Lily and Ruby Holdings Pty Ltd v Aulich Civil Law Pty Ltd (No 3) (In Liquidation)

[2025] ACTSC 353

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Lily and Ruby Holdings Pty Ltd v Aulich Civil Law Pty Ltd (No 3) (In Liquidation)

Citation: 

[2025] ACTSC 353

Hearing Date: 

4 July 2025

Decision Date: 

11 August 2025

Before:

Muller AJ

Decision: 

See [59]

Catchwords: 

PRACTICE & PROCEDURE – INTERLOCUTORY APPLICATION – applications for further disclosure – discovery – rules 605 and 606 of the Court Procedures Rules – plaintiff and defendant applications – request for further documents relating to discrete categories – various orders for further discovery made

Legislation Cited: 

Corporations Act 2001 (Cth) ss 181, 232, 233, 439C, 491

Court Procedures Rules 2006 rr 605, 606

Evidence Act 1991 (ACT)

Cases Cited: 

Australian Competition & Consumer Commission (ACCC) v McMahon Services Pty Ltd [2004] FCA 353

Brookfield v Yevad Products Pty Ltd [2006] FCA 1164

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337

Cossey v Canberra Airport Pty Limited [2022] ACTSC 70

Howard Smith Ltd v Ampol Petroleum [1974] AC 821; 1 NSWLR 68

In the matter of Yowie Group Ltd [2025] NSWSC 648

Mulley v Manifold [1959] HCA 23; 103 CLR 341

MG Corrosion Consultants Pty Ltd v Gilmour [2011] FCA 1514

Procter v Kalivis [2009] FCA 1518; 263 ALR 461

Rio Tinto Ltd v Commissioner of Taxation [2005] FCA 1335

Talada Investments v Revera Scaffolding [2017] ACTSC 160

Telstra Corp Ltd v Australis Media Holdings (Unreported Supreme Court of New South Wales, 10 February 1997­)

Parties: 

Lily & Ruby Holdings Pty Ltd ( First Plaintiff)

Erin Brooke Taylor ( Second Plaintiff)

Aulich Civil Law Pty Ltd (in liquidation) (First Defendant)

Peter William Woodhouse (Second Defendant)

Angiesal Pty Ltd (in liquidation) (Third Defendant)

Benjamin Joseph Aulich (Fourth Defendant)

Gracie Gill Pty Ltd (Fifth Defendant)

Representation: 

Counsel

B Seif ( First and Second Plaintiff)

G Adams ( Second, Third, Fourth and Fifth Defendant)

Solicitors

BAL Lawyers ( First and Second Plaintiff)

Herman Legal ( Second, Third, Fourth and Fifth Defendant)

File Number:

SC 260 of 2024

MULLER AJ: 

Introduction

1․The second plaintiff previously conducted a legal services business, trading as Aulich Civil Law (ACL), with the second and fourth defendants. The first defendant (now in liquidation) is the corporate entity via which the legal services business operated.

2․The legal services business conducted by ACL has ceased to trade. A dispute has arisen over some financial matters that is the subject of these proceedings. In short, the plaintiffs contend that the contract the second plaintiff entered into upon commencing as a partner in ACL obligated the defendants to repay to her the monies she expended on purchasing a 25% share in the business, in the event of her leaving the partnership for any reason within five years of entry. It is contended that the second plaintiff did leave the business within that period and is therefore entitled to reimbursement of the sum of $500,000 she paid for her shares. The pleaded claim comprises 5 separate causes of action, but they fundamentally arise from the failure to repay in the circumstances described above.

3․The other three parties to the proceedings are corporate entities related to the ‘partners’ of ACL as follows:

(a)Lily & Ruby Holdings Pty Ltd (first plaintiff) – a company which held 33,325 of 100,000 shares in ACL and of which the second plaintiff was a director;

(b)Angiesal Pty Ltd (in liquidation) (third defendant) – a company which held 33,325 shares in ACL and of which the second defendant was a director prior to it entering into voluntary liquidation; and

(c)Gracie Gill Pty Ltd (fifth defendant) – a company which held 33,325 shares in ACL and of which the fourth defendant was a director.

4․The present applications concern the adequacy of disclosure given by parties on each side of the dispute. On the plaintiffs’ part it is asserted:

(a)that not all relevant documents have been discovered; and

(b)that some of the relevant documents which have been discovered have not been produced.

5․Similarly, the second, fourth and fifth defendants assert as against the plaintiffs that discovery to date has been inadequate in that not all relevant documents have been discovered.

The plaintiffs’ application

6․The plaintiffs seek orders pursuant to r 606(1)(c) of the Court Procedures Rules 2006 (CPR) that the fourth and fifth defendants make further disclosure, in the form of an updated affidavit verifying list of documents, providing:

1.That, pursuant to Rule 606(1)(c) of the Court Procedures Rules 2006, and within 7 days of these orders being entered, the fourth and fifth defendants make further disclosure of documents by:

a)Filing and serving an updated Affidavit Verifying List of Documents, providing disclosures as to:

i.Unredacted copies of bank statements of the further defendant, and the fifth defendant, and any other company in which the fourth defendant has an interest (including an offset accounts) from April 2024 to September 2024; and

ii.Mortgage liabilities in respect to any properties owned by the fourth defendant from April 2024 to September 2024

and providing an electronic copy of any listed to the plaintiffs’ solicitors organised in a way that is referrable to the updated list of documents;

7․In addition, and in respect of the existing disclosure, they seek provision of:

b)… an electronic copy of the documents described in Items 518 to 520, 555, 560 and 570 to 573 of the List of Documents verified by affidavit of the fourth defendant dated 17 April 2025 (Missing Documents)

8․The plaintiffs read the following affidavits, in support of their application and, in reply to the application of the defendant:

(a)Affidavit Verifying List of Documents of Erin Taylor sworn 31 March 2025;

(b)Affidavit Verifying List of Documents of Benjamin Aulich affirmed 17 April 2025;

(c)Affidavit of Ian Alexander Meagher sworn 29 May 2025;

(d)Affidavit of Erin Brooke Taylor sworn 10 June 2025;

(e)Affidavit Verifying List of Documents of Erin Brooke Taylor sworn 20 June 2025; and

(f)Affidavit of Ian Alexander Meagher sworn 1 July 2025.

The second, fourth and fifth defendants’ application

9․The defendants seek orders requiring the plaintiffs to make disclosure of documents relating to the following issues:

(a)That the second plaintiff has been paid her leave entitlements in full.

(b)The first and/or second plaintiff filing a proof of debt with the administrator of the first defendant claiming $500,000 was owed from the first defendant. This includes the document and any letter and documents in support of the proof of debt.

(c)The first and/or second plaintiff voting to have first defendant placed into liquidation (from administration). Including any correspondence with other creditors of the first defendant and the liquidator of the first defendant.

(d)Any further emails, letters or text that relate to the issue that the first defendant is a ‘partnership’ or quasi-partnership including emails to the effect – “good luck saying we are a quasi-partnership Jack that’s retarded”.

(e)Any correspondence with, and/or advice from the first and/or second plaintiff’s accountant, tax advisor and/or financial advisor concerning the following:

1.Family trust, tax benefits and assets protection of having the first plaintiff purchase the shares in the first defendant; and/or

2.The structure of the first defendant: and/or

3.The first defendant being run as a corporation and not a partnership.

(f)Any correspondence with, and/or advice from the first and/or second plaintiff’s bank to obtain funds for the first plaintiff to purchase shares in the first defendant.

(g)All tax returns and any financial document, which concerns the first and/or second plaintiff claiming a tax benefit or any other benefit from the proof of debt filed with the first defendant in the sum of $500,000.

Applicable principles

10․Rule 605(1) of the CPR sets out the documents that are discoverable. The obligation extends to any documents relating, directly or indirectly, to a matter in issue in the proceeding, or to documents mentioned in a pleading or other document filed in the proceeding. The rule also provides for exceptions to the general obligation in relation to certain categories of documents, including those which meet the definition of confidential communications or documents, under the Evidence Act 1991 (ACT).

11․The court is empowered, pursuant to r 606 of the CPR to make orders about disclosure of documents, including orders that limit or extend the obligation to disclose.

12․Rule 606 of the CPR provides:

606 Orders about disclosure

(1)The court may make the following orders:

(a)an order that limits a party’s duty of disclosure;

(b)an order for a party to disclose discoverable documents;

(c)if the court considers that a party has not, or may not have, adequately disclosed discoverable documents—an order for a party to make further disclosure;

(d)an order for the lists of documents of the parties, or the list of documents of a party, to be served in a stated electronic form;

(e)an order for disclosure of discoverable documents by the parties, or a party, to be made in stages or in a stated way;

(f)an order for disclosure, or nondisclosure, by a party of any discoverable document in the party’s possession;

(g)any other order about disclosure, or nondisclosure, of documents that the court considers appropriate.

Example for par (e) and par (g)

The court may make an order permitting disclosure by bundle.

(2)The court may make an order under subrule (1) on the application of a party or on its own initiative.

Note Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.

(3)Before making an order under subrule (1), the court must have regard to the following matters:

(a)the principle that disclosure of documents in a proceeding should be limited to disclosure that is reasonably necessary for fairly disposing of the proceeding, or part of the proceeding, or for saving costs;

(b)the likely relevance and significance, in relation to the proceeding, of the documents, or particular documents, that may be discovered;

(c)the likely time, cost and inconvenience of disclosing documents or particular documents.

(4)Subrule (3) does not limit the matters to which the court may have regard.

(5)The court may inspect any document in a party’s possession to decide whether it ought to be disclosed by the party.

(6)An affidavit must not be used for an application for an order under this rule unless the court otherwise orders.

13․In considering the history of the process of discovery, in Brookfield v Yevad Products Pty Ltd [2006] FCA 1164 at [364] to [369], Lander J observed:

364. Discovery, which originated in the Court of Chancery, was introduced into all courts in England following upon the enactment of the Judicature Acts.

365. The process was introduced as part of the simplification of the courts’ processes. The Judicature Acts were passed in order to introduce a civil legal system which was understandable and which had procedures which would enable litigation to be conducted efficiently, expeditiously and reasonably inexpensively. The purpose of including a regime which allowed for discovery was to ensure that the parties had full access to all relevant material whether in their hands or their opponents.

366. The process enables the parties to obtain documents from their opponents which support their own case, and which destroy their opponents’ case.  It enables the parties to assess their own prospects of success before trial and to ensure that they are not ambushed at trial.  Interrogatories also form part of this process and are designed to identify the opposing parties’ oral evidence.

367. Sir John Donaldson MR said in Davies v Eli Lilly & Co [1987] 1 All ER 801 at 804:

‘Let me emphasise that the plaintiffs’ right to discovery of all relevant documents, saving all just exceptions, is not in issue.  The right is peculiar to the common law jurisdictions.  In plain language, litigation in this country is conducted “cards face up on the table”.  Some people from other lands regard this as incomprehensible.  “Why”, they ask, “should I be expected to provide my opponent with the means of defeating me?”  The answer, of course, is that litigation is not a war or even a game.  It is designed to do real justice between opposing parties and, if the court does not have all the relevant information, it cannot achieve this object.’

368. The integrity of the discovery process must be maintained.  The process in many ways depends upon the honesty of the parties and their legal advisers.

369. It is essential for the administration of justice that the parties’ legal advisers properly instruct their clients as to their responsibilities in the discovery process.  The parties must be instructed on the issues in the litigation, including the issues raised by their opponents’ pleadings.  They must be instructed as to what documents are relevant for the purposes of discovery.  They must be encouraged to open up their documents for assessment by their own legal advisers.  If the parties are not mindful of the heavy responsibility that lies upon them, including the responsibility to discover and provide production of documents which might be destructive of their own case, then it is likely that the parties might fail to discover those documents.

14․In relation to the conclusiveness of discovery, in Mulley v Manifold [1959] HCA 23; 103 CLR 341 Menzies J stated at [3]:

[I]t cannot be shown by a contentious affidavit that the discovery made is insufficient. Before 1912, it was thought that the insufficiency had to appear from the pleadings, the affidavit of documents itself or the documents therein referred to. However, in British Association of Glass Bottle Manufacturers Ltd. v. Nettlefold (1912) 1 KB 369; (1912) AC 709, it was established that the insufficiency might appear not only from the documents but also from any other source that constituted an admission of the existence of a discoverable document. Furthermore, it is not necessary to infer the existence of a particular document; it is sufficient if it appears that a party has excluded documents under a misconception of the case. Beyond this, the affidavit of discovery is conclusive.

15․Other cases have suggested a broader approach. After reviewing the authorities Besanko J described the position in this way in Procter v Kalivis [2009] FCA 1518; 263 ALR 461 at [33]-[35]

I refer also to the detailed discussion of the authorities by Menhennitt J in Beecham Group Ltd v Bristol-Myers Co [1979] VR 273. I think reasonable grounds for being fairly certain that there are other relevant documents is a good workable test and is a test supported by the authorities.

As the passage from Mulley v Manifold set out above makes clear, there are limits on the material which may be considered by a Court in determining the sufficiency of an affidavit of discovery. The most significant is that the insufficiency cannot be established by a contentious affidavit.

The insufficiency of an affidavit of discovery will ordinarily lead to an order requiring the filing of a further affidavit of discovery.

16․As Mossop J observed in Talada Investments v Revera Scaffolding [2017] ACTSC 160, at [15], the principle in Mulley is reflected in the terms of r 606(6) of the CPR that prohibits the use of an affidavit for an application seeking an order under this rule unless the court otherwise orders. In summary, the principles to be applied in considering an application for orders about disclosure are:

(a)The court will generally not go behind an affidavit of discovery;

(b)The power to do so is to be exercised sparingly;

(c)Something more than a contentious affidavit in respect of the discovery that has been given will ordinarily be required;

(d)The court must generally be satisfied with reasonable certainty either from the disclosing party's own evidence or from documents other than a contentious affidavit that discovery is incorrect or inadequate;

(e)Reasonable grounds for being fairly certain that there are other relevant documents is a good workable test.

The defendant’s discovery

Request for further disclosure

17․Dealing first with the application for further discovery I will address each of the component parts:

Bank statements

18․The plaintiff’s complaint has three components:

(a)Some bank statements have been produced that include unilateral redactions;

(b)Statements have been produced from a date in July 2024 when they should be produced from 12 April 2024, being the date of the second plaintiff ceasing as a partner in the practice;

(c)Statements in respect of other bank accounts, either known by the second plaintiff to exist, or evidently existing from the references to them in the produced bank statements themselves, are missing.

19․As to the redacted statements the plaintiffs relied upon the decision of the Federal Court in MG Corrosion Consultants Pty Ltd v Gilmour [2011] FCA 1514 at [10] to [12] (Gilmour), in support of its contention that redaction of parts of discovered documents should not occur without the consent of the opposing party or an order of the court: See also Telstra Corp Ltd v Australis Media Holdings (Unreported Supreme Court of New South Wales, 10 February 1997) at 3, Rio Tinto Ltd v Commissioner of Taxation [2005] FCA 1335 at [25] and Australian Competition & Consumer Commission (ACCC) v McMahon Services Pty Ltd [2004] FCA 353 at [12]-[13].

20․The defendants contended that the basis for the redaction of components of the bank statements discovered is a question of relevance. They contend that the redacted aspects relate only to payments or withdrawals from the accounts and it is only amounts coming into the accounts that are relevant for the purposes of the proceeding. For the reasons identified in Gilmour I am of the view that if the document itself is considered a relevant document to be disclosed, it is appropriate for the whole of the document to be produced. That is, unless there is an agreement between the parties as to what might be redacted, or an order of the Court in appropriate circumstances imposing limits on disclosure. In that regard I note that an initial submission to the effect that there was a legal privilege basis for the redactions was withdrawn in the course of oral submissions.

21․In relation to bank statements referable to the period from 12 April 2024 to July 2024, it is the plaintiff’s contention that the period is relevant as a consequence of 12 April 2024 being the date on which the second plaintiff ceased as a partner in the practice. The defendant argues that what the plaintiffs seek in their claim is an account of profits from July 2024 and, in those circumstances, only the bank account statements from that time are relevant.

22․A review of the pleadings demonstrates that the plaintiffs seek, amongst other things, an account of monies paid, received by, or owed to, the relevant entities on account of profits or distributions from “Aulich Criminal Law” since 1 July 2024: [73] of amended statement of claim. That accounting is sought on the basis of a claim for breach of fiduciary duties to shareholders of ACL. Equitable compensation is also sought pursuant to that claim. A similar claim is made in respect of asserted breaches of fiduciary partnership duties.

23․In addition, the plaintiffs assert:

(a)breach of contract in respect of the failure to repay the first plaintiff the sum of $500,000, paid for the acquisition of shares in ACL; and

(b)breaches of the Corporations Act as against the second and fourth defendants in terms of oppressive conduct, improperly gaining advantage for themselves or someone else or causing detriment to ACL in their roles as directors of that entity.

24․The particulars pleaded in support of those claims refer to a number of financial transactions occurring outside of the period from 12 April to 1 July 2024, but there is an absence of reference to transactions within that period. However, [30A] of the amended statement of claim is in the following terms:

Also on 22 March 2024, Woodhouse sent an email to Aulich to state his intentions, inter alia, that “I am not prepared to buy shares in a company that may not make it”, and that “I hope we will be in a position to pay [the first plaintiff] for [its] shares in 6 to 12 months if the company survives”.

25․By their defence the second, fourth and fifth defendants admit the email was sent in those terms but deny that it was a statement of the intentions of Mr Woodhouse.

26․The email communication on its face raises the issue of the capacity of ACL to purchase the plaintiff’s shares following her departure from the business on 12 April 2024. In addition, the amended defence relied upon by the second, fourth and fifth defendants asserts, inter alia, the placement of ACL into liquidation “to ensure proper corporate governance” on 24 October 2024, after the ending of the second plaintiff's engagement with ACL. In those circumstances, I am satisfied on the basis of the pleadings that there is a proper basis for disclosure of the bank statements from the date of the ending of her partnership on 12 April 2024, as the funds at bank in that period, and the movement of funds, will be relevant to the assessment of the financial capacity of ACL, and the corporate governance decisions made in that period.

27․The third category relied upon by the plaintiffs is in respect of the asserted existence of additional relevant bank accounts. The plaintiffs rely on the second plaintiff’s knowledge of the fourth defendant’s financial affairs as set out in the affidavit of the second plaintiff, sworn on 10 June 2025, at paragraphs [6]-[7] and [9]:

6.In relation to the “Bank Statement (Mr Aulich).pdf” that was sent to the plaintiffs’ solicitors on 3 June 2024 at 2:18pm – being at pages 7 to 12 of Annexure A – I note the following:

a)Despite the description of the PDF document as being a “Bank Statement” it appears to instead be a transaction history statement for two accounts – one being a St George account, and the other a Members Equity account. I am aware from my previous relationship with Mr Aulich that he banks with Members Equity (or at least he used to).

b)The selected end date for the Members Equity statement is noted to be 15 July 2024. I am not sure of the relevance of that end date. The St George statement does not disclose a second end date, though it discloses no transactions after 10 July 2024.

c)The Members Equity statement includes incoming credits from the following further accounts which have not been discovered by the fourth or fifth defendants:

i.Account described as “Benjamin Aulich BSB Ben – ME Account” – see transactions dated 2 April 2024, 13 June 2024, 4 July 2024 and 10 July 2024.

ii.Account described as [redacted] – see transactions dated 15 April 2024, 27 May 2024, and 28 May 2024.

iii.Account described as [redacted] – see transactions dated 4 May 2024, 13 May 2024, and 28 May 2024.

iv.Account described as [redacted] – see transaction dated 13 June 2024. I believe this account to be an “off-shoot type account” as referred to in paragraph 12 of a letter from the defendants’ solicitors dated 21 May 2025, as found at [IAM-31] to the exhibit to Mr Meagher’s affidavit. I am aware from my previous relationship with Mr Aulich that he had savings accounts in his name that he transferred money to each week that he had notionally allocated to each of his children.

d)Each of the Members Equity or St George accounts show account balances of less than $100. However, neither disclose the outgoing transactions for the accounts. This includes in the case of:

i.The St George account, it having incoming payments totalling $165,294.35 from 3 April 2024 to 10 July 2024; and

ii.The Members Equity account, it having incoming payments totalling $54,552.23 from 2 April 2024 to 10 July 2024.

7.In relation to the email from Ms Zhang to Mr Meagher sent at 6:04pm on Tuesday 3 June 2025 – being at page 13 of Annexure A – in the final dot point of Ms Zhang’s email, she states “Your client may now review the bank statements provided for accounts held by Mr Aulich and Gracie Gill Pty Ltd from April 2024”. I assume because of this that the St George statement attached to Ms Zhang’s email earlier that day was for an account of the fifth defendant, though frankly I am not sure.

…

8.In relation to the PDF that was attached to email from Ms Zhang to Mr Meagher sent at 2:55pm on Thursday 5 June 2025 – being at page 20 of Annexure A – I note that:

a)The attached PDF provides a screenshot for a further account being BSB [redacted], Account Number [redacted]. I infer it to relate to the mortgage account of Mr Aulich’s home at [redacted].

b)I am not sure if it relates also to a property at [redacted], which I am aware was registered in the name of Mr Aulich’s ex-wife for asset protection purposes.

c)In any case, the document refers to an owed balance of $887,340.95, as at 14 June 2025.

d)The plaintiffs seek discovery of the defendants’ financial position as at 14 April 2024, being the date the plaintiffs say a contractual obligation existed for the first plaintiff’s shares in the first defendant to have been bought back.

e)On the plaintiffs’ case, the defendants’ financial position is relevant and necessary to inform the Court as to whether the individual defendants (that is, the second and fourth defendants) breached the Implied Term (as defined in the Amended Statement of Claim) by failing to procure that the first plaintiff’s shares were purchased back for $500,000 by any of the first, third or fifth defendants. I in particular say this as, in my experience in dealing with the bank for the first defendant, the financial position of the directors was relevant to the borrowing capacity of the first defendant.

28․They also contend that the existence of such accounts is itself evident from the references made to them in the bank statements that have been disclosed to date.

29․To the extent that the plaintiffs seek to place reliance on the particular knowledge of the second plaintiff as to the financial affairs of the fourth defendant, the request of the plaintiffs in my opinion goes beyond that which can be “inferred from the documents that have been discovered or from material already filed in the proceeding”: per Kennett J in Cossey v Canberra Airport Pty Limited [2022] ACTSC 70 at [8]. In so far as the plaintiffs rely upon entries in the bank statements already discovered which, on their face, identify other bank accounts in the name of the fourth defendant, it is appropriate to make orders for further disclosure. The Identified accounts are:

1.Benjamin Aulich BSB Ben - ME account;

2.Benjamin Aulich [redacted] Account [redacted]; and

3.Benjamin Aulich [redacted] Account [redacted].

Mortgage liabilities

30․The additional category of further disclosure sought by the plaintiffs is:

mortgage liabilities in respect to any properties owned by the fourth defendant from April 2024 to September 2024

31․The basis underpinning the request for disclosure of documents in this category is not illuminated by the oral or written submissions of the plaintiff, other than to observe that the material is considered reasonably necessary. The mortgage liabilities are referred to by the second plaintiff in her affidavit sworn on 10 June 2025 at [9]. The second plaintiff seeks to draw inferences as to the import of an account balance statement that appears at page 20 of annexure “A” in her affidavit of 10 June 2025. She submits that the status of mortgage accounts of the fourth defendant, and in a broader sense the fourth defendant’s financial position, is relevant and necessary to the court’s determination of whether individual defendants breached implied terms of the contract with the plaintiffs by failing to procure the repurchase of the first plaintiff’s shares in ACL. I disagree. As to the basis upon which the court may imply a term into a contract, Mason J observed in the frequently cited passage from Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337 at [8]:

8. The basis on which the courts act in implying a term was expressed by MacKinnon L.J. in Shirlaw v. Southern Foundries (1926) Ltd (1939) 2 KB 206, at p 227 in terms that have been universally accepted: "Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying. . . " (at p347)

9. The conditions necessary to ground the implication of a term were summarized by the majority in B.P. Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council (1977) 52 ALJR 20, at p 26 : "(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." (at p347)

32․The plaintiffs have not established that the status of the fourth defendant's mortgage account at any material time is or may be relevant to the determination of whether the contract included, or as to the import of, an implied term to the effect that each of the second and fourth defendants would take all steps necessary to ensure that the obligation of ACL to purchase the subject shares would be performed. The mortgage accounts may be relevant to an assessment of the fourth defendant’s financial capacity to meet a successful claim by the plaintiffs, but that is not the issue.

Missing Documents

33․The second part of the plaintiff’s complaint concerning the defendant’s discovery relates to documents that have apparently been discovered but cannot be located.

34․As to this aspect of the plaintiffs’ complaint I note that the orders made by McCallum CJ in respect of discovery on 25 March 2025 were:

1.Order 6 of the orders of Deputy Registrar Barker-Mitchell be varied as follows:

f)Any party in receipt of a notice to disclose discoverable documents is to file and serve pursuant to rule 607(3) on or before Tuesday 1 April 2025:

i.Its list of documents set out in a convenient (and subject to being organised in convenient groups, in chronological) order in accordance with rule 608(1), with a copy of any not privileged documents to be provided by electronic means organised in a way referrable to the list of documents;

ii.Any affidavit verifying the list; and

iii.If the party is represented by a solicitor, the solicitor’s certificate of advice in relation to the list.

35․In relation to this category, there is no argument that the documents are relevant and ought to be discovered. The argument is about whether they have in fact already been discovered. The defendants say that they have, and the plaintiffs assert that they cannot find them amongst the material disclosed. It is unfortunate that in circumstances where the matter in dispute is of such narrow compass that the parties remain unable to resolve it without the assistance of the court. Compliance in good faith with the orders made previously by the Chief Justice should be sufficient to resolve the matter. Lest that not be possible I propose to make a further order dealing specifically with the items identified by the plaintiffs in footnote 7 of their written submissions at Page 3.

The plaintiff’s discovery

36․The defendant relies on the following affidavits:

(a)Benjamin Aulich affirmed 17 April 2025; and

(b)Eric Herman sworn on 17 June 2025.

37․The application seeks further disclosure in a number of distinct categories and I will deal with each separately below. The affidavit of Mr Aulich is directed to the topic of the adequacy of the defendants’ discovery and does not bear on the defendant’s own application. The affidavit of the defendants’ solicitor, Mr Herman, does refer to the plaintiffs’ discovery, but in doing so, simply restates the categories of further disclosure that appear in the application in proceeding filed by the defendants. Mr Herman’s affidavit does confirm that the further disclosure in terms of the categories of documents now sought in the defendant’s application in proceeding were first sought in an email from his office directed to the plaintiff’s solicitor on or about 5 June 2025.

That the second plaintiff has been paid her leave entitlements in full

38․Counsel for the defendants submitted that a single email had been discovered in relation to this category, and that disclosure didn’t “seem to be a comprehensive or genuine effort to comply with the discovery request”.

39․The plaintiffs assert at [53](b) of their amended statement of claim that one of the particulars of oppressive conduct on the part of the fourth defendant was directing the office manager of ACL not to pay the second plaintiff her statutory leave entitlements. That allegation is denied in the defendants’ amended defence.

40․The document that has been disclosed by the plaintiffs has not been placed before me. There is, as a consequence, insufficient material to enable me to assess whether further disclosure is required.

Documents in support of a proof of debt claim filed by the plaintiffs with the administrator of ACL

41․The submission made by counsel for the defendants was that although there had been some limited production in this category the production was considered inadequate and not reflecting a genuine effort to comply with the defendant’s request. The documents disclosed to date were not placed before me and I consider there to be insufficient material to enable me to assess whether further disclosure is required.

Documents in respect of the plaintiff’s participation in voting in favour of the liquidation of ACL

42․No documents have been produced in response to this category. The defendants contend that the production is directly relevant to the claims made by the plaintiffs with respect to breach of directors’ duties under s 181 of the Corporations Act 2001 (Cth) (Corporations Act), and in respect of the oppression claim pursuant to ss 232 and 233 of the Corporations Act. Those claims are set out at [63], [65] and [67] of the amended statement of claim.

43․Section 181 of the Corporations Act states:

181  Good faith—civil obligations

Good faith—directors and other officers

(1)A director or other officer of a corporation must exercise their powers and discharge their duties:

(a)in good faith in the best interests of the corporation; and

(b)for a proper purpose.

Note 1: This subsection is a civil penalty provision (see section 1317E).

Note 2: Section 187 deals with the situation of directors of wholly‑owned subsidiaries.

(2)A person who is involved in a contravention of subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: This subsection is a civil penalty provision (see section 1317E).

44․The defendants have not demonstrated how the voting intentions of the plaintiffs in respect of the liquidation of ACL may be related to the determination of the question of whether the second and fourth defendants, in their discharge of duties as directors of that entity, acted in good faith in the best interests of the corporation and for a proper purpose. That is particularly so when a determination of the question in s 181 necessarily involves an analysis of the conduct of the defendants and not of the conduct or the motivations of the plaintiffs: see In the matter of Yowie Group Ltd [2025] NSWSC 648 at [73]; Howard Smith Ltd v Ampol Petroleum [1974] AC 821; 1 NSWLR 68.

45․Sections 232 and 233 of the Corporations Act provide:

232Grounds for Court order

(1)The Court may make an order under section 233 if:

(a)the conduct of a company’s affairs; or

(b)an actual or proposed act or omission by or on behalf of a company; or

(c)a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d)contrary to the interests of the members as a whole; or

(e)oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company.

Note 1: For affairs, see sections 53 and 53AAA.

Note 2: The effect of paragraph (d) is extended in relation to a sub‑fund of a CCIV: see section 1227F.

233  Orders the Court can make

(1)The Court can make any order under this section that it considers appropriate in relation to the company, including an order:

(a)that the company be wound up;

(b)that the company’s existing constitution be modified or repealed;

(c)regulating the conduct of the company’s affairs in the future;

(d)for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law;

(e)for the purchase of shares with an appropriate reduction of the company’s share capital;

(f)for the company to institute, prosecute, defend or discontinue specified proceedings;

(g)authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company;

(h)appointing a receiver or a receiver and manager of any or all of the company’s property;

(i)restraining a person from engaging in specified conduct or from doing a specified act;

(j)requiring a person to do a specified act.

Note: If the company is a CCIV there are modifications for paragraphs (1)(a) and (h) (see section 1227G and Part 8B.6).

Order that the company be wound up

(2)If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply:

(a)as if the order were made under section 461; and

(b)with such changes as are necessary.

Order altering constitution

(3)If an order made under this section repeals or modifies a company’s constitution, or requires the company to adopt a constitution, the company does not have the power under section 136 to change or repeal the constitution if that change or repeal would be inconsistent with the provisions of the order, unless:

(a)the order states that the company does have the power to make such a change or repeal; or

(b)the company first obtains the leave of the Court.

Note: If the company is a CCIV the reference to section 136 is modified (see subsection 1227G(2)).

46․Oppression of a member of the company may arise where the conduct of a company's affairs or an actual or proposed act by or on behalf of a company is oppressive to a member or members.

47․The amended statement of claim includes the pleading at [3](c) that since about 24 October 2024 ACL has been subject to voluntary liquidation under ss 439C(c) and 491 of the Corporations Act. Section 439C(c) is concerned with a creditors resolution that the company be wound up. Section 491 permits a company to be wound up voluntarily if the company so resolves by special resolution. In the further development of the oppressive conduct and director’s breaches claim, at [51] and following of the amended statement of claim, there is no direct particularisation of the circumstances of the entry into voluntary liquidation as amounting to oppressive conduct. However, I am satisfied, based on the pleading, that documents in respect of the plaintiff’s participation in the voluntary liquidation process may be relevant to the determination of the oppressive conduct claim. In those circumstances it is appropriate for the plaintiffs to make disclosure of this category of documents.

48․With reference to the oral submissions on behalf of the plaintiffs it may be this category of documents has now been produced.

Correspondence relating to the characterisation of ACL as a partnership or quasi partnership

49․It is contended that no documents have been produced in respect of this category. The defendants argue that the documents are relevant to the plaintiffs’ claim for reimbursement of the $500,000 sum paid for shares, and also relevant to the associated oppression claim. The argument was not developed further in submissions.

50․There is no obvious basis upon which to infer that the content of communications dealing with the characterisation of ACL as a partnership or quasi-partnership are, or may be, relevant to the determination of the terms of the subject contract and, in particular, the implication of terms into the contract. The same difficulty applies in seeking to connect that category of communications with the claim for oppression, which is based on an analysis of the conduct of the second and fourth defendants in their management of ACL. I have reached the same view in relation to financial advice that may have been received concerning the structure of ACL and the running of ACL as a corporation and not a partnership.

Correspondence in the nature of tax or financial advice

51․It is the defendants’ contention that this category is relevant to the allegations in [55] of the amended statement of claim. Paragraph 55 is lengthy, but it contains a primary assertion that the second and fourth defendants have taken positive steps to frustrate the ability of the first plaintiff to have its shares in ACL bought back by either of ACL, the third defendant or the fifth defendant.

52․The pleading then includes particulars of a series of financial transactions concerning invoices issued from Aulich Criminal Law Pty limited to ACL, the nomination of ACL to purchase the shares of the first plaintiff seemingly to the exclusion of the other parties to the agreement, and the transfer of the fifth defendant’s shares in Aulich Criminal Law Pty limited to another entity for only $1.00.

53․The defendant submits that the decisions to place ACL and the third defendant in liquidation were to ensure proper corporate governance of those entities on the advice of the company's accountant, a registered liquidator and administrator. That submission is a restatement of the position set out at [55] of the amended defence. Further it is contended that ACL was nominated to purchase the shares of the first plaintiff in answer to a demand from the plaintiffs to do so.

54․The defendants then submit that it is crucially relevant to see any correspondence with and/or advice from the first and/or second plaintiff’s accountant, tax advisor and/or financial advisor concerning family trust issues, tax benefits and assets protection or advice relating to the structure of ACL.

55․The crucial relevance is not readily apparent. It may be that the defendants wish to argue that the actions taken, by the second and fourth defendants in particular, were actions taken with the knowledge and consent of the plaintiffs, and in a way that was consistent with the advice the plaintiffs had received. However, that does not appear from the defendants’ case as it is presently pleaded, and the basis for further disclosure is therefore not made out.

Correspondence with the plaintiffs’ bank to obtain funds for the purchase of shares in ACL

56․The defendants submit that this request falls into the same category as the tax documents that are sought. The category of documents is contended to be relevant “[t]o the plaintiff’s claim for her alleged leave entitlement of $500,000 in exchange for her shares in Aulich Civil Law and the associated oppression claims brought by the plaintiffs”

57․For the reasons set out above I am not satisfied that a basis for further disclosure is made out.

Tax returns and financial documents concerning the claiming of a tax benefit by the plaintiffs from the proof of debt filed with ACL

58․The defendants again assert the same basis for this category of disclosure. I accept that the receipt of a financial advantage by the plaintiffs in terms of tax offsets or deductions arising from the lodging of a proof of debt, and the subsequent failure to secure any compensation for the subject shares upon the winding up of ACL may be relevant matters in the quantification of a claim for damages for breach of contract: see Liggins v Park Trent Properties Group Pty Ltd (No 2) [2022] NSWSC 176 at [89]; Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17. It may be that the winding up process has not reached the stage where these matters are capable of determination, however, I accept that tax returns and financial documents evidencing any tax benefit received by the plaintiffs as a result of the liquidation of ACL may be relevant to a fact in issue in the proceedings.

Orders

59․For the reasons stated above I make the following orders:

(a)the second, fourth, and fifth defendants are to give discovery, within 14 days, of the following documents:

1.unredacted copies of bank statements of the fourth defendant and the fifth defendant from April 2024 to September 2024;

2.items 518 – 520, 555, 560 and 573 in the affidavit verifying list of documents of Benjamin Aulich, documents to be organised in convenient groups, in chronological order and in a way referable to the list of documents.

(b)The plaintiffs are to give discovery, within 14 days, of the following documents:

1.documents relating to the plaintiff’s participation in the voting process resulting in ACL being placed into liquidation;

2.tax returns and financial documents relating to the claiming of a tax benefit by the plaintiffs from the proof of debt filed with ACL in the sum of $500,000.

(c)The costs of the applications are to be costs in the cause.

I certify that the preceding fifty-nine [59] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Muller.

Associate:

Date: 11 August 2025