Russell v Lee Holdings Pty Ltd [No 3]

[2020] WASC 346

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   RUSSELL -v- LEE HOLDINGS PTY LTD [No 3] [2020] WASC 346

CORAM:   KENNETH MARTIN J

HEARD:   3 - 7, 10, 12 & 14 AUGUST 2020

DELIVERED          :   14 AUGUST 2020

PUBLISHED           :   25 SEPTEMBER 2020

FILE NO/S:   COR 227 of 2017

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 LIMITED as trustee of the estate of RONALD WILLIAM LEE

Fourth Defendant

FILE NO/S:   CIV 2533 of 2018

BETWEEN:   LEE HOLDINGS PTY LTD

Plaintiff

AND

LEE BROS PTY LTD

First Defendant

FAY EILEEN LEE

Second Defendant

JOHN ANTHONY CAMPBELL LEE

Third Defendant

AUSTRALIAN EXECUTOR TRUSTEES LTD AS TRUSTEE OF THE ESTATE OF THE LATE RONALD WILLIAM LEE

Fourth Defendant

Catchwords:

Corporations law - Unique structure of companies involving family members - Members' rights and remedies - Admitted oppressive conduct - Determination of appropriate relief - Winding up as remedy of last resort - Where alternative and less intrusive remedy available - Corporations Law 2001 (Cth) s 233 broad discretion as to orders court can make - Established share values shown by worth of underlying assets - Whether to discount share value for marketability or control negative considerations - Bespoke hybrid buy out remedy made available to both sides of family alignment - Mutual offer process ordered involving silent sealed bids with highest price per share buying out shares not held with winding up as last fall back position

Costs - Determination of reserved action and trial costs - Plaintiffs seeking indemnity costs alternatively special cost orders under Legal Profession Act 2008 (WA) - Cost orders resisted by defendants - Some levels of 'mixed success' by parties - Special cost orders made

Legislation:

Corporations Act 2001 (Cth)
Legal Profession Act 2008 (WA)

Result:

Relief granted

Category:    B

Representation:

COR 227 of 2017

Counsel:

First Plaintiff	:	Mr M L Bennett and Mr M A MacLennan
Second Plaintiff	:	Mr M L Bennett and Mr M A MacLennan
First Defendant	:	Mr G M G McIntyre SC and Mr T O Coyle
Second Defendant	:	Mr G M G McIntyre SC and Mr T O Coyle
Third Defendant	:	Mr M Sims
Fourth Defendant	:	Mr M McKenna

Solicitors:

First Plaintiff	:	Bennett + Co
Second Plaintiff	:	Bennett + Co
First Defendant	:	Solomon Hollett Lawyers
Second Defendant	:	Solomon Hollett Lawyers
Third Defendant	:	Croftbridge
Fourth Defendant	:	Gilbert + Tobin

CIV 2533 of 2018

Counsel:

Plaintiff	:	Mr M L Bennett and Mr M A MacLennan
First Defendant	:	Mr M Sims
Second Defendant	:	Mr G M G McIntyre SC and Mr T O Coyle
Third Defendant	:	Mr M Sims
Fourth Defendant	:	Mr M McKenna

Solicitors:

Plaintiff	:	Bennett + Co
First Defendant	:	Croftbridge
Second Defendant	:	Solomon Hollett Lawyers
Third Defendant	:	Croftbridge
Fourth Defendant	:	Gilbert + Tobin

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

Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd [2018] QCA 48; [2018] 3 Qd R 520

Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304

Ebrahimi v Westbourne Galleries Ltd [1973] AC 360

Hillam v Ample Source International Ltd (No 2) [2012] FCAFC 73; (2012) 202 FCR 336

In the matter of Scientific Management Associates Pty Ltd [2019] NSWSC 1643

O'Neill v Phillips [1999] UKHL 24; [1999] 1 WLR 1092

Russell v Lee Holdings [2017] WASC 283

Russell v Lee Holdings [2018] WASC 275

Russell v Lee Holdings [No 2] [2020] WASC 257

Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256

Snell v Glatis (No 2) [2020] NSWCA 166

Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)

William Buck (WA) Pty Ltd v Faulkner [No 6] [2013] WASC 342

Table of Contents

Introduction

The Lee parties

Background

The three (3) Lee Family Companies

Lee Holdings

Lee Bros and Lee Pastoral

The Lee family members (and their evidence)

Ron

Fay

Fay's financial position

Shana

Nerida

John

Ron's estate:  Australian Executor Trustees

Expert reports

The significance of context in a statutory oppression action

Agreed facts as to statutory oppression

The precise pleaded admissions as to statutory oppression of Fay, John and Lee Bros

The New Share Issue and Ron's last days

Lee Companies' issued shares status at the time of the trial

Lee Holdings

Lee Bros

Lee Pastoral

Nerida's loan

Evaluations as to oppression:  Nerida

Case law as to statutory oppression

The Lee Companies factual context

Buyout offers

Available forms of relief:  a buyout order, winding up or a hybrid

The appropriate relief to be ordered

A proposed bespoke remedy for statutory oppression in the Lee Companies

Fay's position

The opportunity

Disposition as to relief:  a mutual offer process ordered

The orders explained:  relief and the mutual offer process

Mutual offers opened and revealed on Friday, 14 August 2020 at 1.30 pm

Reserved costs orders

Costs orders evaluation

Final cost orders

ANNEXURE A

ANNEXURE B

ANNEXURE C

KENNETH MARTIN J:

(These reasons, save as to costs issues, were delivered ex temporaneously on 12 and 14 August 2020 and have since been revised and edited from the transcript.)

Introduction

1. What follows are my reasons in relation to two statutory oppression actions which have been heard together in their trials before me. Essentially, they are statutory oppression actions brought under s 232 and s 233 of the Corporations Act 2001 (Cth) by respective plaintiffs in COR 227 of 2017, which I refer to as 'the oppression action'. The other action is CIV 2533 of 2018, which I refer to as 'the derivative action' - as I have, in effect, done in my previous interlocutory decisions.

2. On the afternoon of Wednesday, 12 August 2020 (then day seven of the trials) I provided then a conspectus of my reasons for decision, prior to issuing judgment and related orders that day.  This was on the basis of what I had assessed then to be a need for urgent steps, clarifications and for decisions in respect of the position of the respective first defendant corporations under each action - namely, for Lee Holdings Pty Ltd (ACN 008 692 637) the first defendant in the oppression action, and Lee Bros Pty Ltd (ACN 008 692 546) the first defendant in the derivative action.

3. I was able to issue judgment at the end of day seven in the trials by reason of the common ground then reached and, as a result, the clarity which had then emerged in respect of key issues admitted (by the pleadings) as to the uncontroversial establishment then of what was significant statutory oppression conduct by both Lee Holdings and Lee Bros against certain of the members (ie, shareholders) of these corporations as plaintiff(s) in each action. 

4. I assessed the clarity as to admitted statutory oppression to be decisive towards supporting relief immediately being ordered - which could be viably done prior to the delivery of these more substantive and revised reasons.  I took that course then, essentially because there was no dispute against the respective plaintiffs' cases for relief for statutory oppression being made good in both actions. 

5. The only real issue of controversy as articulated by the parties' counsel during the respective openings on day one of the trial, was as to the terms of appropriate relief.  But even as to the question of relief, there was, by day seven of the trial, what I assessed then as a large measure of agreement that had emerged, as I will explain, as to my making of orders towards a hybrid mutual offer process by the contemporaneous submission of sealed buyout bids from each side (but with a stipulated floor price). 

6. At the end of what was day seven of the trial, on 12 August 2020, after hearing the verbal closing submissions by all counsel and articulating an extempore conspectus of my reasons for decision, I did issue mutual offer process orders where the highest offer would succeed.  The orders were accompanied by a winding up order for Lee Holdings and Lee Bros as the ultimate default outcome, in the event the as offered opportunities to buyout the unheld rival shareholding interests of the other shareholders were not completed upon by a bidding party.  The 12 August 2020 mutual offer process orders can be found at Annexure A to these reasons.

7. Upon the implementation of the mutual offer process on 14 August 2020, the highest share price bidding party would have 30 days, ie, until 14 September 2020 to complete at a settlement.  Failing such completion, lesser sum per share bid parties would then receive a further period of thirty (30) days to complete upon settlement at their nominated (lesser) bid price.  Ultimately, if neither party completed upon such a share buyout opportunity, only then would Lee Holdings and Lee Bros be the subject of winding up orders.  At that point, one way or another, what had been a very protracted dispute within the Lee family, fought under the corporate canvas, would hopefully be at an end.

The Lee parties

1. The parties to the two actions include, in the oppression action, COR 227 of 2017, plaintiff sisters, Mrs Shana Francinne Russell and Ms Nerida Jayne Puangkham.  For that action the defendants are Lee Holdings, Mrs Fay Eileen Lee (Shana and Nerida's mother), Mr John Anthony Campbell Lee (Shana and Nerida's brother) and Australian Executor Trustees Limited (ACN 007 869 794) (as trustee of the estate of the late Mr Ronald William Lee) (AET).  By CIV 2533 of 2018 (the derivative action), the plaintiff by my orders granting leave to that end is Lee Holdings, with Lee Bros the first defendant to that action and, again, along with Mrs Fay Eileen Lee, Mr John Anthony Campbell Lee and AET as further defendants.

2. Ronald (Ron) Lee (deceased) had been married for many years to Fay Lee.  Shana Russell, Nerida Puangkham and John Lee (in order of birth) are the children of Fay and Ron.  Henceforth, and with no disrespect intended, I shall for the sake of clarity and convenience, refer to each of the Lee family members using their first names.  I will turn back to the Lee family and their involvements and evidence in this trial later in the reasons.

Background

1. As necessary background, I would refer to and incorporate into these reasons three previous decisions of mine that have been rendered in or towards the present two actions.  The earlier reasons explain my ongoing involvement as a case manager towards both the actions for some time prior to their trials.  First is Russell v Lee Holdings [2017] WASC 283, being my interlocutory injunction reasons issued ex tempore on 26 September 2017, then subsequently revised and published.

2. Those reasons record my first significant involvement at 2017, in relation to the Lee parties' actions commenced in this court.  There had been even earlier actions by way of pre‑action discovery (CIV 2378 of 2017) essentially resolved by or before other members of the court.  There was also a previous action against Shana in this court, CIV 2605 of 2015, known as 'the Processors Action', which had been commenced during Ron's lifetime and resolved after Ron's death.

3. On 26 September 2017, at the behest of Shana and Nerida as plaintiffs in COR 227 of 2017, I issued interlocutory injunctive relief that day to restrain any holding of a foreshadowed extraordinary general meeting (EGM) of Lee Holdings' shareholders.  At that urgent hearing I heard then from both Fay and John, in person.  They had been unable to secure legal representation in the urgent circumstances of that application and hearing.  The interlocutory injunction obtained by Shana and Nerida has remained in place for almost three years until the trial.  It essentially restrains that proposed EGM of Lee Holdings, then said to be called for the purposes of effectively issuing further shares in Lee Holdings to raise more capital. 

4. It is not necessary to detail those reasons any further, other than to note that they help explain what are the various structural shareholdings within the Lee family company context as between what was, in effect, a parent company, Lee Holdings, and its subsidiaries, namely, the corporations Lee Bros and Lee Pastoral Pty Ltd (I refer in these reasons to the three corporations collectively, as the 'Lee Companies').

5. Next, and also by way of background, I mention my subsequent 2018 reasons for decision - to explain the genesis of the leave I granted to shareholders for the derivative action that became CIV 2533 of 2018.  The reasons in Russell v Lee Holdings [2018] WASC 275 display what issued then as an affirmative decision, on that application brought by Shana and Nerida (as COR 58 of 2018) for leave pursuant to s 236 and s 237 of the Corporations Act.  By that application, Shana and Nerida sought, in effect, permission of the court for them to bring a derivative action in the name of Lee Holdings, as against Lee Bros and the other defendants (again, John and Fay and AET) on the basis of further as contended statutory oppression suffered by Lee Holdings, as a (member) shareholder in Lee Bros (with all three Lee Companies then having a common board of Fay and John as their two directors).  That application had been strongly opposed by John and Fay represented by lawyers and counsel.  But in the end, I was persuaded that leave to bring a derivative action should be granted.  On that basis, CIV 2533 of 2018 came to be issued.  I then case managed that action, along with the oppression action, up to their trials.

6. Those reasons granting leave were delivered ex tempore, but subsequently were revised and published on 5 September 2018.  They explain why I had been persuaded at the end by Shana and Nerida to grant leave for the bringing of a derivative action for statutory oppression by the parent corporation, Lee Holdings, as against, ostensibly, its subsidiary, Lee Bros, and against the other defendants.

7. The third set of earlier interlocutory reasons that I also incorporate as background are the reasons delivered upon costs order issues in COR 58 of 2018 in Russell v Lee Holdings [No 2] [2020] WASC 257. Primarily those reasons, delivered on 3 July this year, resolved disputed costs order issues arising around that opposed application seeking leave to bring the derivative action. But in the course of those reasons as to costs, I needed there to refer at some length to the parties' somewhat evolved pleadings, and especially to some fundamental amendments made by way of admissions in the pleaded defences in both actions of John and Fay which had then occurred. Defence amendments made in the derivative action had manifested at about 19 October 2019. There had followed almost mirror amendments in the defences of Fay and John made in the oppression action, with like admissions as to statutory oppression conduct evident. These latest defence plea amendments by John and Fay, most uniquely, then admitted conduct in the nature of acts of statutory oppression by both Lee Holdings and, as well, by Lee Bros respectively, for the purpose of s 232 and s 233 of the Corporations Act under both actions.  (See particularly [38] ‑ [47] of those reasons as to costs).  

8. So then, most uniquely here, an admitted pleaded defence position as to statutory oppression conduct in both actions had manifested as from about 19 October last year (2019) and so, axiomatically then, was evident before these trials were to commence in August 2020.

The three (3) Lee Family Companies

1. Now, beyond that background, I need also to refer by way of more underlying context to what are the unique shareholding interrelationships manifested in the three Lee Companies.  To that end, I attach as Annexure C an extract from the expert report of Mr Dawson (dated 28 June 2019) illustrating the group structure of the Lee Companies (exhibit 1.188).

Lee Holdings

1. As I have now mentioned, Lee Holdings was essentially the parent corporation within the Lee Companies.  It had sat at the apex of a pyramid‑like underlying corporate holding corporation structure.  From the time of incorporation of all three Lee Companies in 1964, a longstanding overall shareholding control position had arisen from the fact that the late Mr Ron Lee, who passed away on 26 July 2016, had over almost 52 years owned and held the one A class share that had been issued in Lee Holdings.

2. Under the articles of association of Lee Holdings a tranche of very significant control rights had been attached to that one A class share whilst held by Ron - in terms of affording to Ron personally what was, in effect, sole and supreme lifetime control over all decisions taken by that company.  This extended not only to decisions taken in general meetings of shareholders, but also to decisions taken at board level by Ron, as lifetime governing director.  The rather unique control powers conferred by the Lee Holdings' articles of association upon Ron came to be summarised, helpfully, under Mr Dawson's second trial expert report filed for AET, on 23 July 2020 (exhibit 1.200).  I refer particularly to the observations by Mr Dawson of Ron's A class share at par 121 and par 122:

   121.The rights attached to the 'A' class share were as follows:

   a.The right to exercise 76 votes out of every 100 votes cast at every general meeting of the Company and at every poll of LHPL [ie, Lee Holdings];

   b.As Governing Director, a right to be the Chairman of Directors;

   c.Management and control of LHPL including all the powers, authorities and discretions afforded by the Memorandum of Association of the Company or the Articles or by law;

   d.Notwithstanding anything contained in the Articles the decision of the Governing Director as to all matters affecting LHPL shall be paramount;

   e.A right to veto any resolution of LHPL or the Board of Directors;

   f.All other Directors were under the control of the Governing Director and were bound to conform to his directions;

   g.A right to appoint any other person or persons to be Directors of LHPL up to five Directors;

   h.A right to take up any unissued capital in the original capital of LHPL;

   i.A right to declare dividends in favour of any class of share of LHPL;

   j.The rights attached to the 'A' class share could not be altered or varied except by the holder.

   122.In summary, the 'A' class share gave Ron unfettered control over the affairs of LHPL during his lifetime.

3. Additionally, there is a B class share in Lee Holdings, issued and held by Fay.  Under Lee Holdings' articles of association, on Ron's passing, the powers of that B class share automatically expanded - so as only then to equate to those of Ron's A class share - as regards a supreme degree of control over Lee Holdings' decision making.  Correlatively, the former control rights emanating from the A class share had ended at Ron's death.  Equivalent control rights from then attached to Fay's B class share for as long as she held it.  These are personal rights afforded to her only.  They are not transferable by Fay to anyone else.

4. A significant feature of the A and B class shares issued in Lee Holdings is that they were and remain the only class of shares in Lee Holdings that would enjoy a right to vote at a general meeting of shareholders.  There are non‑voting C class shares as well, as I will explain.  But in respect of voting at a meeting of shareholders of Lee Holdings by the articles of association, the weighting of the governing directors' share is elevated up to a weight of 76 votes for out of every 100 votes cast, depending upon whether the control rights attached to the A class share (during Ron's life) or to the B class share (held by Fay, upon Ron's passing).  Upon Ron's passing the A class share then carried one (1) vote for its holder and the weighting is in the B class share - held by Fay.

1. A residual class of shares issued in Lee Holdings only are the C class shares.  These are non‑voting shares for this class of shareholder.  Following the incorporation of the Lee Companies in 1964, C class shares in Lee Holdings came to be issued in seven (7) tranches over eleven (11) years and held respectively by the each of the three children of Ron and Fay.  Over time, John came to hold 21,040 C class shares.  Shana eventually came to hold one more C class share than her brother, that is, 21,041 C class shares.  Similarly, Nerida also came to hold 21,041 C class shares in Lee Holdings.

2. Explaining the issues in tranches over time of C class shares to each of the three siblings,  I reproduce below the particulars (which were admitted) as seen in par 9 of John's Fourth Amended Substituted Defence, as filed on 26 June 2020 in the oppression action - and identifying details of the tranches of issue of C class share issues over time to the children as follows:

   John admits that the issued share capital of Lee Holdings is currently as pleaded in paragraph 9 of the Statement of Claim, but says that the fully paid C class shares that are now owned by Shana, Nerida and John were issued in 7 tranches between 1964 and 1975.

   Particulars

   (a)On or about 6 July 1964, Shana, Nerida and John were each issued 100 C class shares;

   (b)On or about 25 August 1966, Shana and Nerida were each issued 3,3901 C class shares and John was issued 3,390 C class shares;

   (c)On or about 17 August 1967, Shana, Nerida and John were each issued 3,333 C Class shares;

   (d)On or about 7 October 1968, Shana, Nerida and John were each issued 2,000 C class shares;

   (e)On or about 29 October 1969, Shana, Nerida and John were each issued 4,382 C class shares;

   (f)On or about 28 October 1971, Shana, Nerida and John were each issued 6,921 C class shares; and

   (g)On or about 12 September 1976, Shana, Nerida and John were each issued 914 C class shares.

3. So, over time and under seven issued tranches, there came to be issued some 63,122 issued C class shares in Lee Holdings, as between the three siblings (and always so issued it seems for no consideration paid by the siblings and as seen always issued equally as between them -save for the second issue occasion in 1966, when John received one less C class share than each of his two sisters). 

4. But the C class shares in Lee Holdings would never carry shareholder voting rights in general meeting, by the articles of association cl 6, unless that was otherwise determined by the company at a general meeting.

5. There are, of course, for Lee Holdings the two other issued shares, that is, the one A class share to Ron (now held by his estate) and the one B class share, that is still held by Fay, making 63,124 issued shares all up. 

6. From her B class share Fay has now effectively acquired, from the time of Ron's passing in 2016, the significant Lee Holdings governing control rights that formerly attached to Ron's A class share.  As mentioned, those elevated control lifetime rights endure for the duration of her continued holding of that B class share.  But on a transfer by Fay of that B class share to a third party (or at her death), her elevated control rights then cease.  From that point her B class share will then carry only a single vote in general meeting.  So too does the A class share, now held by Ron's estate.  And even on the passing of Fay, or on her loss by transfer of the B class share, the C class shares as held in Lee Holdings (by the siblings, or anyone else) will never enjoy a vote at a general meeting of the shareholders of Lee Holdings.

Lee Bros and Lee Pastoral

1. The other significant Lee Companies are the two subsidiaries, Lee Bros and Lee Pastoral.  The share ownership in both in these subsidiaries of Lee Holdings is identical.  But neither Lee Bros, nor Lee Pastoral, by their articles of association manifest the same governing share derived directors' powers and shares that is evident with their parent corporation, Lee Holdings.

2. For Lee Bros, its issued shareholding, at relevant times after 1964 (until what are the impugned and by the trial result and orders, now accepted to be void ab initio further share issue events of 14 July 2016), was 150 ordinary shares that were held by Lee Holdings.  Two more shares were issued in Lee Bros, to Ron and Fay respectively.  In addition, Lee Holdings held a further (1) B class share in Lee Bros.  That afforded Lee Holdings 151 of the 153 issued shares in Lee Bros.  Fay held, and she continued to hold at trial, one ordinary share in Lee Bros.  Ron had held, until the time of his death (and thus, his estate held at trial) the other one (1) ordinary share in Lee Bros.

3. Hence, for the shareholding in Lee Bros until the impugned attempted share issue events of 14 July 2016 (unfolding 12 days before the ultimate passing of Ron), the numerically dominant shareholder in Lee Bros was its corporate parent, Lee Holdings, holding 151 of the 153 issued shares in Lee Bros.

4. That shareholding in Lee Bros had afforded to Lee Holdings (in terms of a controlling Lee Bros share ownership) just over a 98% voting control over Lee Bros at a general meeting of shareholders.  However, the board of Lee Bros was comprised of Ron, Fay and John in 2016.

5. An identical subsidiary shareholding structure also manifested for Lee Pastoral, by the numerically dominant shareholding held in it by Lee Holdings.  Its board was the same three persons in 2016.

6. The boards of each of the Lee Companies had seen John added as a director in August 2015 - following an earlier unilateral removal of his sister, Shana, off the boards of all the Lee Companies.  Ron had always been a director of all the Lee Companies from their corporate inception in 1964 until the time of his passing in 2016.  Fay was appointed as a director of the Lee Companies in June 1999.  She continued as director of all the Lee Companies, as did John up to the time of the trials. 

7. After the passing of Ron at the end of July 2016, the common two person board for the three Lee Companies comprised John and Fay.

The Lee family members (and their evidence)

1. I now need to provide some greater detail about the five relevant Lee family individuals.

Ron

1. The late Mr Ron Lee was born in November 1927.  He died on 27 July 2016.  Thus, Ron was 88 when he passed at Hollywood Private Hospital as the result of an infection unfortunately sustained after a pacemaker operation.  For some time prior to his death Ron and Fay had resided at their jointly owned residence at 214 Marine Parade, Cottesloe.  That property passed to Fay by survivorship on Ron's death.  It was unencumbered at the time.

2. Ron appears to have been a highly successful businessman, who started off his business life as a wholesale, then retail butcher working in partnership with his brother, at Midland - then known as Midland Junction.  Subsequently, Ron became a pastoralist, farmer and general businessman.  Over his lifetime Ron also personally acquired a number of rural properties - owned in his own name and held as personal assets outside the balance sheets of the Lee Companies. 

3. By 2016, Ron had presided over a lifetime's accumulation of significant and valuable assets held largely in Lee Bros and Lee Pastoral.  As seen, Lee Holdings was at the apex of that corporate hierarchy and, of course, then controlled by Ron by the powers afforded under his A class share.

4. At the time of Ron's passing in July 2016, the asset rich 'jewel in the crown' within the Lee Companies empire was Lee Bros - in terms of its very significant balance sheet assets and minimal debt.

Fay

1. Ron's widow, Fay, attended court every day.  However, she did not give evidence during the trials.  Fay is, of course, a defendant in both actions.  Born in September 1935, she had been appointed a director of the Lee Companies, in June 1999.  Nevertheless, Fay did, through her senior counsel, tender some documentary evidence providing insights in terms of her own healthy financial position, as she approached 85 years of age.

Fay's financial position

1. When Ron passed in July 2016, it seems he had executed a will instrument and appointed an executor.  Nevertheless, it would appear Ron's will did not actually distribute anything, in terms of the property he owned personally by that instrument.  Consequently, Ron's personal assets pass, in effect, to Fay and the three Lee siblings to be dealt with, in effect, as an intestate estate. 

2. However, the property at 214 Marine Parade, Cottesloe, which Ron and Fay had resided at for many years prior to July 2016, had been owned by them as a joint tenancy.  Consequently, that property duly passed to Fay as a joint tenancy under survivorship, thereby affording her a 100% ownership.  There also appears to have been significant cash that was held in a joint Westpac bank account of Ron and Fay that also passed by survivorship to Fay as well (see ts 395).

3. Fay also owns in her name another strata property in Marine Parade, Cottesloe.  This is a unit which was referred to in the short documentary evidence that was led at the trials on Fay's behalf by her senior counsel.  I refer in respect of the two Marine Parade properties of Fay to exhibits 1.205D and 1.205F.

4. Fay receives from Lee Bros a salary said to be equivalent to the salary as received by John and which, through the trial evidence, was related by John to be of a net amount of $1,000 per week (ts 532).

5. As mentioned, Ron's rural properties (at Chittering and Bullsbrook) were personally owned by him. By the effect of the intestacy, they stand to be divided as between Ron's surviving family in the statutory proportions as identified under s 14 of the Administration Act 1903 (WA), with Fay as Ron's widow effectively receiving, after an initial $50,000, a one-third share of the residue of Ron's personal estate net assets and the children sharing the remaining two-thirds interest between themselves.

6. In 2017, Fay transferred to John an individual half share in her then unencumbered, solely own property at 214 Marine Parade, Cottesloe, as a gift (exhibit 8).  That disposition also made John from then a joint tenant of that property with Fay ‑ so eventually by survivorship that property would be expected to pass to John completely.  A transfer document, which was tendered by Fay, showed that stamp duty had been assessed on the 2017 gift of the individual half share to John upon assessment, showed as to value of the gift the amount of $1.25 million for duty purposes (see exhibit 1.205F), indicating an overall indication of the worth of the 214 Marine Parade, Cottesloe property then in 2017 at some $2.5 million. 

7. The consequence of all this evidence is that I assess Fay, at almost 85 years of age, to be a woman of significant financial means.  I assess her to be in no jeopardy in terms of an adverse financial exposure as regards the possible loss by her of her governing B class share in Lee Holdings, were orders eventually to issue that her B class share be compulsorily acquired by Shana and Nerida, on acquisition terms for value, in the context of relief issued in the present proceedings.

8. For a time, I had been troubled, just as the trial began, by some aspects of Fay and John's written opening submissions, as to Fay's financial position.  Those submissions suggested that any contemplated potential acquisition of or, in effect, sterilisation of Fay's life time governing B class share in Lee Holdings under a winding up, would leave Fay then exposed to 'penury'.  But the trial evidence as a whole is against that.  Overwhelmingly, it confirms that Fay's long term financial position is comfortably secure, irrespective of the outcomes in these trials.

9. The other three Lee family members concerned in the trial are the three Lee siblings, that is, Shana, Nerida and John.  I heard from all of them in the way of their evidence given by them at the trials.

Shana

1. Shana is Ron and Fay's first child, born in January 1958.  Her trial evidence generally impressed me as being someone astute in business.  Shana was only briefly cross‑examined by counsel for John over minor issues concerning Western Meat Processors (her business operated with her husband, Mr Rod Russell) and the accounts for that company (see ts 367).  Shana was not cross‑examined at all by senior counsel for Fay (see ts 366).  Shana currently holds, as I have indicated, some 21,041 C class, non-voting shares in Lee Holdings.

2. According to corporate search records as tendered at the trials, Shana had been appointed a director of Lee Holdings, and, indeed, also to the other Lee Companies, namely Lee Bros and Lee Pastoral as well, on 11 September 1975.  She was then still a minor, at age 17.  Shana came to be removed as a director of all three Lee Companies somewhat unilaterally in April 2015, as the records for all those corporations disclose.

Nerida

1. The second Lee sister is Nerida, who I heard from at the trials by way of her evidence over a video‑link from Edmonton, Canada.  Nerida has resided for some years in the town of Clyde, in the province of Alberta, Canada. 

2. Again, Nerida was not cross‑examined on any of her evidence by senior counsel for Fay.  She was only briefly cross‑examined by counsel for John as regards Nerida's holding (akin to that of Shana) of her 21,041 C class shares in Lee Holdings. 

3. Nerida's evidence under cross‑examination was explicit to the effect that, effectively, she would wish not to be a participant in relation to a continued holding of her C class shares in Lee Holdings.  Contextually, I took that answer to mean as things stand currently.  Nerida is, of course, a co-plaintiff with Shana in COR 227 of 2017.  She and Shana have, of course, also caused Lee Holdings to obtain leave to bring the derivative action by Lee Holdings against Lee Bros, that is CIV 2533 of 2018, as I have explained.

4. From her evidence and brief cross‑examination, Nerida's holding of her C class shares in Lee Holdings is perceived by her to have delivered to her only significant disadvantages - as regards her not being eligible to obtain welfare benefits in Canada and also as going against her obtaining potential permanent residency and ultimately, citizenship of Canada which she seeks.  Consequently, my perception is that as between the two sisters, effectively, the oppression action, whilst run in the names of the two sisters as plaintiffs, is driven and pursued essentially at the behest of Shana, rather than by Nerida ‑ who also said that she has no money.

John

1. The remaining Lee sibling, of course, is John, who is a defendant in both actions.

2. John is holder of 21,040 C class shares in Lee Holdings -numerically, one less than each of his sisters.  John was appointed to the boards of the three Lee Companies in August 2015, after the earlier removal of Shana as a director from each of them. 

3. John is also a director of the corporation West Coast Skin & Hide Co Pty Ltd - which is a trustee corporation for the West Coast Skin & Hide Unit Trust.  Eight (8) of the shares in that corporation are held by Lee Bros, being the majority holding in that trustee.  Lee Bros holds half the units in that trading trust.  They are of considerable value.

4. John was appointed a director of West Coast Skin & Hide on 28 June 2006.  Prior to that, Ron had been a director from 1982.

Ron's estate:  Australian Executor Trustees

1. AET obtained a grant of letters of administration over Ron's estate on or about 28 August 2017.  As administrator of Ron's estate, AET (the fourth defendant in both actions) filed substituted defences of 17 June 2020, identifying then that it would, in effect, abide by the decision of the court in both actions, save as to relief sought by the plaintiffs in par H of the prayer for relief in the statements of claim as they then stood in each proceeding on 12 June 2020. 

2. Counsel for AET, Mr McKenna, was given leave to withdraw at the commencement of the trials.  No submissions as to relief or orders were made by AET.  I had also given leave for AET, by its lawyers, to follow the trial remotely as it progressed by a link to the court established through Microsoft Teams.

Expert reports

1. By orders made on 16 May 2019, I had granted leave to the parties to adduce expert valuation evidence at the trial.  I duly programmed a filing of the initial expert reports and if required, a joint expert post conferral memorandum.  The date for compliance with these orders was subsequently varied.  The initial expert reports as filed were received as follows:

   1.the report of Mr John Dawson of KordaMentha, as to the asset worth, in effect, of the Lee Holdings, Lee Bros and Lee Pastoral, filed on 28 June 2019, on behalf of AET ('Dawson Report 1', exhibit 1.188); and

   2.the report of Mr Sherif Andrawes of forensic accountants, BDO, filed on 9 August 2019 on behalf of Lee Bros and John - going to issues of possible discounts upon share values based, essentially, on considerations of lack of control and lack of marketability of the valued shares ('Andrawes Report 1', exhibit 1.189).

2. Following a foreshadowed receipt at trial of new financial statements for Lee Holdings' financial affairs (and its subsidiaries) prepared for the financial periods up to 30 April 2020 and then later for 30 June 2020 (by my orders of 5 June 2020), I issued further orders of 3 July 2020 as regards allowing for updated responsive expert evidence (to the Andrawes Report 1).  

3. As a result, further valuation reports (taking account of the further financial information then made available up to 30 April 2020), were subsequently filed by the same experts, being:

   1.the updated report of Mr Dawson of KordaMentha of 23 July 2020 on behalf of AET ('Dawson Report 2', exhibit 1.200); and

   2.the updated report of Mr Andrawes of BDO of 29 July 2020 on behalf of Lee Bros and John ('Andrawes Report 2', exhibit 1.203).

4. Mr Dawson came to calculate a pro‑rata net worth for the shares in Lee Holdings following upon his receipt and incorporation of the 1 April 2020 updated financial information.  This was assessed as $13,597,213 (Dawson Report 2, page 42).  Mr Andrawes' reports worked upon accepting Mr Dawson's results.  Dividing that aggregate net worth sum by the 63,124 shares as issued in Lee Holdings generated a result of $215.40 per each issued share in Lee Holdings, treating all of those shares equally.  I will reproduce below a value table below from the Andrawes Report 2, page 2:

Value of a C class share in Lee Holdings	Low value	High value
Total net asset value of Lee Holdings	$13,597,213	$13,597,213
Total number of all shares in Lee Holdings	63,124	63,124
Calculated pro-rata value of a share	$215.40	$215.40
Discount for lack of control - C class share	50%	30%
value after control discount - C class share	$107.70	$150.78
Discount for lack of marketability - C class share	40%	30%
Assessed value of C class share after discounts	$64.62	$105.55

1. As I will explain, I used the pro rata value per share of $215.40 as the floor price for the sealed bid to be submitted under the mutual offer process orders that came to be issued.

The significance of context in a statutory oppression action

1. What I have related to date concerning the Lee Companies and the Lee family members is all essentially by way of necessary assimilated background, because for a statutory oppression action, particularly concerning disputes in so‑called family corporations, it is critically important to take proper account of the unique circumstances of the underlying family participants and, as well, of course, the relationships within the family, presenting under the overall corporate structure. Nevertheless, as has been said by other judges, such facts cannot ultimately alter the essential legal character of the underlying corporate relationship(s), nor the legal characters of the corporations whose affairs are under scrutiny. To that end, I mention in illustration observations by Lord Wilberforce, to which I will make reference at [139] below.

Agreed facts as to statutory oppression

1. Uniquely again, in the present actions, I hold before me, as submitted for the purposes of the trials, a very detailed statement of agreed facts that was agreed as between all key trial participants.  This fact document came to be tendered at the commencement of the trials, subsequently amended by consent, as exhibit 3.  The range of facts standing as fully agreed for the trials across 22 pages of material is significant. 

2. All these agreed facts, coupled with the already mentioned pleaded admissions of statutory oppression accepted by Lee Holdings and Lee Bros (as defendants) and Fay and John provided a sound and sufficient factual base (established by reference to all those agreed facts) for this court to independently confirm the as pleaded concessions of statutory oppression which are made by the key defendants.  Uniquely, this then allowed the court to proceed immediately to deliver orders granting relief for statutory oppression at the end of the parties' respective closing submissions on day seven of the trials.

3. The pleas I am referring to are the as amended pleaded defences by Fay and John (and Lee Bros in the derivative action), accepting the establishment by the plaintiff shareholders of statutory oppression in both actions.  Also accepted without any level of equivocation by the key defendants by their defence pleadings, and verbally by counsel, is the significant trial relief by way of the court declaring as void ab initio an attempted issue of further shares in Lee Bros on 14 July 2016.  That invalidation order is appropriate.  It was eventually made on 12 August 2020, as I had indicated to the parties on day one, as these trials commenced.

4. So, wholly uniquely then for statutory oppression actions brought to trials under s 232 and s 233 of the Corporations Act, what are significant acts of oppression by Lee Holdings and Lee Bros are admitted.  As mentioned, that has been the case from the times of the amended pleadings submitted in both actions at around mid‑October 2019.  Such admissions were confirmed in the written opening submissions for trial of the key defendants when exchanged between the parties, prior to the commencement of the trials.  The same position as to admitted statutory oppression in both actions was reaffirmed by the verbal openings of respective counsel for John and Fay during their verbal opening of the trial on day one.  And that same statutory oppressive admitted conduct position was reiterated yet again in the written closing submissions I received on 11 August 2020 and have then heard verbally again from counsel for John and Fay during their closing arguments across day seven of the trial.

5. Hence there was at these trials no contest from the start or at the end in terms of particular pleaded aspects of statutory oppression being seen as admitted under the pleaded defences and positions of Fay, John and Lee Holdings, as accepted and established in both actions. 

6. It is, of course, necessary to draw a close and careful distinction in the two actions as between the two corporate defendants ‑ that is, for the oppression action, the first defendant, Lee Holdings, who is there pursued at the behest of Shana and Nerida as C class shareholders (members) therein.  In the derivative action, Lee Holdings is plaintiff.  In that action there is again admitted statutory oppression by Lee Bros as first defendant as suffered by Lee Holdings, as the relevant (shareholder) member.  Lee Holdings as the (derivative) plaintiff as now seen, somewhat unusually, was the predominant numerical shareholder in Lee Bros (holding 151 of 153 shares).  But at the time of the relevant acts of oppression that are complained of, the corporation Lee Holdings was then a subject of Ron's governing director's supreme control, by reason of the rights carried by his A class share.  Hence, from a control and decision making perspective, it had been perfectly feasible in Ron's lifetime for Lee Holdings, as numerically superior shareholder in Lee Bros, nevertheless to be statutorily oppressed, by reasons of the controlling influence of Ron over the decisions of Lee Holdings and thereby, Ron's lifetime control over all the Lee Companies.

The precise pleaded admissions as to statutory oppression of Fay, John and Lee Bros

1. I will now refer to the precise conduct as to statutory oppression as admitted, by what is found on the face of the defence pleadings, as exchanged between the parties.  In particular, I will refer to the admissions made as to statutory oppression in the defences of Fay and John in both actions (and by Lee Bros in the derivative action).

2. In the oppression action, COR 227 of 2017, I will refer first to par 48 of the Second Further Re‑Amended Statement of Claim (REASOC) dated 4 April 2018, next to par 62, and then to par 62.4.  Those pleas are seen to be admitted in terms of statutory oppression by John (in his Second Amended Substituted Defence dated 8 October 2019) under his defence pleas at par 48, then at par 62(a) where John admits to par 62.4.5 of the REASOC.  And further, I will mention John's plea under par 62(b) of that defence where it is seen admitted that acts of oppression in reference to the events of an extraordinary general meeting of the shareholders of Lee Holdings on 7 June 2016 at 214 Marine Parade, Cottesloe, being a meeting of Ron and Fay as the shareholders of Lee Holdings (with John present), was, as regards Shana and Nerida as C class shareholders of Lee Holdings, in effect, oppressive.  Fay's separately pleaded defences as defendant are to like effect by way of admission. 

3. So also for the derivative action, I will refer again to pars 62, as found commonly numbered in each of the parties' statement of claim and defences. 

4. For the sake of clarity, I set out below the relevant pleadings.  I will do that only by reference to the oppression action proceedings, but the pleas in the derivative action are closely akin (even to the paragraph numberings):

   Further Re‑Amended Statement of Claim (12 June 2020)

   ...

   48.By reason of the matters pleaded in paragraphs 32 to 34 hereof, further or alternatively paragraphs 43 to 45 hereof, the New Share Issue was invalid in that it was not duly authorised by a valid ordinary resolution of Lee Bros, further or alternatively because Article 24 of the Articles of Association of Lee Bros was not complied with.

   …

   62.The conduct of Lee Holdings' affairs by Ron, Fay and John referred to in and in the circumstances of paragraphs 10 to 13, 18 to 20, 29 to 32, 35, 37 to 40, 42 to 48 and 53 to 57 hereof (excluding paragraphs 56F ‑ 56I and that part of paragraph 56J that refers to the Discovery Affidavit) (further or alternatively by Fay and/or John referred to in and in the circumstances of paragraphs 10 to 13, 18 to 20 and 28 to 58 hereof):

   …

   62.4further or alternatively was such as to make it just and equitable that Lee Holdings be wound up in the following circumstances:

   62.4.1the plaintiffs are and have been at all material times since in or about 2015 estranged from Fay and John;

   62.4.2in breach of the Duties, Ron, Fay and John (alternatively Fay and/or John) caused Lee Holdings to approve the New Share Issue for an improper purpose, namely to divert the opportunity to subscribe for the New Shares from Lee Holdings to themselves thereby transferring the substantial ownership and control of Lee Bros from Lee Holdings to John, further or alternatively to John and Fay;

   62.4.3as pleaded in paragraph 46 hereof, Lee Bros did not require the additional capital at the time of the New Share Issue;

   62.4.4having regard to the net assets of Lee Bros as pleaded in paragraph 21 hereof, the price at which the New Shares were issued ($2.00 each) represented a substantial discount on their true value;

   62.4.5the subsequent taking up of the New Shares by Fay, John and Ron as set out in paragraphs 38 and 41 hereof resulted in the dilution of Lee Holdings' interest in Lee Bros from approximately 98.7% (as pleaded in paragraph 17 hereof) down to approximately 1%;

   62.4.6in causing Lee Holdings to not insist upon compliance with Article 24 of the Articles of Association of Lee Bros, and in then taking up the New Shares themselves as set out in paragraphs 38, 41 and 44 to 45 hereof, Ron, Fay and John (alternatively Fay and/or John) placed themselves in a position of conflict as between their own personal interests, and also the interest of Lee Bros on the one hand, and those of Lee Holdings on the other; and

   62.4.7Fay and John's failure or refusal to provide the Books as set out in paragraph 59 hereof was unfairly prejudicial to or discriminatory against the plaintiffs in that the value of Lee Holdings, and hence the value of their shares in Lee Holdings, was substantially reduced by the New Share Issue and the decision by Lee Holdings to support the New Share Issue, alternatively not to oppose it, further or alternatively to not take up Lee Holdings' entitlement with respect to the New Shares pursuant to Article 24 of the Articles of Association of Lee Bros, was never explained by the defendants or any of them to the plaintiffs.

5. To which John responds:

   Second Amended Substituted Defence of John (8 October 2019)

   48.As to paragraph 48 of the Statement of Claim, John:

   (a)admits that Lee Bros did not comply with Article 24 of the Articles of Association of Lee Bros;

   (aa)admits that the New Share Issue was invalid for that reason; and

   (b)otherwise denies each of the allegations in paragraph 48.

   …

   62.As to paragraph 62 of the Statement of Claim, John:

   (a)admits paragraph 62.4.5;

   (b)admits that the conduct of:

   (i)the members of Lee Holdings in passing the resolution pleaded in paragraph 29 above; and

   (ii)Lee Holdings in passing the resolutions pleaded at paragraph 38 above, which effected the New Share Issue,

   was oppressive to, unfairly prejudicial to or unfairly discriminatory against Shana and Nerida in their capacities as C class shareholders of Lee Holdings; and

   (c)otherwise denies each of the allegations in paragraph 62 of the Statement of Claim.

6. As mentioned, Fay's pleaded defence is the same as John's.  Even the numbering corresponds.

The New Share Issue and Ron's last days

1. What follows below are essentially any necessary factual findings in both trials derived mainly from the submitted agreed chronology in both actions (exhibit 3, as amended).  At places I have elaborated by reference to some extra information found in trial bundle documents to which the agreed facts refer as the documentary sources of information.

2. As mentioned, Ron had retained his A class share based position as governing director of Lee Holdings until the time of his death in late July 2016.  To fully comprehend the ramifications of the acts of oppression which have been admitted in both actions it is necessary to better appreciate events around Ron's deteriorating health in 2016 and the admitted acts of oppression as identified under the parties' agreed chronology of facts (exhibit 3).

3. By 2014, as a result of his macular degeneration and glaucoma, Ron's eyesight had deteriorated to a point where he was no longer able to read (exhibit 3, ts 252 and exhibit 1.164 page 1488).

4. John says that he was asked to be a director of the Lee Companies in August of 2015 (exhibit 3).  That eventuated.  Later, in March 2016, as a suggested reward for agreeing to be a director of the company for 10 years (knowing the company structure and Ron's position as governing director) John says, in effect, that he had requested 10,000 shares in Lee Bros.  He claims Ron verbally agreed.  For present purposes it is unnecessary to render any definitive finding over that.

5. On 27 April 2016, a solicitor (engaged by AC Morris & Co) prepared enduring powers of attorney (EPOA) and enduring powers of guardianship (EPOG) for Fay and Ron (see exhibit 1.101 and exhibit 10).  Ron had signed his EPOA on 9 May 2016, appointing Fay as his attorney with John as his substitute (exhibit 1.104).  The execution of that document by Ron came to be witnessed by two doctors.

6. A professor of ophthalmology recorded Ron as being legally blind on 4 May 2016 (exhibit 1.103).

7. Fay and John both assert that a general meeting of the A and B class shareholders of Lee Holdings took place at the Marine Parade, Cottesloe residence of Ron and Fay on 7 June 2016.  An ordinary resolution prepared towards this date details a decision to agree to the allotment of extra shares in Lee Bros to John, Fay and Ron (see exhibit 1.106).  A proposed allotment of 10,000 shares in Lee Bros to John, is described under this resolution as 'consideration for the acceptance of the offer to become director of Lee Bros for a period of ten years from the date of the acceptance by the board at the 2016 Lee Bros Pty Ltd EGM'.  Further actions were also detailed.

8. John asserts that, on Ron's instructions, he subsequently drafted a notice of another EGM, this time for the corporation Lee Bros (dated 17 June 2016) and for this meeting to be held at 10.00 am on 4 July 2016, also at Ron and Fay's Marine Parade, Cottesloe residence.  A document, titled 'Agenda', can be found at exhibit 1.108.  It identified four resolution items for discussion at that proposed EGM:

   1.Issue of B class shares (one each in Lee Bros to Fay, John and Ron);

   2.Allotment of ordinary shares (2500 Lee Bros shares to Ron);

   3.Allotment of ordinary shares (2500 Lee Bros shares to Fay); and

   4.Allotment of ordinary shares (10,000 Lee Bros shares to John).

9. Nevertheless, it is accepted in this litigation that a 4 July 2016 EGM of Lee Bros ultimately did not take place.  Unfortunately, Ron had suffered a fall at home on 30 June 2016.  He was hospitalised (exhibit 3, ts 486).  So there could be no such proposed EGM on 4 July 2016 of Lee Bros.

10. John's evidence was to the effect that later he purportedly convened the proposed, but deferred, EGM meeting of the members of Lee Bros on 14 July 2016 at 1.30 pm at Hollywood Private Hospital - where Ron was still a patient undergoing treatment after his fall but then burdened by some detected heart issues.  John claims Ron attended the EGM meeting of Lee Bros in his own right, and as still then the governing director of the shareholder, Lee Holdings.  Fay also attended in her own right as a shareholder.  According to John, four resolutions were purportedly read out by him and then put to Ron and Fay in accord with the agenda for that delayed EGM and Fay and Ron had then voted in favour of all four resolutions (exhibits 1.121, 1.123, 1.22, exhibit 3 and ts 406 - 407).  My finding, if necessary, is that this all occurred as John says.

11. On 14 July 2016, Fay executed a 'Change to Company Details Form 484', recording an issue of new shares by Lee Bros (exhibit 1.110).  The purported issue of shares is known as the 'New Share Issue' in this litigation.

12. Three memorandums of the Lee Companies all dated 14 July 2016, look to be signed by their then three director board members (Fay, Ron and John) confirming these companies were then able to pay their debts as and when they fell due.

13. Ron passed away at Hollywood Private Hospital on 26 July 2016 of hospital acquired pneumonia (exhibit 1.164, page 1496).

14. On 26 July 2016, the same day as Ron died, a sum of $10,000 was deposited into Lee Bros' bank account, being $5,000 each paid for Ron and Fay's 2,500 shares issued as a part of the New Share Issue (see Lee Bros Westpac Bank Statement showing the deposit at a Claremont branch on 26 July 2016, exhibit 1.124).

15. Minutes for a Lee Bros EGM of 14 July 2016 were then prepared by John a few weeks later, following Ron's death (exhibit 3).  The minutes record a 'New Share Issue' and three company resolutions in relation to a New Share Issue are seen signed and dated 14 July 2016 (exhibits 1.112, 1.115 and 1.117).

16. Following his death, Ron's fully paid A class share in Lee Holdings came to be held by his estate.  But the rights attached to that A class share reverted at Ron's death to those of just an ordinary share in Lee Holdings and carrying, from then, only one vote attached to it at a general  meeting of shareholders of Lee Holdings.  

17. On 7 September 2016, Fay, on behalf of Lee Bros, signed off on three ASIC Form 484 'Change of Company Details' for all the Lee Companies, notifying ASIC that Ron had ceased to be a director on 12 August 2016.  They were lodged the same day Fay signed them (exhibits 1.129 - 1.132).  Resolutions were then drafted and signed by both Fay and John, giving effect to changes to the directorship position for each Lee Company as a result of Ron's passing (exhibits 1.134 - 1.140).

18. A cheque for $20,000 (for the share allotment to John in Lee Bros) was drawn for John, dated 9 September 2016 (exhibit 1.127) to be deposited into Lee Bros Westpac account at the Cottesloe branch, on 12 September 2016 (exhibit 1.128).

19. On 24 January 2017, Lee Bros submitted an ASIC Form 484 notification, notifying then the details of the New Share Issue (exhibit 1.110 and exhibit 1.114).

20. Nevertheless, the details of the New Share Issue in Lee Bros only became apparent to Shana and Nerida, at 5 July 2017. I so find. That was as a result of information in affidavits filed in CIV 3134 of 2016. That was another action commenced by Shana and Nerida in this court seeking, amongst other relief, that an independent administrator be appointed to administer Ron's estate (exhibits 1.163 and 1.164, pages 1481 - 1533). Through July 2017, Shana and Nerida by their local lawyers had requested information and access to documents relating to the New Share Issue (exhibits 1.165 and 1.167). Requests for information continued into the next month, but were declined by John (exhibits 1.174 and 1.179). This eventually led to Shana and Nerida commencing a separate proceeding in this court (CIV 2378 of 2017) pursuing relief pursuant to s 247A of the Corporations Act, by a production of the books and records of Lee Holdings relating to the New Share Issue in Lee Bros.

21. Shana and Nerida then duly received notice of a proposed EGM of the members of Lee Holdings that had been scheduled to be held on 27 September 2017 (exhibit 1.183).  Such notice had identified that shareholders would be presented with 2017 company financial accounts and two resolutions (capital raising and share allotment) on the agenda to be put to a vote.

22. Following their receipt of this notice, Shana and Nerida commenced their oppression action COR 227 of 2017 and sought an urgent interlocutory injunction restraining Lee Holdings, John and Fay from convening the proposed EGM, which, in turn, was granted by me on 26 September 2017.  This was the interlocutory injunction granted at the commencement of COR 227 of 2017.  As I earlier mentioned, the interlocutory injunction extended to prohibiting any action that would result in a change to the Lee Holdings share capital structure.  That injunction remained in place up to the time of these trials.

23. It was not until October and November of 2017 that Shana and Nerida obtained the documents relevant to the New Share Issue.  That was a result of the orders made in CIV 2378 of 2017 by Martino J.

Lee Companies' issued shares status at the time of the trial

1. According to the ASIC company records of 10 July 2019, the as recorded share positions for the Lee Companies were as I set out below.

Lee Holdings

1. Lee Holdings had issued 1 x A class share, 1 x B class share and 63,122 C class shares.  The issued shares were recorded as being held as follows (see exhibit 1.001):

   •1 fully paid A class share held by Ron;

   •1 fully paid B class share held by Fay;

   •21,041 fully paid C class shares held by Nerida;

   •21,041 fully paid C class shares held by Shana; and

   •21,040 fully paid C class shares held by John.

Lee Bros

1. Lee Bros had issued 4 x B class shares, 152 ordinary shares (ORD) and 15,152 ordinary shares (ORD2).  These shares were recorded as being held (exhibit 1.002):[1]

   [1] Note, this reflects the New Share Issue, comprising the admitted oppressive conduct.

   •1 fully paid B class share held by Lee Holdings;

   •1 fully paid B class share held by Fay;

   •1 fully paid B class share held by John;

   •1 fully paid B class share held by Ron;

   •150 fully paid ordinary shares held by Lee Holdings;

   •2,501 fully paid ordinary shares held by Fay;

   •10,000 fully paid ordinary shares held by John; and

   •2,501 fully paid ordinary shares held by Ron.

   The 152 ORD shares were recorded as being held:

   •1 by Ron;

   •1 by Fay; and

   •150 by Lee Holdings.

Lee Pastoral

1. Lee Pastoral records showed the issue of 1 x B class share, 152 ordinary shares.  These shares were recorded as being held (exhibit 1.003):

   •1 fully paid B class share by Lee Holdings;

   •1 fully paid ordinary share by Fay;

   •1 fully paid ordinary share by Ron; and

   •150 fully paid ordinary shares by Lee Holdings.

Nerida's loan

1. Commencing at 30 June 1996 and continuing through to 30 June 2000, a loan of $137,166 (later $137,167) stood to Nerida's credit as shown in the end of each year's financial statements prepared for Lee Holdings, and shown in the 'Creditors and Borrowings' column (see exhibits 1.213, 1.216, 1.219, 1.222 and 1.225).

2. By her handwritten letter of 29 January 2001, Fay wrote to Nerida.  She requested Nerida sign an enclosed 'Deed of Gift' document, effectively gifting to Ron the amount of $137,166.73, which was then the sum standing to Nerida's credit as a loan made by her back to the company in the books and accounts of Lee Holdings (exhibit 1.023).  The proposed 'Deed of Gift' document refers to a 'credit balance loan account' in Nerida's favour.  However, Nerida, as was her right, then declined her mother's request to sign the Deed of Gift document (exhibit 4, pars 18 - 20).

3. Thereafter, the end of year financial statements for 30 June 2001 for Lee Holdings changed.  They ceased to show the loan amount of $137,167 owed to Nerida - with the amount seemingly just removed from the accounts of the company (exhibit 1.228).  The loan amount was never paid to Nerida (see par 21 of Nerida's affidavit sworn 17 November 2017).

4. At 2003, Nerida had become a permanent resident of Canada.  That triggered local tax disclosure obligations for her from the Canada Revenue Agency (exhibit 4).

5. Between 2011 and 2014, multiple requests for financial information about Lee Holdings and her C class shares, including as to her unpaid dividend (loan), were made by Nerida and also by her accountants in Australia and Canada, seeking out further information from Ron, Fay, John and Lee Holdings.  The requested information was genuinely needed by Nerida to meet her tax and disclosure obligations in Canada.  Her requests were not unreasonable.  Records of this correspondence are readily identified under emails passing between Nerida, the local accountant (Mr Frank Iannantuoni) of AC Morris & Co (the Perth based accounting firm acting for Lee Holdings), Mr Tim Donnelly (an accountant based in Edmonton, Alberta, also engaged by Nerida), Mr Tony Underhill (a Perth based Chartered Tax Adviser also acting for Nerida) and John.  I mention in this respect communications and letters written by Nerida to her parents (see non-exclusively exhibits 1.032, 1.043, 1.045, 1.047, 1.048, 1.051, 1.053 and 1.071).

6. Meanwhile, in 2014, after asking her accountant to conduct company searches, Shana only then became aware that she had, in fact, held for many preceding years the position as a director of Lee Holdings, Lee Bros and Lee Pastoral (ts 247). 

7. On 20 April 2014, Shana made a request for financial information, by letter and email, to Mr Iannantuoni.  She was seeking to access and to inspect the books and records of the Lee Companies (see exhibit 1.052).

8. In March 2015, Nerida, by correspondence between her Perth based accountant Tony Underhill and Mr Iannantuoni, had sought clarification over the timing of dividends declared for her, which made up the balance of the loan amount once recorded as due to her ($137,166.73) on the books of Lee Holdings.  She was then seeking the date and reason for the reassignment of her loan to Ron (exhibits 1.056 and 1.058).[2]  Mr Iannantuoni duly responded to Nerida that an assumption had been made that a gifting deed (ie, the Deed of Gift document sent to Nerida by Fay in 2001) had been signed by Nerida (exhibit 1.056).  It then appears from even more correspondence that no clarifications were forthcoming to Nerida as had been sought for the year(s) dividends (that make up the balance of the $137,166.73) were declared.  No copies of tax returns were provided showing the declared dividends as income.

   [2] Of note is that a loan to Shana is also on the books for $24,827 for 1996 - 1998, 2000 (see exhibits 1.213, 1.216, 1.220 and 1.225).

9. On 6 March 2015, Mr Underhill communicated again to Mr Iannantuoni, on Nerida's behalf.  This time he advised '[u]nless this loan is accruing interest, Nerida would now like the company to settle this loan and make repayment immediately'.  Details as to an accrual of interest were also requested if applicable (exhibit 1.058).

10. At 2 April 2015, Mr Underhill emailed Shana (still then a director of Lee Holdings and its associated companies) on Nerida's behalf.  He told Shana of an uncovered 'potential accounting irregularities perpetrated or authorised by the company or its directors' and of Nerida's actions in seeking legal guidance on the implications on the 'reclassification of the monies due to her'.  This communication expressed Mr Underhill's belief that unpaid dividends declared to Nerida had been reclassified by the company (or an agent for the company) as monies due to Ron (exhibit 1.058, ts 249).

11. Shana in turn then emailed Mr Iannantuoni on 8 April 2015 attaching the message from Mr Underhill (exhibit 1.058).  Shana then requested an urgent board meeting be held to address the issue with an appropriate course of action (ts 249).  Shana even proposed a date for the meeting, giving at least two weeks' notice (also stating she had copied her request to Ron and Fay), or alternatively to be advised on another preferred date for the board meeting.

12. The same day, a Mr Andrew Foster, a local solicitor acting for Nerida, wrote to Mr Iannantuoni demanding payment of the outstanding monies and notifying him of Nerida's requirement for an inspection by her accountant, Mr Underhill, of the corporate records of Lee Holdings (see exhibit 1.059).  But Mr Iannantuoni responded in the negative, relaying that without instructions from Ron and Fay, that no communication or information would be forthcoming.  Shana was also told then that all future correspondence was to be sent to the directors of Lee Holdings (see exhibit 1.061) - ie, to Ron and Fay.

13. Next, Shana was then notified by an email from John of 13 April 2015 that she had been removed as director of Lee Bros and Lee Holdings (see exhibit 1.062).  Not too long after this, on 9 August 2015, John came to be appointed a director of all the Lee Companies (see exhibits 1.001, 1.002 and 1.003).  ASIC company records identify the date of Shana's removal as a director of Lee Holdings and Lee Bros as 13 April 2015 (see exhibits 1.001 and 1.002).  She was also removed as a director of Lee Pastoral on 9 April 2015 (see exhibit 1.003).

14. Throughout April, May and June of 2015, more unfruitful correspondence was exchanged between Mr Underhill (for Nerida) with John, as to Nerida's Canadian tax disclosure obligations and her expressed issues of concern about Lee Holdings' corporate governance (see exhibits 1.063, 1.065, 1.067, 1.070 and 1.074). 

15. Instead of providing the information as requested by Mr Underhill on behalf of Nerida, John's reply asserted that the information requested was private, confidential and that the company was only required to satisfy Australian income tax laws, not Canadian laws.  John himself had interpreted the Canadian tax obligations of Nerida as being satisfied, merely by providing the cost base for the C class shares in Lee Holdings (at $AUD2.00 per share), rather than by reference to the market value of the assets of the company.  By his email dated 5 May 2015 John asserted that shareholders (in Lee Holdings) had and would continue to be supplied with shareholder reports only as was required by Australian legislation (see exhibit 1.067).

16. On 18 August 2015, on Shana's behalf, Valenti Lawyers wrote to Lee Holdings and Lee Bros (enclosing an unexecuted copy of the 'Deed of Gift' between Ron and Nerida) now requesting that company information be provided to Shana (exhibit 1.076).

17. Further communication followed from Nerida's accountant followed, regarding her loan balance in Lee Holdings.  By an email to Mr Underhill of 16 October 2015 (and, of course, he was now a director of Lee Holdings) John advised he would 'follow up the matter when time is available'.  He said he held a suspicion that the loan had something to do with 'private school fees paid for by Ron for the education of his children, the loan seems to go into the 80's possible even seventies'.   Further, John relayed '[w]e are extremely busy, we are making inroads but it is a long time ago with Rons [sic] memory of the matter faded' (exhibit 1.084).  

18. On 17 October 2015, Mr Underhill pressed again for information as to underlying circumstances by which the monies owing to Nerida arose, to determine the consequential financial implications.  Two days later, John replied that he was investigating the matter and would brief all parties once his investigation was complete (exhibit 1.085).  

19. Three weeks following this, John sent a follow up email in which he stated he was 'proposing to trace the loans back to origin and to access the terms and conditions of the loans, reasons for the loans, any documentation regarding the loans or associated inter-company loans to or from your client' (exhibit 1.088). 

20. John did not respond positively to Mr Underhill's suggestion of a meeting with John, Fay and Ron to resolve Nerida's situation (exhibits 1.094 and 1.095).  

21. In December of the same year, after being informed of a further penalty notice that had been received by Nerida from the Canada Revenue Agency, John wrote that he was '[s]till looking into the loan facts and history, terms and conditions' (exhibit 1.094) and that the 'loans may date back to 1964' (exhibit 1.097).  Under his correspondence of December 2015 Mr Underhill claimed John held company executive authority.  John did not deny this (exhibit 1.097).

22. Mr Underhill, in further correspondence, expressly told John that due to that the existence of the loan, evidenced by the company accounts (which were signed and approved by the governing director, Ron), '[t]he key question is how the loans were then dealt with, not their history of terms.  Whether or not the loans were interest bearing is of interest to Nerida, but is not the main focus of our enquiries' (exhibit 1.097).

23. At 29 October 2016, Nerida contacted Mr Iannantuoni by an email requesting all financial records that she was entitled to as a shareholder (of Lee Holdings) during periods from 2000 until 2012 (at that time she had only the 2012 - 2014 records) (exhibit 1.087).  Mr Iannantuoni on‑forwarded Nerida's email to John, seeking John's permission to send Nerida the requested financials (exhibit 1.087).  It does not appear that John's express permission was given for this to occur.

24. I will next render some findings in relation to the circumstances surrounding these as related events.

Evaluations as to oppression:  Nerida

1. Above and beyond what is conceded by the parties' pleadings within the two actions as admitted acts of statutory oppression in relation to Lee Holdings and Lee Bros (as already discussed), I am also left satisfied by the documentary trial evidence that the ongoing conduct by Lee Holdings to which Nerida was exposed in relation to, first of all, a deliberate non‑payment to her over extended time of her loan, then a disappearance of that loan by her from out of the financial accounts for many following years (prior to its eventual reinstatement in the financial statement as a loan only for 2019) was oppressive conduct against Nerida contrary to s 232 and s 233 of the Corporations Act as a C class shareholder (member) of Lee Holdings.  That sustained conduct by Lee Holdings vis‑à‑vis Nerida provides, were it needed, an independent basis to sustain a finding of statutory oppression suffered by her as a shareholder of Lee Holdings and by that corporation.  It also provides a basis for bespoke relief for her by reason of that statutory infringement.

2. I also find as a further and independent basis to affirmatively establish statutory oppression that the many negative documented responses sent via John on behalf of Lee Holdings back to Nerida and to her appointed agents from time to time in response to reasonable requests for financial information about Lee Holdings was wrongful.  Those requests, on Nerida's behalf, were requesting reasonable information from Lee Holdings.  Nerida was always a C class shareholder in Lee Holdings.  She had genuinely needed to respond to the Canada Revenue Agency to resolve issues around her obtaining access to special security benefits, or as her perpetuation of residing or, as she wished, obtaining Canadian citizenship.  She and her agents took ongoing and reasonable steps to obtain that information, but were steadfastly rebuffed at every turn.

3. Lee Holdings' failures under the ongoing negative or unhelpful responses of John to Nerida's requests for what, by my assessment, were reasonable requests for financial information sought as a C class shareholder over time, are a further and an independent basis for a further finding of statutory oppression by Lee Holdings vis-à-vis Nerida beyond those otherwise admitted or established.

Case law as to statutory oppression

1. At the two trials (heard together) there presented no real level of disagreement between the parties over the applicable law towards statutory oppression for the purposes of s 232 and s 233 of the Corporations Act.

2. Thus I can be relatively brief for that area in terms of observing that, by their written opening submissions of Shana and Nerida, at par 152 to par 167, had provided an extensive recitation of case law and principles in this sphere.  The written submissions of John, by counsel, expressly accepted that summary of law and principles as correct, at the commencement of the trial.  I also detected nothing in the detailed written submissions on the law for Fay that took any real issue with these key principles.  Fay's submissions elaborated on the case law to a greater extent on the case law, but not inconsistently.

3. Hence, the uncontroversial legal principles collected below towards statutory oppression litigation can be accepted as a starting point in these terms:

   152The relevant principles of oppression are summarised in Australian Institute of Fitness Pty Limited v Australian Institute of Fitness (Vic/Tas) Pty Limited (No 3) [2015] NSWSC 1639; (2015) 109 ACSR at [81] - [116].

   Contrary to the interest of the members as a whole

   153The broad concept of 'contrary to the interests of the members as a whole' is independent of the 'oppressive, unfairly prejudicial or unfairly discriminatory' ground and 'should not be hedged about by implied limitations'.

   154This conduct will not necessarily involve commercial unfairness.  It may, for example, be pointlessly wasteful.

   155The test is an objective test determined by reference to whether the conduct adheres to accepted standards of corporate behaviour or is in accordance with how reasonable directors would act in attending to the affairs of the company.

   156Relevantly, what is contrary to the interests of the members as a whole is determined by reference to the interests of an individual hypothetical member.

   157A company has an interest, separate from its shareholders, in resisting a compulsory buyout order and in defending challenges to the validity of its decision-making.

   Oppressive to, unfairly prejudicial to, or unfairly discriminatory against

   158This phrase is a compound expression concerned with conduct that involves commercial unfairness.

   159Whether there has been conduct of unfairness is judged objectively.  However, the court should have regard to the context in determining whether the conduct is unfair.

   160The relevant context to be taken into account includes the course of conduct undertaken by the parties.

   161This conduct includes the conduct of the plaintiff as it may render the conduct of the other side not unfair and may affect the relief which the Court thinks fit to grant.

   162Commercial unfairness is to be judged having regard to facts known to the parties at the time of the conduct in question, and not by reference to what subsequently transpires.

   163Fairness is to be determined with a consideration of factors including conflicting interests of different groups in the company, principles governing the duties of a director in the conduct of the affairs of a company, the rights and duties of a majority shareholder in relation to the minority, history and structure of the company, and reasonable expectations of the members.

   164Therefore, the exercise of assessing commercial unfairness is one of balancing competing considerations.

   165The conduct to be demonstrated must be unfairly prejudicial.

   166It may be oppressive to require a party to fund contentious litigation against itself.

   167The types of orders the Court can make once its jurisdiction is invoked under section 232 of the Act include, relevantly, the following:

   167.1regulating the conduct of the company's affairs in the future;

   167.2    the purchase of any shares by any member or person;

   167.3    requiring a person to do a specified act;

   167.4    a winding up order; and/or

   167.5    a compensation order.  (citations omitted)

4. Beyond that, I also refer to some statutory oppression principles found collected in an earlier decision of mine in this area - namely, in William Buck (WA) Pty Ltd v Faulkner [No 6] [2013] WASC 342. There I dealt with law and legal principle at [37(iii)] and from [93] and following, under a heading 'The s 232 Corporations Act statutory oppression action', and commencing again at [108] and following the legal principles applicable to such an action.  I incorporate those observations by reference, but I will not repeat them again here.

5. I refer also to my observations in William Buck from [117], citing s 232, s 233 and s 234 of the Corporations Act.  There I incorporate, by reference, observations from Lord Wilberforce, in the seminal decision of Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, in the House of Lords, made concerning quasi-partnerships at [130] - [131]. See also my further observations in William Buck at [133] - [143] on another significant decision, O'Neill v Phillips [1999] UKHL 24; [1999] 1 WLR 1092.

6. Concerning more specifically the remedy of winding up to be used, in effect, as relief of last resort for statutory oppression, I mention again the observations in William Buck from [144] - [148], and also at [228]. Again I incorporate but do not repeat them verbatim again here.

7. Those William Buck reasons were delivered in 2013.  From then, I would only seek to add further case references to subsequent decisions by the Queensland Court of Appeal (Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd [2018] QCA 48; [2018] 3 Qd R 520), the New South Wales Court of Appeal (Snell v Glatis (No 2) [2020] NSWCA 166) and by the Full Federal Court (Hillam v Ample Source International Ltd (No 2) [2012] FCAFC 73; (2012) 202 FCR 336), referred in the parties' submissions as to winding up by way of a remedy of last resort.

8. To summarise then as regards statutory oppression and proper relief, the case law position is that the leading authority remains that of the High Court of Australia under its decision in Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304. There, both French CJ by his own reasons, in alignment with the reasons of the plurality, rendered it explicit that the broad words of s 232 and s 233 of the Corporations Act, which empower a court to issue such orders by way of redress for corporate oppression as are just and appropriate in the face of statutory oppression, ought not be read down.  Nor should the words of the statute be unnecessarily grafted upon by extra constraints under judge‑made law.

1. Significantly, however, Shana and Nerida have at the end been substantially vindicated. 

2. Consequently, Shana and Nerida should receive, with a removal of all scale limits and hourly rates, a costs award in their favour of taxed costs in respect of all reserved costs under the interlocutory orders issued to date.  Secondly, and with a like removal of scale limits and hourly rates, Shana and Nerida (in COR 227 of 2017) and Lee Holdings (in CIV 2533 of 2018) should receive their costs to be taxed, if not agreed, in respect of both actions up until a reasonable time after the amendments to the defence pleadings of October 2019.  My assessment of a reasonable time to digest and consider the implications of those concessions would be to allow, in effect, six weeks - that would be up to and including the end of November 2019. 

3. For the period after December 2019 through to the rendering of final orders at the trials, my assessment is that whilst the plaintiffs in all actions - that is, Shana and Nerida in COR 227 of 2017 and Lee Holdings in CIV 2533 of 2018 - should receive their costs to be taxed (and with the trials which were heard together assessed as one action) on the same basis with a removal of scale limits and hourly rates, that the plaintiffs should from that time receive 80% of those costs, so assessed.  A 20% reduction would, by reference to my assessment of relative successes and the other considerations I have now mentioned, deliver a just costs outcome and be appropriate towards the trial costs.

Final cost orders

1. My final costs orders then will be:

   1.The defendants pay the plaintiffs' reserved costs under interlocutory orders of COR 227 of 2017 and CIV 2533 of 2018, to be taxed if not agreed, and to be assessed without reference to the scale limits or hourly rates of any applicable Costs Determinations.

   2.The defendants pay the plaintiffs' costs in COR 227 of 2017 and CIV 2533 of 2018 up to 30 November 2019, to be taxed if not agreed and to be assessed without reference to the scale limits or hourly rates in any applicable Costs Determination.

   3.The defendants pay 80% of the plaintiffs' costs from 1 December 2019 in COR 227 of 2017 and CIV 2533 of 2018, to be taxed if not agreed and to be assessed without reference to the scale limits or hourly rates of any applicable Costs Determination (and with the costs of the trials which were heard together assessed as one action).

ANNEXURE A

_____________________________________________________________________

FINAL JUDGMENT ORDERS
MADE AFTER TRIALS BY
THE HONOURABLE JUSTICE KENNETH MARTIN
ON 12 AUGUST 2020
_____________________________________________________________________

UPON these applications in COR 227 of 2017 dated 26 September 2017 and in CIV 2533 of 2018 dated 30 August 2018 standing for trial on 3 to 7 August 2020, 10 August 2020 and 12 August 2020 in the presence of the Honourable Justice Kenneth Martin and UPON hearing Mr M L Bennett and Mr M A MacLennan of Counsel for the plaintiffs and Mr G M G McIntyre of Senior Counsel and Mr T O Coyle of Counsel for the first and second defendants in COR 227 of 2017 and for the second defendant in CIV 2533 of 2018 and Mr M J Sims of Counsel for the third defendant in COR 227 of 2017 and for the first and third defendants in CIV 2533 of 2018, UPON summary reasons being delivered with more detailed reasons to follow, IT IS NOW ORDERED that judgment be entered as follows:

New Share Issue invalid

1. It is declared that the issue by Lee Bros Pty Ltd (Lee Bros) of:

   1.110,000 'ordinary 2' class shares and 1 'B' class share to John Anthony Campbell Lee (John);

   1.22,500 'ordinary 2' class shares and 1 'B' class share to Fay Eileen Lee (Fay); and

   1.32,500 'ordinary 2' class shares and 1 'B' class share to Ronald William Lee (Ron),

on or about 14 July 2016 (New Share Issue) did not comply with Lee Bros' Articles of Association, was invalid and is void ab initio.

1. By no later than 11:59 am on Friday 14 August 2020 Lee Bros must:

   2.1cancel the share certificates issued to each of John, Fay and Ron in respect of the New Share Issue;

   2.2file a notice with the Australian Securities and Investments Commission (ASIC) in the approved form notifying that the shareholding in Lee Bros is restored to the shareholding as it stood immediately prior to the New Share Issue on or about 14 July 2016; and

   2.3refund to each of John, Fay and Australian Executor Trustees Limited as trustee for the Estate of the late Ronald William Lee (AET) any purchase price paid by each of John, Fay and Ron to Lee Bros in respect of the New Share Issue.

Payment of debt owing to Nerida Jayne Puangkham

1. It is declared that the sum of $137,167 shown in the accounts of Lee Holdings Pty Ltd (Lee Holdings) as at 30 June 2020 is a debt payable by Lee Holdings to Nerida Jayne Puangkham (Nerida).

2. Within 7 days from the date of this order, Lee Holdings must pay to Nerida the sum of $137,167.

3. Within 7 days from the date of this order, Lee Holdings must pay to Nerida simple interest on the debt payable pursuant to order 4 hereof calculated at the rate of 6 per centum per annum from 30 June 2001 to the date of payment pursuant to section 32 of the Supreme Court Act 1935 (WA) being the sum of $157,317.40 to the date hereof and thereafter accruing interest at the rate of $22.55 per day.

Discharge of interlocutory injunction and undertakings

1. The interlocutory injunction restraining each of Lee Holdings, Fay and John made by the orders of this Honourable Court pursuant to section 1324(4) of the Corporations Act 2001 (Cth) on 26 September 2017 is hereby discharged.

2. The undertaking as to damages of each of Shana Francinne Russell (Shana) and Nerida given to this Honourable Court and each of Lee Holdings, Fay and John on 21 September 2017 is hereby discharged.

3. The undertaking by each of Fay and John given to this Honourable Court and the parties to these proceedings on 7 August 2020 is hereby discharged.

Injunctions restraining Fay and John pending settlement

1. Until settlement is concluded in accordance with these orders or until further order of this Honourable Court, pursuant to section 233(1)(i) of the Corporations Act 2001 (Cth) Fay must not:

   9.1transfer, encumber, charge or otherwise deal with any of the shares she holds in the issued capital of Lee Holdings, Lee Bros and/or Lee Pastoral (Lee Companies) other than for the purposes of effecting settlement in accordance with these orders;

   9.2cause Lee Holdings to transfer, encumber, charge or otherwise deal with any of the shares it holds in the issued capital of Lee Bros and/or Lee Pastoral;

   9.3cause any of the Lee Companies to:

   9.3.1make any change to its capital structure;

   9.3.2register the transfer of any of its shares;

   9.3.3declare any dividends or make any distributions;

   9.3.4appoint any directors or officers;

   9.3.5enter into or make any related party transactions, other than Lee Bros which shall be permitted (but not required) to make payments to each of Fay and John of not more than $1,000 salary net of tax per week;

   9.3.6sell, transfer, dispose of, gift, encumber, charge or otherwise deal with its present assets other than in the ordinary course of its business other than Lee Bros which shall be permitted (but not required) to sell at market in an orderly manner its investments in listed shares and if it does so shall thereafter retain the proceeds of such sale in a term deposit with a major Australian bank for a term of 60 days; or

   9.3.7make any payments, loan or borrow any money or incur any liabilities other than in the ordinary course of its business;

   9.3.8cause Lee Bros to sell, transfer, dispose of, gift, encumber, charge or otherwise deal with:

   (a)the shares it holds in the issued capital of West Coast Skin & Hide Co. Pty Ltd; and

   (b)the units it holds in the West Coast Skin & Hide Unit Trust.

2. Until settlement is concluded in accordance with these orders or until further order of this Honourable Court, pursuant to section 233(1)(i) of the Corporations Act 2001 (Cth) John must not:

   10.1transfer, encumber, charge or otherwise deal with any of the shares he holds in the issued capital of the Lee Companies other than for the purposes of effecting settlement in accordance with these orders;

   10.2cause Lee Holdings to transfer, encumber, charge or otherwise deal with any of the shares it holds in the issued capital of Lee Bros and/or Lee Pastoral;

   10.3cause any of the Lee Companies to:

   10.3.1make any change to its capital structure;

   10.3.2register the transfer of any of its shares;

   10.3.3declare any dividends or make any distributions;

   10.3.4appoint any directors or officers;

   10.3.5enter into or make any related party transactions, other than Lee Bros which shall be permitted (but not required) to make payments to each of Fay and John of not more than $1,000 salary net of tax per week;

   10.3.6sell, transfer, dispose of, gift, encumber, charge or otherwise deal with its present assets other than in the ordinary course of its business other than Lee Bros which shall be permitted (but not required) to sell at market in an orderly manner its investments in listed shares and if it does so shall thereafter retain the proceeds of such sale in a term deposit with a major Australian bank for a term of 60 days; or

   10.3.7cause Lee Bros to sell, transfer, dispose of, gift, encumber, charge or otherwise deal with:

   (a)the shares it holds in the issued capital of West Coast Skin & Hide Co. Pty Ltd; and

   (b)the units it holds in the West Coast Skin & Hide Unit Trust.

Mutual offer process

1. The parties shall receive the opportunity to undertake a mutual offer process for the issued shares of Lee Holdings, Lee Bros and Lee Pastoral in accordance with the following directions to follow.

2. By no later than 10:00 am on Friday 14 August 2020:

   12.1the plaintiffs (respectively, Shana and Nerida) may deliver (but are not obliged to deliver) to the Court (without providing a copy to the other parties) a confidential memorandum identifying the price per share they would be willing to pay, if any, (with no distinction between classes of shares) on any buy out of the shares in Lee Holdings held by Fay, John and AET (Plaintiffs' Bid Price);

   12.2Fay and John may deliver (but are not obliged to deliver) to the Court (without providing a copy to the other parties) a confidential memorandum identifying the price per share they would be willing to pay, if any, (with no distinction between classes of shares) on any buy out of the shares in Lee Holdings held by Shana, Nerida and AET (Defendants' Bid Price).

3. The Plaintiffs' Bid Price and the Defendants' Bid Price shall be unconditional and shall not be less than $215.40 per share of any class.

4. Subject to order 16 below, the Plaintiffs' Bid Price shall be confidential and access to it shall be restricted to the plaintiffs and the Court.

5. Subject to order 16 below, the Defendants' Bid Price shall be confidential and access to it shall be restricted to the defendants and the Court.

6. The proceedings be listed for further hearing at 1.30pm or such other time as may be advised by this Honourable Court on Friday 14 August 2020 at which:

   16.1if any bids have been received, the bid(s) shall be opened in Court by the Trial Judge (case manager) and revealed to the parties simultaneously;

   16.2if no bids have been received, order 36 below will take effect; or

   16.3the Court will consider issuing further injunctive orders towards the protection of the worth of the ASX listed shares held by Lee Bros, as per proposed orders 9 and 10 of the Plaintiffs' proposed minute of orders dated 11 August 2020.

Lee Holdings purchase price

1. If the Plaintiffs' Bid Price is greater than the Defendants' Bid Price, Shana and Nerida shall be declared the successful bidders and shall then be entitled to purchase Fay's, John's and AET's shares in Lee Holdings as follows:

   17.1the Plaintiffs' Bid Price for the 'A' class share, payable to AET;

   17.2the Plaintiffs' Bid Price for the 'B' class share, payable to Fay; and

   17.3the Plaintiffs' Bid Price x 21,040 for the 'C' class shares, payable to John.

2. If the Defendants' Bid Price is greater than or equal to the Plaintiffs' Bid Price, Fay and John shall be declared the successful bidders and shall then be entitled to purchase Shana's, Nerida's and AET's shares in Lee Holdings Pty Ltd as follows:

   18.1the Defendants' Bid Price for the 'A' class share, payable to AET; and

   18.2the Defendants' Bid Price x 21,041 for the 'C' class shares, payable to Shana; and

   18.3the Defendants' Bid Price x 21,041 for the 'C' class shares, payable to Nerida.

Lee Bros purchase price

1. If Shana and Nerida are the successful bidders, then Lee Holdings shall be entitled to purchase Fay's and AET's shares in Lee Bros as follows in respect of the pre-New Share Issue shares:

   19.11 'ordinary 2' class share from Fay for the sum of $72,549.02 (being 1 out of 153 of $11,100,000); and

   19.21 'ordinary 2' class share from AET for the sum of $72,549.02 (being 1 out of 153 of $11,100,000),

and Lee Holdings shall pay the purchase price of shares in Lee Bros to Fay and AET at settlement.

1. If John and Fay are the successful bidders, then Lee Holdings shall be entitled to purchase AET's 1 'ordinary 2' class share in Lee Bros from AET for the sum of $72,549.02 (being 1 out of 153 of $11,100,000), and Lee Holdings shall pay the purchase price of that share in Lee Bros to AET at settlement.

Lee Pastoral purchase price

1. If Shana and Nerida are the successful bidders, then Lee Holdings shall be entitled to purchase Fay's and AET's shares in Lee Pastoral as follows:

   21.11 'ordinary' class share from Fay for the sum of $7,758.17 (being 1 out of 153 of $1,187,000); and

   21.21 'ordinary' class share from AET for the sum of $7,758.17 (being 1 out of 153 of $1,187,000),

and Lee Holdings shall pay the purchase price of shares in Lee Pastoral to Fay and AET at settlement.

1. If John and Fay are the successful bidders, then Lee Holdings shall be entitled to purchase AET's 1 'ordinary' class share in Lee Pastoral from AET for the sum of $7,758.17 (being 1 out of 153 of $1,187,000), and Lee Holdings shall pay the purchase price of that share in Lee Pastoral to AET at settlement.

Settlement process

1. Settlement shall occur at a venue and time to be agreed between the parties on or before 14 September 2020.

2. Failing agreement between the parties, settlement shall occur at the offices for the plaintiffs' solicitors at 11:00 am on 14 September 2020.

3. In consideration for payment in cleared funds by the successful bidders, the unsuccessful bidders and AET shall provide to the successful bidders duly authorised and executed transfers of their shares in Lee Holdings free of any encumbrance or charge.

4. If Shana and Nerida are the successful bidders, then against payment by them in cleared funds as required by order 25 above:

   26.1in consideration of payment of the purchase price of shares in Lee Bros to Fay and AET at settlement, Fay and AET each shall provide to Lee Holdings at settlement duly authorised and executed transfers of their shares in Lee Bros free of any encumbrance or charge;

   26.2in consideration of payment of the purchase price of shares in Lee Pastoral to Fay and AET at settlement, Fay and AET each shall provide to Lee Holdings at settlement duly authorised and executed transfers of their shares in Lee Pastoral free of any encumbrance or charge;

   26.3Fay and John must provide to Shana and Nerida at settlement:

   26.3.1the ASIC Corporate Key for each of the Lee Companies;

   26.3.2all books and records of each of the Lee Companies within Fay or John's possession or custody including, without limitation, for each of the Lee Companies:

   (a)the original certificate of incorporation;

   (b)the original Memorandum and Articles of Association;

   (c)the common seal and duplicate seal;

   (d)all prescribed registers;

   (e)all statutory, minute and other business records of the company including all original and certified copies of the books, records, documents, information, accounts and data (whether machine readable or in printed form) owned by or relating to the company or the property of the company and any source material used to prepare them;

   (f)all unused share certificate forms;

   (g)all ledgers, journals and books of account; and

   (h)all certificates of insurance and applicable policy documents and schedules;

   (i)all cheque books of each of the Lee Companies and a list of all bank accounts maintained by the Lee Companies in their names;

   (j)all documents of title in the possession of the Lee Companies relating to the ownership of the Lee Companies' assets including, without limitation, the certificate of title to 314 – 316 Great Eastern Highway, Midland in the state of Western Australia of which Lee Holdings is registered proprietor and the share and unit certificates in respect of Lee Bros' interests in West Coast Skin & Hide Co. Pty Ltd;

   26.3.3duly signed forms and notices authorising Shana and Nerida to operate all bank accounts held by the Lee Companies after settlement;

   26.3.4all investment account details, electronic access information and any passwords and keys required to operate Lee Bros' investment accounts including any online share trading account including Westpac Cash Investment Account 6599278 and duly signed forms and notices authorising Shana and Nerida to operate all such investment accounts after settlement;

   26.3.5all secured party group numbers, access codes, dealing numbers and token codes for all security interests held by each of the Lee Companies as at the date of settlement;

   26.3.6the media for any computer programs and software owned by or licensed to the Lee Companies and any access keys or passwords in respect thereof;

   26.3.7all property and equipment owned by the Lee Companies as at the date of settlement including, without limitation, any:

   (a)vehicles registered in the name of any of the Lee Companies, including keys, accessories, manuals, service books and log books;

   (b)office furniture and equipment;

   (c)computers and accessories including manuals; and

   (d)personal electronic devices; and

   26.3.8petty cash held by the Lee Companies as at the date of settlement; and

   26.4for a period of 90 days following settlement, Fay and John must do all things necessary to effect an orderly handover of all of the business and affairs of each of the Lee Companies to Shana and Nerida including by the execution of such documents and forms as shall be necessary to record the change of control and authority from Fay and John to Shana and Nerida.

5. If John and Fay are the successful bidders, then:

   27.1in consideration of payment of the purchase price of shares in Lee Bros to AET at settlement, AET shall provide to Lee Holdings at settlement a duly authorised and executed transfer of its share in Lee Bros free of any encumbrance or charge; and

   27.2in consideration of payment of the purchase price of shares in Lee Pastoral to AET at settlement, AET shall provide to Lee Holdings at settlement a duly authorised and executed transfer of its share in Lee Pastoral free of any encumbrance or charge.

6. Each of the share transfers referred to in orders 25, 26 and 27 above are to take effect notwithstanding any pre-emptive rights provisions in the constitutions of the Lee Companies.

Resignations of directors

1. If Shana and Nerida are the successful bidders then against payment by them in cleared funds as required by orders 25, 26.1 and 26.2 above:

   29.1Fay shall also provide to Shana and Nerida at settlement duly executed notices of resignation as director and secretary of each of Lee Holdings, Lee Bros and Lee Pastoral; and

   29.2John shall also provide to Shana and Nerida at settlement duly executed notices of resignation as director of each of Lee Holdings, Lee Bros. Lee Pastoral and West Coast Skin & Hide Co Pty Ltd,

effective from the date of settlement.

Ongoing obligations to provide information

1. If Fay and John are the successful bidders and settle in accordance with these orders, they must cause the Lee Companies to provide to Nerida and Shana by no later than:

   30.130 September 2020 a copy of Lee Bros' final signed financial statements for the year ended 30 June 2020; and

   30.230 September 2021 a copy of each of Lee Holdings', Lee Bros' and Lee Pastoral's signed financial statements for the year ended 30 June 2021.

2. Nerida and Shana shall not use, or otherwise disclose, the documents provided to them in accordance with order 30 above other than to provide a copy of, or otherwise disclose, those documents to:

   31.1their tax agents;

   31.2their accountants;

   31.3the Canadian Revenue Agency (CRA); and

   31.4the Australian Tax Office (ATO),

for the purpose of complying with their obligations to the CRA and/or ATO and satisfying any of the CRA's and/or ATO's requests for information regarding tax affairs.

Failure to settle by successful bidders

1. If the successful bidders fail to settle in accordance with these orders, then if there were unsuccessful bidders they shall be entitled to the right to purchase the other parties' shares and AET's 'A' class share calculated in accordance with orders 17 or 18 hereof (as the case requires) as if the unsuccessful bidders had been declared the successful bidders.

2. The settlement shall occur at a venue and time to be agreed between the parties but within 30 days of the date that the successful bidders fail to settle (or if the 30^th day is not a business day, by the next business day).

3. Failing agreement between the parties, settlement shall occur at the offices for the plaintiffs' solicitors at 11:00 am on the 30^th day following the date that the successful bidders fail to settle provided that such day is a business day failing which on the next business day after the 30^th day.

4. Settlement shall otherwise take place in accordance with orders 25 to 29 above.

If none of the parties purchase the others' shares

1. If no party delivers a bid in accordance with order 12 above, or if both the successful bidders and unsuccessful bidders fail to settle in accordance with orders 25 to 29 above, then:

   36.1each of Lee Holdings and Lee Bros be wound up pursuant to section 461(1)(k) of the Corporations Act 2001 (Cth) on the ground that it is just and equitable that they be wound up; and

   36.2pursuant to section 472(1) of the Corporations Act 2001 (Cth), Clifford Stuart Rocke of Cor Cordis be appointed liquidator of each of Lee Holdings and Lee Bros.

Applications otherwise dismissed

1. The plaintiffs' applications in both actions are otherwise dismissed without prejudice to the pursuit of claims against directors or officials, or former directors or officials, of the Lee Companies by the Lee Companies. 

Costs

1. The adjudication as to all cost issues is reserved to delivery of the more detailed reasons or until further order.

Liberty to apply

1. The parties have liberty to apply for further or other directions to give effect to these orders as may be appropriate.

2. Any such application is to be made in chambers on 2 business days' notice.

ANNEXURE B

_____________________________________________________________________

ORDERS MADE BY
THE HONOURABLE JUSTICE KENNETH MARTIN
ON 14 AUGUST 2020
_____________________________________________________________________

Further to the orders made by the Honourable Justice Kenneth Martin on 12 August 2020 and pursuant to paragraph 16.3 further and alternatively the liberty to apply granted by paragraph 39 thereof, IT IS ORDERED THAT:

1. By 4 pm on Tuesday, 18 August 2020, John shall file and serve an affidavit attaching a statement of the listed securities held by Lee Bros Pty Ltd and their value marked to market as at close of trade on the Australian Securities Exchange on Monday, 17 August 2020 (share portfolio), including for each of the securities the number of securities held and last traded price. (The market value of the share portfolio as at close of trade on the Australian Securities Exchange on Monday, 17 August 2020 being the Opening Value.)

1. By reason of Shana and Nerida being entitled to first proceed to a settlement (by operation of paragraph 17 of the orders made 12 August 2020) the orders under paragraphs 3 to 7 below are made.

1. In the event of Lee Bros receiving any dividends in the period from Monday, 17 August 2020 and the second to last business day prior to the settlement date, Lee Bros shall deposit any such dividends in a term deposit account with a major Australian bank for a term of 60 days.

1. By midday on the last business day prior to the settlement date, John shall file and serve an affidavit attaching:

   (i)     a statement of the portfolio marked to market as at close of trade on the second to last business day prior to the settlement date including for each of the securities the number of securities held and last traded price; and

   (ii)    a statement of the balance of any term deposit account(s) opened in accordance with paragraphs 9.3.6 and 10.3.6 of the orders made 12 August 2020 and order 3 above.

(The market value of the share portfolio as at close of trade on the Australian Securities Exchange on the second to last business day prior to the settlement date plus the balance of any term deposit account(s) opened in accordance with paragraphs 9.3.6 and 10.3.6 of the orders made 12 August 2020 and order 3 above as at the second to last business day prior to the settlement date being the Closing Value.)

1. The total purchase price payable to John at settlement for his C class shares in Lee Holdings shall be reduced by the amount of the decrease (if any) from the Opening Value to the Closing Value.

1. Fay, John and Lee Bros Pty Ltd shall be and are hereby restrained from dealing with the share portfolio between close of business on the second to last business day prior to the settlement date and settlement.

1. If Shana and Nerida do not complete settlement in the manner required by the orders made 12 August 2020, paragraph 6 above shall cease to have effect.

ANNEXURE C

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

25 SEPTEMBER 2020

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION: RUSSELL -v- LEE HOLDINGS PTY LTD [No 3] [2020] WASC 346 (S)

CORAM:   KENNETH MARTIN J

HEARD:   ON THE PAPERS (by the submissions of the fourth defendant by letter of 2 October 2020 and by the solicitors for the plaintiffs by letter of 7 October 2020)

DELIVERED          :   29 OCTOBER 2020

FILE NO/S:   COR 227 of 2017

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 LIMITED as trustee of the estate of RONALD WILLIAM LEE

Fourth Defendant

FILE NO/S:   CIV 2533 of 2018

BETWEEN:   LEE HOLDINGS PTY LTD

Plaintiff

AND

LEE BROS PTY LTD

First Defendant

FAY EILEEN LEE

Second Defendant

JOHN ANTHONY CAMPBELL LEE

Third Defendant

AUSTRALIAN EXECUTOR TRUSTEES LTD AS TRUSTEE OF THE ESTATE OF THE LATE RONALD WILLIAM LEE

Fourth Defendant

Catchwords:

Costs - Variation to earlier costs orders

Legislation:

Nil

Result:

Revised final cost orders to issue

Category:    B

Representation:

COR 227 of 2017

Counsel:

First Plaintiff	:	No appearance (on the papers)
Second Plaintiff	:	No appearance (on the papers)
First Defendant	:	No appearance (on the papers)
Second Defendant	:	No appearance (on the papers)
Third Defendant	:	No appearance (on the papers)
Fourth Defendant	:	No appearance (on the papers)

Solicitors:

First Plaintiff	:	Bennett + Co
Second Plaintiff	:	Bennett + Co
First Defendant	:	Solomon Hollett Lawyers
Second Defendant	:	Solomon Hollett Lawyers
Third Defendant	:	Croftbridge
Fourth Defendant	:	Gilbert + Tobin

CIV 2533 of 2018

Counsel:

Plaintiff	:	No appearance (on the papers)
First Defendant	:	No appearance (on the papers)
Second Defendant	:	No appearance (on the papers)
Third Defendant	:	No appearance (on the papers)
Fourth Defendant	:	No appearance (on the papers)

Solicitors:

Plaintiff	:	Bennett + Co
First Defendant	:	Croftbridge
Second Defendant	:	Solomon Hollett Lawyers
Third Defendant	:	Croftbridge
Fourth Defendant	:	Gilbert + Tobin

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

Russell v Lee Holdings Pty Ltd [No 3] [2020] WASC 346

KENNETH MARTIN J:

1. In Russell v Lee Holdings Pty Ltd [No 3] [2020] WASC 346 (primary reasons) at [269] I indicated the final costs orders that I had resolved upon after addressing the issue of costs in the two actions commencing at [228] of those reasons.

2. However, after those reasons were published and costs orders in those terms had issued, the lawyers for the fourth defendant in each proceeding, Australian Executor Trustees Ltd (AET), who are acting as trustee of the estate of the late Ronald William Lee, queried the terminology of the reference to 'the defendants' in each of pars 1, 2 and 3 as drawing the fourth defendant under the liability of those costs orders.  Clearly that was not the intent of the orders since AET had not participated by taking an active position in the litigation.  I mentioned at [62] of the primary reasons that leave had been given for counsel for AET to withdraw at the commencement of the trials.  Consequently, the final costs orders require modification to render it explicitly clear that they do not extend to impose any costs exposure against the fourth defendant.

3. My endeavour to implement that result at first settled upon for the purposes of identifying a costs exposure, the alternate terminology of 'participating defendants (excluding AET)'.

4. However, that proposal has proved problematic and in turn has led to a submission and request for clarification from the lawyers for the respective plaintiffs.  They ask that Lee Holdings Pty Ltd and Lee Bros Pty Ltd also be expressly excluded from any definition of participating defendants and thus also be removed from the exposure to costs under those final costs orders.  However, that proposal would not correctly reflect the intent of those costs orders. 

5. The submissions of the plaintiffs' lawyers under their communication of 7 October 2020, did draw my attention to pages 714 and 725 of the trial transcript concerning the closing submissions of respective counsel at this trial as regards costs.  In particular, my attention was drawn to a reference at page 725 to 'order 38' - as a reference to par 38 of John Lee and Lee Bros' marked up version of a minute of proposed orders for judgment filed on their behalf on 11 August 2020 (folio document 242 in COR 227 of 2017).

6. I have re‑examined those transcript references and also that revised minute of proposed orders as marked up on 11 August 2020.

7. It is correct, reviewing the position, that that minute of orders commencing at a former par 35 was renumbered when marked up and with proposed changes became par 38.  It displayed then a chapeau reference, 'John and Fay jointly and severally pay Shana and Nerida's costs of these proceedings up to and including 17 October 2019 including: …'.  Lee Bros and John as defendants contended as regards trial costs more generally (see par 40) that all parties should bear their own costs of the proceedings incurred on and from 18 October 2019. 

8. In terms of the trial defendants' participation across the two actions heard together, I would reiterate for the purposes of this exercise that:

   (a)The fourth defendant, AET, took a neutral stance overall, did not participate in the trial and effectively withdrew at the beginning of the trial through counsel.  Consequently, it should have no exposure to any parties' costs in either action.  So much is clear.

   (b)Lee Holdings was a (first) defendant in the oppressive action (COR 227 of 2017), but was the plaintiff under the derivative action (CIV 2533 of 2018).  Up to the commencement of senior counsel's opening on day one of the trial, Lee Holdings had, in effect, been aligned with the position of the lawyers representing Fay Lee.  But it had filed its own separate defence based upon the asserted shielding or barring effects of clauses within a settlement deed to which it was a party and perfected in other litigation.  However, that pleaded defence came to be abandoned by senior counsel on day one in his opening, notwithstanding that it featured in written opening submissions as being pressed for Lee Holdings.  I address this issue in passing at [263] of the primary reasons.

9. Consequently Lee Holdings was a participating and resisting defendant in COR 227 of 2017 right up to the time, in effect, senior counsel on day one of the trial articulated the abandonment of its defence based upon the contended effect of the settlement deed.  From that point it essentially abided the outcome of COR 227 of 2017, but pressed for relief as the plaintiff in the derivative action, CIV 2533 of 2018.

10. The derivative action was heard together at the trial of COR 227 of 2017.  Consequently, Lee Holdings is the beneficiary of the costs award made against the defendants in CIV 2533 of 2018 under current orders.

11. In my view, there should be a correction towards Lee Holdings in respect of any exposure to reserved costs orders, by confining that exposure only to Fay and John - by reason of the effects of what I assess to have been accepted under ts 725 by counsel for Lee Bros and John and also by senior counsel for Fay (and Lee Holdings) in COR 227 of 2017.  See:

    McINTYRE, MR:   And we agree with the comment my learned friend made about the costs orders.

12. A little earlier on the same transcript page, Mr Sims (for John and Lee Bros in CIV 2533 of 2018) had said:

    SIMS, MR:   - - - and so on those will be part - I should just say that your Honour will note that we haven't amended order 38 to change from John and Fay.  We accept that if - that cross‑orders ought not be made against the company.  No argument about that.

13. But otherwise, Lee Holdings was a participating and resisting defendant in COR 227 of 2017 and actively so right up until the concession from senior counsel on day one of the trial.  That was a late concession.  In the circumstances, I am of the view that Lee Holdings ought be exposed to the costs in COR 227 of 2017 on a joint and several basis along with Fay and John.  That exposure will be tempered by the fact that Lee Holdings will be a beneficiary of costs orders in its favour as the successful plaintiff in CIV 2533 of 2018.

14. As regards Lee Bros the position is that it was not party to and so neither a plaintiff nor a defendant in COR 227 of 2017.  Consequently, Lee Bros is neither exposed to, nor a beneficiary of, costs orders relating to COR 227 of 2017.  However, in CIV 2533 of 2018 Lee Bros was the first defendant.  Lee Bros actively aligned itself in that action with John to defend its position in that action. 

15. Lee Bros did not render any relevant concessions in the trial different in substance to the position of John in defending that action on my assessment. 

16. In the circumstances, Lee Bros should bear, along with John and Fay, a joint and several costs exposure to the costs of CIV 2533 of 2018, including to the costs of the trial. 

17. Consequently, final costs orders should be adjusted in the terms seen below.

18. The revised final costs orders will be:

    1.Fay Lee and John Lee shall be jointly and severally liable for and shall pay the plaintiffs' reserved costs under interlocutory orders of COR 227 of 2017 and CIV 2533 of 2018, to be taxed if not agreed, and to be assessed without reference to the scale limits or hourly rates of any applicable Costs Determinations.

    2.Fay Lee, John Lee, Lee Holdings (in COR 227 of 2017 only) and Lee Bros (in CIV 2533 of 2018 only) shall be jointly and severally liable for and shall pay the respective plaintiffs' costs in COR 227 of 2017 and CIV 2533 of 2018 up to 30 November 2019, to be taxed if not agreed and to be assessed without reference to the scale limits or hourly rates in any applicable Costs Determination.

    3.Fay Lee, John Lee, Lee Holdings (in COR 227 of 2017 only) and Lee Bros (in CIV 2533 of 2018 only) shall be jointly and severally liable for and shall pay 80% of the respective plaintiffs' costs from 1 December 2019 in COR 227 of 2017 and CIV 2533 of 2018, to be taxed if not agreed and to be assessed without reference to the scale limits or hourly rates of any applicable Costs Determination (and with the costs of the trials which were heard together assessed as one action).

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

29 OCTOBER 2020