the 1993 will. The appellant would be entitled to the Coopers shares if that will is declared valid. The respondents to this application are nephews and nieces of the testatrix, who would be entitled to a substantial percentage of the Coopers shares if either the 1991 or 1992 will were declared to be the valid will.

The administrator had considered his position, including the views of the appellant and the second, third, fourth and fifth respondents (“the Coopers respondents”). He was of the opinion that he should not exercise the voting rights attaching to the Coopers shares in a manner which would prevent those beneficiaries ultimately entitled to the Coopers shares from accepting or not accepting any takeover offer which has or may be made by Lion Nathan. He considered that the manner in which the Coopers shares are to be voted might be crucial to the outcome of the meeting.
The administrator sought directions from this Court to authorise him to attend the meeting and vote against the resolution. Perry J declined to give such a direction. The appellant sought to review that decision.
The Full Court heard argument on Friday, 2 December 2005, and delivered judgment on Monday, 5 December 2005. I determined that I would grant leave to appeal and would allow the appeal. I provided short ex tempore reasons for my decision. I now publish my considered reasons.
The background facts have been dealt with in the reasons for decision of the majority. I propose only to refer to the facts insofar as it is necessary to do so to understand my reasons.
The role of an administrator pendente lite
A threshold question in the appeal is to consider the role of an administrator pendente lite and the function of the Court which has appointed him.
The power of the Court to appoint an administrator pendente lite will be exercised when the Court considers an estate should be administered pending the resolution of litigation. Such an administrator is required to act in accordance with the terms of the order, and at the direction of the Court. An administrator will be appointed where there is a potential loss to the estate if the estate is not administered by a personal representative.[1] An administrator pendente lite has a duty to preserve the assets and their value for the benefit of the estate. The Court has an overriding responsibility to ensure that all reasonable steps are taken to preserve those assets and their value.
[1] See Greenway v McKay (1911) 12 CLR 310; Bellew v Bellew (1865) 164 ER 1437.
Counsel for the Coopers respondents conceded that there is no necessary limit to the role of the administrator, but the extent of his role is to be determined by the terms of the appointment. He submitted that, in this case, the Judge who appointed the administrator did so solely to preserve the asset, being the Coopers shares, in order that the administrator could become the registered owner of the shares and seek directions to vote the shares if the potential beneficiaries could agree on how those shares might be voted. Counsel submitted that was the limit of the administrator’s role, and that if the potential beneficiaries could not agree then the administrator should not be permitted to vote the shares. He submitted that the administrator was appointed to preserve the asset, not to preserve or enhance the value of the asset. The administrator’s role was to preserve the asset in its form, without regard to value.
I do not agree. Protecting an asset of an estate cannot mean protecting the asset in its form, and no more. There are circumstances in which the failure of an administrator to act could lead to a substantial diminution in value of the asset to the detriment of the estate. In those circumstances, a court should give directions to the administrator to ensure that the value of the asset is maintained for the benefit of the estate.
A simple example illustrates the point. It is assumed that the asset is a parcel of land, and a developer sought to purchase that land at a price well above the market value. It is also assumed that the developer had purchased all surrounding parcels of land, and had obtained approval to develop the land. He expressed his intention to proceed with the development, whether or not the administrator accepts the offer. If the administrator does not accept the offer, then the land will become unsaleable. One group of potential beneficiaries wish to sell and obtain the best price. A competing group wish to hold on to the asset because they believe that it was always the testator’s intention to hold the land as a family asset, and because it has been an asset of the family over generations. They are not concerned with the economic value of the land.
The Court would weigh up what is in the best interests of the estate. In so doing, the Court would have regard to the views of potential beneficiaries, and it would also have regard to the views of the administrator. A court would decide what is in the best interests of the estate. Ultimately, the Court would make a decision, having regard to the competing interests. It would decide how best to preserve the value of the estate. In so doing, the Court would have regard to the sentimental value of the land to potential beneficiaries. However, it would be difficult to attach other than little weight to purely sentimental factors. Ultimately, the Court would decide how best to preserve the economic worth of the estate. If that results in the Court empowering the administrator to sell, that would occur over the objection of the opposing potential beneficiaries. To do nothing would mean that the value of the estate would diminish. The Court might make the decision itself, or it may determine that it is a commercial decision to be made by the administrator who is better able to make commercial decisions than the Court.[2]
[2] Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409.
In my view, the Court would not decline to act on the basis that, when the developer obtained approval to develop the land and offered to purchase the estate’s interest, there had not been an administrator yet appointed. The Court would not decide to do nothing and maintain the status quo, because there was no ability to sell the land prior to the appointment of the administrator. The very reason for appointing an administrator is to ensure that the assets of the estate are protected. If the Court were to refuse to direct the administrator to accept the offer, ‘sentimental value’ would carry the day over commercial considerations which would enhance the economic value of the estate.
In Greenway v McKay[3], an order had been made appointing an administrator ad litem to pursue an action on behalf of an estate. The deceased had died in an accident at work. The deceased’s wife and child claimed to be entitled to recover damages under the Wrongs Act 1890 (Vic) and the Employers and Employees Act 1890 (Vic). However, because there had been no grant of letters of administration and time was running, a judge appointed an administrator to bring the action on behalf of the estate. He subsequently revoked his order. His reason for so doing was that he considered that an administrator ad litem should only be appointed under circumstances which require the interference of the Court for the purpose of protecting the assets of the estate, and that it must be shown that the estate was in jeopardy in order for it to be necessary to make the order. He concluded that because the order was not for the benefit of the estate but for the benefit of the widow and the child, it should be revoked. On appeal, the High Court allowed the appeal and rescinded the order, thereby reinstating the administrator and authorising him to pursue the action. Griffiths CJ observed:
Those reasons [of the primary judge] are applicable primarily to an application for administration pendente lite which is analogous to the appointment of a receiver. But even if those reasons be applicable to grants of this kind, the case falls within the rules suggested by the learned judge. Although administration limited to bringing an action is not, in one sense, for the protection of the assets of the estate – that is, the physical assets – yet that limited administration is granted in order to secure for the estate what would not otherwise be available as assets, which is the same thing in principle. If what might so become available is in danger of being lost, surely that is the best reason for prompt action, the granting of administration for the purpose of bringing an action is just as much for the benefit of the estate as a general grant which is for the benefit of the persons interested in the estate, that is, the next of kind.
[3] (1911) 12 CLR 310
The Chief Justice drew an analogy between the role of an administrator pendente lite and that of a receiver. The duties owed by a court-appointed receiver are governed by the terms of the appointment, by directions of the Court, and by statute. These duties include a duty to exercise reasonable care and skill to preserve the assets under the control of the administrator, pending their realisation or pending the determination of any dispute between competing interests, as the case may be.[4]
[4] See O’Donovan, Company Receivers and Administrators (2 ed, Lawbook Co, Sydney, 2000) [23.110]. See also Re Newdigate Colliery Ltd [1912] 1 Ch 468 at 473 – 474 and Cape v Redarb Pty Ltd (1992) 107 FLR 362.
Preserving an asset is to ultimately protect the value of that asset for the benefit of those who may in due course be entitled to it. In this case, the beneficiaries are, as yet, to be finally determined.
The position of competing beneficiaries
The competing beneficiaries disagree as to the course to be taken in relation to the Lion Nathan takeover offer. The applicant submits that the asset is best preserved by ensuring that the Lion Nathan offer of $310 per share remains open. The Coopers respondents submit that the asset is best preserved by preventing the administrator pendente lite from voting at the Extraordinary General Meeting. It is put on behalf of the Coopers respondents that the administrator pendente lite was appointed for the specific purpose of enabling the shares to be registered and only if agreement was reached between the parties could they be voted. They submit that the status quo should be maintained in that, until the dispute is resolved, the shares should not be voted. They submit that, prior to the appointment of the administrator, the shares could not be voted and, therefore, that position should be maintained, unless all the potential beneficiaries agree on a different course.
I do not accept that the sole reason for the appointment of the administrator pendente lite was to register the shares and not vote them. In the course of argument before Perry J, the following exchange occurred between the Judge and counsel for the Coopers respondents:
HIS HONOUR: Putting the cart before the horse. Just so I can indicate that I’ve got an understanding of it, none of these provisions in the articles would in any way detract from the power of a court to appoint an administrator, but you say that the bite would come when an administrator came along to the company and said ‘I’ve been appointed by the court –’
MR WHITINGTON: With the power to vote and the power to sell these shares.
HIS HONOUR: That would be down the track, because I wouldn’t give the administrator any powers, I would simply at most appoint an administrator. Because an administrator would then have to take advice as to how he or she was going to exercise their powers, and whether it would be right to seek to have a right to vote, and if so in what direction. So unless I’m disabused of that view, I would have thought that the proper course for the court to take at best from the applicant’s point of view, would be to appoint an administrator and leave it to the administrator then once they’ve come in with their guarantees and formalise the appointment and so on, to then apply to the court for such directions as may be necessary, to give effect to what they may be advised to do in terms of dealing with the shares.
In my view, it was left open to the administrator to return to the Court to seek further directions. I do not accept the submission that, because the shares were not registered and were not capable of being voted immediately before the appointment of the administrator, that that position should be maintained.
The shares are, and always have been, shares that carry a vote. The Articles provide for the shares to be voted upon any resolution seeking to change the Articles of the company. The question is whether the Court should direct the shares to be voted in the manner in which the administrator recommended in order to preserve the value of the asset in the estate.
The contention of the appellant that by removing some 8.5 per cent of the voting shares that the number of votes required to carry the special resolution will be reduced from at least 75 per cent of the votes to at least 68.625 per cent of the votes is correct. The Corporations Act requires at least 75 per cent of the votes cast by members entitled to vote and voting. To suggest that if the shares are not voted, the position will be that the motion can only be carried if 75 per cent of those voting in favour of it overlooks the fact that the administrator would be precluded from exercising those rights. That leads to the consequence being that a lesser percentage than if those rights were exercised would be required to carry a resolution changing the Articles.
The consequences of the court’s decision
It is necessary to consider any adverse effects that may result if the shares are not voted. The Coopers respondents claim there is a potential prejudice to them if the resolutions are defeated.
The purpose of the resolutions is to defeat the Lion Nathan takeover bid. The manner in which it is sought to defeat that bid is to change the rules of the company, and thereby to exclude Lion Nathan from pursuing its takeover offer. The Articles currently permit Lion Nathan to pursue its offer and give all shareholders an opportunity to consider Lion Nathan’s offer. It is for the individual shareholder to determine whether or not to accept the Lion Nathan offer. If the resolutions are carried, that opportunity will be lost to all shareholders. If the resolutions are lost and the Lion Nathan takeover proceeds, then the future of Coopers will be determined in the market place under the Articles as they presently exist.
On any view of the result of the disputed wills proceedings, the appellant is entitled to at least 17,500 Coopers shares. If she is deprived of the opportunity to accept the Lion Nathan offer, and if it is assumed that the value of the buy back to shareholders is $260 per share at a minimum, she stands potentially to lose, with respect to that parcel, the opportunity of receiving $875,000 over and above the buy back price. This calculation assumes an immediate cash back value of the buy back offer at $260 per share for all of the shares, which is not the case. If the 1993 will prevails, she stands potentially to lose the opportunity of receiving $5,714,600 over and above the buy back price. She is not protected against this loss in any way. No undertaking has been proffered to protect her position.
It is not possible to predict the result of the meeting to amend the Articles. However, it may be concluded that if the Articles are amended and the Lion Nathan bid is defeated, shareholders, including the administrator on behalf of the estate, will be deprived of the opportunity of considering whether or not to accept the Lion Nathan offer.
In the case of the administrator, he would be required to seek further directions from the Court before he could accept the offer. It may well be that the Court would refuse to permit him to accept the offer once all relevant considerations had been taken into account. Those considerations include not only the price, but also the view of some shareholders that Coopers should remain under the control of its current board. It is impossible for this Court, upon the information before it, to make an assessment of these competing views, nor is it necessary at this stage to do so. However, it is clear that if the Lion Nathan offer does not proceed, then shareholders, including the appellant, will be precluded from the opportunity of further considering that offer and deciding whether they should accept $310 per share for their shares.
Currently, the Articles provide that if a shareholder decides to offer their shares to Lion Nathan at $310 per share, or any increased price, then the members of Coopers, who include the Coopers respondents, are entitled to exercise a first tier pre-emptive right and to purchase the shares, thereby precluding Lion Nathan from becoming a member. The shares are to be purchased at the price offered, or at fair value as determined by the auditor of Coopers. It is not possible to predict what that fair value might be.
It does not follow that the Lion Nathan offer will succeed. Further, even if the members are not in a position, or do not wish to purchase shares offered to Lion Nathan, then the Trustees of the Coopers Superannuation Fund could do so. If the Trustees were to receive advice that it is in the best interests of the superannuation fund to purchase any shares offered to Lion Nathan for fair value, because the long-term interest of the superannuation fund is to retain the company under the control of the current board, then the Trustees could exercise their second tier pre-emptive right, ensuring that Lion Nathan would never become a member.
Although it is not possible to predict what may happen in the fluid situation of a takeover, an alternative currently available to shareholders is to accept Lion Nathan’s offer to purchase the shares at $310 per share. At the time Lion Nathan were offering $260 per share, the auditor re-valued the shares at $260 per share. Another alternative is to participate in the proposed buy back. However, the buy back offer is limited to 15 per cent of the share capital. If all shareholders participated in the buy back, it would not be possible for a shareholder to sell more than 15 per cent of their shareholding at a nominal value of $260 per share.
Grant Samuel provided an independent expert’s report for the purpose of expressing an opinion as to whether the Lion Nathan offer of $260 per share was fair and reasonable. Grant Samuel observed that the prospects of an alternative bidder making a more attractive bid for Coopers was remote, because the Coopers constitution deters bidders from making a takeover offer. Grant Samuel commented that Coopers is an unlisted company and there is no formal market for the exchange of shares, thereby making the shares extremely “illiquid”. Grant Samuel observed that there is no certainty of receiving $260 for all shares in the buy back, because if the aggregate number of shares tendered into the buy back substantially exceeds 15 per cent of the total Coopers shares on issue, there could be a material scale back, and shareholders could be left with a significant residual shareholding. Grant Samuel further observed that future buy backs will be at prices substantially higher than $260 per share, if Coopers achieves its 2006 earnings forecasts and delivers further earnings growth in subsequent years. However, Grant Samuel commented that future buy backs will be subject to a range of constraints, and are uncertain. They will depend upon the company having surplus-free cash, the extent of any other capital requirements and financial constraints, and the need to obtain an appropriate capital structure. Further, as the buy back envisaged that part of the payment would be by way of dividends, Coopers would need to maintain profits.
Those opposing the Lion Nathan offer argue that the long-term interests of shareholders is to reject the offer. That is a matter for the decision of individual shareholders. If the position of the Coopers respondents is correct, and shareholders will be better off by rejecting the Lion Nathan offer, then they will simply reject it. Alternatively, shareholders who believe that by rejecting the Lion Nathan offer they will be better off can simply take up any shares offered to Lion Nathan by exercising their first pre-emptive right.

The proposed resolutions might be seen by an independent observer as being an attempt by those currently in control of Coopers, including the Coopers respondents desiring to entrench their positions at the expense of shareholders who may wish to entertain the Lion Nathan offer. On the face of it, the offer of $310 cash represents a significant advantage to shareholders who wish to sell. It is difficult to conceive how there can be any commercial justification in seeking to prevent shareholders from having the opportunity to benefit from the Lion Nathan offer.
The shares have always carried voting rights. The Articles provide that all shares are able to be voted. The Articles provide that Lion Nathan is to have a third tier pre-emptive right. It is an accident of history that there is a dispute and that, as a consequence, the estate has not been administered and the shares registered at the time when Lion Nathan announced its offer. It was appropriate for an administrator to be appointed in order for him to have the ability to exercise a vote in respect of the shares. By allowing the shares to be voted, the status quo will be preserved in that Lion Nathan’s third tier pre‑emptive right will be preserved unless 75 per cent of the registered shareholders voting at the meeting vote to remove that right. If it had been envisaged at the time that Article 143 was included that Lion Nathan should lose its third tier pre-emptive right upon a change in control of Lion Nathan, the Articles could have so provided.
If the shares are voted and if the resolutions are lost, the only effect upon the Coopers beneficiaries is that their desire to prevent the takeover by changing the Articles of the company will be defeated. It does not follow that the Coopers beneficiaries will, together with other Coopers family members, lose control of Coopers. It is impossible to predict what might happen.
On the other hand, if the shares are not voted and the resolutions are passed, then the estate will be deprived of the opportunity of obtaining what some shareholders may consider to be the best value for the Coopers shares. To suggest that, prior to the appointment of the administrator, the shares could not be voted and, therefore, after the appointment of the administrator, that position should prevail fails to have regard to the financial consequences that may befall the estate from preventing the administrator from voting.
In my opinion, the Judge failed to give adequate weight to what he considered to be the interests of the estate in preserving its value. The Judge gave too much weight to the potential adverse effect upon the Coopers beneficiaries, without sufficiently identifying and analysing those suggested adverse effects.
As I indicated, I would grant leave to appeal and I would allow the appeal and direct that the administrator be permitted to vote the subject shares against the resolutions.
I agree with the orders as to costs, for the reasons expressed by Debelle J.
ANDERSON J.
BACKGROUND
I have read the draft reasons of Debelle J and I agree with his conclusion and substantially with his reasons. Because the members of this Court do not agree, I will briefly set out those factors which have influenced my decision to dismiss the appeal.
Debelle J has set out in some detail the background to this matter, and in particular the facts leading up to the contest regarding three wills made by the late Phyllis Mary Rondahl (“the testatrix”). The dispute regarding these wills is yet to be resolved, and in fact is set down for hearing in this Court in March 2006. The exact details of each of the three wills are set out in Debelle J’s reasons.
The resolution of this dispute will determine who of, and in what proportion, the five nieces and nephews of the testatrix are found to be beneficiaries in her estate. On the one hand, all five may share in the estate, which includes a parcel of Coopers shares, or Mrs Henderson may get all of the shares if the 1993 will prevails. Those Coopers shares in total amount to 8.5 percent of the issued shares in Coopers. Mrs Henderson may get, on one interpretation; 25,000 shares, on another interpretation, 17,500 shares; or as she contends, all 114,292 shares depending on which will prevails.
The potential beneficiaries of the shares would all, as at present advised, want to vote the shares at the Coopers meeting but in quite different ways in order to achieve different results. The significance of the vote at the meeting is of course known to me as a member of the Full Court in Coopers Brewery Ltd v Lion Nathan Australia Pty Ltd [2005] SASC 400.
ROLE OF ADMINISTRATOR
As a result of this dispute regarding the wills, an administrator pendente lite, was appointed pursuant to Rule 104.13 of the Supreme Court Rules. Rule 104.13 states:
(1)Application to appoint an administrator pendente lite Where a proceeding is pending touching the validity of the will of the deceased person or for obtaining or revoking any grant of probate or administration, application may be made for the appointment of an administrator pendente lite.
(2)Affidavit in support The application shall be supported by an affidavit.
(3)Powers of the administrator subject to directions of the Court Where the Court appoints an administrator pendente lite:
(a)     he shall have all the rights and powers of a general administrator other than the right of distributing the estate;
(b)     he shall be subject to the immediate control of the Court and act under its direction;
(c)     his powers shall cease with the making of the final order in the action or on the making of any further order of the Court directing that his powers cease;
(d)     the Court may direct that the administrator receive out of the estate of the deceased such reasonable remuneration as the Court thinks fit.
The role of the administrator has been the subject of debate in this appeal. On the one had it is said that he has made an informed decision in weighing up the merits and considers that he should vote the shares at the meeting. He wishes to vote the shares in such a way as to obtain the maximum monetary value of the shares by accepting an offer made by Lion Nathan. The full details of the Lion Nathan offer and its significance in the context of this meeting is explained in the reasons of Debelle J. In this way, the administrator says that he is acting to best preserve the estate.
On the other hand, it is put that if he takes any steps, other than preserving the status quo, he is going to inevitably, and perhaps irretrievably, affect the rights of the parties. In other words, one way or another, one party will be a winner, the other a loser if the administrator is permitted to vote the shares.
The administrator has been appointed by the Court to hold the shares until the outcome of the dispute regarding the wills. He is as such an Officer of the Court and subject at all times to the directions and control of the Court. There is a general discussion on the role of an administrator pendente lite contained in Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (18^th ed), set out in Debelle J’s reasons at paragraph [44].
It is also clear that the person appointed as administrator should be totally dissociated from the litigation and is not to be seen to act in the role of an agent for any party. See Tomkinson v Hersey (1983) 34 SASR 181.
It is therefore my view that the role of any administrator pendente lite is quite limited. Although the role will vary according to the circumstances of any case, it is clear that he or she is not in the same position as either a liquidator or a receiver, and, as Debelle J points out, nor is he or she in the same position as an administrator appointed under the Corporations Act 2001 (Cth).
Likewise he or she is not in the position of a trustee. As Perry J points out in the decision under appeal, there is no trust at this point of time because the administration of the estate is pending. In this matter, no trust could arise until the dispute regarding the wills is finalised. Perry J describes the role of the administrator as a stakeholder and with respect I think that is the most appropriate analogy.
What is clear is that the administrator must at all times act in an impartial manner and not favour any of the potential beneficiaries when there is a dispute as to their entitlement. The important point is that the disputing parties are only potential beneficiaries, and, until their dispute is finalised there is no ability to predict how many of them and in what proportions they will have a capacity to exercise voting rights in relation to the shares.
THE CRITICAL OUTCOME OF THE VOTE
In my view, it is not to the point, in deciding whether the administrator should be permitted to vote the shares at the meeting, that the parcel of shares in dispute may be critical to the outcome of the vote. In principle it would be no different if the parties in dispute were arguing only over an insignificant number of shares, but nevertheless disagreeing on how the shares should be voted.
The vote at the meeting can only be made by those present at the meeting. Many things may change leading up to the meeting and at any time before the vote is actually taken. There may well voters who are undecided as to which way they will vote at this stage. As Debelle J points out in his reasons, some persons entitled to vote may not, for whatever reason, attend the meeting. I agree that in those circumstances it is just not possible to say how critical this disputed parcel of shares may be. The parcel may assume greater or lesser significance depending on how events pan out, right up until the time that the vote is taken.
There are therefore many unknowns at this point of time. The dispute as to which will prevails has yet to be decided. That will determine who is entitled to the shares and in what proportions. How many shareholders will attend the meeting and which way will they vote is another unknown.
THE OFFER BY LION NATHAN
The economic considerations advanced in argument as to the high value put on the shares are not compelling in my view. I say that because there are other equally important considerations apart from the mere monetary value of the shares. In this case, those other considerations, that is, those matters aside from the financial benefits attaching to the shares, are of significance. These other considerations include the obvious benefits to shareholders in their ability to maintain some control or influence in the management of Coopers. That is clearly an important issue in this matter. It may be that it is for some shareholders an overriding consideration, but in any event it is not possible to say that it is less important than the actual monetary value of the shares, but not significantly having regard to the other factors to which I have referred.
The administrator, in my opinion, in seeking to vote the shares, has been primarily concerned with getting the best price for the shares, but not sufficiently having regard to the other factors to which I have referred.
SUMMARY
In summary therefore, my reasons are influenced by my characterisation of the role of the administrator pendente lite. I believe the reasoning of Perry J is correct in the analysis he gives as to the role of the administrator. Likewise, I am in agreement with the analysis and description of that role set out by Debelle J in his reasons. I am aware that by permitting or not permitting the administrator to vote the shares, there will be potential prejudice to one side or the other. The main suggested prejudice put forward by the appellant relates to the monetary value of the shares, whereas for the respondents the other considerations of control and influence within a family company assume significant importance.
I therefore return to the role of the administrator pendente lite, having regard to the facts of this case. I take account of the extract set out by Debelle J in the passage from Williams, Mortimer and Sunnucks discussed earlier, as a useful guide to the role of the administrator.
Applying that extract to the facts of this case, it is my view that the assets of the estate of the late Phyllis Mary Rondahl, and in particular the Coopers shares, are best managed and preserved for the benefit of the ultimate beneficiaries by not allowing the administrator pendente lite to vote the shares.
I would therefore dismiss the appeal