Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) (ACN 094 819 717) [No 2]
[2025] WASC 109
•7 APRIL 2025
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) [No 2] [2025] WASC 109
CORAM: HILL J
HEARD: 27 MARCH 2025
DELIVERED : 1 APRIL 2025
PUBLISHED : 7 APRIL 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 various assets - Whether plaintiffs have adduced evidence of comparative sales - Whether shares will gain some value in the future - Whether court should exercise discretion to make orders - Application granted
Legislation:
Corporations Act 2001 (Cth), s 444GA, s 447A, sch 2 s 90-15
Result:
Application granted
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, G Pasas |
| Second Interested Party | : | No appearance |
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 |
Cases referred to in decision:
Clack v Murray [2018] WASCA 120
Collopy v Commonwealth Bank of Australia [2019] WASCA 97
Donohoe v The Director of Public Prosecutions (WA) [2011] WASCA 239
English Exporters (London) Ltd v Edonwall Ltd (1973) 1 Ch 415
Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) (ACN 094 819 717) [2025] WASC 57
HILL J:
On 12 and 13 February 2025, I heard the plaintiffs' originating process for orders pursuant to s 444GA of the Corporations Act 2001 (Cth) (Act) for leave to transfer all the issued shares in Yeeda Pastoral Company Pty Ltd (subject to Deed of Company Arrangement) (Yeeda) to TLP4 Australian Holdings Pty Ltd (TLP4).
On 27 February 2025, I delivered reasons for my decision that, at that stage, I was unable to draw any conclusion as to whether there was any residual value in the equity of Yeeda or whether or not it would be unfairly prejudicial to Fitzroy River Limited Liability Company (Fitzroy) or the other Yeeda shareholders to grant leave to transfer their shares to TLP4. This was because, at that stage, I was of the view that there was no admissible evidence before me as to the value of Yeeda's pastoral leases.[1]
[1] Re Yeeda Pastoral Company Pty Ltd (Subject to Deed of Company Arrangement) (ACN 094 819 717) [2025] WASC 57 (Primary Reasons).
Following delivery of the Primary Reasons, the plaintiffs sought and were granted leave to file and serve further affidavits. The originating process came back before me for hearing on 27 March 2025. Prior to that, on 21 March 2025, Fitzroy sought and was granted leave not to attend this hearing.
These reasons should be read together with the Primary Reasons. The abbreviations used in the Primary Reasons have been adopted in these reasons.
Procedural background
Following delivery of the Primary Reasons, on 5 March 2025, I made orders that by 4.00 pm on 19 March 2025, the plaintiffs have leave to file and serve any further affidavits and/or expert reports as to:
(a) whether there is any residual value in the shares of Yeeda (including the prospect of the shares in Yeeda obtaining some value within a reasonable time);
(b) the value of the pastoral leases held by Yeeda; and/or
(c) the transactions referred to in the expert reports prepared by LAWD in respect of the pastoral leases owned by Yeeda and the Abattoir owned by KMC.[2]
[2] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1' - 'TMM-2'.
In accordance with these orders, between 13 and 19 March 2025, the plaintiffs filed seven further affidavits:
(a)four open affidavits of Timothy Michael McKinnon (one filed 13 March 2025, and three filed on 18 March 2025);
(b)two confidential affidavits of Timothy Michael McKinnon, filed 13 and 18 March 2025; and
(c)a third affidavit of Nadine Marke, filed 19 March 2025.
On 21 March 2025, orders were made for the originating process to be relisted for hearing on 27 March 2025. Orders were also made on that date for Fitzroy to file any additional submissions and affidavits, and to have leave not to attend the further hearing. On 21 March 2025, Fitzroy filed a fifth affidavit of Dirk Maurice Fairweather, as well as submissions in relation to the further affidavits filed by the plaintiffs.
On 26 March 2025, the plaintiffs filed a further affidavit of Leith David Ayres, annexing correspondence exchanged between the solicitors for Yeeda and Fitzroy. This affidavit contains annexures totalling almost 1,700 pages, comprising communications between KordaMentha, Lavan, and the experts retained by the plaintiffs. A further affidavit of Mr Ayres was filed on 27 March 2025. This affidavit annexed correspondence between the solicitors for the plaintiffs and TLP4, and Yeeda's secured creditor in relation to an extension of time to the date by which the conditions precedent in the DOCAs were required to be satisfied.
On 27 March 2025, at the conclusion of the hearing, the originating process was adjourned until the afternoon of 1 April 2025. At that time, I delivered oral reasons for my decision granting leave and indicated that I would subsequently publish reasons for my decision. These reasons supplement (and are consistent with) the oral reasons I gave on 1 April 2025.
In reaching my decision, I have taken into account all of the additional materials filed by the parties.
Will the transfer of shares unfairly prejudice members of Yeeda?
Is there any residual value in the equity of Yeeda?
In the Primary Reasons, I concluded that the plaintiffs had not discharged their onus of establishing that the transfer of shares in Yeeda would not unfairly prejudice the interests of members. This was because, at that stage, the plaintiffs had not proved the facts of the comparative sales relied upon by LAWD in the Yeeda LAWD report and, as a result, had not adduced any admissible evidence as to the value of Yeeda's pastoral leases.[3]
[3] Primary Reasons [101] - [102].
The parties accepted that the same criticism applied to the valuation of the Abattoir (although this was not the subject of argument at the initial hearing).
Since the initial hearing, the plaintiffs have filed an updated valuation of Yeeda's pastoral leases (Updated Yeeda LAWD report).[4] The Updated Yeeda LAWD report is dated 18 March 2025 and was prepared by Mr McKinnon. In this report, Mr McKinnon confirms that he inspected the property, including the Yeeda pastoral leases, on 13 March 2025. His opinion is that as at 13 March 2025, by reference to the same comparative sales evidence as referred to in the Yeeda LAWD report:
(a)the market value of Yeeda's pastoral leases on an 'As Is - Vacant Possession' basis is $30.25 million; and
(b)the estimated value of Yeeda's pastoral leases on a forced sale is $24.2 million - $27.225 million.
[4] Fifth affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-1'.
The question for determination at the further hearing of the originating process was whether the plaintiffs have now discharged their onus to prove the comparative sales referred to in the Yeeda LAWD report and Updated Yeeda LAWD report and, as a consequence, have adduced admissible evidence of the value of the Yeeda pastoral leases and the Abattoir. While Fitzroy did not appear at the hearing on 27 March 2025, it filed detailed submissions highlighting what it described as 'serious deficiencies' in the further evidence filed by the plaintiffs and submitted that the appropriate order was for the originating process to be dismissed.
Given this, it is necessary to address in some detail the evidence, to explain my findings and the conclusion I have reached.
Before doing so, it is useful to set out the evidentiary requirements where opinion evidence is adduced from an expert, and when it is necessary and unnecessary for matters relied upon by an expert to be specifically proved.
Where an expert relies on comparative sales evidence in reaching their opinion as to the valuation of particular assets, the principles that govern what is required to be proved as specific hearsay and those matters which do not require specific proof (known as general hearsay) were summarised by Megarry J in English Exporters London Ltd v Edonwall Ltd as follows:[5]
A valuer giving expert evidence-in-chief (or in re-examination):
(a)may express the opinions that he has formed as to values even though substantial contributions to the formation of those opinions have been made by matters of which he has no first-hand knowledge;
(b)may give evidence as to the details of any transactions within his personal knowledge, in order to establish them as matters of fact; and
(c)may express his opinion as to the significance of any transactions which are or will be proved by admissible evidence (whether or not given by him) in relation to the valuation of which he is concerned; but
(d)may not give hearsay evidence stating the details of any transactions not within his personal knowledge in order to establish them as matters of fact.
[5] English Exporters (London) Ltd v Edonwall Ltd (1973) 1 Ch 415, 423.
The Full Court of this court in Pownall v Conlan Management Pty Ltd[6] and subsequently the Court of Appeal in Clack v Murray[7] have confirmed that this summary is a correct statement of the relevant principles.
Valuation of the Yeeda pastoral leases
[6] Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370, 374.
[7] Clack v Murray [2018] WASCA 120 [52].
In reaching an opinion as to the value of the Yeeda pastoral leases, the Yeeda LAWD report and the Updated Yeeda LAWD report refer to five comparative sales, namely the Kimberley Cattle Portfolio, and the Christmas Creek, Springvale, Nerrima, and Ruby Plains and Sturt Creek Stations.[8]
[8] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 41 - 53; Fifth affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-1', p 54.
In valuing the Yeeda pastoral leases, LAWD adopted a methodology which is described as a 'Direct Comparison - Productive Unit Approach'. An explanation of the 'Productive Unit Approach (Grazing Land)' is set out in the Yeeda LAWD report as follows:[9]
Units of productive value deduced from sales serve as common denominators, which enable the value of one property to be methodically compared with another.
Adult Equivalents (AE) for cattle and Dry Sheep Equivalents (DSE) are a common basis by which cattle and sheep grazing/pastoral properties may be compared. It involves the conversion of the historic or estimated livestock classes that are/can be carried on a property to an equivalent Productive Unit. The stocking equivalent relates to the assessed sustainable carrying capacity of the property on a "year in year out" basis.
The Productive Unit Approach correlates the attributes of the subject property to the sales evidence attributes that underpin its rate per equivalent as analysed, to ascertain an appropriate productive unit dollar rate to apply to the subject property equivalent.
This is done along comparative lines where an assessed carrying capacity/rate per Equivalent for each sale holding or property, generally inclusive of structures and land development, is correlated to the subject property holding to determine what rate applies in relative terms. This accounts for the land and its development, carrying capacity including potential, waters, property infrastructure, rainfall and location to markets and services.
[9] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 59.
To obtain a productive unit rate, the sale price of the land is divided by the carrying capacity (on an adult equivalent basis) to obtain a rate per adult equivalent (AE) for each property. To obtain a value of land, the carrying capacity is multiplied by the productive unit rate per adult equivalent.
As expressly noted in the Yeeda LAWD report, there is degree of subjectivity in regard to the estimate of the carrying capacity of each property. This assessment is based on an understanding of district average carrying capacities and how this is apportioned into different land systems.[10] It is clear from the Yeeda LAWD report that the opinions expressed by LAWD as to the carrying capacity of each property are based on Mr McKinnon's general experience, knowledge, and expertise. In my view, these aspects of the Yeeda LAWD report are non-specific hearsay which were drawn upon by Mr McKinnon for the formulation of the opinion expressed in the Yeeda LAWD report. These matters are not required to be specifically proved by the plaintiffs.[11]
[10] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 15.
[11] Pownall v Conlan Management 376 (Ipp J).
LAWD's assessment of the productive unit rates per adult equivalent range from $950/AE (for a sale in August 2021) to $1,579/AE (for a sale in Dec 2023). After taking account of matters such as the location of each property, average rainfall, and matters particular to each property, LAWD express the view that the carrying capacity for the Yeeda pastoral leases is 27,500 AE and the appropriate productive unit rate for the Yeeda properties is $1,100/AE. On this basis, the value of the Yeeda pastoral leases is $30.25 million (27,500 AE multiplied by $1,100).[12]
Kimberley Cattle Portfolio
[12] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 41 - 53; Fifth affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-1', p 55.
The relevant details of the sale of the Kimberley Cattle Portfolio are that the sale occurred in December 2023 of properties comprising 1,827,769.69 hectares at a sale price of $315 million. This sale price is apportioned between the land, water, and other inclusions (such as livestock, plant, and equipment). In the Yeeda LAWD report, the amount apportioned to the land is $148,049,345. The Kimberley Cattle Portfolio's carrying capacity is assessed as being 93,875 AE. On this basis, the rate attributed by LAWD to the sale of the Kimberley Cattle Portfolio is $1,579/AE (which equates to an amount apportioned to the pastoral leases of $148.226 million).[13]
[13] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 45.
A copy of the relevant sale agreement is annexed to the confidential affidavit of Mr McKinnon filed 13 March 2025.[14] The information memorandum in relation to the sale was also adduced in evidence.[15]
[14] Confidential affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-1'.
[15] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-1'.
Mr McKinnon's evidence is he personally inspected the properties in June 2023 and provided advice to the purchaser as part of their due diligence. He has confirmed the details of the sale set out in the Yeeda LAWD report are consistent with his personal knowledge of the property and the transaction.[16]
[16] Second affidavit of Timothy Michael McKinnon filed 13 March 2025 [14].
Fitzroy points to a number of discrepancies between the details of the transaction in the LAWD report and the terms of the sale agreement, namely the purchase price (both as a total and for the pastoral leases), the number of pastoral leases transferred, and the size of the then current cattle herd.
Mr McKinnon's evidence is that the differences between the description of the sale price in the Yeeda LAWD report and the amounts in the sale contract (both the total and for the pastoral leases) is due to the relevant amounts being rounded up.[17] This evidence has not been challenged nor been the subject of cross-examination. I accept Mr McKinnon's explanation. In any event, I consider the differences to be immaterial to the opinions expressed by LAWD.
[17] Fourth affidavit of Timothy Michael McKinnon filed 18 March 2025 [9] - [11], [15].
For the following reasons, I do not consider that any of the other discrepancies identified by Fitzroy are relevant. They are not material and do not impact the relevant elements of this comparative sale - namely, the productive unit analysis.
First, the number of pastoral leases that were the subject of the sale is not material given the land area is not in dispute.
Second, it is clear from the Yeeda LAWD report that it is not the size of the current cattle herd on any property that is relevant, but the assessment of the carrying capacity of the property. In this case, while LAWD's assessment of the carrying capacity of the pastoral leases is higher than the estimate of the current herd in the information memorandum, it is lower than the number of cattle referred to in the sale agreement. No evidence has been adduced to call into question the opinion expressed by LAWD as to the carrying capacity of these pastoral leases.
I accept and find that the plaintiffs have now adduced evidence of the essential aspects of the sale of the Kimberley Cattle Portfolio.
Christmas Creek Station
The relevant details of the sale of the Christmas Creek Station are that the sale occurred in May 2023 of land comprising 139,353.72 hectares at a sale price of $25 million. The amount apportioned to the land is $11,566,359. On the basis that the carrying capacity of the pastoral leases is 10,000 AE, the productive unit rate attributed to this property by LAWD is $1,150/AE.[18]
[18] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 46; Fifth affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-1', p 54.
A copy of the contract for sale is annexed to the confidential affidavit of Mr McKinnon filed 13 March 2025.[19] A number of other documents that are relevant to this sale, including the information memorandum and the transfer of the pastoral leases, are also in evidence.[20]
[19] Confidential affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-2'.
[20] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-2' - 'TMM-4'.
Fitzroy again points to a number of discrepancies between the details of the transaction in the Yeeda LAWD report and the documents that have been adduced in evidence, including in relation to the total purchase price, the purchase price, the date of the sale, the land area, and the carrying capacity of the pastoral leases.
In the responsive submissions filed by Yeeda, Yeeda explained that the date of sale has been taken from the sale contract rather than the date of the transfer of the leases. I accept this submission. Mr McKinnon's evidence (which is not challenged) is that the other differences (other than carrying capacity) are attributable to the rounding (up or down) of the relevant values as well as the apportionment of the purchase price.[21]
[21] Fourth affidavit of Timothy Michael McKinnon filed 18 March 2025 [8] - [15].
The only possible material discrepancy is the difference between the advertised carrying capacity of the Christmas Creek Station (of 7,000 CU)[22] and Mr McKinnon's assessment of 10,000 AE. As set out above, I accept that the assessment of the carrying capacity of the Christmas Creek Station has a degree of subjectivity. The opinion of LAWD is consistent with the results of the 2023 muster of 10,120 head of cattle, and less than the average size of the herd over the previous five years, being 11,900 head of cattle.[23]
[22] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-2', p 25. A 'CU' is a cattle unit which is defined as a 400 kg animal, as opposed to a AE which is defined as a 450 kg animal: see affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 30.
[23] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-2', p 24.
Mr McKinnon's evidence is that he is familiar with the Christmas Creek Station as well as this transaction as he advised the first ranking mortgagee, and that his opinion is derived from his personal knowledge of both the Christmas Creek Station and the transaction.[24]
[24] Second affidavit of Timothy Michael McKinnon filed 13 March 2025 [18] - [19].
In my view, none of the discrepancies identified by Fitzroy are material or impact the relevant aspect of this comparative sale - namely, the productive unit analysis.
I accept and find that the evidence that has now been adduced by the plaintiffs supports the summary contained in the LAWD report, save for a minor discrepancy as to the date of the sale (which is not material).
Springvale Station
The relevant details of the sale of the Springvale Station[25] are that the sale occurred in November 2021 of land comprising 584,196.83 hectares for a total price of $35.8 million. On the basis that the carrying capacity of the pastoral leases is 28,760 AE, the productive unit rate attributed to this property by LAWD is $1,245/AE.[26]
[25] Also referred to as the Springvale Aggregation: affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 47.
[26] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 47; Fifth affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-1', p 54.
Mr McKinnon has adduced evidence of the information memorandum used to market Springvale Station, the transfer of pastoral lease lodged with Landgate, and the certificate of stamp duty. A copy of the relevant contract of sale is annexed to the confidential affidavit of Mr Osborne.[27]
[27] Confidential affidavit of David Christopher Osborne filed 31 October 2024, 'DCO-2'.
Fitzroy point to a number of discrepancies between the details of this transaction in the Yeeda LAWD report and these documents, including the date of the sale (November 2021 in the Yeeda LAWD report as opposed to March 2022 in the contract for sale), the land area (584,196.83 hectares in the Yeeda LAWD report and 604,430 hectares in the information memorandum), the purchase price, and the advertised carrying capacity of 24,955 CU,[28] compared to Mr McKinnon's assessment of 28,670 AE.
[28] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-5', p 63.
For the following reasons, I do not consider that any of these discrepancies are material or impact the opinion expressed in the Yeeda LAWD report.
First, while I accept that the first two discrepancies exist, there is no evidence that either the date of the sale or the relatively small discrepancy in the land area have any impact on Mr McKinnon's opinion of the carrying capacity of Springvale Station or the productive unit rate per adult equivalent.
Second, I accept there is also a discrepancy between the description of the purchase price in the Yeeda LAWD report and the amount in the stamp duty certificate. As the terms of the sale contract are confidential, I am somewhat constrained in the comments that I can make. Mr McKinnon's evidence, which I accept, is that:
(a)the difference between the description in the Yeeda LAWD report and the amount in the contract of sale is due to the purchase price being rounded up; and
(b)the difference between these amounts and the amount in the stamp duty certificate is attributable to a change in the apportionment of the components of the sale by the purchaser.[29]
[29] Fourth affidavit of Timothy Michael McKinnon filed 18 March 2025 [8] - [15].
Ultimately, neither of these differences impact the carrying capacity or the productive unit rate per adult equivalent of the Springvale Station.
Third, Mr McKinnon's opinion of the carrying capacity of the Springvale station is less than the size of the herd as at 31 December 2021 of 35,021, and the size of the herd since 2011, which has ranged from 35,000 to 42,000.[30] Mr McKinnon's evidence is that he personally inspected the property as part of a valuation engagement for the previous owners and again in 2023 for the present owners, and his opinion is based on his personal knowledge of both the relevant properties and the transaction.[31] In any event, no evidence has been adduced which contradicts the opinion expressed by LAWD.
[30] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-5', p 59, 63.
[31] Second affidavit of Timothy Michael McKinnon filed 13 March 2025 [23].
I accept and find that the evidence that has now been adduced by the plaintiffs supports the relevant details of the Springvale Station transaction in the Yeeda LAWD report that underpins the opinions expressed.
Nerrima Station
The relevant details of the sale of the Nerrima Station are that the sale occurred in August 2021 and included pastoral leases of an area of 203,142.75 hectares for a total price of $32.4 million. Of this, the amount attributable to the land was $11,375,994. On the basis that the carrying capacity of the land is 12,000 AE, the productive unit rate attributed to this property in the Yeeda LAWD report is $950/AE.[32]
[32] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 48; Fifth affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-1', p 54 (referred to as the 'Nernma Station').
Mr McKinnon has adduced evidence of the information memorandum used to market Nerrima Station, the transfer of pastoral lease lodged with Landgate, and the certificate of title.[33]
[33] Second affidavit of Timothy McKinnon filed 13 March 2025 'TMM-8' - 'TMM-10'.
There are a number of minor discrepancies between the details of this transaction in the Yeeda LAWD report and these documents, including the date of the sale (August 2021 in the Yeeda LAWD report as opposed to December 2021 in the transfer of lease), as well as the sale price.[34] Mr McKinnon's unchallenged evidence is that for the purposes of the Yeeda LAWD report, he rounded up the purchase price.[35] I accept this evidence. In any event, these discrepancies are not material to the opinion expressed by Mr McKinnon in the Yeeda LAWD report, which is based on his opinion of the carrying capacity of Nerrima Station and an amount per adult equivalent.
[34] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-8', p 189.
[35] Fourth affidavit of Timothy Michael McKinnon filed 18 March 2025 [9] - [11], [15].
The only possible material difference is between the advertised carrying capacity of Nerrima Station (of 9,776 CU) and Mr McKinnon's assessment of 12,000 AE. As set out above, I accept that this assessment has a degree of subjectivity. While I accept that there is a discrepancy between the advertised carrying capacity of the Nerrima Station and Mr McKinnon's assessment, I note that Mr McKinnon's opinion of the carrying capacity is less than the three year average of the herd of 15,445.[36] No evidence has been adduced to contradict the opinion expressed in the Yeeda LAWD report.
[36] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-8', p 113.
Mr McKinnon's evidence is that he personally inspected the Nerrima Station in December 2020 to value the property for its previous owners, and his opinion is based on his personal knowledge of the property.[37]
[37] Second affidavit of Timothy Michael McKinnon filed 13 March 2025 [27].
I accept and find that the evidence that has now been adduced by the plaintiffs supports the relevant details of the transaction in the LAWD report.
Ruby Plains and Sturt Creek Stations
The relevant details of the sale of the Ruby Plains and Sturt Creek Stations are that the sale occurred in August 2021 of pastoral leases comprising 796,134 hectares at a sale price of $61.9 million. The amount of the purchase price attributed to the pastoral leases by LAWD is $29,456,958. On the basis that the carrying capacity of the pastoral leases is 25,000 AE, the productive unit rate attributed to this property in the Yeeda LAWD report is $1,178/AE.[38]
[38] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-1', p 49; Fifth affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-1', p 54.
The plaintiffs have now adduced evidence of the information memorandum for the sale of these properties, the transfer of pastoral lease lodged with Landgate, and the certificate of title.[39]
[39] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-8', 'TMM-10' - 'TMM-11'.
I accept that there are a number of discrepancies identified by Fitzroy between the details of this transaction in the Yeeda LAWD report and these documents, being the date of the sale (August 2021 in the Yeeda LAWD report as opposed to December 2021 in the transfer of lease), and the amount apportioned for the land ($29.457 million in the Yeeda LAWD report as opposed to $29.751 million in the transfer of lease form). Mr McKinnon has explained the difference in the amount apportioned for the land as being a result of rounding the rate per hectare down, from $37.37 per hectare to $37 per hectare.[40] I accept this evidence.
[40] Fourth affidavit of Timothy Michael McKinnon filed 18 March 2025 [9] - [11], [15].
In my view, neither of these discrepancies materially impact the opinion expressed by LAWD as to the carrying capacity or rate per adult equivalent of the Ruby Plains and Sturt Creek Stations. If the correct purchase price is adopted, the rate attributable to this property marginally increases to $1,190/AE. This is not material.
The other discrepancy identified by Fitzroy is the difference between the advertised carrying capacity of the Ruby Plains and Sturt Creek Stations (of 24,458 CU) compared to Mr McKinnon's assessment (of 25,000 AE). As set out above, not only does this assessment have a degree of subjectivity, but it is also less than the three year average of the herd of 25,636.[41] Mr McKinnon's evidence is that he inspected these properties in December 2020 to undertake a valuation of the properties for their previous owners. He has confirmed that his opinion is consistent with his personal knowledge of these properties. No evidence has been adduced which contradicts this opinion. I accept Mr McKinnon's evidence.
[41] Second affidavit of Timothy Michael McKinnon filed 13 March 2025, 'TMM-5', p 113.
I accept and find that the evidence that has now been adduced by the plaintiffs broadly supports the relevant details of this transaction in the Yeeda LAWD report.
Conclusion
For these reasons, I accept and find that the plaintiffs have now adduced admissible evidence of each of the comparative sales referred to in the Yeeda LAWD report.
On this basis, I accept and find that the value of the Yeeda pastoral leases is not more than $30.25 million, and between $24.2 million - $27.225 million on a liquidation scenario, for the reasons expressed by RSM in its first report.
Valuation of the Abattoir
Before turning to the detail of the evidence adduced in relation to the comparative sales of the Abattoir, it is important to give some context to the relevance of this evidence.
The Abattoir is an asset of KMC, a subsidiary of Yeeda. KMC has secured debts of $6,818,931. For this reason, unless the value of the Abattoir is greater than KMC's secured debts, no amount from the sale of the Abattoir will be available to be paid to Yeeda on a liquidation scenario. Further, in order to have any impact on the issue as to whether there is any residual value in the shares of Yeeda (given the disparity between Yeeda's assets and liabilities), the Abattoir would need to be valued at an amount in excess of $55 million on a liquidation scenario. In that regard, the court is not required to reach any concluded view as to the precise value of the Abattoir. The question for the court is whether there is any residual value in the equity of Yeeda.
In valuing the Abattoir (KMC LAWD report), LAWD adopted two methodologies: Capitalisation of Net Operating Income (NOI) and a Direct Comparison - Productive Unit. Each methodology resulted in a valuation of $7.5 million.[42]
[42] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 114.
The KMC LAWD report refers to five comparative sales, being:[43]
[43] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 151.
Having considered this evidence, LAWD adopted a NOI multiple of 2.5 for the Abattoir. The KMC LAWD report specifically acknowledges that this is below the comparative sales. However, LAWD expresses the opinion that this value was appropriate based on the fact that any purchaser of the Abattoir would need to find 'end-user markets, procure livestock and source a viable way to remove renderable materials'.[44]
[44] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2' p 154.
In relation to the Direct Comparison - Productive Unit methodology, LAWD expresses the opinion that the Abattoir can process approximately 200 units per day at a large stock (cattle) rate of $37,500 per head per day.[45]
[45] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2' p 155.
The KMC LAWD report sets out the basis for its opinion that the Abattoir can process 200 units per day. This is described in the report as the Abattoir's sustainable processing capacity, based on historical numbers which underpins the continued use of the facility as an Abattoir. The report expressly acknowledges that this is less than the Abattoir's 'as-built throughput capacity'. No evidence has been adduced to challenge or contradict this opinion.[46]
[46] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2' p 109.
While the large stock rate adopted by LAWD is significantly lower than the rates of the comparative transactions, the KMC LAWD report provides an explanation for this. In their view, a lower rate is appropriate given the nature, condition, and location of the Abattoir compared to the other properties.[47] The KMC LAWD report highlights the smaller land area of the Abattoir (only 9.99 hectares) and the substantial capital investment required to address a number of issues with the Abattoir, including issues with its fire suppression system, the removal of render, and compliance with the licensing requirements under the Environmental Protection Act 1986 (WA). The cost of installing a render plant is likely to be in the order of $9 million - $10.2 million.[48]
[47] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 155.
[48] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 110, 122.
Before turning to the specific evidence that has been adduced by the plaintiffs in relation to these comparative sales, it is important to note three matters. First, not all of the transactions are used as comparative sales for each methodology. Three of the comparative sales are used for the Capitalisation of NOI assessment, and three are used for the Direct Comparison - Productive Unit approach. Second, each of these methodologies independently arrive at a valuation of $7.5 million. On this basis, if there is admissible evidence to support one of these methodologies, the plaintiffs will have discharged their onus. Third, the comparative sales refer to both small stock (sheep and goats) and large or big stock (cattle). The evidence of the throughput rate of big stock is the relevant comparator for the purposes of the valuation of the Abattoir, which processes cattle and not small stock.
Australian Lamb Company
The relevant details of this transaction are that the sale occurred in October 2022 for approximately $400 million.[49] This abattoir is a red sheep meat processing plant. This transaction was used to demonstrate the interest in red meat in Australia.[50]
[49] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 146.
[50] Third affidavit of Timothy Michael McKinnon filed 18 March 2025 [20].
Mr McKinnon's evidence is that he was previously engaged by the Australian Lamb Company to provide a valuation of its business. As a consequence of this engagement, Mr McKinnon became familiar with this abattoir and its operations. Mr McKinnon has had conversations with various people who have informed him of the sale price of this abattoir. The remaining details in the KMC LAWD report of this transaction are based on Mr McKinnon's knowledge from this engagement.[51]
[51] Third affidavit of Timothy Michael McKinnon filed 18 March 2025 [15] - [19].
The plaintiffs accept that they have not adduced any direct evidence of the sale price of this transaction.[52] In addition, no evidence has been adduced to support the basis on which Mr McKinnon has calculated the NOI adopted for this abattoir. Given this, I am not satisfied that the plaintiffs have adduced the necessary evidence to prove the relevant details of this comparative sale. To the extent that this transaction is relied upon as demonstration of interest in processing facilities such as the Abattoir, I accept it is admissible as evidence of broad market background.
V & V Walsh
[52] Plaintiffs' supplementary submissions filed 25 March 2025 [30] - [32].
The relevant details of this transaction are that the sale occurred in February 2022 for $117 million and the daily capacity of this abattoir is 292 head of big stock (that is, cattle) at a productive unit rate of $115,000.[53]
[53] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 147.
A copy of an offer from V & V Walsh is annexed to the second confidential affidavit of Mr McKinnon. Because the offer is confidential, I am somewhat limited in the comments I can make. It is sufficient, for the purpose of these reasons, to make the following observations. The offer is for the purchase of a percentage of the equity interest in the various entities comprising the V & V Walsh group. The offer includes both a call and put option for the remaining equity in the group, which could be exercised within five to 10 years after completion of the initial purchase. The price for the purchase of the remaining equity was to be calculated at the time the option was exercised.
I accept that the evidence of this offer is admissible because, to Mr McKinnon's knowledge, it was followed by a concluded contract. As such, it is evidence of the real value of the enterprise value of the V & V Walsh entities as at January 2017, which included this abattoir.[54]
[54] Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547, 562.
Mr McKinnon's evidence is that he was engaged by the National Australia Bank to provide a valuation for first mortgage security purposes in relation to this acquisition. As a result of that valuation, he became familiar with this abattoir and its operations, and that the information in the KMC LAWD report is derived from this engagement.[55]
[55] Third affidavit of Timothy Michael McKinnon filed 19 March 2025 [21] - [23].
In circumstances where this offer is for the purchase of shares in a number of entities comprising the V & V Walsh group, and there is no specific apportionment for this abattoir, I am not satisfied that the plaintiffs have adduced evidence of the basis for the calculation of the NOI multiple.
However, I am satisfied that Mr McKinnon's evidence and his knowledge of this abattoir provides a basis for his opinion as to its daily capacity and daily productive unit rate. The matters which Mr McKinnon has taken into account in his assessment are clearly set out in the KMC LAWD report, including this abattoir's location and existing contracts which underpin the throughput at the facility. In my view, this evidence is sufficient to prove the underlying facts of this sale for the purposes of the Direct Comparison - Productive Unit valuation.
Tabro Meats
The relevant details of this transaction are that the sale occurred in February 2022 for $43.5 million.[56]
[56] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 148.
The plaintiffs have adduced evidence of the land transfer form, a company search, and a file note. The land transfer form discloses that the purchase price was $31.3 million. The plaintiffs accept that they have not adduced any direct evidence of the sale price set out in the KMC LAWD report.[57]
[57] Plaintiffs' supplementary submissions filed 25 March 2025 [36].
Mr McKinnon's evidence is that he was engaged by a potential purchaser of this abattoir and inspected this abattoir and reviewed its operations. From this, he became familiar with this abattoir and the operations of Tabro Meats.
Given his personal knowledge of this abattoir, I accept that there is evidence supporting Mr McKinnon's opinion as to its daily capacity and daily productive unit rate. The matters which Mr McKinnon has taken into account in his assessment are set out in the KMC LAWD report, including this abattoir's location and the relevant accreditations for this facility. In my view, this evidence is sufficient to prove the underlying facts of this sale for the purposes of the Direct Comparison - Productive Unit valuation.
Darling River Meats
The relevant details of this transaction are that the sale occurred in November 2021 for $23 million. Only small stock (sheep and goats) are processed at this abattoir. The daily capacity of this abattoir is 6,000 head of small stock.[58]
[58] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 149.
Mr McKinnon has annexed a copy of the contract for sale to his second confidential affidavit,[59] as well as the associated information memorandum.[60]
[59] Second confidential affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-2'.
[60] Third affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-10'.
I accept that the plaintiffs have adduced evidence which prove the relevant details of this transaction.
Hilltop Meats
The relevant details of this transaction are that the sale occurred in September 2020 for $22.75 million. The daily capacity of this abattoir is 300 head of cattle at a daily rate of $75,800.[61]
[61] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 150.
Mr McKinnon's evidence is that he was engaged by the National Australia Bank to provide a valuation of Hilltop Meats for first mortgage security purposes. As part of that engagement, he inspected this abattoir and reviewed its operations. The information contained in the KMC LAWD report is based on this engagement.[62] Mr McKinnon has annexed to his confidential affidavit an email he received from the chief financial officer of the purchaser of Hilltop Meats.[63] In my view, this email is admissible under s 79C(2a) of the Evidence Act 1906 (WA).[64]
[62] Affidavit of Timothy Michael McKinnon filed 3 January 2025 [30] - [31].
[63] Second confidential affidavit of Timothy Michael McKinnon filed 18 March 2025, 'TMM-3'.
[64] Donohoe v The Director of Public Prosecutions (WA) [2011] WASCA 239 [121] - [128] (Buss JA, Murphy JA & Hall J agreeing); Collopy v Commonwealth Bank of Australia [2019] WASCA 97 [69] (Mitchell, Beech & Pritchard JJA).
As Mr McKinnon has personal knowledge of this abattoir and its operations, I accept the plaintiffs have adduced evidence to support the details of this transaction, including the throughput of this facility and the basis for LAWD's assessment of this abattoir's daily productive unit rate. In my view, this evidence is sufficient to prove the underlying facts for the purpose of the Direct Comparison - Productive Unit valuation.
Conclusion
On the basis of the further affidavits filed by the plaintiffs, I accept that the plaintiffs have adduced evidence of both Mr McKinnon's experience in valuing meat processing facilities (which includes abattoirs) and of his knowledge of the property and operations of each of the comparable sales used for the Direct Comparison - Productive Unit valuation in the KMC LAWD report, namely V & V Walsh, Tabro Meats, and Hilltop Meats.
I accept and find that this evidence provides a factual basis for Mr McKinnon's opinion of the daily capacity and daily productive unit rate per head for each of these comparative transactions. The opinions expressed in the KMC LAWD Report are based on LAWD's analysis of the sales evidence, as well as the nature, condition, and location of each property. The KMC LAWD report specifically acknowledges that this approach has a high degree of value judgment 'when sites are not directly comparable in one or a number of variables'.[65]
[65] Affidavit of Timothy Michael McKinnon filed 3 January 2025, 'TMM-2', p 155.
I accept and find that the plaintiffs have adduced admissible evidence to support the conclusion in the LAWD report as to the value of the Abattoir of $7.5 million.
No residual value in the shares of Yeeda
Given these conclusions, I accept the plaintiffs have now discharged their onus in proving that there is a very significant shortfall between the assets and liabilities of Yeeda (of at least $66 million). As a consequence, I accept and find that, at present, there is no residual value in the shares of Yeeda.
Is there any prospect of the shares in Yeeda gaining some value within the future?
On 19 March 2025, RSM prepared a second supplementary independent expert's report.[66] In this report, RSM considered whether there is any prospect of the shares in Yeeda gaining some value within a nine to 12 month period. In order for this to occur, one of two things would need to happen. Either the value of Yeeda's liabilities would need to decrease to a greater extent than any decrease in the value of its assets, or the value of Yeeda's assets would have to increase to a greater extent than any increase in the value of its liabilities. In the opinion of Ms Marke and Mr Audcent, in the absence of any unforeseen market events, it is not likely that either of these will occur.
[66] Third affidavit of Nadine Marke filed 19 March 2025, 'NM-1'.
In the second supplementary independent expert's report, RSM sets out a number of reasons as to why they believe this is unlikely to occur.
First, there is nothing to suggest that the liabilities of Yeeda will decrease or be forgiven. In fact, if liquidators were to be appointed to Yeeda, it is probable that its liabilities will instead increase, given the continued accrual of interest on the secured loans owed by Yeeda and the ongoing funding required to sustain Yeeda's operations during the liquidation process.
Second, the administrators have already undertaken a sales process. The average and median of the non-binding offers received by the administrators during that sales process were broadly consistent with RSM's opinion as to the value of Yeeda's assets on a liquidation scenario.
Third, any return from litigation claims that Yeeda may have against third parties (including the matters raised by Fitzroy) are uncertain, would incur additional costs, and be likely to take more than nine to 12 months to realise from the date of commencement of any proceedings.
No expert evidence has been adduced to challenge the opinions expressed by RSM. I accept this evidence and find there is no reasonable prospect that the shares in Yeeda will obtain some value within a reasonable period of today's date.
Should the court exercise its discretion to make the orders sought?
Having established the precondition in s 444GA(3) of the Act, the remaining question is whether the court should exercise its discretion to make the orders sought.
In my view, a full and accurate description of the TLP4 DOCA has been given to Yeeda's members and creditors. I accept and find that these members and creditors have been given an opportunity to appear at the hearing before me today to oppose the making of the orders. In this regard, while I accept that a significant amount of additional evidence has been filed by the plaintiffs since the last hearing, I consider (as is clear from the submissions filed by Fitzroy) that Fitzroy has reviewed this additional material and has drawn a number of matters to the attention of the court. I note that Fitzroy did not appear at the hearing before me today and did not seek an adjournment of this hearing to enable them to undertake a more detailed review of the material filed by the plaintiffs. In the circumstances of this case, it is my view that Fitzroy (and the other members and creditors of Yeeda) have had the opportunity to appear at the hearing before me today to oppose the making of the orders and have chosen not to do so.
The alternative to the completion of the TLP4 DOCA is that Yeeda will go into liquidation. Given the history of the sales process undertaken by the plaintiffs, there is no dispute that this is the only alternative.
In exercising my discretion, I take into account the fact that on a liquidation there is likely to be a lower return to creditors, the creditors of Yeeda have voted in favour of the TLP4 DOCA, and that the TLP4 DOCA presents the best opportunity for the continued operation of the business. In my view, granting the relief sought by the plaintiffs is consistent with the objects of pt 5.3A of the Act, as set out in s 435A of the Act.
Conclusion
For these reasons, on the basis of the further evidence that has been filed by plaintiffs (together with the evidence filed prior to the first hearing), I am satisfied that the transfer of shares in Yeeda to TLP4 would not unfairly prejudice the interests of the members of Yeeda, and that I should exercise my discretion to make the orders sought by the plaintiffs.
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
7 APRIL 2025
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