Slea Pty Ltd v Connective Services Pty Ltd; Mortgage Results Pty Ltd v Millsave Holdings Pty Ltd
[2017] VSC 327
•9 June 2017
| IN THE SUPREME COURT OF VICTORIA AT MELBOURNE | Not Restricted |
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2011 4332
| SLEA PTY LTD (ABN 16 081 276 811) | Plaintiff |
| v | |
| CONNECTIVE SERVICES PTY LTD (ACN 107 366 496) | First defendant |
| CONNECTIVE OSN PTY LTD (ACN 106 761 326) | Second defendant |
| MILLSAVE HOLDINGS PTY LTD (ACN 115 160 097) | Third defendant |
| CONNECTIVE GROUP PTY LTD (ACN 162 397 060) | Fourth defendant |
| CONNECTIVE BROKER SERVICES PTY LTD (ACN 161 731 111) | Fifth defendant |
| CONNECTIVE LENDER SERVICES PTY LTD (ACN 161 731 460) | Sixth defendant |
| CONNECTIVE FUNDER SERVICES PTY LTD (ACN 161 732 645) | Seventh defendant |
| CONNECTIVE GROUP IP HOLDINGS (NO 1) PTY LTD (ACN 165 282 084) | Eighth defendant |
| CONNECTIVE GROUP IP HOLDINGS (NO 2) PTY LTD (ACN 165 281 925) | Ninth defendant |
| MARK SEAMUS HARON | Tenth defendant |
S ECI 2016 001144
| MORTGAGE RESULTS PTY LTD (ACN 080 574 170) | Plaintiff |
| v | |
| MILLSAVE HOLDINGS PTY LTD (ACN 115 160 097) | Defendant |
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JUDGE: | ALMOND J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 25 May 2017 |
DATE OF RULING: | 9 June 2017 |
CASE MAY BE CITED AS: | Slea Pty Ltd v Connective Services Pty Ltd & Ors; Mortgage Results Pty Ltd v Millsave Holdings Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2017] VSC 327 |
PRACTICE AND PROCEDURE – Application that two proceedings be heard sequentially – Supreme Court (General Civil Procedure) Rules 2015 r 9.12 – Whether common questions of fact or law – Risk of inconsistent findings – Risk of adverse credit findings giving rise to prejudice in second proceeding – Prejudice occasioned by delay – Application refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff in proceeding S CI 2011 4332 | Mr M H O’Bryan QC Ms K Foley | Arnold Bloch Leibler |
| For the First, second and fourth to ninth defendants in proceeding S CI 2011 4332 | MR D J Crennan QC Ms J D Williams | Quinn Emmanuel Urquhart & Sullivan |
| For the Third defendant in proceeding S CI 2011 4332 | Mr S D Hay | HWL Ebsworth |
| For the Tenth defendant in proceeding S CI 2011 4332 | Mr M Clarke | Obst Legal |
| For the Plaintiff in proceeding S ECI 2016 1144 | Ms W A Harris QC Ms S Gory | Robert James Lawyers |
| For the Defendant in proceeding S ECI 2016 1144 | Mr S D Hay | HWL Ebsworth |
HIS HONOUR:
This application concerns two proceedings. The first is brought by Mortgage Results Pty Ltd against Millsave Holdings Pty Ltd (the MR proceeding).[1] The second is brought by Slea Pty Ltd against Connective Services Pty Ltd, Connective OSN Pty Ltd, other Connective entities (collectively, Connective), Millsave Holdings Pty Ltd and Mark Seamus Haron (the Oppression proceeding).[2]
[1]Proceeding No. S ECI 2016 1144.
[2]Proceeding No. S CI 2011 4332.
Millsave Holdings Pty Ltd (Millsave) seeks to have the two proceedings tried sequentially. For the reasons which follow, Millsave’s application should be refused.
Background
The MR proceeding principally concerns events that occurred in 2003. Mortgage Results Pty Ltd (MR) alleges that in late 2003, an agreement was reached between Murray Lees, Glenn Lees, MR, Mortgage Results (Australia) Pty Ltd (MR Aust) and Slea Pty Ltd (Slea) to incorporate two companies (ultimately incorporated as Connective Services Pty Ltd (Connective Services) and Connective OSN Pty Ltd (Connective OSN)). MR alleges that the interests in the issued shares in Connective Services and Connective OSN would be held as to one-third by MR, one-third by Glenn Lees and one-third by Slea, that the assets of the mortgage broking business conducted by MR Aust would be transferred to Connective Services and Connective OSN and that those companies would conduct business as a mortgage aggregator.[3]
[3]MR statement of claim dated 11 July 2016, [8].
MR alleges that Glenn Lees arranged for 12 of the 18 issued shares in each of Connective Services and Connective OSN to be allotted to himself, and for the remaining six shares to be allotted to Slea.[4] In the premises, MR alleges that Glenn Lees held his 12 shares as to one-half (six shares) upon trust for MR and as to the balance (six shares) for himself beneficially.[5] Further, MR alleges that Glenn Lees transferred the 12 shares to Millsave (which is owned and controlled by him) and that Millsave took the shares subject to the beneficial interest of MR.
[4]MR statement of claim dated 11 July 2016, [10].
[5]MR statement of claim dated 11 July 2016, [12]-[14].
In its defence, Millsave alleges that MR is not entitled to the shares. It says that the interest in the issued shares in Connective Services and Connective OSN were to be held as to two-thirds (12 shares) by Glenn Lees as trustee for the Millsave Family Trust and as to one-third (six shares) by Slea.[6] Further, Millsave alleges that Glenn Lees and MR entered into an oral agreement at about the same time (between September and December 2003) to the following effect. First, that Glenn Lees would hold the shares in Connective Services and Connective OSN as trustee for the Millsave Family Trust.[7] Second, that Glenn Lees would retain absolute control of Connective Services and Connective OSN.[8] Third, that each of Glenn Lees and MR would be paid 50 per cent of the net income earned by the Millsave Family Trust in respect of the shares.[9]
[6]Millsave defence dated 13 September 2016, [8(c)(i)B].
[7]Millsave defence dated 13 September 2016, [8(c)(ii)A].
[8]Millsave defence dated 13 September 2016, [8(c)(ii)B].
[9]Millsave defence dated 13 September 2016, [8(c)(ii)C].
The Oppression proceeding principally concerns events which occurred between 2009 and October 2013. Slea, the holder of one-third of the shares in the Connective business (operated at the time through Connective Services and Connective OSN), alleges that a series of acts undertaken by Connective shareholders and directors were oppressive to, unfairly prejudicial to or unfairly discriminatory against Slea under s 232(e) of the Corporations Act 2001 (Cth). This includes events concerning a restructure which resulted in the movement of the business downstream from Connective Services and Connective OSN to wholly owned Connective subsidiaries, and sale of part of the Connective business to Macquarie Bank Limited.[10]
[10]Slea amended statement of claim dated 1 July 2014, [27]-[45].
Millsave is the defendant in the MR proceeding and the third defendant in the Oppression proceeding and has applied by summonses filed in each proceeding to have the proceedings heard together.[11] It became apparent from reading its written submissions, clarified during argument, that Millsave did not wish to pursue an application that the proceedings be consolidated or heard together (such that evidence in one proceeding would be evidence in the other). Rather, Millsave applies to have the proceedings heard sequentially, the trial of one taking place immediately before the trial of the other, in no particular order.[12] The purpose of the application is to avoid the determination of one trial before the hearing of the second trial. The application proceeded on that basis.
[11]Summonses dated 10 February 2017 (in S CI 2011 4332) and 13 February 2017 (in S ECI 2016 1144). Millsave’s application was supported by affidavits of Jonathan Alan Kramersh sworn 3 February 2017 and 9 May 2017. A summons seeking a similar order was filed and served in proceeding No. S ECI 2016 001168 Connective Services Pty Ltd & Anor v Slea & Ors but that application did not proceed as the proceeding had been stayed by order of Almond J made on 12 May 2017.
[12]Third defendant’s outline of submissions dated 9 May 2017, [5]-[8]; Third defendant’s outline of submissions in reply dated 22 May 2017, [4], [7]; T 6.28-7.18.
Principles
Millsave’s application is made pursuant r 9.12 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), which provides as follows:
Consolidation or trial together
(1) Where two or more proceedings are pending in the Court, and—
(a)some common questions of law or fact arises in both or all of them;
(b)the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transactions; or
(c)for any other reason it is desirable to make an order under this Rule—
the Court may order the proceedings to be consolidated, or to be tried at the same time or one immediately after the other, or may order any of them to be stayed until after the determination of any other of them.
(2)Any order for the trial together of two or more proceedings or for the trial of one immediately after the other, shall be subject to the discretion of the trial Judge.
The language of the Rules reflects the wide discretion of the Court. In Traditional Values Management Ltd v Taylor & Ors,[13] Ferguson J (as she then was) considered an application for consolidation of proceedings and helpfully summarised matters which have been taken into account in previous cases considering these questions.
[13][2012] VSC 299.
Her Honour said:
Other matters that have been taken into account by courts in considering whether orders for consolidation, concurrent or sequential trials should be made include:
(a) whether the proceedings are broadly of a similar nature;
(b)the level of overlap of witnesses (lay and expert) between the proceedings;
(c) time savings or other efficiencies that might be achieved;
(d)any procedural or evidentiary difficulties that might be encountered;
(e)inconvenience that might be caused to parties to the separate proceedings if they are required to participate in a consolidated proceeding or concurrent trials;
(f) the stage each proceeding has reached;
(g)the number and nature of the issues that are not common to the proceedings;
(h) whether inconsistent findings might result from separate trials;
(i)the effect on the prospects of non-judicial resolution of the dispute through negotiation or mediation.
All of these matters are considered in the context of a party’s entitlement to a fair trial and the overarching purpose of the Civil Procedure Act 2010 (Vic) and the Court Rules to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[14]
[14][2012] VSC 299, [10]–[11] (citations omitted).
There is no issue between the parties that these are the applicable principles.
Submissions in support of the application
Millsave’s application was supported by Connective[15] and Mr Haron.[16] It is convenient to enumerate the submissions made on behalf of Millsave together with those made on behalf of Connective and Mr Haron as follows:
(a)there are overlapping issues which raise common questions in each proceeding which could lead to inconsistent findings;[17]
(b)the Court will have to make adverse credit findings against one or other of Murray Lees or Glenn Lees, and whoever is the subject of an adverse credit finding in the first proceeding will inevitably be prejudiced by that finding when the second proceeding is determined;[18]
(c)it is undesirable to have witnesses giving evidence and being cross-examined on the same issues twice;[19]
(d)there is no evidence of any urgency in the trial of the MR proceeding, and the inconvenience of a delay of (perhaps) nine months to MR would not outweigh the prejudice of two trials possibly traversing the same material and witnesses being subjected to the same cross-examination;[20]
(e)there is a likelihood of further proceedings if MR were to be successful in the MR proceeding as it, together with Slea, would hold a majority of shares in Connective and could therefore control Connective. This could lead to a change in the composition of the Connective board and the position adopted by Connective, particularly in relation to its defence of the Oppression proceeding. This could produce a risk of further proceedings including, perhaps, further oppression proceedings;[21] and
(f)sequential trials would enable the question of the legal and beneficial entitlement to the shares in the Connective companies to be authoritatively determined at the one time.[22]
[15]Referring collectively to the first, second and fourth to ninth defendants in the Oppression proceeding.
[16]Tenth defendant in the Oppression proceeding.
[17]Third defendant’s outline of submissions dated 9 May 2017, [5]-[6], [9]-[10]; Affidavit of Jonathan Alan Kramersh sworn 3 February 2017, [6]-[28].
[18]Third defendant’s outline of submissions dated 9 May 2017, [6]-[8]; Third defendant’s outline of submissions in reply dated 22 May 2017, [6].
[19]Affidavit of Jonathan Alan Kramersh sworn 3 February 2017, [29]-[31].
[20]T 18.9-29.
[21]Connective submissions dated 9 May 2017, [11]-[16]; T 18.30-20.4.
[22]Tenth defendant’s outline of reply submissions dated 22 May 2017 [6(2)]-[8]; T 22.8-23.4, with particular reference to a passage from Lew v Priester [2012] VSC 57, [15].
Submissions against the application
MR and Slea each oppose the application.[23] They submit that the application should be refused for the following reasons:
(a)any overlap of issues in the two proceedings relates to trivial background matters with no realistic prospect of inconsistent findings of fact because the MR proceeding and the Oppression proceeding concern two discrete issues in two discrete periods;[24]
(b)the MR proceeding concerns a single issue - namely, whether Millsave holds half its shares in Connective Services and Connective OSN on trust for MR - in contrast to the numerous and complex allegations in the Oppression proceeding;[25]
(c)the Court will not necessarily have to make adverse credit findings and even if there is a risk of such findings, immediately sequential trials will not eliminate that risk;[26]
(d)the possibility of witnesses having to give evidence multiple times is not avoided by sequential trials;[27]
(e)a party is entitled to a trial if a proceeding is ready and it cannot be clearly shown that an injustice is likely to be caused if it proceeds.[28] There is no evidence of any injustice or prejudice to the defendant (Millsave) if the MR proceeding proceeds when it is ready, rather than waiting for trial of the Oppression proceeding;[29]
(f)the proposition that if MR succeeds in establishing in the MR proceeding that it is the beneficial owner of half the shares held by Millsave may have consequences, whether for the Oppression proceeding or otherwise, is speculative and cannot concern the Court;[30] and
(g)the question about the pre-emptive rights clause which arises in the MR proceeding (whether the clause has any application where legal title to shares held on trust are transferred to their beneficial owner) differs from the question concerning the same clause which arises in the Oppression proceeding (whether the clause was not complied with or was, in effect, subverted by oppressive conduct).[31]
[23]MR relied on the affidavit of Dimitri Nuwan Peries sworn 24 April 2017 and Slea relied on the affidavit of Justin Taede Vaatstra sworn 24 April 2017.
[24]Affidavit of Justin Taede Vaatstra sworn 24 April 2017, [20]-[38]; Mortgage Results’ outline of legal submissions dated 17 May 2017, [17]-20].
[25]Slea submissions dated 17 May 2017, [6]-[8]; Affidavit of Dimitri Nuwan Peries sworn 24 April 2017, [10]-[18].
[26]Slea submissions dated 17 May 2017, [9]-[11]; Mortgage Results’ outline of legal submissions dated 17 May 2017, [19]-[20].
[27]T 36.22-29.
[28]Slea submissions dated 17 May 2017, [15]; Mortgage Results’ outline of legal submissions dated 17 May 2017, [13], [24]-[28].
[29]Mortgage Results’ outline of legal submissions dated 17 May 2017, [16].
[30]Slea submissions dated 17 May 2017, [12]-[13]; Mortgage Results’ outline of legal submissions dated 17 May 2017, [21]-[22].
[31]T 30.6-31.7.
Analysis
Overlapping issues and risk of inconsistent findings
The MR proceeding primarily concerns a single issue: namely, whether Millsave holds half its shares in Connective Services and Connective OSN on trust for MR.[32] The determination of this issue will depend on precisely what was agreed between Murray and Glenn Lees and Slea (by its director Sofianos Tsialtas) when they agreed between September and December 2003 to establish companies to conduct business as a mortgage aggregator.[33]
[32]Affidavit of Dimitri Nuwan Peries sworn 24 April 2017, [10], [16]-[18].
[33]MR statement of claim dated 11 July 2016, [7]-[9]; Millsave defence dated 13 September 2016, [7]-[9].
The pleadings in the MR proceeding contain references to a transfer of shares in January 2006 to Millsave without the consent of MR,[34] to a reorganisation of capital which substantially increased the number of shares in Connective Services and Connective OSN,[35] and to an alleged agreement for the sale of some of the shares in Connective Services and Connective OSN.[36] Nevertheless, the fundamental issue is still whether Millsave holds half of the shares in these Connective companies on trust for MR. The answer to this question will ultimately depend on what was agreed in 2003.
[34]MR statement of claim dated 11 July 2016, [12]-[14].
[35]MR statement of claim dated 11 July 2016, [15]-[17].
[36]MR statement of claim dated 11 July 2016, [18]-[19].
The Oppression proceeding broadly concerns conduct said to constitute acts of oppression from July 2008, including allegations of:
(a)a failure to pay dividends from about July 2009;[37]
[37]Oppression proceeding amended statement of claim dated 1 July 2014, [4A]-[4B].
(b)inappropriate retention of dividends from the end of the financial year 2010;[38]
(c)inappropriate payments made by Connective Services during and following the financial year ended 30 June 2009;[39]
(d)inappropriate recording of director’s fees as unsecured loans in the 2009 and 2010 financial years;[40]
(e)a failure to provide further drafts of a shareholders’ agreement or to otherwise finalise the shareholders’ agreement in about July 2009;[41]
(f)conduct designed to remove Slea as a shareholder from at least July 2009;[42]
(g)a purported restructure allegedly designed to circumvent or attempt to circumvent Slea’s rights from about March 2012;[43]
(h)a sale of an interest in the Connective business to Macquarie Bank from about July 2013;[44]
(i)conduct relating to the adoption of provisions of the Connective Group Pty Ltd constitution during 2013;[45] and
(j)allegations of breach of pre-emptive rights provisions and misleading and deceptive conduct during October 2013.[46]
[38]Oppression proceeding amended statement of claim dated 1 July 2014, [5]-[7A].
[39]Oppression proceeding amended statement of claim dated 1 July 2014, [8]-[9C].
[40]Oppression proceeding amended statement of claim dated 1 July 2014, [10]-[12].
[41]Oppression proceeding amended statement of claim dated 1 July 2014, [18]-[24].
[42]Oppression proceeding amended statement of claim dated 1 July 2014, [25]-[26].
[43]Oppression proceeding amended statement of claim dated 1 July 2014, [27]-[38].
[44]Oppression proceeding amended statement of claim dated 1 July 2014, [39]-[45].
[45]Oppression proceeding amended statement of claim dated 1 July 2014, [46]-[50].
[46]Oppression proceeding amended statement of claim dated 1 July 2014, [53]-[76].
None of these alleged oppressive acts appear to have a temporal overlap with the issues in the MR proceeding, or to have any relationship to the issues in the MR proceeding. It is self-evident from looking at the respective statements of claim in each proceeding that the issues in the Oppression proceeding are far more numerous and complex than the issues in the MR proceeding.
There was some focus during argument on paragraph 3I of the amended statement of claim in the Oppression proceeding, which is to the effect that at all relevant times Murray Lees held an indirect interest (through Millsave and a family trust) in Connective Services and Connective OSN. In the responding paragraph in the Connective defence, this allegation is denied.
Likewise, an allegation in the Oppression proceeding amended statement of claim that the Connective business was founded in 2003 by Glenn and Murray Lees and Slea and was intended to be, and was akin to, a partnership where those three persons owned and operated that business, is denied.
Whilst acknowledging that there is an overlap, the overlap is very much at the margin and for present purposes is not significant. The findings the Court will make concerning these allegations are unlikely to affect a determination of the Oppression proceeding. In my view, given the nature of the claims and the timeframe, there is no realistic prospect of inconsistent findings of fact in the MR proceeding of any significance to the Oppression proceeding.
Adverse credit findings
I do not accept the submission that the Court will have to make adverse credit findings against one or other of the Lees brothers, or that whoever is the subject of an adverse credit finding in the first proceeding determined will inevitably be prejudiced by that finding when the second proceeding is determined.
First, the Court may decide that one version of events is to be preferred over another without there being any adverse effect on the credit of either witness or, for that matter, any beneficial effect on the credit of either witness. Alternatively, it is possible that neither witness might be able to be believed for reasons such as effluxion of time (for example, the alleged conversations in the MR proceeding occurred more than 14 years ago). Instead, the Court may determine the matter based on objective evidence.
In the MR proceeding, the particulars indicate that there might be such objective evidence in the nature of a prior acknowledgement, prior conduct, instructions given to solicitors and evidence given on oath on a previous occasion.[47] Furthermore, if an adverse credit finding were to be made against one or other of the Lees brothers, it does not follow that there will be inevitable prejudice by that finding if and when the Oppression proceeding is determined. It will very much depend on the nature of the finding. It is commonplace for witnesses to be believed in respect of one matter and not another.
[47]See particulars to paragraph [21] of the MR statement of claim dated 11 July 2016.
Even on the assumption that there is a risk of an adverse credit impression being formed as a result of an adverse credit finding on one matter, I accept that having immediately sequential trials would not ameliorate this risk. Indeed, having immediately sequential trials may inhibit the capacity of the Court to make orderly arrangements for a different judge to hear the second proceeding if a sufficiently adverse credit impression had been formed about a witness in the first proceeding.
Some reliance was placed on the decision in Lew v Priester in support of Millsave’s proposition regarding the risk of inconsistent evidence being led or adverse credit findings being made. The background facts were most unusual. The case concerned proceedings brought by Mr and Mrs Lew against (amongst others) their three children, seeking orders that the children did not have any beneficial interest in certain loan accounts and held those accounts on trust. Alongside those proceedings were two separate Family Court proceedings involving two of the three children, where the Family Court was required to determine whether the children had a beneficial entitlement to the same loan accounts for the purposes of assessing the division of property in their marriages.
His Honour Pagone J recognised the ‘obvious benefit’ of the three proceedings being consolidated.[48] Notably, Mr Lew would be required to give the same key evidence in each proceeding about the background giving rise to the agreements, his taxation concerns, advice about the structure of the agreements and development of the trust proposals. He would likely be cross-examined as to those matters in at least two of the proceedings. It was undesirable that three parties have opportunities for testing the same evidence on three different occasions.
[48]Lew v Priester [2012] VSC 57, [12].
This case is markedly different. As noted above, the factual matters in the MR and Oppression proceedings are distinct, and there is considerably less scope for the testing of the same evidence in the respective proceedings by way of cross-examination. Each of the key events have clear temporal and subject-matter differences.
Undesirability of witnesses giving evidence twice
If this were an application that the proceedings be heard together, the undesirability of witnesses giving evidence twice would have relevance. However, in this case the application is that the matters be heard sequentially. The potential inconvenience caused by witnesses being required to give evidence twice is not avoided by sequential trials.
Delay
I accept the submission that a party is entitled to a trial if a proceeding is ready and it is not demonstrated that an injustice is likely to be caused if it proceeds.[49] In this regard, the interlocutory steps in the MR proceeding are well advanced and the MR proceeding will be ready for trial in a matter of months. By contrast, the state of readiness of the Oppression proceeding is uncertain – the interlocutory steps appear to be far from complete and there is a pending application for leave to commence a derivative proceeding, the outcome of which will have a bearing on trial duration and readiness for trial. I do not accept that the likely potential period for delay of the MR proceeding until the Oppression proceeding is ready for trial is in the order of nine months, given the protracted history and continued interlocutory applications in the Oppression proceeding.
[49]See generally Geelong Football Club Ltd v Clifford [2002] VSCA 212.
Consequences if MR succeeds in the MR proceeding
I am not satisfied that the fact that there might be consequences if MR succeeds in the MR proceeding is a relevant consideration for present purposes. If MR succeeds in establishing that it is the beneficial owner of half the shares held by Millsave in Connective Services and Connective OSN, it will have vindicated rights it had since 2003. In that circumstance, if MR wished to exercise its rights it should be free to do so. The fact that this may have consequences to the Connective interests in the defence of the Oppression proceeding or may lead to further oppression proceedings is not only hypothetical and speculative, but it also presumes that MR would conduct itself in such a way as to enliven the Court’s jurisdiction under the Corporations Act.[50]It is not open to make such assumptions on the evidence before me.
[50]Or that those who control MR would do so.
Determining the question of the legal and beneficial entitlement to the shares at the one time
In the MR proceeding, MR seeks a declaration that Millsave holds its shares on trust, and an order under the Trustee Act 1958 vesting half of the shares held by Millsave in MR. Alternatively, MR seeks a direction for the transfer of half of Millsave’s shares.
In essence, Millsave says in its defence that clause 77 of the constitutions of each of the Connective companies contain a pre-emptive rights provision which requires that, before transferring shares of a particular class, a member must offer them to the existing members of the class (vesting a first right to the shares in the other shareholders). In the circumstances, Millsave says that MR is not entitled to the relief claimed and could not obtain it without joining the other shareholders. In MR’s reply, MR alleges that on its proper construction clause 77 has no application where the legal title to shares held on trust are transferred to their beneficial owner.
MR submits that this issue, which arises solely in the context of the MR proceeding, has no equivalent in the Oppression proceeding where the plaintiff alleges that the pre-emptive rights clause was not complied with and was, in effect, subverted by the alleged oppressive transactions.
It seems to me that the question whether the pre-emptive rights clause has any application where legal title to shares held on trust are transferred to their beneficial owner is different from the question whether the pre-emptive rights clause was not complied with or was, in effect, subverted by oppressive conduct. There appears to be no particular advantage in having those two questions determined at the one time.
Conclusion
For all of these reasons, in my opinion the application that the MR proceeding and Oppression proceeding be heard sequentially (one immediately before the other) should be refused.
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