In the matter of Anne Lewis Pty Limited
[2014] NSWSC 418
•09 April 2014
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Anne Lewis Pty Limited [2014] NSWSC 418 Hearing dates: Wednesday, 9 April 2014 Decision date: 09 April 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Dismiss application for referral for mediation.
Catchwords: PROCEDURE - miscellaneous procedural matters - referral of proceedings for mediation - where application made at final hearing Legislation Cited: (Cth) Corporations Act 2001, s 461
(NSW) Civil Procedure Act 2005, s 26Category: Interlocutory applications Parties: Peter Lewis (Plaintiff)
Anne Lewis Pty Limited ACN 000 357 933 (Defendant)
Pamela Lewis (Interested Party)Representation: Counsel:
S B Loughnan (Plaintiff)
S W Climpson (Defendant)
G R Waugh (Interested Party)
Solicitors:
Hennessey & Co (Plaintiff)
Gadens Lawyers (Defendant)
Rickard Lawyers (Interested Party)
File Number(s): 2013/366800
Judgment
HIS HONOUR: By originating process filed on 5 December 2013 the plaintiff Peter Lewis, who is jointly with Mr Bird the executor of the estate of his late father Geoffrey Howarth Lewis, and as a result jointly with Mr Bird the holder of 50 per cent of the shares in the defendant company Anne Lewis Pty Ltd, sought an order that the company be wound up on the grounds referred to in (Cth) Corporations Act 2001, s 461(1)(e) and (k), that a provisionally liquidator be appointed, and costs. An interlocutory process of the same date sought the appointment of a provisional liquidator. When the originating process and the interlocutory process first came before the Court, the application for a provisional liquidator was not pressed, but the parties being desirous of taking an early final hearing date had the matter referred for fixture of a hearing on the basis that the plaintiff's evidence was complete and that the defendant would serve its evidence within 14 days. On 3 February 2014, the matter was therefore set down for hearing on a final basis today, and directions were made for the completion of the evidence and the exchange of written submissions.
The defendant has filed no evidence in answer to the winding-up application. Prior to his death, the shareholders in the company were Mr Lewis senior and his then wife, now widow, Mrs Pamela Lewis. It would seem that prior to the death of the deceased one of the plaintiff's siblings, Mr David Lewis, sought and obtained advice - apparently in consultation with Mrs Pamela Lewis - as to the restructuring of the affairs of the company, and as a result, a number of trusts were established and a number of companies incorporated, which are essentially under the control of Mrs Pamela Lewis. In early 2012, virtually all of the assets of the company were transferred to those companies and trusts. Those transactions are said to be reflected in the accounts of the company as loans. There is no suggestion that such loans are bearing interest, and there is no evidence as to how they served the interests of the company.
Mr Lewis senior died on 22 June 2012. His estate compromised two main assets, namely, the home in Turramurra which he occupied with Mrs Lewis, and his shareholding in the company. In the inventory of property sworn in support of the probate application, the Turramurra house was valued at $1 million and his shares in the company at $4.45 million (implying that the company was worth, in all, approximately $8.9 million; for present purposes that approximation suffices). Of that $8.9 million, roughly $3 million was held in cash and roughly $6 million represented a share portfolio. That cash and share portfolio were the assets transferred in January 2012 to the companies and trusts established by Mr David Lewis and Mrs Lewis at about that time.
By his will, Mr Lewis, having appointed the plaintiff and Mr Bird as executors, gave his estate to his trustees upon trust to pay his debts, funeral and testamentary expenses and then if, as occurred, his wife Pamela Lewis survived him for two calendar months, to permit his wife to reside in the Turramurra property, together with what is conventionally described as a "Crisp" provision, requiring the trustees to sell that property and purchase a replacement at the wife's request, and to pay the income to her during her lifetime and as to the balance, to hold the residue for such of his four sons (including the plaintiff and David, and two others, Roger and Hugh) who survive him, if more than one, equally. A clause provided for substitution per stirpes and there was also a discretion conferred on the trustees to pay to Pamela Lewis or apply for her maintenance and benefit any part or parts of the capital as may be required to ensure she not be in circumstances of need.
As I have said, no evidence was filed in opposition to the winding up application, but by leave granted at the outset of the hearing this morning, the defendant seeks an order adjourning the hearing of the proceedings and referring the proceedings for mediation pursuant to (NSW) Civil Procedure Act 2005, s 26. Alternatively, the defendant submits that the Court should, in its discretion, decline to make a winding up order in order to allow the protagonists to endeavour to negotiate a family reconciliation and settlement. That application is supported by Mrs Pamela Lewis, who is the other 50 per cent shareholder in the company.
This is not the first piece of litigation between these parties. The plaintiff earlier applied for an order permitting him access to the company's books and records, which application was initially opposed and in which Mrs Lewis, herself, took a separate active role in opposing in addition to the company's opposition. Three of the protagonists - that is three of the four sons - have indicated, albeit briefly in response to the present application, that they do not consider that there is any reasonable prospect of a mediation producing an acceptable compromise in light of the course of the dispute to date.
It is, no doubt, desirable, if it were possible, for those involved in this dispute to achieve some form of family reconciliation and resolve their dispute rather than have it submitted to a liquidator. That would be desirable both in economic terms and in social and family terms.
That said, in the context of Court ordered mediation pursuant to Civil Procedure Act, s 26, mediation is a means to an end and not an end in itself. It is intended to be a means of assisting parties to avoid a judicial determination, and the costs and other incidents of that, through an alternative dispute resolution process. Its utility as a means to an end is more or less exhausted when the matter is set down for a final hearing, where there is no evidence in opposition to the application, and where it is conceded that the grounds for a winding up order are established.
Effectively, what is sought here is that a plaintiff - who has invoked the Court's jurisdiction, filed the requisite evidence, incurred the costs of doing so, prosecuted the matter to a final hearing, and faces no opposition on the merits at the final hearing - should nonetheless be held out of the relief to which he is, prima facie, entitled because of a last minute suggestion that perhaps it would be better if the parties could mediate their dispute.
If there were to be any prospect of that happening, then one would have wanted to see some indication that an offer had been made (so that there were some parameters within which it might be possible that a negotiated settlement could take place), or at least some evidence of a reaching out by the defendants and its associates to the plaintiffs with a view towards some sort of reconciliation. There is nothing in the evidence adduced on this application suggestive of any real prospect of a mediated solution being reached. In my view, I am afraid it is too little, too late for that course to be adopted.
The interlocutory process is, therefore, dismissed.
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Decision last updated: 28 October 2014
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