Russell v Lee Holdings Pty Ltd [No 2] - [2020] WASC 257

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RUSSELL -v- LEE HOLDINGS PTY LTD [No 2] [2020] WASC 257
CORAM:   KENNETH MARTIN J
HEARD:   ON THE PAPERS
DELIVERED          :   3 JULY 2020
FILE NO/S:   COR 58 of 2018
BETWEEN:   SHANA FRANCINNE RUSSELL
First Plaintiff
NERIDA JAYNE PUANGKHAM
Second Plaintiff
AND
LEE HOLDINGS PTY LTD
First Defendant
FAY EILEEN LEE
Second Defendant
JOHN ANTHONY CAMPBELL LEE
Third Defendant
AUSTRALIAN EXECUTOR TRUSTEES LTD
Fourth Defendant

Catchwords:

Costs - Costs orders against second and third defendants sought to be stayed - Opposed application for the plaintiffs to be given permission to commence derivative proceeding by first defendant - Leave to commence derivative proceeding granted - Derivative Action commenced - Derivative Action pending trial in August 2020 - Application to stay costs orders of opposed derivative proceeding application - Application to stay payment of costs orders opposed - Discretionary considerations - Special circumstances required by s 15(3) of Civil Judgments Enforcement Act 2004 (WA) - Turns on own facts

Legislation:

Civil Judgments Enforcement Act 2004 (WA)

Result:

Application refused

Category: B

Representation:

Counsel:

First Plaintiff	:	No appearance
Second Plaintiff	:	No appearance
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Bennett + Co
Second Plaintiff	:	Bennett + Co
First Defendant	:	Hotchkin Hanly
Second Defendant	:	Hotchkin Hanly
Third Defendant	:	Croftbridge
Fourth Defendant	:	Gilbert + Tobin

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

Burnet v Francis Industries plc [1987] 1 WLR 802
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141
New Resource Holdings Pty Ltd v Lunt [No 3] [2008] WASC 221
Russell v Lee Holdings Pty Ltd [2017] WASC 283
Russell v Lee Holdings Pty Ltd [2018] WASC 275
Russell v Lee Holdings Pty Ltd [2019] WASC 320
State Bank of Victoria v Parry (1989) WAR 240
Streeter v Western Areas Exploration Pty Ltd [2009] WASCA 214

KENNETH MARTIN J:

Introduction

On 29 August 2018, after resolving an opposed application, heard on 6 August 2018, I then issued orders granting leave to the plaintiffs to bring proceedings on behalf of and in the name of Lee Holdings Pty Ltd (ACN 008 692 537) against each of Lee Bros Pty Ltd (ACN 008 692 546), Fay Eileen Lee, John Anthony Campbell Lee and Australian Executor Trustees Ltd (ACN 007 869 794) as trustee of the estate of the late Ronald William Lee, for:
(i)relief from oppression pursuant to s 233 of the Corporations Act 2001 (Cth) (the Act);
(ii)relief from each of Fay Eileen Lee, John Anthony Campbell Lee and Australian Executor Trustees Ltd as trustee of the estate of the late Ronald William Lee for breach of directors' duties pursuant to s 180(1), s 181(1), s 182(1), s 191(1) and s 1317H of the Act and breach of fiduciary duties;
(iii)orders pursuant to s 233 of the Act, further or alternatively s 461(1)(e), (f), (g) and/or (k) of the Act that Lee Bros Pty Ltd be wound up on such terms as the Court deems fit taking into account the defendants' oppressive conduct (or such other relief as the Court deems just); and
(iv)relief arising out of and in connection with the issuing of shares in Lee Bros Pty Ltd to Fay Eileen Lee, John Anthony Campbell Lee and the late Ronald William Lee in or about July 2016,
(Proposed Proceedings) on condition that the plaintiffs pay and bear (and indemnify Lee Holdings Pty Ltd against) all costs, charges and expenses including costs on a solicitor/client basis of and incidental to the bringing and continuation of the proposed proceedings except to such extent, if any, as the court may in future otherwise direct or allow.
My reasons in this action - Russell v Lee Holdings Pty Ltd [2018] WASC 275 - were delivered ex tempore on the day of the hearing, being 6 August 2018. I later revised and published the reasons on 5 September 2018. Those reasons explain the basis on which I had been ultimately persuaded by the plaintiffs to grant that leave, in effect, so as to permit the plaintiffs to bring in the name of Lee Holdings Pty Ltd an action for shareholder oppression under the Corporations Act 2001 (Cth) in this court.
At the time of the hearing on 6 August 2018 I proposed the orders to issue, however I allowed the parties a period of time to confer as to the precise terminology to be used. Subsequently, the orders I issued on 29 August 2018 reflect the final form of these orders.
Subsequently, in accord with those orders, derivative proceedings were duly commenced in the name of Lee Holdings Pty Ltd against the envisaged defendants.
The Derivative Action proceedings were commenced by writ of summons by an endorsed statement of claim on 30 August 2018 as CIV 2533 of 2018 (the Derivative Action).
The Derivative Action has been case managed by me in conjunction with action COR 227 of 2017 (the Oppression Action). The Oppression Action involves essentially most of the same parties. But in the Oppression Action Shana Francinne Russell and Nerida Jayne Puangkham are the plaintiffs and the corporation Lee Bros Pty Ltd is not a defendant. In the Derivative Action, Lee Bros is the first defendant to that action where the plaintiff is Lee Holdings.
The two actions have been listed for a 10‑day trial before me commencing in the Supreme Court on Monday 3 August 2020. Both proceedings are actively defended.

The present applications to stay payment of costs orders

The present applications which are being determined on the papers are only concerned with the costs orders that I issued in this action (COR 58 of 2018) in the wake of that determination namely that leave to bring the derivative proceedings should be allowed.
At 29 August 2018, as regards the issue of costs, my orders 4 and 5 were made in these terms:
4.The second and third defendants pay the plaintiffs' costs of this application to be assessed if not agreed.
5.The second and third defendants have liberty to apply for a stay of payment of the costs assessed or agreed in accordance with order 4 of these orders until after the disposition of the Proposed Proceedings.
Towards those costs orders as made in COR 58 of 2018, the respective applications of 14 May 2020 (as regards the third defendant, John Anthony Campbell Lee - who, henceforth, I will with no disrespect intended refer to as John), and of 21 May 2020 (by the second defendant, Fay Eileen Lee who, henceforth, on the same basis I will refer to as Fay) each seek, by reference to order 5 of the 29 August 2018 orders seen above, as I then provided for at the time by way of a potential application, a stay against the enforcement of order 4 of those orders as regards those costs made on the successful application of the plaintiffs for permission to cause Lee Holdings to bring a Derivative Action against Lee Bros and others.
To that end, respective minutes of 14 and 21 May 2020 as filed by the lawyers for John and Fay each invoke s 15 of the Civil Judgments Enforcement Act 2004 (WA) seeking to suspend any enforcement of my 2018 orders for costs until '… judgment in action CIV 2533 of 2018, or further order'.
By the agreement of the parties the present applications to suspend those previous 2018 costs orders on an interim basis, is to be determined on the papers. That is under circumstances where such suspension relief is firmly opposed by the plaintiffs, Shana and Nerida (as I will refer, again with no disrespect intended, to them as plaintiffs).
All parties have filed written submissions in support of their rival contentions as regards a suspension of the enforcement of those 2018 costs orders, or otherwise. To that end, I first refer to John's lawyer's written submissions on his behalf of 14 May 2020. They are essentially supported and adopted as Fay's position as well, under her lawyers' submissions of 21 May 2020.
Under par 3 and par 4 of Fay's written submissions she says:
3.Fay adopts John's written submissions and also relies on the affidavit of Timothy Lethbridge sworn 11 May 2020 in support of her application.
4.At paragraph 15 of his written submissions, John submits that proceedings CIV 2533 of 2018 are brought in the name of Lee Holdings Pty Ltd (Lee Holdings), but in substance are a claim being pursued by the plaintiffs (respectively, Shana and Nerida). This submission is supported by the terms of order 2 made on 29 August 2018 in these proceedings. That order granted leave to Shana and Nerida to commence proceedings CIV 2533 of 2018 on the condition that Shana and Nerida pay and bear (and indemnify Lee Holdings against) all costs, charges and expenses of and incidental to the bringing and continuation of CIV 2533 of 2018 (except to such extent, if any, as the Court may in future otherwise direct or allow).

John's submissions to suspend enforcement of the costs orders

John's written submissions of 14 May 2020 are extensive. Since the applications of John (and Fay) rely upon s 15 of the Civil Judgments Enforcement Act (found in Pt 3 Div 3 of that Act) it is convenient to start there. I will set out subsections (1) through to (4) of s 15.
Section 15 of Civil Judgments Enforcement Act appears at the commencement of Div 3, under the heading 'Suspending the enforcement of judgments'. Thereafter:
15Suspension Order
(1)A person against whom a judgment is given may apply for an order suspending the enforcement of all or part of the judgment to -
(a) the court that gave the judgment; or
…
(2)The court may deal with such an application in the absence of the person entitled to the benefit of the judgment if it is just to do so.
(3)On such an application, the court may only make such an order if there are special circumstances that justify doing so.
(4)A suspension order may be made for any period (including an indefinite period) and may be made on terms as to costs or otherwise.
By the parties' exchanged written submissions all sides proceeded on the basis the word 'judgment', as is seen used in s 15(1)(a), extends to encompass an adverse costs order made within litigation and presumably as to a costs order on either an interlocutory or final determination made within the litigation.
Here the orders of 29 August 2018 effectively resolved COR 58 of 2018 (subject to some further issues relating to privilege) as it had been commenced by the plaintiffs on 11 April 2018, upon my determination of the opposed application by Shana and Nerida as minority shareholders seeking leave to commence a derivative proceeding in the name of Lee Holdings Pty Ltd.
The word 'judgment' is a defined term under s 3 within Pt 1 of the Civil Judgments Enforcement Act meaning, inter alia '(a) a monetary judgment'. The term 'monetary judgment' is then defined in s 3:
monetary judgment means a judgment or an order of a court that requires or has the effect of requiring a person to pay money, whether or not the judgment or order contains any other requirements.
Given the breadth of such definitions, I am satisfied here that order 4 of my orders as to costs of 29 August 2018, as regards John and Fay being then ordered to pay the plaintiffs' costs of that application, does meet the description of a 'judgment' for the purposes of s 15(1)(a). Therefore, it may be the legitimate subject of an application for an order suspending the enforcement of all or part of such a judgment. By reference to s 15(3), however, there is a basal need for John and Fay to establish 'special circumstances' which 'justify doing so'.
Those phrases as used in s 15(3) essentially pose the key issue for resolution now upon the respective applications of John and Fay to suspend enforcement.
John's written submissions refer me back to the transcript of the hearing on 6 August 2018 and particularly to what was said then concerning costs upon the determination of the application and in the wake of the ex tempore decision.
It is correct that at the time I had expressed to counsel for John and Fay my then inclination to order that the costs of the application be reserved to be dealt with in the wash-up result, in effect, of the outcome of the derivative proceeding that was now permitted to be commenced - and thereby leaving the costs of the leave application to later and so then to abide the decision of whatever the trial judge, upon an eventual determination of the Derivative Action, would then assess as appropriate.
However, that 'later' position as to costs was opposed at the time by counsel for the plaintiffs (Mr Bennett), leading me to observe in regard to costs at page 42 of the transcript:
I am in the end persuaded by Mr Bennett that the plaintiffs should have their costs in the present application since (a) they were successful and (b) they won't be parties to the second action.
So I will make an order in terms of what was the former paragraph 5. That will now be paragraph 4. But I will indicate [that] there's liberty to apply to the second and third defendants to stay the payment of any costs assessed until after the disposition of the proposed proceedings, which I think will cater for [the] concern that was troubling me in dialogue with counsel.
After the issuing those August 2018 orders and then later dealing with some further ancillary issues during September 2018, it transpired that it was not until 27 March 2020 that a bill for those costs was lodged on behalf of the plaintiffs (in the amount of $57,405.40) by their lawyers.
There followed a provisional assessment of that bill by a Registrar of this court on 8 April 2020. However, John and Fay, via their lawyers, have respectively objected to the provisional costs assessment. It is not apparent to me that any formal taxation of the claimed bill of costs has yet taken place.
In any event, as at late June 2020 a looming 10-day substantive trial of the Derivative Action and Oppression Action, presents as only some five or so weeks away from commencement.
The submissions of John next refer me to earlier decisions by this Court - including State Bank of Victoria v Parry (1989) WAR 240 and Malcolm CJ's observations in New Resource Holdings Pty Ltd v Lunt [No 3] [2008] WASC 221,[1] particularly at [34], [35] and [40] thereof, concerning situations where a proposed stay relates to related claims and so to the factors a court will usually consider in deciding whether there are special circumstances to justify a stay. The factors will include:
(a)the nature of the plaintiff's claim, in particular whether it displays a characteristic such that it may be of class where a stay of enforcement of a judgment would rarely be granted (that, of course, not being a problematic issue for a costs order such as was made here);
(b)the extent of the identity between the parties (here, of course, this is essentially a family dispute over property between two sisters with their brother, mother and their late father's estate all litigating under the accompanying umbrella of the accoutrements of a Corporations Act setting as regards affairs of two related family held corporations amid contentions of oppressive conduct against shareholders);
(c)the interrelationship of the respective claims;
(d)the strength of the pending claim (here the strength of the Derivative Action);
(e)the size of the pending claim relative to the costs judgment;
(f)the likely delay before the merits of the pending claim will be adjudicated (here the trial being imminent);
(g)any prejudice to the holders of the costs judgment (here, to Shana and Nerida) if they were denied the fruits of their costs judgment until resolution of the substantive pending trial in the Derivative Action being determined; and
(h)any risk of prejudice (to John and Fay) if they were required to render payment of the costs prior to the ultimate determination of the pending actions including the Derivative Action.
[1] Referring with approval to Burnet v Francis Industries plc [1987] 1 WLR 802, 811 (Bingham LJ).
The written submissions of John expand contextually upon most of those factors, in a context of a contention that, in aggregate and duly assessed, the factors do support a conclusion that towards the 2018 costs that special circumstances are indeed demonstrated, so as to justify their suspension until the determination of the pending actions, including in the Derivative Action.
Particular emphasis was directed at what I had allowed for under my costs order 5 to that end. John's submissions conclude:
37.So much seems to follow from the fact that despite his Honour having concerns and being troubled in dialogue with counsel, the fact that Shana and Nerida would not be parties to CIV 2533 of 2018 was a significant factor in him making the costs he did. In so doing, his Honour departed from the often taken position that where an application is a prelude to a substantive claim, the costs of the application be reserved to the substantive claim.
An affidavit of Timothy Lethbridge sworn 11 May 2020 is relied upon by both John and Fay. That affidavit of John's lawyer essentially attaches materials including a transcript of the hearing of 6 August 2018 that resulted in the relevant adverse costs orders for Fay and John, in addition to the parties' pleadings in the Derivative Action and Oppression Action as they had stood at the time Mr Lethbridge swore his affidavit.
Given the nature of the enforcement and suspension arguments now put as regards the 2018 costs orders, it is necessary to say something more about the state of some formal admissions made in the pleadings concerning the issue of statutory oppression against shareholders -particularly in the Derivative Action manifested by the pleaded defences therein as they currently stand by Fay, by Lee Bros and by John. I turn to the pleadings, particularly their defences in the Derivative Action.

Aspects of the pleadings in the Derivative Action - CIV 2533 of 2018

As some further background to the looming trials in the Oppression Action and in the Derivative Action, commencing on 3 August 2020, I would first refer to two more of my earlier interlocutory decisions involving these same parties in COR 227 of 2017, namely Russell v Lee Holdings Pty Ltd [2017] WASC 283 (delivered ex tempore on 26 September 2017 and subsequently revised) and to further reasons in both actions namely Russell v Lee Holdings Pty Ltd [2019] WASC 320 delivered 4 September 2019. Those reasons, hopefully, assist to explain the central disputed issue of contended shareholder oppression which has emerged in both actions, as alleged first by Shana and Nerida as shareholders in the Oppression Action vis-à-vis Lee Holdings and then, second, in the Derivative Action by Lee Holdings as regards its allegedly oppressive treatment as a shareholder by Lee Bros.
For present purposes, I concentrate on the pleadings as regards alleged statutory oppression in the Derivative Action, in which Lee Holdings is the relevant plaintiff (at the behest of Shana and Nerida) and the first defendant is Lee Bros.

The Further Re-Amended Statement of Claim in CIV 2533 of 2018

I first refer to the current statement of claim which is folio document 84, namely, Lee Holdings' Further Re‑Amended Statement of Claim (FRASOC) of 12 June 2020.
Paragraph 44 of the FRASOC pleads:
In breach of Article 24 of the Articles of Association of Lee Bros, Lee Bros did not make an Offer to Lee Holdings and neither Ron, Fay nor John caused Lee Bros to make such an Offer.
'Offer' is earlier defined by reference to par 43, as an Offer from Lee Bros to acquire 98.7% of the New Shares in proportion to the amount of its existing shares in Lee Bros as at the date of the New Share Issue, being 14 July 2016.

Under par 58 of the FRASOC it is pleaded that the New Share Issue of 14 July 2016 in Lee Bros 'was invalid'. The plea at par 58 reads:
By reason of the matters pleaded in paragraphs 30 - 46 hereof, the New Share Issue was invalid in that:
58.1it was not approved by a valid Board or shareholders' resolution of Lee Holdings;
58.2it was not approved by a valid Board or shareholders' resolution of Lee Bros; and
58.3Lee Bros did not comply with Lee Holding's pre-emptive rights provided in Article 24 of the Articles of Association of Lee Bros.

Further Amended Defence (Lee Bros and John)

Under the pleaded third amended defences of the first and third defendants (ie, Lee Bros and John) filed 12 June 2020 (folio document 82) (3AD) and, similarly, under the re-amended defence of the second defendant, Fay Eileen Lee (see folio document 83 also filed 12 June 2020) there are some significant admissions made by those defendants in the Derivative Action, as regards the conduct complained about by the derivative plaintiffs.
By their pleaded defence, Lee Bros and John plead that 'Lee Bros and John admit par 44 of the [FASOC]'. Fay does likewise (see par 44).
Regarding next par 46 of the FRASOC, Lee Bros and John both:
(a)admit that Lee Bros did not comply with Article 24 of the Articles of Association of Lee Bros; and
(b)deny that such non-compliance was caused by Ron, Fay and/or John exercising any power as a director of Lee Bros.
Responding to par 58 of the FRASOC under the heading issue 'New Share Issue Invalid', Lee Bros and John both:
(a)deny that the New Share Issue required approval of a resolution of either the directors or the members of Lee Holdings;
(b)deny paragraphs 58.1 and 58.2; and
(c)admit that the New Share Issue was invalid for the reason pleaded in par 58.3.
The plea by par 58.3 in the FRASOC as earlier seen, was to the effect that Lee Bros had not complied with Lee Holdings' pre-emptive rights as provided under Article 24 of the Articles of Association of Lee Bros.
By par 62 of the 3AD Lee Bros and John then say:
As to paragraph 62 of the Statement of Claim, Lee Bros and John:
(a)admit that the conduct of the members of Lee Bros in passing the resolutions pleaded in paragraph 38 above, which effected the New Share issue, was oppressive to, unfairly prejudicial to or unfairly discriminatory against Lee Holdings in its capacity as a shareholder of Lee Bros; and
(b)otherwise deny each of the allegations in paragraph 62 of the [FRASOC].
By par 62A of the 3AD of Lee Bros and John say:
Lee Bros and John admit paragraph 62A of the [FRASOC].
Paragraph 62A of the FRASOC is a plea that since 1 July 2015 the directors of Lee Bros from time to time caused or alternatively permitted Lee Bros to incur and pay legal expenses with particulars provided of those amounts for the financial years between 30 June 2016 to 30 June 2019.
By par 64 of the 3AD of Lee Bros and John, they plead further as follows:
Lee Bros and John deny paragraph 64 of the [FRASOC] and say further that the winding up of Lee Bros would be neither just nor equitable because:
(a)Lee Bros is solvent;
(b)Lee Bros is not, and has never been, a quasi-partnership in which Shana or Nerida are, or were, participants or in which either of them has, or had, any expectation of an entitlement to participate in management;
(c)there is not, and has never been, a deadlock in, or breakdown of, Lee Bros' management;
(d)there is not, and has never been, a deadlock in Lee Bros' membership in general meeting;
(e)once the New Share Issue is set aside, if Lee Bros were wound up, Fay's and the estate's proportional entitlement to a distribution of the assets of Lee Bros, built up over many years as a result of the efforts, work, skill and investment acumen of Fay and (during his lifetime) Ron, would be negligible and such a winding up would disproportionately favour Lee Holdings at the expense of Fay and the Estate;
…
(r)an alternative remedy is available to the plaintiff and the plaintiff is acting unreasonably in seeking to have Lee Bros wound up instead of pursuing that other remedy; and
Particulars
(i) Lee Bros and John rely on s 467(4) of the Act.
(ii)The alternative remedy is the relief sought in prayers B and C of the Statement of Claim.
(s)in the premises pleaded in subparagraphs 64(a) to 64(r) above and in light of the offer made by John and Fay to purchase Shana and Nerida's C class shares and Ron's (now the Estate's) A class share in Lee Holdings at fair market value in their defences in action COR 227 of 2017, it is neither necessary nor appropriate for Lee Bros to be wound up.
At the 3AD heading 'Relief Claimed' at par 65, Lee Bros and John:
(a)admit that the plaintiff is entitled to the relief sought in prayers B and C of the [FRASOC];
(b)say that by reason of s 1317J of the Act, the plaintiff does not have standing to seek the relief sought in prayer E of the [FRASOC]; and
(c)otherwise deny that the plaintiff is entitled to the relief claimed or to any other relief.
For clarification purposes the relief sought in the prayers for relief by the FRASOC of 12 June 2020 at par B and par C is:
BA declaration that the New Share Issue was invalid.
CAn order rescinding the New Share Issue ab initio.

Further Amended Defence (Fay) CIV 2533 of 2018

Fay's most recently pleaded re-amended defence of 12 June 2020 (folio document 83), reads in almost identical terms as regards the FAD paragraphs as I have extracted them above from the 3AD of Lee Bros and John.

Summary of relevance of the application

The plaintiffs suggest by their submissions that of key significance in the Derivative Action to costs order suspension issues presenting for present resolution are:
(a)the admissions of Lee Bros, John and Fay as to invalidity of the New Share Issue and as to oppressive conduct against Lee Holdings Pty Ltd; and
(b)the observed clash over whether or not the remedy of winding up Lee Bros (and, indeed, Lee Holdings Pty Ltd) is an appropriate remedy or not.

The rival positions over costs

The plaintiffs' submissions

Shana and Nerida, as successful plaintiffs in COR 58 of 2018, effectively say that given the now observed state of admissions as to admitted oppressive conduct against Lee Holdings, seen on the face of the pleadings within the Derivative Action on behalf of Lee Bros and by John and Fay, in effect, Shana and Nerida have already been vindicated. They say as regards their contention of corporate shareholder oppression against Lee Holdings, that this is now established, on the basis that the invalidation of the New Share Issue of shares in Lee Bros, is to be accepted. That state of admitted affairs, they say, is the heavily significant factor sustaining and entrenching their entitlement to their costs payment as the successful parties on that leave application of 2018 and, in effect, as the status quo under my orders of 29 August 2018.
Shana and Nerida also rely generally upon the observations by the Court of Appeal concerning s 15 of the Civil Judgments Enforcement Act from Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141 at [47]. See also observations made in Streeter v Western Areas Exploration Pty Ltd [2009] WASCA 214 at [17] - [18] and in New Resource Holdings Pty Ltd v Lunt [No 3] at [28].
Significantly, Shana and Nerida say that the suspension of costs enforcement application here has been brought on by John and Fay, in circumstances where there is no suggestion at all of any risk that Shana and Nerida would be unable to satisfy any adverse (trial) costs orders, if such orders were ever to be made against them in the Derivative Action. Likewise, it is said as regards potential prejudice John and Fay do not seek to argue that they are unable to pay the costs ordered against them in COR 58 of 2018. Nor is it suggested that meeting the 2018 costs as ordered would be burdensome, or would significantly affect the ability of John and Fay to continue to participate and to defend in effect in the Derivative Action, or in the Oppression Action.
Consequently, it is put by Shana and Nerida that there is no prejudice shown at all for John and Fay by way of a present enforcement of the 2018 costs order made against them in this action.
Shana and Nerida's submissions also contend that John and Fay's expressed opposition in 2018 to the application of the sisters for leave to commence the Derivative Action was framed at the time on a basis that the New Share Issue was not oppressive. On that denial position they then resisted leave to pursue the Derivative Action in the name of Lee Holdings. That, of course, is no longer the resistance stance of John and Fay, under their admissions in the pleadings of the Derivative Action and the stark change in position between 2018 and now as to admitted oppression is highlighted by Shana and Nerida to support their costs order.
Moreover, it is further pointed out that the original defences in the Derivative Action, once commenced, had initially maintained a denial of any oppressive conduct - until the later amendments to the defences as they had emerged, approximately 14 months after the derivative proceedings were begun.
Shana and Nerida also reject the proposition by John and Fay that a buy‑out order at trial for their shares held in Lee Holdings would be an adequate remedy to adequately address their oppressed positions as shareholders. Whilst 'buy-out' relief has been sought inter alia by them in the alternative, they say the primary relief that is sought in both actions is for winding up orders of both Lee Holdings and Lee Bros.
Shana and Nerida also point to various other issues concerning the asserted lack of relevant and contemporary financial information provided, in order for them to assess whether a buy-out order could be presently evaluated as an adequate remedy or not, in terms of financial information not being available.

The defendants' submissions

Essentially, the suspension of the enforcement of costs orders position as is contended for by Fay and John proceeds on the basis that notwithstanding such as observed pleading admissions in the Derivative Action admitting oppressive conduct as a shareholder, and as is acknowledged as being suffered by Lee Holdings, and concessions as regards the invalidity of the New Share Issue of shares in Lee Bros on 14 July 2016 that, nevertheless, the substantive clash at the looming trial is over winding up relief.
In particular, John and Fay say that a Lee Bros winding up order, as is pressed for primarily by Shana and Nerida (and sought as well by Lee Holdings at their behest in the Derivative Action) is likely to fail - with the likely correlative costs result that notwithstanding frankly admitted oppressive conduct against Lee Holdings as a shareholder in Lee Bros, that there is a significant likelihood of an ultimately adverse post trial costs order looming being made against Shana and Nerida and in favour of John and Fay - by reference to the fate of the mooted winding up orders.
John and Fay say that the likely costs eventuality in the Derivative Action ought to be determined, set off and paid out, at the same time as their present 2018 costs exposure under COR 58 of 2018 under my orders of 29 August 2018. That desirability of dealing with all the costs together when the trial result is known, they contend, provides the necessary s 15(3) special circumstances which, for the purpose of s 15(3) of the Civil Judgments Enforcement Act, warrants suspension relief.

Final determination as regards special circumstances and a suspension of the costs orders against John and Fay made 29 August 2018

I am unable to accept the arguments of John and Fay. Instead, my assessment is that special circumstances have not been demonstrated. I prefer the submissions of Shana and Nerida (as regards costs in COR 58 of 2018) as regards what is now a 2018 action that essentially has been concluded in their favour, against strong opposition. They were successful in 2018 against the opposition of John and Fay, to obtain an order to permit a derivative proceeding by Lee Holdings to be pursued.
Moreover, I agree with Shana and Nerida that to some considerable extent the Derivative Action has already borne substantial fruit, fully justifying its commencement - merely assessed by reference to the New Share Issue invalidity admission as currently seen in the respective further amended defences of Lee Bros, John and Fay.
Whatever the ultimate decision and final relief ordered in the pending litigation turns out to be as regards the residual relief issues still presenting for trial, an admitted acceptance of oppressive conduct towards Lee Holdings as a shareholder has already emerged. By my assessment that provides ample evidence as to the demonstrated utility of COR 58 of 2018, and so for the costs order 4 that I issued. That 2018 costs order against John and Fay ought not be disturbed.
The future outcome concerns that I allowed for in 2018 at the time of issuing those costs orders, as regards the eventual fate of the derivative proceedings are now, in 2020, much alleviated even before the trials take place. The 2018 'blank canvas' for a derivative action has been overtaken by an overt pre‑trial acceptance, in effect, of a measure of statutory oppressive conduct against Lee Holdings.
That all being the case, I am not persuaded of any sufficient level of linkage as between the adverse costs order 4 made against John and Fay in 2018 (for Shana and Nerida) and the hypothetical trial relief and final costs order outcomes which might eventually emerge by way of the final relief to be issued in the two trial actions presenting for trial at the commencement of August 2020.
Consequently, the orders I will issue, having determined the present stay applications on the papers, are as follows:
(a)The applications by the third defendant under letter and minute of 14 May 2020, and by the second defendant under letter and minute of 21 May 2020, for relief pursuant to s 15(3) of the Civil Judgments Enforcement Act 2004 as against order 4 of my orders of 29 August 2018, are refused.
(b)Correlative to that determination, for these suspension applications which have now been wholly determined on the papers by reference to the parties' exchanged written submissions, John and Fay must bear the costs of the present unsuccessful applications to be taxed, if not agreed.
The orders under [65] above will issue upon the publication of these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DW
Associate to the Honourable Justice Martin
3 JULY 2020