Re Yeeda Pastoral Company Pty Ltd (Subject to Deed Of Company Arrangement) (ACN 094 819 717) - [2025] WASC 57

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 094 819 717) [2025] WASC 57
CORAM:   HILL J
HEARD:   12 & 13 FEBRUARY 2025
DELIVERED          :   27 FEBRUARY 2025
FILE NO/S:   COR 167 of 2024
BETWEEN:   ANTHONY JAY EDWARD MISKIEWICZ as joint and several administrator of YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 094 819 717)
First named First Plaintiff
RICHARD SCOTT TUCKER as joint and several administrator of YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 094 819 717)
Second named First Plaintiff
DAVID CHRISTOPHER OSBORNE as joint and several administrator of YEEDA PASTORAL COMPANY PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 094 819 717)
Third named First Plaintiff
TLP4 AUSTRALIAN HOLDINGS PTY LIMITED (ACN 670 204 930)
First Interested Party
FITZROY RIVER LIMITED LIABILITY COMPANY
Second Interested Party

Catchwords:

Corporations - Application pursuant to s 444GA of Corporations Act 2001 (Cth) for leave to transfer shares - Application for ancillary orders pursuant to s 447A and s 90-15 of sch 2 of Corporations Act 2001 (Cth) - Whether plaintiffs have discharged onus of establishing shares have nil residual value - Expert evidence as to value of shares - Whether valuation evidence is 'stale' - Whether court has discretion to admit expert evidence based on hearsay - Whether offers can be used to determine value of asset - No admissible evidence of value of significant asset of company - What orders should be made

Legislation:

Corporations Act 2001 (Cth), s 444GA, s 447A, sch 2 s 90-15

Result:

Parties to be heard on the orders to be made

Category: B

Representation:

Counsel:

First named First Plaintiff	:	P Edgar SC & SP Tomasich
Second named First Plaintiff	:	P Edgar SC & SP Tomasich
Third named First Plaintiff	:	P Edgar SC & SP Tomasich
First Interested Party	:	J Hewitt SC
Second Interested Party	:	SK Dharmananda SC & F Maher

Solicitors:

First named First Plaintiff	:	Lavan
Second named First Plaintiff	:	Lavan
Third named First Plaintiff	:	Lavan
First Interested Party	:	Clayton Utz (Sydney)
Second Interested Party	:	Fairweather Litigation

Case(s) referred to in decision(s):

Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547
Kipoi Holdings Mauritius Limited v Kirman and Bauer as joint and several administrators of Tiger Resources Limited (subject to deed of company arrangement) [No 4] [2024] WASCA 145
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Re Bizpay Group Limited [2024] NSWSC 1480
Re Yeeda Pastoral Company Pty Ltd (Administrators Appointed) (ACN 094 819 717) [2024] WASC 120
Tucker, in the Black Oak Minerals Ltd (Subject to a Deed of Company Arrangement) (in liq) [2019] FCA 293

HILL J:

By originating process dated 31 October 2024, the plaintiffs seek orders pursuant to s 444GA of the Corporations Act 2001 (Cth) (Act) for leave to transfer all of the issued shares in Yeeda Pastoral Company Pty Ltd (subject to Deed of Company Arrangement) (Yeeda) to TLP4 Australian Holdings Pty Ltd (TLP4). The plaintiffs also seek ancillary orders pursuant to s 447A and s 90‑15 of sch 2 of the Act for the execution of documents to give effect to any orders for transfer that are made.
The originating process first came on for directions before me on 6 November 2024. On that date, directions were made for notice of the application to be given to Yeeda's shareholders and creditors, and for any party who wished to be heard on the application to file a notice of appearance by 19 December 2024. Two parties filed notices of appearance: TLP4 (the deed proponent); and Fitzroy River Limited Liability Company (Fitzroy), a 20% shareholder of Yeeda. Both were given leave to be heard and were joined as interested parties, pursuant to r 2.13(1) of the Supreme Court (Corporations) (WA) Rules 2004 (WA).
Fitzroy does not accept that the plaintiffs have established that there is no residual value in its shares to the requisite standard, and says that leave should not be granted for this reason. In any event, Fitzroy says that the court should not exercise its discretion to grant the leave sought due to various corporate governance issues that they say should be investigated in any liquidation of Yeeda. A further argument was advanced by Fitzroy at the hearing, namely that any prejudice suffered by the court granting leave for the transfer of its shares could be addressed by transferring to Fitzroy the Yeeda group's claims against its former directors (which will otherwise be released under the terms of the deed of company arrangements proposed by TLP4) for nil consideration.[1]
[1] ts 145.
For the reasons set out below, I am not satisfied that there is any admissible evidence before me as to the value of the pastoral leases which comprise a significant asset of Yeeda. As a consequence, I am unable to draw any conclusion as to whether there is any residual value in the equity of Yeeda or whether or not it would be unfairly prejudicial to Fitzroy or the other Yeeda shareholders to grant leave to transfer their shares to TLP4. In the particular circumstances of this case, my preliminary view is that the plaintiffs should be granted leave to re‑open their case to address the issues identified in these reasons. However, before making orders to this effect, I will hear from the parties as to the orders that should be made.

Evidence relied upon in relation to the application

At the hearing before me, the plaintiffs relied on 15 affidavits, being:
(a)four affidavits of David Christopher Osborne, one of the joint deed administrators of Yeeda (three open affidavits filed 31 October 2024,[2] 10 December 2024,[3] and 6 January 2025;[4] one confidential affidavit filed 31 October 2024);[5]
(b)six affidavits of Leith David Ayres, a partner of Lavan, the solicitors for the plaintiffs (five open affidavits filed 6,[6] 8[7] and 13 November 2024,[8] and 9[9] and 29 January 2025;[10] one confidential affidavit filed 29 January 2025);[11]
(c)two affidavits of Nadine Marke, a partner of RSM, the independent expert retained by the plaintiffs (filed 19 December 2025,[12] and 23 January 2025);[13]
(d)two affidavits of Anthony Jay Edward Miskiewicz, another of the joint deed administrators of Yeeda (one open[14] and one confidential[15] affidavit, both filed 29 January 2025); and
(e)an affidavit of Timothy McKinnon, a director of LAWD Pty Ltd, the valuer retained by the plaintiffs (filed 3 January 2025).[16]
[2] Ex 4.
[3] Ex 2.
[4] Ex 1.
[5] Ex 3.
[6] Ex 15.
[7] Ex 14.
[8] Ex 13.
[9] Ex 6.
[10] Ex 5.
[11] Ex 122.
[12] Ex 25.
[13] Ex 22.
[14] Ex 16.
[15] Ex 17.
[16] Ex 23.
TLP4 relied on three affidavits, being:
(a)an affidavit of Jamie Michael Lord, an associate director at New Agriculture Pty Ltd, a member of the New Forests group, a minor shareholder in TLP4, save for [6], [21], [22], [29], [30], the last sentence of [34], [35], and [51] - [55][17] (filed 18 December 2024);[18]
(b)an affidavit of David Shelton (filed 23 December 2024);[19] and
(c)an affidavit of Eustace Bruce King (filed 28 January 2025).[20]
[17] ts 48.
[18] Ex 26.
[19] Ex 24.
[20] Ex 18.
Fitzroy objected to the entirety of Mr Lord's affidavit,[21] and, in the alternative, objected to a number of specific paragraphs of this affidavit.[22] The parties did not require a ruling on the admissibility of these paragraphs during the hearing and accepted that admissibility (to the extent necessary) could be dealt with as part of these reasons.[23] Ultimately, I did not have regard to this affidavit in reaching my decision. Given this, it is not necessary in these reasons to resolve any questions as to the admissibility of these paragraphs.
[21] Second Interested Party's objections to Affidavit of Jamie Michael Lord filed 11 February 2025.
[22] Being [11], [18], [21], [23] - [27], [28], [31], [36] - [38].
[23] ts 48.
Fitzroy relied on six affidavits in opposing the orders sought by the plaintiffs, namely:
(a)four affidavits of Dirk Maurice Fairweather, the solicitor for Fitzroy River (filed 27 January 2025,[24] 7 February 2025;[25] and one open[26] and one confidential[27] affidavit both filed 11 February 2025);
(b)an affidavit of Katherine Susan Sierakowski, a solicitor for Larrawa Cattle Pty Ltd, a secured creditor of Kimberley Meat Company Pty Ltd, a subsidiary of Yeeda (filed 27 January 2025);[28] and
(c)an affidavit of Robert Wesley Stone, an authorised co‑representative of Fitzroy (filed 27 January 2025).[29]
[24] Ex 20.
[25] Ex 123.
[26] Ex 124.
[27] Ex 125.
[28] Ex 21.
[29] Ex 19.
I also had the benefit of various outlines of submissions filed by each of the parties.
Ms Marke (a partner of RSM Corporate Australia Pty Ltd (RSM), the independent expert retained by the plaintiffs) and Mr Miskiewicz (one of the joint deed administrators of Yeeda) attended the hearing and were cross‑examined by senior counsel for Fitzroy. Both witnesses answered the questions asked of them succinctly and directly, and made concessions where appropriate. To the extent that it is relevant, I accept their evidence in its entirety.

Factual background

Yeeda was established in about June 2006 and runs a pastoral operation in the Kimberley region of Western Australia. It is the parent company of a number of wholly owned subsidiaries, who are collectively referred to in these reasons as the Yeeda group. Yeeda's wholly owned subsidiaries include Kimberley Meat Company Pty Ltd (KMC), Kimberley Properties Pty Ltd (KPPL), Yeeda Fodder Company Pty Ltd (YFC),[30] Australian Rangeland Meat Pty Ltd, and Yeeda Kimberley Tours Pty Ltd (YKT).[31]
[30] Now deregistered: Ex 4 [11.1], 'DCO-1'.
[31] Ex 4 [9].
The Yeeda group:[32]
(a)owns, operates, and holds the associated licences and leases of KMC's Colourstone Abattoir (Abattoir). The Abattoir was transitioned to care and maintenance following the appointment of the plaintiffs as voluntary administrators. Before this, the Abattoir processed cattle from Yeeda's landholdings and from other landholders in the Kimberley region;
(b)controls two cattle stations (Yeeda Station and Mount Jowlaenga Station), including pastoral leases N050161 and N050691;
(c)owns or owned approximately 30,000 head of cattle; and
(d)holds other interests, including eight residential properties in Broome and Derby.
[32] Ex 4 [10].
Yeeda also has an interest in the Yeeda Station Carbon Project, located at Mount Jowlaenga Station, and a claim in a class action against the Commonwealth (following the temporary suspension of the live cattle trade in June 2011).[33]
[33] Ex 4 [10.4].
The plaintiffs were appointed as joint and several administrators of KMC on 27 February 2024 by the directors representing ADM Capital Investments Pte Ltd (ADM), a company registered in Hong Kong.[34] Following that appointment, the plaintiffs were appointed as voluntary administrators of Yeeda (as well as other companies in the Yeeda group) on 29 February 2024.[35]
[34] Ex 4 [12], [15].
[35] Ex 4 [13].
On 8 March 2024, the first meeting of creditors of each of the companies in the Yeeda group was held concurrently.[36] On 1 March 2024, prior to this concurrent meeting, the plaintiffs sent a circular to creditors and suppliers of the Yeeda group.[37] At the first creditors' meeting, Mr Osborne informed creditors of the plaintiffs' intention to seek an extension of the convening period to the second creditors' meeting to enable an orderly sale process to be conducted.[38] At that stage, the administrators estimated that the Yeeda group's creditors were owed in excess of $104 million, comprising approximately $50 million owed to secured creditors, more than $800,000 owed to employees, and approximately $53 million owed to unsecured creditors (including shareholder loans of approximately $43 million).[39]
[36] Ex 4 [16].
[37] Ex 4 [18] - [19], 'DCO-8'.
[38] Ex 4, 'DCO-7'.
[39] Ex 4, 'DCO-7', p 162.
On 27 March 2024, I made orders extending the convening period of the second creditors' meeting for a period of six months.[40]
[40] Re Yeeda Pastoral Company Pty Ltd (Administrators Appointed) (ACN 094 819 717) [2024] WASC 120.
During the administration, the plaintiffs entered into funding deeds with ADM and the Commonwealth Bank of Australia (CBA) (to fund the costs of the administration)[41] and Attvest Finance Pty Ltd (to fund various insurance policies).[42]
[41] Ex 4 [21], [24].
[42] Ex 4 [30].
Between 19 April 2024 and July 2024, the plaintiffs ran a sale process for the acquisition and/or recapitalisation of the Yeeda group. As a result of this process:
(a)82 parties sought and were provided with a copy of an information memorandum;[43]
(b)seven non-binding indicative offers were received on about 17 May 2024, which sought to acquire or recapitalise the entirety or a material component of the Yeeda group. The plaintiffs' assessment of these bids was that they ranged in value from $7 million to $70 million;[44]
(c)five of these bidders advanced to stage two of the sales process, which required best and final offers to be submitted by 19 June 2024;[45] and
(d)four formal bids were received on or around this deadline.[46]
[43] Ex 4 [35].
[44] Ex 4 'DCO-10' [5.1.4], p 260.
[45] Ex 4 [37].
[46] Ex 4 [37].
In addition to this formal process, the plaintiffs received a confidential deed of company arrangement (DOCA) proposal from a third party who did not participate in the sales process. The plaintiffs also facilitated the conduct of an accelerated due diligence on certain assets owned by the Yeeda group for three parties, none of whom made a formal offer.[47]
[47] Ex 4 [37].
As a result of this process, the plaintiffs formed the view that only one bidder had provided a strong, feasible, and detailed proposal, namely the proposal received from TLP4.[48] TLP4's proposal included an offer for the ongoing funding of the operations of the Yeeda group, until the earlier of the termination of the five interdependent DOCAs for each of the Yeeda group companies (TLP4 DOCAs) or their completion. The plaintiffs negotiated with TLP4 to increase the value of their offer from $52.80 million to $55.81 million. The final offer valued Yeeda's cattle at $17.31 million (subject to the numbers being verified at the final muster) and its rural properties at $23.25 million.[49]
[48] Ex 4 [39].
[49] Ex 4, 'DCO-10', p 260.
None of the offers, bids, or proposals received by the plaintiffs, including those made by TLP4 and Fitzroy, resulted in any return to or payment being made to Yeeda's shareholders.[50]
[50] Ex 3 (confidential affidavit), 'DCO-12'; Ex 1, 'DCO-11'.
On 19 July 2024, Mr Osborne (as voluntary administrator of the Yeeda group) and Mr King (as director of TLP4) executed a term sheet for the TLP4 DOCAs,[51] and an addendum on 28 July 2024.[52]
[51] Ex 99.
[52] Ex 100.
A second creditors' meeting of the companies in the Yeeda group was convened and held concurrently on 30 July 2024.[53] A report to creditors for the purposes of this meeting was issued on 23 July 2024 (Second creditors' report).[54] In the Second creditors' report, the plaintiffs summarised the relevant aspects of the TLP4 DOCAs. Relevantly, the TLP4 DOCAs proposed the acquisition of all Yeeda group companies, assets, and interests (other than the class action claim) for $55.81 million.[55] The specific breakdown of this amount between the assets of the various companies in the Yeeda group is at [70] below.
[53] Ex 4 [43].
[54] Ex 4 [44], 'DCO-10'.
[55] Ex 4, 'DCO-10', p 260.
In the Second creditors' report, the plaintiffs recommended that creditors of the Yeeda group vote in favour of the proposed TLP4 DOCAs. A series of reasons were given for this recommendation, including that none of the other offers received were capable of acceptance and progression at that stage, that the TLP4 DOCAs allowed for continuity of the Yeeda group companies, and that the TLP4 DOCAs provided a better outcome for creditors than liquidation.
In their recommendations, the plaintiffs specifically noted that:[56]
Our preliminary investigations into the Group's affairs indicate there may be potential future courses of action available to a liquidator if appointed to YPC and/or KMC. However, any such liquidators are likely to have limited, or no, available funding and will therefore need to expend monies which may otherwise be available to creditors, and/or borrow further monies to pursue any potential courses of action. The outcome of which is not currently known and uncertain. Our preliminary investigations have not identified any potential future courses of action that would be available to a liquidator if appointed to KPP, ARM and/or YKT.
[56] Ex 4, 'DCO-10', p 217.
Further details of the investigations done by the plaintiffs are summarised in section 4 of the Second creditors' report.[57] These included their assessment that the Yeeda group may not have adequately maintained its books and records; there were aspects of the Yeeda group's operations which reflected 'poor corporate hygiene'; the Yeeda group may have traded whilst insolvent; and there were potentially voidable transactions (namely, unfair preferences).[58] The plaintiffs also drew attention to the settlement deeds entered into with former directors of the Yeeda group, and significant discrepancies in reported cattle numbers.[59]
[57] Ex 4, 'DCO-10', p 242.
[58] Ex 4, 'DCO-10', p 243 - 244.
[59] Ex 4, 'DCO-10', p 254 - 256.
The estimated return to creditors under the TLP4 DOCAs were summarised in section 1.4 of the Second creditors' report in the following terms:[60]

[60] Ex 4, 'DCO-10', p 217.

Further details of the estimated return to creditors were set out in section 8 of the Second creditors' report. In relation to Yeeda and KMC, the estimated dividend to all unsecured creditors was nil, which was the same as if these companies were liquidated.[61]
[61] Ex 4, 'DCO-10', p 275.
The plaintiffs' assessment of the creditors of each company in the Yeeda group was summarised in the Second creditors' report as follows:[62]

[62] Ex 4, 'DCO-10', p 229.

The Second creditors' report also included the following analysis of the difference between the directors' and plaintiffs' assessment of Yeeda's assets and liabilities:[63]

[63] Ex 4, 'DCO-10', p 234.

The same comparative analysis was included in relation to KMC as set out below:[64]

[64] Ex 4, 'DCO-10', p 235. Comparative tables for the balance of the Yeeda group companies (bar YFC) are included in Appendix 'I' of the Second creditors' report: Ex 4, 'DCO-10', p 361 - 363.

The plaintiffs' financial analysis of the TLP4 DOCAs as compared to liquidation indicated that if the Yeeda group were liquidated, there would be a shortfall to secured creditors of at least $43 million, and no payment to unsecured creditors. This was shown in the Second creditors' report in section 7.4 in the table reproduced below:[65]

[65] Ex 4, 'DCO-10', p 271.

In forming their view that, regardless of the approach taken, the return to unsecured creditors would be nil, the plaintiffs had regard to the independent valuations of LAWD dated 17 April 2024 (the LAWD reports), and the bids made by each of the parties who participated in the second stage of the sales process.[66]
[66] Ex 16 [47].
After the convening of the second creditors' meeting but before it was held, the plaintiffs received DOCA proposals for Yeeda and KMC from Fitzroy (Fitzroy proposal). The plaintiffs assessed the Fitzroy proposal and did not consider that any change was required to their recommendation that creditors approve entry into the TLP4 DOCAs.[67]
[67] Ex 4 [38].
Following receipt of the Fitzroy proposal, the plaintiffs issued a supplementary report to creditors on 28 July 2024 (Supplementary creditors' report).[68]
[68] Ex 4 [46], 'DCO-11'.

On 30 July 2024, at the second creditors' meeting of the Yeeda group companies, the creditors did not agree to adjourn the meetings to allow further consideration of the Fitzroy proposal,[69] and resolved that each Yeeda group company enter into the TLP4 DOCAs.[70]
[69] Ex 4, 'DCO-12'.
[70] Ex 4 [47], 'DCO-12'.

Terms of the TLP4 DOCAs and conditions precedent

On 17 August 2024, the TLP4 DOCAs were executed by the plaintiffs, TLP4, and each of the companies in the Yeeda group. Under their terms, TLP4 agreed to provide funding to the plaintiffs (as deed administrators) during the DOCAs.[71]
[71] Ex 4 [49] - [50], 'DCO-14'.
The TLP4 DOCAs include a number of conditions precedent that are required to be satisfied or waived by no later than 31 March 2025. A number of these conditions precedent have already been satisfied. The only substantive condition precedent that remains outstanding is for the court make an order, pursuant to s 444GA of the Act, for leave to transfer all of the issued shares in Yeeda to TLP4.[72] If orders are made in terms of the originating process, this condition precedent will be satisfied. As all of the DOCAs are interdependent, once this condition precedent is satisfied, effectuation can occur.
[72] Ex 2 [10] - [15]; Ex 26, 'JL-5'.
The key terms of the TPL4 DOCAs are that:[73]
(a)a deposit of $800,000 was to be advanced by TLP4 to the plaintiffs by no later than 23 July 2024;
(b)on effectuation of the DOCAs, payments will be made by TLP4 into separate creditors' trusts for each of Yeeda, KMC, and KPP for the benefit of all creditors of those companies. These payments are defined as the 'Cattle Contribution' (which is to be calculated following the final muster), the 'YPC Land Contribution' of $23.25 million to Yeeda, the 'KPP Contribution' of $7.25 million to KPP, and the 'KMC Contribution' of $8 million to KMC;
(c)TLP4 will assume the liability for all continuing employees from completion of the TLP4 DOCAs; and
(d)all creditors' claims against each relevant Yeeda group company will be transferred to the relevant creditors' trust and extinguished, in exchange for a claim against the creditors' trust.
[73] Ex 4, 'DCO-10', p 264, 366 - 367.
In addition to the payments from TLP4, the rights in the class action (and any proceeds that may be payable) will be assigned to the Yeeda creditors' trust on effectuation.[74]
[74] Ex 119, cl 1.1 (definition of 'Available Property').

Opposition to the application

The plaintiffs have complied with the orders made by the court on 6 and 8 November 2024 requiring it to send the relevant documents to shareholders and creditors of the Yeeda group.[75] The plaintiffs have also served the application on the Australian Securities and Investments Commission (ASIC) as required by r 2.8(3) of the Supreme Court (Corporations) WA Rules 2004 (WA).[76]
[75] Ex 13 [9] - [10], [13], 'LDA-2', 'LDA-4' - 'LDA-8'.
[76] Ex 13 [11] - [12], 'LDA-3'.
Yeeda has three shareholders and 2,423 shares on issue. Its shareholders are Beachline Holdings Pty Ltd (Beachline) (with 1,109 shares), Twenty Two Dragons Limited (Twenty Two Dragons) (with 827 shares), and Fitzroy (with 487 shares, being 20% of the shares on issue).[77] Neither Beachline nor Twenty Two Dragons oppose the application or object to the transfer of their shares to TLP4.[78]
[77] Ex 4 [55].
[78] Ex 4 [58] - [59], 'DCO-19'.
Fitzroy filed a notice of intention to be heard on the application and opposed orders being made in the terms sought by the plaintiffs. Fitzroy also filed a confidential schedule setting out in more detail the basis for their opposition to the orders sought.[79] In essence, the basis for Fitzroy's opposition is two‑fold.
[79] Fitzroy's Grounds of Opposition - Confidential Schedule filed 19 December 2024.
First, Fitzroy says that the independent expert report relies on a series of documents which are not in evidence, have not been verified, and fail to include the value of any recovery actions that could be taken by Yeeda's liquidators. As a consequence, Fitzroy says the plaintiffs have not discharged their onus of satisfying the court that the transfer would not unfairly prejudice the interests of members.
Second, and in any event, the court should not exercise its discretion to make the orders sought due to various corporate governance issues that have been raised by Fitzroy.
I address each of these objections in more detail below.

Section 444GA of the Act

Section 444GA of the Act provides that:
(1)The administrator of a deed of company arrangement may transfer shares in the company if the administrator has obtained:
(a)the written consent of the owner of the shares; or
(b)leave of the court.
(2)A person is not entitled to oppose an application for leave under subsection (1) unless the person is:
(a)a member of the company; or
(b)a creditor of the company; or
(c)any other interested person; or
(d)ASIC.
(3)The court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company.
In Kipoi Holdings Mauritius Limited v Kirman and Bauer as joint and several administrators of Tiger Resources Limited (subject to deed of company arrangement) [No 4], the Court of Appeal considered the approach to be taken by a court on the hearing of an application under s 444GA.[80]
[80] Kipoi Holdings Mauritius Limited v Kirman and Bauer as joint and several administrators of Tiger Resources Limited (subject to deed of company arrangement) [No 4] [2024] WASCA 145 (Kipoi) [287] (Vaughan JA).
On an application under s 444GA, the key consideration is that set out in s 444GA(3). This requires the court to be satisfied that the proposed transfer would not unfairly prejudice the interests of members of the company.
This, however, is not the only consideration. Once the court is satisfied that the transfer would not unfairly prejudice the interests of members of the company, the court has a residual discretion as to whether to grant leave to a deed administrator to transfer the shares in the company. This residual discretion, under s 444GA(1)(b), is to be exercised having due regard to the objects of pt 5.3A as set out in s 435A of the Act.
Vaughan JA summarised the propositions that apply to an application for leave to transfer shares under s 444GA in the following terms:[81]
[81] Kipoi [288] - [290].
1.The interests that are required to be taken into account are those of the members generally not just the members whose shares it is desired to transfer.
2.The section is directed to the interests of members in their capacity as members rather than as creditors or some other capacity.
3.The requirement that the transfer not unfairly prejudice the interest of members directs the court to consider the impact of compulsory transfer on members where there may be some residual value in the company.
4.The question of unfairness only arises if prejudice is established. If the company has no residual value to the members - such that the shares have no value - and the members are unlikely to receive any distribution in an immediate winding up, it is difficult to see how, ordinarily, the members could suffer any prejudice, let alone prejudice that could be described as unfair. That assumes that winding up is the only practicable alternative to the deed of company arrangement proposal of which the transfer is an aspect.
5.One relevant consideration is whether a full and accurate description of the proposal has been given to members and whether members have been given a full opportunity to appear in opposition to the application.
6.While there is an evidentiary onus on the members to raise any consideration telling against the exercise of the discretion, the ultimate onus of satisfying the court that the discretion should be exercised remains on the deed administrator. This requires the deed administrator to satisfy the court that the transfer would not unfairly prejudice the interests of members of the company.
7.Whether or not 'unfair prejudice' would result from a transfer of the shares is determined having regard to all of the circumstances of the case, taking into account the policy of the legislation. Relevant matters in the court's discretion include whether the shares have any residual value which may be lost to the existing shareholders if leave is granted; whether there is a prospect of the shares obtaining some value within a reasonable time; the steps or measures necessary before the prospect of the shares obtaining some value may be realised; and the attitude of the existing shareholders to providing the means by which the shares may obtain some value or by which company may continue in existence. A relevant consideration for the court is between the position of the shareholders if the proposal does not proceed and their position if leave to transfer the shares is granted.
8.The fact that shares are to be transferred without compensation to the shareholder is not of itself sufficient to establish 'unfair prejudice'. The question as to whether members hold equity of any residual value is determined by considering the position of the members in a winding up - at least where that is the likely or necessary consequence of the transfer of shares not being approved. This makes it necessary to consider a valuation of the assets and liabilities of the company by reference to a liquidation scenario rather than as a going concern.
(footnotes omitted)
If liquidation is the only realistic alternative to the proposed DOCA and shareholders would not receive any distribution in a liquidation, ordinarily there will not be any prejudice, or at least no prejudice that has the required quality under the Act of being unfair.
The central issue for determination is whether, on the evidence before the court, there is any residual value in the shares of Yeeda. While regard must be had to the 'mundane reality of the marketplace' in assessing and weighing the evidence that has been adduced, Vaughan JA acknowledged in Kipoi that this only describes the context in which valuations are to be evaluated, and does not mean the valuation evidence is irrelevant or insignificant.[82]
[82] Kipoi [641].
An absence of computational evidence does not necessarily mean that the deed administrators have not discharged their legal onus under s 444GA of the Act. It is possible for the court to undertake the computational exercise itself, or alternatively, to determine the contested issues and ask the parties to assist by giving computational effect to those determinations.[83] As Vaughan JA stated in Kipoi:[84]
Valuation (and, perhaps even more so, an exercise in determining realisable value) involves an inquiry about which reasonable minds may differ. Valuation is an art not a science. It involves the exercise of many subjective judgments. Steps in reasoning are not always able to be articulated fully. In evaluating expert evidence going to value and coming to a determination it is commonly accepted that the court must not allow itself to become a 'third valuer' (using that term in the sense described by Murphy JA in McKay v Commissioner of Main Roads). In other words the court's role is not to piece together a valuation of its own. But this does not mean that the evidence of one expert must be accepted on all issues. A trial judge determines what parts of the expert evidence is accepted and what parts of the expert evidence is rejected. The court may make such adjustments to value as are required by the evidence. If the court finds any valuation evidence to be defective, incomplete or irreconcilable it may use other evidentiary material to correct, complete or reconcile the valuation evidence.
(footnotes omitted)
[83] Kipoi [689] - [690].
[84] Kipoi [714].
Where leave is granted under s 444GA of the Act, the court may also make ancillary orders under s 447A of the Act to provide the necessary machinery through which the transfer of shares can occur.[85]
[85] Tucker, in the Black Oak Minerals Ltd (Subject to a Deed of Company Arrangement) (in liq) [2019] FCA 293 [39] - [40].

Will the transfer of shares unfairly prejudice members of Yeeda?

In support of their contention that there was no residual value in the shares of Yeeda, senior counsel for the plaintiffs emphasised the very significant deficiency between Yeeda's assets and liabilities, as summarised in the Second creditors' report (which the plaintiffs submitted was prima facie evidence of this fact pursuant to s 1305 of the Act).[86] In their submission, this deficiency was so great that none of the matters raised by Fitzroy could bridge this gap or enable the court to conclude that there was any residual value in the equity of Yeeda, or that the transfer of shares would unfairly prejudice Fitzroy. While this submission was advanced consistently at the hearing, the specific evidence that was relied upon by the plaintiffs to support this submission altered over the course of this matter.
[86] Corporations Act 2001 (Cth) s 9 (definition of 'books').
At the first directions hearing in this matter, the plaintiffs informed the court of their intention to obtain and file an expert valuation report for the hearing of the application, and to provide this report to all shareholders and creditors to assist their decision as to whether or not to participate in the hearing.
The first submissions filed by the plaintiffs on 20 December 2024 referred to and relied on the independent expert report of RSM (signed by Nadine Marke and Justin Audcent) dated 10 December 2024 (IER) as the basis upon which they contended there was no residual value in the shares of Yeeda.[87] Primary reliance on the IER was maintained in the plaintiffs' submissions filed 6 January 2025, although reference was also made in these submissions to the plaintiffs' own financial analysis, the Fitzroy proposal, and the TLP4 DOCAs.
[87] Ex 28.
The plaintiffs' initial shift away from their primary reliance on the IER occurred on 29 January 2025 in their submissions in reply, which were filed the day before the scheduled hearing of the application. In those submissions, the plaintiffs set out an alternative calculation of the total assets and liabilities of the Yeeda group.[88] This calculation was not based on the IER, and was described instead as 'the most optimistic, reasonable value' of the assets.[89] On this calculation, the residual value of the shares in Yeeda was nil.
[88] Plaintiffs' supplementary submissions filed 29 January 2025, p 3 - 4.
[89] Plaintiffs' supplementary submissions filed 29 January 2025 [9].
In opening, senior counsel for the plaintiffs submitted that the best evidence of the value of Yeeda's assets was the market evidence from the sales process undertaken by the plaintiffs.[90] After repeating their general submission (summarised at [56] above), senior counsel explained that the plaintiffs' submissions in reply set out the evidence which supported this contention, without reference to the IER or RSM's supplementary independent report dated 3 January 2025 (Supplementary IER). However, the IER and Supplementary IER were said to be relevant and a 'valuable sense check of the evidence' before the court.[91]
[90] ts 50 - 51.
[91] ts 50.
At the commencement of the plaintiffs' closing submissions and in answer to a direct question from the court, senior counsel for the plaintiffs advised that the plaintiffs relied on three separate matters in support of their contention that Yeeda's shares have nil value:[92]
(a)the Deloitte report of early 2024;
(b)the offer made by Fitzroy, which was formulated as part of the sale process for the assets of the Yeeda group; and
(c)the TPL4 DOCAs.
[92] ts 149 - 153.
At the conclusion of the plaintiffs' closing submissions, senior counsel for the plaintiffs withdrew any reliance on the Deloitte report.[93]
[93] ts 176.
When asked what use should be made of the IER, the Supplementary IER, and the evidence of Ms Marke, senior counsel for the plaintiffs submitted this evidence should be used 'as a buttress and a comparator'.[94] This change in position, or at least shift in emphasis, appeared to occur as a result of Fitzroy's objection to RSM's reliance on the LAWD reports. I address this objection in more detail below.
[94] ts 156.
The primary objections of Fitzroy were to the valuation of the pastoral leases, the valuation of the cattle, and the failure to include any value for Yeeda's potential claims against its directors and former directors. Most of the other assets and liabilities of the Yeeda group were not the subject of significant challenge.
Given this procedural history, it is necessary to set out the evidence of each matter relied upon by the plaintiffs, in some detail and in the order raised, to explain the conclusion I have reached.

Fitzroy proposal

On 26 July 2024, the plaintiffs received the Fitzroy proposal. A summary of the material terms of the Fitzroy proposal is at Appendix C of the Supplementary creditors' report.[95]
[95] Ex 4,'DCO-11', p 390.
The key terms of the Fitzroy proposal were that, prior to completion of the DOCAs, Fitzroy would take operational and financial control of the businesses of Yeeda and KMC. On completion of the DOCAs:
(a)Fitzroy would assume the existing liabilities for the CBA loans and the Creditor Residual Liabilities[96] (estimated at $54.44 million), along with any claims Fitzroy had against the Yeeda group companies (subject to these claims being subordinated to the CBA loans and not payable until 24 months after completion), and ongoing employee entitlements for employees who continued with the businesses;
(b)Fitzroy would make a contribution of $10.811 million, to be paid into a single creditors' trust (comprised of $7.599 million earmarked for Yeeda and $3.252 million for KMC);
(c)the funds in the single creditors' trust would be used first to pay the administrators and deed administrators' liabilities up to an aggregate of $1.675 million. Distributions would then be made from the fund to the admitted creditors of Yeeda and KMC (including payment in full of the loans entered into during the voluntary administration), and to other creditors in the amount of $0.10 for every $1.00 owed (apart from Class D creditors, which includes the Yeeda shareholders); and
(d)the other shareholders of Yeeda would transfer their shares to Fitzroy by consent, pursuant to s 444GA(1)(a) of the Act.
[96] Defined to include the residual liability of any claims, apart from Class C and Class D Creditors: Ex 4, 'DCO-11' [15], p 396.
The plaintiffs submitted that Fitzroy did not ascribe any value to the shares in Yeeda by requiring the transfer of shares to occur as a condition of its proposal.
The plaintiffs' assessment was the Fitzroy proposal did not offer a full return to creditors and, if accepted, would have resulted in a shortfall of approximately $35.408 million.[97] These figures were confirmed by a representative of Fitzroy.[98]

TLP4 DOCAs

[97] Ex 1, 'DCO-17', p 252.

[98] Ex 1, 'DCO-15', p 243.

Under the TLP4 DOCAs, TLP4 agreed to make a total payment of $55.81 million for the Yeeda group. This comprised the following amounts for the following assets:[99]
(a)the Yeeda and Mt Jowlaenga stations - $23.25 million;
(b)livestock (ie cattle) - between $15.574 million - $19.097 million, on a per head basis and subject to the final muster;
(c)KMC, including the purchase of the Abattoir - $8 million; and
(d)KPP, being the residential properties - $7.25 million.
[99] Ex 4, 'DCO-10', p 216.
The basis for the calculation (and a worked example) of the amount payable for the cattle is set out in the schedule to the TLP4 DOCA for Yeeda as follows:[100]

RSM expert reports

[100] Ex 119, p 37.

On 31 October 2024, the plaintiffs retained RSM to provide an independent expert opinion on the assessment of the residual value (if any) of the shares in Yeeda.[101] RSM was requested to provide an initial draft of their report by 29 November 2024. The final IER is dated 10 December 2024 and was prepared in accordance with ASIC Regulatory Guide 111.[102] On 3 January 2025, RSM prepared the Supplementary IER,[103] following a request by the solicitors for the plaintiffs received on 30 December 2024.[104]
[101] Ex 29.
[102] ASIC Regulatory Guide 111 - Content of expert reports (October 2020).
[103] Ex 27.
[104] Ex 27, Appendix 1; see also Ex 39 and Ex 40.
RSM assessed the value of the shares of Yeeda on a liquidation scenario. This was because liquidation of the Yeeda group is the inevitable consequence if the transfer of shares is not approved under s 444GA of the Act.[105]
[105] Ex 28 [5.1], [5.2.1].
RSM expressed the opinion that on a liquidation scenario, there would be a deficiency of assets available, both on a standalone and aggregated basis, to meet the claims of Yeeda's creditors. For this reason, RSM concluded that there was nil residual equity in Yeeda's shares.[106] The basis for their opinion is summarised in two tables in the IER.
[106] Ex 28 [5.2.1].
The first table sets out the residual equity in Yeeda's shares on a standalone basis. On this basis, the shortfall is between $76.610 million (low case) and $66.851 million (high case) as set out below (Table 1):[107]
[107] Ex 28, Table 1, p 5.

Company Assets

Low case ($'000)

High Case ($'000)

Inventory

14,442

15,776

Pastoral leases

24,200

27,225

Class action recovery

2,277

6,661

Total asset value

40,919

49,663

Claims against the assets

Single entity

20,016

19,000

Cross-collateralised

97,513

97,513

Total claims against assets of company

117,529

116,513

Shortfall of assets for creditors

(76,610)

(66,651)

Net equity value

-

-

The calculation of residual equity in Yeeda's shares was less favourable on an aggregated basis. On an aggregated basis, RSM's opinion was that the shortfall was between $82.086 million (low case) and $67.549 million (high case) as summarised in a separate table (Table 2):[108]
[108] Ex 28, Table 2, p 6.

Assets

Low case ($'000)

High Case ($'000)

Debtors

222

222

Inventory

14,684

16,018

Plant & Equipment

5,000

7,500

Land and buildings

5,802

7,120

Pastoral leases

24,200

27,225

Class action recovery

2,277

6,661

VA Funding Contribution

87

87

Total asset value

52,272

64,833

Claims against the assets

Single entity

36,845

34,870

Cross-collateralised

97,513

97,513

Total claims against assets of company

134,358

132,383

Shortfall of assets for creditors

(82,086)

(67,549)

Net equity value

-

-

RSM considered that the most appropriate methodology for the valuation of the business was the 'orderly realisation of assets methodology'. RSM rejected the other suggested methodologies set out in ASIC Regulatory Guide 111 on the basis that they were not appropriate in this instance due to the current financial circumstances of Yeeda as an historically loss-making company (the discounted cash flow and capitalisation of future maintainable earnings methods), and because Yeeda is a private company (the quoted price method).[109]
[109] Ex 28 [5.1], p 29.
In assessing the value of the residual equity in Yeeda and assuming a liquidation outcome, RSM used the directors' report on company activities (ROCAP) as the basis for their assessment, cross‑checked this against the management accounts as at 29 February 2024, and incorporated further information received from the plaintiffs and other third parties. The IER sets out in detail the basis of RSM's assessment of the value of each of the assets of the Yeeda group, and explains the difference between the ROCAP and their assessment.
In the Supplementary IER, RSM explained that the ROCAP was used to identify the assets and liabilities of the Yeeda group, and not as a source of value for any of these assets and liabilities.[110]
[110] Ex 27 [1.4].
Fitzroy raised a concern about RSM's use of the ROCAP and the inconsistency in the descriptions provided in the IER and Supplementary IER about the manner in which the ROCAP was relied upon. Fitzroy's concern about RSM's use and the accuracy of the ROCAP was due, in part, to the fact that the majority of the directors of Yeeda were associated with ADM.

In relation to the valuation of the cattle, RSM valued the cattle on a 'walk in walk out' basis, where the cattle are sold as part of the property.[111] RSM's valuation of the cattle is set out in Table 24 of the IER.[112] The valuation assumed that as at 15 November 2024, there were 22,614 head of cattle, and set out what RSM understood to be the composition of the herd (organised by categories based on the relevant age and gender of the cattle). The market rates used by RSM were based on 'the indicative prices in the DOCA, adjusted for a 25% discount to reflect market conditions'. An additional risk discount of 30% ‑ 40% was then applied to reflect the following factors: the liquidation basis; the possibility that the expected number of cattle may be inaccurate as a final muster was yet to be completed; the quality of the cattle (including the potential presence of 'mickey bulls');[113] and the cost of mustering the herd to brand and tag them for sale.[114]
[111] Ex 28 [5.3.2.3]. See also Ex 27 [1.8].
[112] Ex 28, p 32.
[113] That is, uncastrated male bulls.
[114] Ex 28, p 32.
In the Supplementary IER, Ms Marke set out her experience in valuing agricultural industry assets,[115] and gave further details of the basis on why the cattle were valued on a 'walk in walk out' basis and not at auction.
[115] Ex 27, Appendix 3.
In relation to the pastoral leases, RSM expressly stated in the IER that their assessed value of these assets was based on the LAWD reports, and specifically acknowledged that neither Ms Marke nor Mr Audcent had property valuation experience.[116] The IER records that LAWD assessed the value of the pastoral leases as $30.25 million. RSM discounted this value by 10% ‑ 20% to reflect four factors: first, a forced sale scenario; second, the inferior cattle on the property; third, the fact that the last full muster had been carried out three years ago; and fourth, the further work the plaintiffs intended to carry out on the pastoral leases. Taking account of these matters, RSM adopted a valuation of the pastoral leases of $24.20 million ‑ $27.23 million, based on the opinion contained in the Yeeda LAWD report.[117]

LAWD reports

[116] Ex 28 [5.3.2.6], p 33.

[117] Ex 28 [5.3.2.6], p 33 - 34. This is defined at [84].

In April 2024, LAWD was retained by the plaintiffs to provide two valuation reports: the first on the value of Yeeda's pastoral leases (Yeeda LAWD report); and the second on the value of the Abattoir. The LAWD reports were provided to the plaintiffs on 17 April 2024.[118] These reports were prepared and signed by Josh Ledingham and counter‑signed by Timothy McKinnon (who are both directors of LAWD). An affidavit of Mr McKinnon was filed on 3 January 2024, which annexed copies of the LAWD reports and explained how the opinions expressed in the LAWD reports were arrived at. In his affidavit, Mr McKinnon did not update the valuations or confirm what his opinion of the current value of Yeeda's pastoral leases was.
[118] Ex 23, 'TMM-1', 'TMM-2'.
The Yeeda LAWD report states that it was prepared for '[s]ale purposes only'.[119] It noted that there had been increased market activity in the past six to 12 months, and that it would likely take nine to 12 months to sell the Yeeda pastoral leases. On the basis of a comparison to other market sales, LAWD expressed the view that the market value of the pastoral leases on an 'as is - vacant possession' basis was $30,250,000. The Yeeda LAWD report then stated:[120]
LAWD advises that, in this rapidly changing economic environment, the opinions and values detailed at the time of preparing this report may change significantly in a short period of time. The standard 90 day reliance period should be considered in light of the current sentiment and the evolving nature of the market / economy. We recommend intermittent evaluation to confirm any reliance on this report.
[119] Ex 23, 'TMM-1', p 7.
[120] Ex 23, 'TMM-1', p 11.
In forming an opinion on the value of the pastoral leases, LAWD considered comparable sales over a three year period between August 2021 and December 2023.[121] Mr McKinnon's affidavit disclosed that the comparative sales evidence set out in the Yeeda LAWD report concerned the Kimberley Cattle Portfolio, and the Christmas Creek, Springvale, Nerrima, and Ruby Plains and Sturt Creek Stations. His evidence is that LAWD completed valuation assessments for each of these.[122]
[121] Ex 23, 'TMM-1' [13] - [14].
[122] Ex 23 [14], 'TMM-1' [13.3].
On the basis of these comparative sales, LAWD expressed the opinion in the Yeeda LAWD report that:
(a)the highest and best use of the pastoral leases is as a beef breeding and grazing enterprise;[123]
(b)the carrying capacity of the pastoral leases is 27,500 head of cattle;[124]
(c)the rate to be applied is $1,100 per adult equivalent of cattle;
(d)the (rounded) value of the pastoral leases, exclusive of GST, at the date of the valuations was $30,250,000 (exclusive of the carbon income)[125] or $31,600,000 (inclusive of the carbon income);[126] and
(e)on a forced sale estimate, taking into account the inferior cattle at the properties, the time since the last full muster, and the work proposed to be done by the administrators, a discount of 10% ‑ 20% should be applied to the value of the Yeeda pastoral leases. On this basis, LAWD valued the pastoral leases at between $24.2 million ‑ $27.225 million.
[123] Ex 23, 'TMM-1' [3.3].
[124] Ex 23, 'TMM-1' [11.2].
[125] Calculated on the basis of 27,500 x $1,100.
[126] Calculated as being $1,395,266.
In relation to the value of the Abattoir, LAWD expressed the view that its market value on an 'as is - vacant possession' basis was $7,500,000.[127]

Plaintiffs' reply submissions

[127] Ex 23, 'TMM-2' [1.6].

In their submissions in reply, the plaintiffs set out an alternative calculation of the assets and liabilities of Yeeda. This was described by senior counsel for the plaintiffs as the 'most optimistic' or favourable calculation to Fitzroy. This calculation was as follows:[128]
[128] Plaintiffs' supplementary submissions filed 29 January 2025 [9], p 3 - 4.

Assets

Description

Value

Where derived from

Inventory (cattle)

$12,622,808

Adopts a sale price of $642 per head based on sales during DOCA. Does not discount for costs associated with sale.

Pastoral leases

$30,250,000

Highest valuation for the pastoral leases from the [Yeeda] LAWD report with no discount applied.

Class action recovery

$6,661,000

From RSM report (high case).

Kimberley properties

$6,050,000

Adopts price from offers received in sale process.

Residual from sale of abattoir

$1,636,069

Using highest price from the sale of the abattoir less the debts owed by KMC.

Total

$57,259,877

Liabilities

Secured creditors

CBA

$48,012,596

Debt as at 29 January 2025 (Ex 16 [59.1.1]).

Westpac

$6,513,552

Debt as at 29 January 2025 (Ex 16 [59.1.2]).

TLP4

$6,482,134.20

Debt as at 29 January 2025 (Ex 16 [59.1.3]).

Total

$61,008,282.20

Priority creditors (employees)

$419,210

IER [5.3.3.1]. This is lower than the plaintiffs' estimate of $513,000 (Second creditors' report [3.3]).

Unsecured creditors (shareholders, ADM and government)

$42,967,000

Second creditors' report [3.3].

Other unsecured creditors

$6,123,000

Second creditors' report [3.3].

Total

$49,509,210.00

Total liabilities

$110,517,492.20

Residual value of equity

($53,257,615.20)

The submissions set out how each of these figures were calculated in some detail.[129]
[129] Plaintiffs' supplementary submissions filed 29 January 2025 [11] - [16].
In relation to the pastoral leases, the plaintiffs' submissions in reply stated that the market value of Yeeda's assets had been determined by the sale process that they undertook, namely the value in the TLP4 DOCAs of $23.25 million. However, for the purpose of the plaintiffs' alternative calculation, they adopted (without discount) the valuation in the Yeeda LAWD report.

Is there any residual value in the equity of Yeeda?

There was no dispute that the appropriate counterfactual for the assessment of whether there is any residual value in the Yeeda shares is that if the TLP4 DOCAs do not complete, Yeeda will be wound up.[130]
[130] Second Interested Party's submissions filed 27 January 2025 [7].
In considering this question, it is important to stress that the court is not required to reach a concluded view as to the precise value of the assets and liabilities of the Yeeda group. The court's task, as explained at [49] - [55] of these reasons, is to assess whether there is any residual value in the shares of Yeeda.
Fitzroy raised three complaints in relation to the case advanced by the plaintiffs: first, the plaintiff could not rely on the Yeeda LAWD report for the valuation of the pastoral leases; second, a number of issues were raised in relation to the valuation of the cattle herd; and third, the valuation should have included an amount for the potential claims that might be brought by the liquidators against Yeeda's directors and former directors, if the companies in the Yeeda group were liquidated.

Valuation of the pastoral leases

Fitzroy did not adduce any expert evidence at trial to contradict the opinions expressed by RSM or the valuation in the Yeeda LAWD report.
In cross-examination, Ms Marke justified and explained her reliance on the Yeeda LAWD report as part of the IER. When questioned by senior counsel for Fitzroy, Ms Marke stated that neither she nor Mr Audcent were land valuers and that the Yeeda LAWD report was the only evidence they had been provided with as to the value of Yeeda's pastoral leases.[131] I accept this explanation.
[131] ts 85 - 86, 105 - 109.
Senior counsel for Fitzroy raised a number of complaints in relation to the Yeeda LAWD report, including that it was stale, used beyond purpose, and based on specific hearsay without the underlying evidence being proved. Fitzroy submitted that the Yeeda LAWD report should not have been relied upon by RSM in the preparation of the IER.[132] Senior counsel for the plaintiffs accepted that the reports was stale, but did not accept that this alone meant it was unreasonable for RSM to rely on it.[133]
[132] ts 133.
[133] ts 154.
For the following reasons, I do not consider there was any error in RSM's reliance on the Yeeda LAWD report (or the other LAWD report) for the purpose of the IER.
First, while the Yeeda LAWD report refers to a standard 90 day reliance period, it does not state that the opinions expressed are only valid for this period. Instead, it recommends that this 90 day period be considered in light of the 'current sentiment' and 'evolving market' and recommends that 'intermittent revaluations' be undertaken to confirm reliance on their contents. There was no evidence before the court that the current sentiment had changed or that the market had evolved since the date of the valuation in the Yeeda LAWD report.
Second, the Yeeda LAWD report was prepared for 'sale purposes only' and assumed sales processes of nine to 12 months, with the basis for the valuations being 'Market Value - As is - vacant possession'. Additionally, the Yeeda LAWD report refers to the appointment of the external administrators, who commissioned the valuations. It is clear from the IER that on a liquidation scenario, it was assumed that Yeeda's pastoral leases (and freehold) would be sold. While I accept that on a liquidation, the sales processes are likely to be truncated (as opposed to the estimated nine to 12 months adopted in the Yeeda LAWD report), this discrepancy is addressed by the liquidation discount applied by RSM in the IER. In my view, the purpose for which RSM relied on the Yeeda LAWD report was consistent with the purpose for which they were prepared.
However, neither of these conclusions address the third issue identified by Fitzroy, namely the plaintiffs' failure to prove the facts of the specific comparative sales which are relied upon and underpin the opinions expressed in the Yeeda LAWD report. It is clear from the terms of this report that the comparable transactions (being the Kimberley Cattle Portfolio, and the Christmas Creek, Springvale, Nerrima, and Ruby Plains and Sturt Creek Stations) were used to infer the value of Yeeda's pastoral leases.[134] As such, these sales are specific hearsay which are required to be proved by direct or admissible evidence.[135]
[134] Ex 23, 'TMM-1' [13] - [14].
[135] Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370, 375 - 376.
In his affidavit, Mr McKinnon does not confirm that he (or Mr Ledingham) had personal knowledge of the relevant information in relation to these comparative transactions. Nor does he adduce any evidence of these transactions which would enable the court and Fitzroy to test this information. Mr McKinnon's affidavit simply states that LAWD carried out these assessments. In my view, this is insufficient to prove the necessary facts of these comparative sales. Given the failure of the plaintiffs to adduce admissible evidence of these comparative sales, the Yeeda LAWD report is inadmissible. As a consequence, the opinions of RSM which are based on the Yeeda LAWD report are also inadmissible.
In relation to the other matters relied upon by the plaintiffs as evidence of the value of the Yeeda pastoral leases, for the following reasons, I do not consider that these matters are evidence of the value of the pastoral leases as the counterfactual to the TLP4 DOCAs.
First, in relation to the Fitzroy proposal, as a matter of law, an offer that does not result in a concluded contract is not evidence of value.[136]
[136] Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547, 562.
Second, while the TLP4 DOCAs resulted in a concluded contract, this cannot be the offer against which the counterfactual is to be assessed. In my view, it is not possible on a s 444GA application to rely solely on the transaction for which the approval is sought, as evidence of the market value of the shares or assets of the relevant company for the purpose of the counterfactual. If this were the case, there would not be a need to adduce expert evidence (or in fact, any evidence at all) on a s 444GA application. The proposed DOCA would, without more, stand as evidence of the position being advanced by the deed administrators. To adopt such a position would give s 444GA(3) of the Act and the court, in the exercise of its discretion, effectively no work to do. This argument must be rejected.
In this case, the pastoral leases are a very significant asset of Yeeda. The issue that has been identified is not merely an absence of computational evidence; rather, there is a total absence of admissible evidence as to the value of Yeeda's pastoral leases. Barring the offers obtained during the sale process (which, for the reasons set out above, are not evidence of value), all other evidence adduced by the plaintiffs and before the court (including the opinions of the plaintiffs) rely, at least in part, on the Yeeda LAWD report. As I have concluded that the Yeeda LAWD report is inadmissible, so too is all other evidence that relies on it. In my view, no admissible evidence has been adduced that can be used by the court to complete the valuation of whether there is any residual value in the equity of Yeeda.

I accept, given the extensive sale process undertaken by the plaintiffs, that it is unlikely that the value of the Yeeda pastoral leases will be sufficient to address the very significant deficit of Yeeda's assets compared to its liabilities. However, without admissible evidence before the court as to the value of the Yeeda pastoral leases, I am not satisfied that I am able to draw any conclusion as to whether or not there is any residual value in the equity of Yeeda.

Valuation of the cattle

RSM's valuation of the cattle is set out in Table 24 of the IER.[137] In their view, on a liquidation, the (gross) value of the cattle would be $14.442 million ‑ $15.776 million. This calculation assumed a herd of 22,614 head of cattle, which accurately reflected the numbers as at 15 November 2024. The IER sets out the composition of the herd by categories, based on the relevant age and gender of the cattle.
[137] Ex 28, p 32.
The valuation was done on a 'walk in walk out' basis, where cattle are sold as part of the pastoral leases rather than separately. RSM gave two reasons for their rejection of the alternative scenario of an auction. First, in the event of a liquidation, the liquidators would not have funding for ongoing operations, including for an orderly auction of the cattle. Second, the logistical challenges in transporting the cattle to auction in the Kimberley region during the wet season, where temperatures are high and access to roads may be reduced due to excessive rainfall.[138]
[138] Ex 28 [5.3.2.3]; Ex 27 [1.8].
An additional explanation was also proffered in the Supplementary IER for their rejection of an auction, namely that this method of sale ('walk in walk out') was the accepted practice in the region. They supported this opinion by reference to the comparative sales referred to in the LAWD reports, where three of the four comparable sales referred to were on a 'walk in walk out' basis.[139] For the reasons set out above, this explanation is not based on admissible evidence and, accordingly, I have disregarded it in reaching my decision.
[139] Ex 27 [1.10].
In cross-examination, Ms Marke accepted that she did not consider the possibility of an online auction of the cattle, and that this had not been raised with her as an option.[140] In his affidavit, Mr Miskiewicz explained why the plaintiffs had determined it was not appropriate to sell the cattle via an online auction.[141] These reasons included that online auctions are not typically used to sell a large herd of cattle, the scale of the herd would present difficulties in the sales process, and the geographical challenges posed by Yeeda's location.
[140] ts 101.
[141] Ex 16 [49].
The market rates for the cattle used by RSM in the IER were based on 'the indicative prices in the DOCA, adjusted for a 25% discount to reflect market conditions'.[142] These indicative rates were said to be broadly in line with the selling prices for the cattle that had been achieved by the plaintiffs during Yeeda's administration. Ms Marke also consulted agriculture specialists in RSM (Mr Lethbridge) and 'cattle industry operators within the RSM client network'.
[142] Ex 28, p 32.
From these estimated prices, an additional risk discount of between 30% ‑ 40% was then applied. This additional discount reflected four factors: the fact that the sales would occur on a liquidation basis; the possibility that the number of cattle may be inaccurate as a final muster was yet to be completed;[143] the quality of the cattle (including the potential presence of 'mickey bulls');[144] and the cost of mustering the herd to brand and tag them for sale.[145]
[143] As at the date of the report, the final muster had been completed. Ms Marke was unaware of this and had not been provided with any details or results (ts 105).
[144] This is a reference to uncastrated male bulls.
[145] Ex 28, p 32.
Ms Marke acknowledged that RSM's (gross) valuation of the cattle herd was below the sale prices that had been achieved by the plaintiffs during Yeeda's administration. However, in her view, the sale prices achieved by the plaintiffs were consistent with their 'expectation that cattle would sell at a premium at auction after factoring in the additional cost of mustering, transportation, saleyard fees, and livestock levies'.[146] Ms Marke confirmed that as part of their analysis, RSM 'sense checked'[147] their estimated sale prices against recent cattle sales by Yeeda, which occurred at an average price of $616 per head of cattle (inclusive of GST).[148]
[146] Ex 28, p 33.
[147] Ex 27 [1.15].
[148] Ex 43, 'Cattle Sales', Line 63J.
Fitzroy raised two main objections to RSM's valuation of the cattle herd. First, they did not accept that Ms Marke was qualified to express an opinion on the valuation of these assets. Second, objection was taken to the basis for RSM's calculation (namely a 'walk in, walk out' basis) as well as the method by which the estimated market rate had been calculated.
In an annexure to the Supplementary IER, Ms Marke set out the details of her valuation and advisory services experience in the agriculture sector.[149] This has included providing valuation and litigation support in relation to two cattle herds (one of which was a Wagyu cattle herd, which she accepted was a premium product that was different to the cattle at Yeeda),[150] as well as more extensive experience in relation to sheep and cropping.
[149] Ex 27, Appendix 3.
[150] ts 96.
On the basis of the details set out in the Supplementary IER and the answers given to the questions asked of her, I accept that Ms Marke is qualified to give expert evidence on the value of the cattle herd. This is evident from Ms Marke's approach to the valuation of the cattle herd which appropriately distinguished between the value of cattle by reference to their age and gender. As was accepted by senior counsel for Fitzroy in closing submissions, her approach to this task was correct.[151]
[151] ts 133.
I also accept Ms Marke's evidence that a 'walk in, walk out' valuation of the cattle herd was the appropriate basis on which to value this asset. This is primarily because on any liquidation of Yeeda, the liquidator(s) would not have funding to continue its operations or to meet ongoing expenses, and it would be necessary to sell a considerably large herd of cattle quickly. For this reason, and the reasons given by Mr Miskiewicz in his affidavit, I accept that an online auction would not be a feasible option on a liquidation of Yeeda. No evidence was adduced by Fitzroy which would support a conclusion that the 'walk in, walk out' basis for the valuation of the herd would not be appropriate.
Fitzroy's primary objection to the estimated value of the cattle valuation was that the starting point for RSM's valuation was the prices in the TLP4 DOCA (as adopted by the plaintiffs in their estimated outcome statement of 15 November 2024),[152] and not the primary evidence of the sales achieved by the plaintiffs (or any broader market evidence). Ms Marke accepted this was the case and gave two reasons for her approach. First, under ASIC Regulatory Guide 111, RSM was specifically required to look at the actual sales or actual offer information in considering the value of Yeeda's assets. The values in the TLP4 DOCA were actual offer values and accordingly, she considered it was appropriate to use these values as the initial basis of the valuation.[153] Second, the majority of the broader market evidence available does not descend to the level of granularity that would be required to enable a comparative valuation to be done on a 'like for like' basis.[154]
[152] Ex 43, 'Cattle Values'.
[153] ts 97.
[154] ts 98.
A review of the sales evidence from the plaintiffs' records clearly indicates that inconsistent descriptions of cattle sold have been used. This makes it difficult to assess which cattle have been sold, or to cross‑check the figures adopted by Ms Marke in the IER.[155] At a high level, the sales records show that a wide range of prices were obtained by the plaintiffs, ranging from $342.55 ‑ $1,333.75 per head of cattle. These figures generally match the lowest and highest estimated market rates adopted by RSM as set out in Table 24 of the IER. On this basis, I accept Ms Marke's evidence that the valuations in the IER are broadly consistent with the sales evidence and accept the opinion expressed in the IER as to the estimated value of each of the categories of cattle comprising the herd.
[155] Ex 4, 'DCO-2'.
In relation to the additional discount of 30% ‑ 40% that was then applied by RSM to these estimated values, this reflected a liquidation discount (amongst other things). Ms Marke explained that on a liquidation, there was likely to be a significant difference in price that could be achieved from a forced sale of all cattle, as opposed to the sale of cattle in the ordinary course of business.[156] No evidence was led by Fitzroy to contradict Ms Marke's explanation or to contend that the discount adopted by RSM in the IER was not appropriate. Accordingly, I accept Ms Marke's evidence that it is appropriate for a discount of 30% ‑ 40% to be applied to the estimated market rates of the cattle.
[156] ts 103.
In assessing this aspect of the IER, I have also had regard to the plaintiffs' submissions in reply. There were two main differences between the valuation of the cattle in the IER and that in the plaintiffs' reply submissions. The first concerned the number of cattle that presently comprise the herd. The second was in relation to the estimated market rate adopted. In their reply submissions, the plaintiffs proposed a valuation of the cattle on the basis of an average price per head.
In closing submissions, counsel for the plaintiffs explained in some detail how the number of cattle referred to in their reply submissions (19,724) had been calculated.[157] While I accept that there are currently 19,724 cattle in the Yeeda herd, no details were provided as to which cattle have been sold and what the current composition of the herd is.
[157] ts 159 - 164.
For two reasons, I do not accept that the method proposed by the plaintiffs in their reply submissions is an appropriate value of the cattle herd and instead accept the valuation set out in the IER. First, Ms Marke's evidence, which I accept, is that there is a very significant difference in the value of cattle depending on their age and gender and their value is not uniform.[158] Given this, I do not consider that adopting an average price per head is an appropriate methodology. Second, while the IER overestimates the number of cattle which comprise the Yeeda herd, this overestimation is specifically considered and mitigated by RSM in the discount rate that has been applied.
[158] ts 116 - 117.
On this basis, and for the purposes of determining whether there is any residual equity in the shares, I accept RSM's value of the cattle set out in the IER.

Failure to include any amount for potential claims that might be brought in a liquidation

Fitzroy submitted that the IER failed to consider or include any amount for claims which may be brought by the liquidators in the event of Yeeda's liquidation. These claims include:
(a)insolvent trading claims in relation to the incurring of debts after about December 2023,[159] which are estimated by the plaintiffs to be $2.068 million (in respect of Yeeda) and $2.475 million (in respect of KMC);[160]
(b)unfair preference claims, which are estimated by the plaintiffs to be $300,000 (in respect of Yeeda) and $475,000 (in respect of KMC);[161]
(c)potential claims against the Yeeda's former directors for breach of directors' duties, including failing to adequately maintain books and records and for what the IER describes as 'poor corporate hygiene';[162] and
(d)other matters that require further investigation, including: the terms of previous settlements made with two of Yeeda's former directors; the sale of the Springvale station; the dispute with KNT Contracting Pty Ltd in relation to a muster undertaken as part of the Springvale sale; issues surrounding the varying reported numbers of cattle on the pastoral stations; and the management of the various Yeeda group businesses.[163]
[159] This being the period after which the Yeeda group was unable to secure further external funding report.
[160] Ex 4, 'DCO-10' [4.3.10], p 253.
[161] Ex 4, 'DCO-10' [4.4.1], p 253.
[162] Ex 4, 'DCO-10' [4.2.2], p 243.
[163] Ex 4, 'DCO-10' [4.5], p 254 - 256.
The IER does not include any amount for these claims, either individually or jointly. However, in the Supplementary IER, RSM considered what value should be included for the first two claims. Taking into account both the costs of any litigation and applying a discount for litigation risk, RSM estimated that, on a liquidation, the liquidators could recover $2.659 million ‑ $3.989 million in relation to these claims.[164] On their analysis, these recoveries did not significantly impact their view as to whether there was any residual value in Yeeda. It simply reduced the estimated shortfall on a liquidation to $79.427 million ‑ $63.560 million.[165]
[164] Ex 27 [1.35], Table 3, p 11.
[165] Ex 27 [1.36], Table 4, p 11.
Ms Marke accepted that RSM had not considered the value of any claims against Yeeda's former directors nor the insurance policies which might respond to these claims. Ms Marke explained that she had not been provided with any correspondence in relation to these matters, including the correspondence from Jones Day, the solicitors for Fitzroy, to the plaintiffs. Ms Marke agreed that in other expert reports she has authored, she has attributed value to available claims that a company may have against its former directors, and that these claims may have significant value. She noted, however, that considerable costs can be incurred in pursuing these claims, meaning that a balancing exercise that needs to be done in attributing any value to these claims.[166]
[166] ts 109.
Mr Miskiewicz was also cross‑examined in relation to these potential claims. He explained that the plaintiffs had investigated Fitzroy's claims with the limited funding available to them. However, at this stage, the plaintiffs had not sought or obtained any legal advice in relation to these claims.[167]
[167] ts 122 - 123.
Issues arising out of the prior management of Yeeda were the subject of at least three previous reports: a report from Mr Alan Hoppe produced on or about 28 February 2024;[168] an independent business review by Deloitte dated 31 January 2024;[169] and an interim report by JBC Corporate dated 20 December 2019.[170] Mr Miskiewicz accepted that each of these reports had been made available to the plaintiffs.[171]
[168] Ex 19, 'RWS-13'.
[169] Ex 19, 'RWS-12'.
[170] Ex 123, 'DMF-27'.
[171] ts 123 - 130.
Mr Miskiewicz explained that while the administrators were broadly aware of these reports and the issues raised, their report to creditors primarily focussed on providing an update of 'what we saw on the ground', rather than historical corporate governance issues.[172] He stated that the matters raised in these reports formed part of the administrators' investigations memo and that consideration was given to the possible quantum of these claims, although he did not explain what this assessment was.[173] He accepted that no notice had been given to Yeeda's insurers in relation to any claim against its former directors based on the matters raised by Fitzroy.[174]
[172] ts 122 - 127.
[173] ts 129.
[174] ts 131 - 132.
After being appointed as administrators, the plaintiffs reviewed the insurance coverage of the Yeeda group companies, which included a directors and officers policy.[175] While Mr Miskiewicz considered that the aggregate limit of liability under this policy was low, he did not consider that this raised any issue in relation to under‑insurance.[176]
[175] Ex 17, 'AJEM-1' (confidential affidavit).
[176] ts 129 - 130.
Fitzroy adduced in evidence a draft statement of claim (which was annexed to a confidential affidavit).[177] The draft statement of claim pleads various causes of actions against five parties who are said to be current, former, or de facto directors of Yeeda. The relief sought against these parties includes compensation under the Act, as well as damages and equitable compensation in the alternative. No particulars of the quantum of these claims are included in this draft.
[177] Ex 125 (confidential affidavit), 'DMF-35'.
On the basis of the evidence before me, I accept that in a liquidation scenario, the liquidators of Yeeda may be able to pursue a claim against its former directors and/or parties who acted as directors. These claims arise from the issues raised in the reports concerning poor record keeping, the management of the assets of various companies within the Yeeda group, and whether the interests of one Yeeda group company were preferred over others. However, there is no evidence before me as to the possible quantum of these claims, the likely costs involved in pursuing them, or the prospects of recovery (if any). It appears that these claims may not be covered by any available insurance policy, as the required notification was not given to the relevant insurer.
I accept that both the plaintiffs and RSM should have given consideration as to whether to include any amount for the value of these claims in the valuation of Yeeda. However, ultimately, I do not consider that this, by itself, would make any material difference to the question as to whether there is any residual value in the equity of Yeeda.
First, subject to the issues raised in relation to the valuation of the Yeeda pastoral leases, there is a shortfall of in excess of $60 million. Put another way, in so far as these claims are concerned, more than $60 million would need to be recovered from all or any of these claims in order for there to be residual value in the equity of Yeeda. There is no evidence before the court that would enable me to conclude that this outcome is likely or possible.
Second, it is not clear that any prejudice that Fitzroy might suffer if these claims were extinguished can be described as unfair. The claims set out in the writ of summons are said to have arisen from about 2020, 2021, and 2022. It is clear from the reports of JBC Corporation, Deloitte, and Mr Hoppe that Fitzroy has been aware of at least some of these claims since January 2020. At no stage has Fitzroy sought to obtain leave to bring these claims on behalf of Yeeda. In addition, since August 2024, Fitzroy has been able to seek to set aside the DOCA and has not sought to do so.
As Black J observed in Re Bizpay Group Limited:[178]
[T]he utility of s 444GA of the Act would be significantly undermined in any situation where shareholders in a Company have potential claims against the Company or its directors, which they have not sought to pursue, even after a significant time.
[178] Re Bizpay Group Limited [2024] NSWSC 1480 [23].

Conclusion on unfair prejudice

Given my conclusion as to the absence of any admissible evidence on the value of the Yeeda pastoral leases, I do not consider that the plaintiffs have discharged their onus in establishing that the transfer of shares in Yeeda will not unfairly prejudice the interests of its members. Depending on the value of these pastoral leases, this may also affect my conclusion as to the impact of the plaintiffs' failure to include any amount for the potential claims set out above.
In response to a question from the court, senior counsel for Fitzroy accepted that a possible outcome of this application was that the court adjourn the hearing to enable the plaintiffs to file further evidence.[179] For two primary reasons, my preliminary view is that this is the order that should be made rather than an order dismissing the application. First, it is unclear as to what extent the issue of specific hearsay was raised prior to the hearing (apart from in Fitzroy's written submissions). This matter was not raised in oral submissions by any of the parties at the hearing. Second, given the extent of Yeeda's shortfall of assets compared to its liabilities, it appears unlikely that adducing admissible evidence as to the value of the pastoral leases will enable the court to conclude that there is residual value in the equity of Yeeda. However, without any admissible evidence of the value of these assets, I am unable, at present, to conclude this is the case.
[179] ts 143.

Should the court exercise its discretion to order the transfer of shares?

Fitzroy submitted that, for three reasons, even if the court was satisfied the transfer of shares to TLP4 (pursuant to the TLP4 DOCAs) would not unfairly prejudice the interests of Yeeda's members, the court should not exercise its discretion to grant leave.
First, there was a need for further investigations of the management of the Yeeda group in the period leading up to the appointment of the plaintiffs as administrators. Second, the creditors of the Yeeda group did not have sufficient time to properly consider the Fitzroy proposal. Third, the TLP4 DOCAs did not result in a better return than liquidation for all creditors, but only benefitted a limited sub‑set of this group.
For the following reasons, I do not consider that these matters either individually or collectively, would provide a sufficient reason for the court not to exercise its discretion to grant leave if the plaintiffs establish the necessary prerequisite set out in s 444GA(3) of the Act.
First, it is clear from the Second creditors' report that the plaintiffs undertook preliminary investigations into the Yeeda group consistent with their obligations under the Act. These investigations included consideration of: whether there had been breaches of directors' duties; the adequacy of the Yeeda group's books and records; and the potential recovery actions that might be available to a liquidator in the event of a winding up.[180] These matters were drawn to the attention of Yeeda's creditors, who nevertheless resolved to enter into the TLP4 DOCAs.
[180] Ex 4, 'DCO-10', p 215.
Due to a lack of funding, the plaintiffs were limited in the extent to which they could pursue these investigations, and it was only relatively recently that any offer was made by Fitzroy to fund these investigations.
While Yeeda may have possible claims against the former directors, I accept that these matters have not been the subject of further investigation due to a lack of funding. On this basis, the plaintiffs have, in my view, complied with their obligations of investigation required by s 438A of the Act.
Second, I do not accept the criticism of the process adopted by the plaintiffs as being 'not truly competitive'.[181] The brief history of the sales process more generally is set out at [18] - [20].
[181] Second Interested Party's submission filed 27 January 2025, p 25.
Specifically, in relation to Fitzroy, on about 30 May 2024, the plaintiffs invited Fitzroy to submit a DOCA proposal. After receipt of the Fitzroy proposal, the plaintiffs prepared and circulated a Supplementary creditors' report. The minutes of the second creditors' meeting record that Mr Osborne discussed the detail of both the TLP4 DOCAs and the Fitzroy proposal. In accordance with the request from Fitzroy, Mr Osborne concluded his presentation by informing Yeeda's creditors that the plaintiffs intended to propose a resolution to adjourn the second creditors' meeting for two weeks. A representative of Fitzroy (being Ms Higgins, a partner of Jones Day, the solicitors of Fitzroy) was invited to explain why an adjournment was sought before questions were allowed. At the conclusion of the question and answer session, Mr Osborne put a resolution to the meeting that the second creditors' meeting be adjourned for 10 business days. This resolution was lost.[182] Mr Osborne then put to creditors of Yeeda and KMC a resolution to execute the Fitzroy proposal. These resolutions were also lost. Subsequently, the creditors of each of the companies in the Yeeda group resolved to enter into the TLP4 DOCAs.
[182] Ex 4, 'DCO-12'.
In my view, nothing occurred in this process which is inconsistent with the plaintiffs' obligations under the Act or would cause the court to decline to exercise its discretion.
Third, I accept that the TLP4 DOCAs will result in exactly the same outcome for some creditors, particularly unsecured creditors, as if the Yeeda group companies were liquidated. That is a consequence of the very significant shortfall of Yeeda's assets over its liabilities. It does not mean that the TLP4 DOCAs are inconsistent with the purposes of pt 5.3A of the Act. The TLP4 DOCAs will enable parts of the Yeeda group to continue in existence. This is entirely consistent with the objects of pt 5.3A of the Act, as set out in s 435A(a).

Fitzroy's alternative argument

Given my conclusions on this matter, it is unnecessary for me to address the question as to whether the court could (or should) make the alternative order proposed by Fitzroy for leave to be granted to transfer their shares on condition that Yeeda's claims against its directors and former directors are assigned to Fitzroy.
In Kipoi, both Buss P and Vaughan JA left open the question as to whether the court has power to impose conditions on the granting of leave under s 444GA(1) of the Act.[183] As this question does not arise at this time, given my previous conclusions, I decline to offer any view as to whether an order to this effect can be made.
[183] Kipoi [209] - [222] (Buss P), [872] (Vaughan J).
However, even if there were power in the court to grant leave under s 444GA(1) of the Act on conditions, I do not consider that this would enable the court to impose the condition proposed by Fitzroy. This is because the focus of this section is on the unfairness to members as a whole, and not to any individual member. Any condition that could be imposed by the court would need to reflect this and, in my view, the condition proposed by Fitzroy does not do so.

Conclusion

I will hear from the parties as to the appropriate orders that should be made. My preliminary view is that the originating process should be adjourned to enable the plaintiffs to re‑open their case to adduce the necessary evidence of the transactions referred to in the Yeeda LAWD report and/or to adduce admissible evidence of the value of the pastoral leases.
The TLP4s DOCAs require the conditions precedent to be satisfied by 31 March 2025. Subject to the availability of the parties, the court can accommodate any additional hearing before that date.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Associate to the Honourable Justice Hill
27 FEBRUARY 2025

Company Assets	Low case ($'000)	High Case ($'000)
Inventory	14,442	15,776
Pastoral leases	24,200	27,225
Class action recovery	2,277	6,661
Total asset value	40,919	49,663
Claims against the assets
Single entity	20,016	19,000
Cross-collateralised	97,513	97,513
Total claims against assets of company	117,529	116,513
Shortfall of assets for creditors	(76,610)	(66,651)
Net equity value	-	-

Assets	Low case ($'000)	High Case ($'000)
Debtors	222	222
Inventory	14,684	16,018
Plant & Equipment	5,000	7,500
Land and buildings	5,802	7,120
Pastoral leases	24,200	27,225
Class action recovery	2,277	6,661
VA Funding Contribution	87	87
Total asset value	52,272	64,833
Claims against the assets
Single entity	36,845	34,870
Cross-collateralised	97,513	97,513
Total claims against assets of company	134,358	132,383
Shortfall of assets for creditors	(82,086)	(67,549)
Net equity value	-	-

Assets
Description	Value	Where derived from
Inventory (cattle)	$12,622,808	Adopts a sale price of $642 per head based on sales during DOCA. Does not discount for costs associated with sale.
Pastoral leases	$30,250,000	Highest valuation for the pastoral leases from the [Yeeda] LAWD report with no discount applied.
Class action recovery	$6,661,000	From RSM report (high case).
Kimberley properties	$6,050,000	Adopts price from offers received in sale process.
Residual from sale of abattoir	$1,636,069	Using highest price from the sale of the abattoir less the debts owed by KMC.
Total	$57,259,877
Liabilities
Secured creditors
CBA	$48,012,596	Debt as at 29 January 2025 (Ex 16 [59.1.1]).
Westpac	$6,513,552	Debt as at 29 January 2025 (Ex 16 [59.1.2]).
TLP4	$6,482,134.20	Debt as at 29 January 2025 (Ex 16 [59.1.3]).
Total	$61,008,282.20
Priority creditors (employees)	$419,210	IER [5.3.3.1]. This is lower than the plaintiffs' estimate of $513,000 (Second creditors' report [3.3]).
Unsecured creditors (shareholders, ADM and government)	$42,967,000	Second creditors' report [3.3].
Other unsecured creditors	$6,123,000	Second creditors' report [3.3].
Total	$49,509,210.00
Total liabilities	$110,517,492.20
Residual value of equity	($53,257,615.20)