Hamex Corporation Pty Ltd v Latrobe Street Ventures Pty Ltd

Federal Court of Australia|2019-10-18|Before: Charlesworth J

Mobileworld Operating Pty Ltd v Telstra Corporation Limited [2005] FCA 1365 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Ragless v IPA Holdings Pty Ltd (in liq) (2008) 65 ACSR 700 Rizeq v Western Australia (2017) 262 CLR 1 Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238 Swansson v R A Pratt Properties Pty Ltd (2002) 42 ACSR 313 Tait v P.T. Ltd as Trustee of the Scentre Tuggerah Trust [2015] FCA 1015 Tambakis v Ferluga (2010) 107 SASR 246 Vanmarc Holdings Pty Ltd v PW Jess & Associates Pty Ltd [2000] VSC 153; 34 ACSR 222 Emmett, the Hon AR, AO QC and Williams H, "Equity's childbearing years: the proposed extension of shareholder oppression remedies to the beneficiaries of trading trusts" (2018) 10 (July) Butterworths Corporation Law Bulletin

Date of hearing: 15 March, 4 June and 24 July 2019

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 136

Counsel for the Plaintiffs: Mr M Livesey QC

Solicitor for the Plaintiffs: Allen Burtt Legal Services

Counsel for the First Defendant: Ms S MacKenzie

Solicitor for the First Defendant: Davis Lawyers

Counsel for the Second, Fourth and Fourth Defendants: Mr PJ Adams

Solicitor for the Second, Fourth and Fifth Defendants: Mason Black Lawyers

Counsel for the Sixth Defendant: Ms G Walker

Solicitor for the Sixth Defendant: Williams Winter

BETWEEN: HAMEX CORPORATION PTY LTD First Plaintiff

DAMIAN RICHARD ROHAN LESTER Second Plaintiff

AND: LATROBE STREET VENTURES PTY LTD First Defendant

ELEVENTH KLINGON PTY LTD Second Defendant

SERMOCOM PTY LTD (and others named in the Schedule) Third Defendant

JUDGE: CHARLESWORTH J DATE OF ORDER: 18 OCTOBER 2019

Subject to these orders, leave is granted to the second plaintiff to commence a proceeding on behalf of the first plaintiff in respect of the allegations pleaded at [44] - [55], [88] - [91] and [94] - [95] and associated claims for relief pleaded at [109.1] - [109.4] of the Second Statement of Claim dated 26 March 2019.
The second plaintiff's application for leave to commence a proceeding on behalf of the first plaintiff in respect of the matters pleaded at [92] - [93D] of the Second Statement of Claim dated 26 March 2019 is refused.
The leave granted in [1] of these orders is conditional upon: (a) the amendment of the plea in [95] of the Second Statement of Claim so as to separate those claims brought on behalf of the first plaintiff from those claims brought by the second plaintiff in his capacity as co-trustee of the deceased estate of Masha Lester. (b) the second plaintiff is to personally bear the costs of the company of and incidental to the claims subject to the grant of leave and shall bear personal liability for any adverse costs order made in respect of the claims whether or not the claims are ultimately successful.
Nothing in order [3] shall prevent the second plaintiff from seeking an order for costs in respect of the claims.
On or before 1 November 2019, the plaintiffs are to file and serve an affidavit annexing a proposed Third Statement of Claim giving effect to the reasons for judgment delivered today.
On or before 8 November 2019, the defendants are to advise the plaintiff as to whether the filing of the Third Statement of Claim is opposed and, if so, the basis of the opposition.
In the event that there is no opposition to the proposed Third Statement of Claim, by this order the plaintiffs have leave to file and serve a Third Statement of Claim in the form proposed, such leave to be exercised on or before 15 November 2019.
Any application by the defendants to have the claim commenced by the second plaintiff in his capacity as co-trustee of the deceased estate of Masha Lester struck out or summarily dismissed on the grounds that the second plaintiff does not have standing to sue in that capacity is to be filed and served on or before 15 November 2019.
The matter be set down for a case management hearing before a judge of the Victoria District Registry on a date to be fixed, not before 22 November 2019. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

CHARLESWORTH J: 1 On 15 March 2019, the Court made orders allowing an urgent application for injunctive relief filed by the second plaintiff, Damian Lester (the injunction application). Oral reasons for granting the injunction were given on that day. 2 On the application of the first defendant, Latrobe Street Ventures Pty Ltd, the Court made orders on 4 June 2019 to the effect that these proceedings be transferred to the Victoria District Registry of the Court. The parties have confirmed they do not request written reasons for those orders. 3 The transfer of the proceeding is to take effect after judgment is given on a further interlocutory application made by Damian Lester. That application concerns the scope of leave that should be granted to Damian Lester to commence proceedings in the name of the first plaintiff Hamex Corporation Pty Ltd pursuant to s 236 of the Corporations Act 2001 (Cth). The orders sought by Damian Lester would have the effect of enlarging the scope of leave granted to him on 19 December 2017 in an earlier proceeding. 4 These reasons serve three purposes. The first is to set out the legal principles and the largely uncontested facts against which the injunction application was determined. The second is to substantively repeat what I said orally when delivering judgment on the injunction application so that the parties and the trial judge may have the benefit of those reasons including for the purpose of the future case management of the matter. The third is to explain why Damian Lester's application for orders enlarging the scope of leave under s 236 of the Corporations Act should be allowed in part.

Facts 5 Damian Lester is one of two directors of Hamex. The other director is the second defendant, David Lester. David Lester is Damian Lester's father. 6 David and Damian Lester are co-executors of the deceased estate of David's mother, Masha Lester (Estate). Masha Lester's Last Will and Testament established certain testamentary trusts and provided for six named individuals (the beneficiaries) to receive the net annual income of the Estate in specified shares. At present, the beneficiaries of the will are David and Damian Lester, together with Richard Beauregard Lester (David Lester's son and Damian's brother) and three members of a family identified as the Aufgang family. On the death of any or all of the beneficiaries, the income is to be held on trust for Damian's two children until they are aged 25. 7 The sizeable Estate has been the subject of prior litigation between David and Damian in the context of a long running family dispute. Their relationship as co-trustees may be fairly described as dysfunctional. 8 The major asset of the Estate is a holding of 380 units in a trust known as the Latrobe Street Ventures Unit Trust. Those units are held in the names of Damian and David Lester jointly as co-trustees of the Estate. The only asset of the Unit Trust is a multi-level car park situated at 128 Latrobe Street, Melbourne, Victoria. Latrobe is the corporate trustee of the Unit Trust, and the owner of the car park in that capacity. 9 These proceedings have their origin in a separate action commenced on 29 June 2017 in which Damian Lester was granted leave pursuant to s 236 of the Corporations Act to commence a proceeding on behalf of Hamex. Leave was granted in relation to allegations that David Lester had contravened ss 180, 181, 182, and 183 of the Corporations Act in his capacity as director of Hamex. The leave extended to allegations of accessorial liability made against Cecily Lester (Damian Lester's mother and David Lester's wife) and the fifth defendant Eleventh Klingon Pty Ltd. 10 Eleventh Klingon holds 400 units in the Unit Trust. David Lester, Cecily Lester and Eleventh Klingon are, respectively, the fourth, fifth and second defendants in this proceeding, and I will refer to them as the parent defendants. 11 The sixth defendant is Keith McKnight, a director of Latrobe. Mr McKnight is also a director of the third defendant, Sermocom Pty Ltd. Sermocom holds 420 units in the Unit Trust. Sermocom is a company that is said to represent Mr McKnight's family interests. I will refer to the third and sixth defendants as the McKnight defendants. 12 At the time of its incorporation on 18 December 2014 Latrobe had two directors, David Lester and Mr McKnight. Damian Lester was subsequently appointed as a director in October 2016. 13 Hamex, Eleventh Klingon and Sermocom are the shareholders of Latrobe. 14 In April 2017, Damian Lester received a Notice of Meeting of Members of Latrobe addressed to Hamex in its capacity as a shareholder of the company. The notice called for a meeting of the shareholders in order to consider the removal of Damian Lester as a director of Latrobe. The meeting was called on 9 May 2017. At the meeting, David Lester (on behalf of Eleventh Klingon) and Mr McKnight (on behalf of Sermocom) passed a resolution removing Damian Lester as a director. I will refer to that as the Directorship Resolution. 15 The Unit Trust was established by a deed (Unit Trust Deed) containing the following provisions: 7(2) Redemption without the request of a unit holder The Trustee may at any time in its discretion redeem all or any units held by a unit holder without being requested to do so at the unit price per unit by giving one (1) month's notice in writing to the unit holder of its intention to redeem such units provided that if the unit holder waives its right to receive such notice then it shall not be necessary for the Trustee to give such notice. 7(3) Calculation of unit price For the purpose of fixing the unit price, the Trustee shall value the Fund and the units into which the Fund is divided, and if it thinks necessary or advisable have the valuation made by a person competent to make such valuation at the Trustee's expense. In determining the value of a unit regard shall be had to any special rights or restrictions or conditions relating to the entitlement of such unit to share in the income or capital of the Fund and in the distribution of the capital on the termination of the Fund and to any other rights, restrictions or conditions relating to the entitlement of such unit to share in the income or capital of the Fund and in the distribution of the capital on the termination of the Fund and to any other rights, restrictions or conditions attaching to, or affecting, the unit or other units. The unit price shall be calculated on the basis of the value of the Fund and the various units in the Fund. In determining the unit price there shall be deducted all necessary expenses incidental to any realisation by the Trustee of any investment for the purpose of paying the unit price and a trusteeship fee payable in respect of the Fund at the rate chargeable by the Trustee on the amount of the value of the redeemed units computed from the last day of the last preceding financial year prior to the date on which the units are redeemed by the Trustee. The Trustee may pay to the holder of the redeemed units so much of the income of the Fund of the financial year as the Trustee considers should reasonably be attributed to such units and the amount of income to be so paid shall be taken into account in any valuation made or carried out under this deed PROVIDED HOWEVER that the Trustee may, at its discretion, appropriate in specie any portion of the fund or any investment representing the same to or towards the share in or entitlement of a unit holder under this deed. … 17(6) Exercise of powers notwithstanding relationship with unit holder All powers and discretions conferred upon the Trustee by this deed or by law may be exercised notwithstanding that any person being a director or shareholder of a corporate trustee, is or may have been a unit holder or has, or may have, a direct, indirect or personal interest (whether as shareholder, director, member or partner of any company or partnership or otherwise) in the manner or result of exercising such power or discretion or may benefit directly or indirectly as a result of the exercise of any such power or discretion and notwithstanding that the Trustee for the time being is the sole trustee of the Trust. 16 On 13 February 2019, by a resolution of its two directors, David Lester and Mr McKnight, Latrobe issued a Notice pursuant to or purportedly pursuant to cl 7(2) of the Unit Trust Deed redeeming, or purporting to redeem, the units jointly held in the Unit Trust by Damian and David Lester on behalf of the Estate (Redemption Notice). I will refer to that resolution as the Redemption Resolution. 17 The Redemption Notice stated: As Trustee of the Latrobe Street Ventures Unit Trust (the Trust), Latrobe Street Ventures Pty Ltd (ACN 603 431 609) hereby gives you one month's notice pursuant to clause 7(2) of the Trust Deed of the Trustee's intention to redeem all units in the Trust held by you and David Richard Pelham Lester as Trustees of the Estate of Masha Lester in the Trust. 18 As originally framed, the injunction application was made jointly by Damian Lester and on behalf of (or purportedly on behalf of) Hamex. The claim brought or purportedly brought on behalf of Hamex was founded on alleged breaches of duties owed to Hamex by David Lester in his capacity as a director of that company in connection with the Redemption Resolution. As discussed later in these reasons, the leave granted on 19 December 2017 did not extend to any cause of action arising out of the fact or consequence of the Redemption Resolution, nor, for that matter, the Directorship Resolution. The Redemption Resolution was passed some 14 months after the original grant of leave, whereas the Directorship Resolution was passed several months prior. 19 In the course of argument, Damian Lester withdrew the injunction application insofar as it was made or purportedly made in the name of Hamex. The effect of that withdrawal was that the merits of the injunction application fell to be determined by reference to the case advanced by Damian Lester solely in his capacity as co-trustee of the Estate. 20 In that capacity, Damian Lester submitted that David Lester had, by voting in support of the Redemption Resolution, advanced his own interests and the interests of Eleventh Klingon over the interests of the beneficiaries of the Estate and so breached his fiduciary duties as a co-trustee. Accessorial liability was alleged against Mr McKnight. 21 That formulation of the case had not been articulated in the statement of claim at the time that the injunction application was heard. Damian Lester undertook to file and serve an amended pleading alleging facts sufficient to support the substantive claims on which the injunction application was ultimately founded and that has since been done. 22 Latrobe opposed the orders. It submitted, inter alia, that the deficiencies in the scope of leave granted to Damian Lester to commence a proceeding on behalf of Hamex had the consequence that the whole of the proceeding was one in respect of which the Court had no jurisdiction. 23 I rejected the defendants' arguments and made orders with injunctions in the following terms. 1. Until further order, Latrobe Street Ventures Pty Ltd be restrained from doing any act, matter or thing, or causing or permitting any act, matter or thing to be done, to redeem or divest the units held by Damian Richard Rohan Lester and David Richard Pelham Lester in the Latrobe Street Car Ventures Unit Trust. 2. The operation of the notice dated 13 February 2019, from Latrobe Street Ventures Pty Ltd to Mr Damian Richard Rohan Lester, as trustee of the estate of Masha Lester, of intention to redeem all units held by Damian Richard Rohan Lester and David Richard Pelham Lester in the Latrobe Street Car Ventures Unit Trust, be suspended until further order. 24 As I have said, reasons for the orders were given orally on the day of argument, shortly before the Redemption Notice would otherwise have had the legal effect of redeeming the units held in the Unit Trust by Damian Lester and David Lester on behalf of the Estate. I now provide written reasons to substantively the same effect as those given orally, retaining the present tense, and adding a summary of the applicable principles (which were not disputed).

INJUNCTION APPLICATION 25 In Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57, Gleeson CJ and Crennan J said at [19]: … in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. … 26 Gummow and Hayne JJ said (at [65]) that an applicant seeking an interlocutory injunction must show a "sufficient likelihood" of success to justify, in the circumstances, the preservation of the status quo pending trial. The sufficiency of the likelihood of success depends upon the nature of the rights the applicant asserts and the practical consequences likely to flow from the order: see Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622 (Kitto, Taylor, Menzies and Owen JJ); Samsung Electronics Company Ltd v Apple Inc (2011) 217 FCR 238 at [59] (Dowsett, Foster and Yates JJ). 27 The criteria of "serious question to be tried" and "balance of convenience" interrelate, such that a more doubtful claim which nevertheless raises "a serious question be tried" may still attract interlocutory relief if there is a marked balance of convenience in favour of the claim: Mobileword Operating Pty Ltd v Telstra Corporation Limited [2005] FCA 1365 at [20], Tait v P.T. Ltd as Trustee of the Scentre Tuggerah Trust [2015] FCA 1015 at [23] (Besanko J). 28 The extent to which it is appropriate to examine the merits of an applicant's claim for relief will always depend on the circumstances of the case: Australian Broadcasting Corporation v Lenah Game Meats Pty Limited (2001) 208 CLR 199 at [18] (Gleeson CJ). As Weinberg J said in Mobileworld at [23]: Sometimes, on an application for interlocutory relief, a court is sufficiently able, on the evidence before it, to reach a conclusion as to particular facts or matters in dispute. However, it must be remembered that any such conclusion will be provisional, and by no means necessarily the same as that which is subsequently reached at the final hearing. The degree to which a court is prepared to investigate disputes of fact depends on their difficulty and on the other circumstances in question, and particularly on the extent of urgency or prospective hardship involved: ICF Spry, The Principles of Equitable Remedies (6th ed, 2001) ('Spry') at 466. 29 In assessing where the balance of convenience lies the Court must assess and compare the prejudice likely to be suffered if an injunction is granted with that which is likely to be suffered if one is not granted: Lucisano v Westpac Banking Corporation [2015] FCA 243 at [7] (Gordon J). In Samsung the Full Court (Dowsett, Foster and Yates JJ) said (at [62]): … The question of whether damages will be an adequate remedy for the alleged infringement of the plaintiff's rights will always need to be considered when the Court has an application for interlocutory injunctive relief before it. It may or may not be determinative in any given case. That question involves an assessment by the Court as to whether the plaintiff would, in all material respects, be in as good a position if he were confined to his damages remedy, as he would be in if an injunction were granted (see the discussion of this aspect in Spry, The Principles of Equitable Remedies (8th ed, 2010) at pp 383-389, 397-399 and 457-462). 30 The Court went on to say that to elevate "irreparable injury" into a separate and antecedent inquiry in every case would be to "adopt too rigid an approach" (at [63]).

Jurisdiction 31 I am satisfied that at least in some parts the allegations that are pleaded on behalf of Hamex fall within the grant of leave previously granted to Damian Lester to commence the proceeding in that company's name. However, in other significant respects the allegations in the statement of claim clearly do not fall within that grant of leave, particularly in relation to causes of action that only Hamex could have standing to pursue. 32 For the present limited purposes, it is sufficient to say this Court's jurisdiction in the matter is attracted by reason of those causes of action in respect of which Hamex does have standing to sue, and in respect of which there has been a grant of leave to Damian Lester pursuant to the Corporations Act. The jurisdiction is that conferred by s 39B(1A)(c) of the Judiciary Act 1903 (Cth). 33 It matters not that the claims of Damian Lester are founded on a breach of trust or other causes of action arising under general law. The whole of the matter involves the exercise of federal jurisdiction: Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559. 34 The law to be applied is that to be identified in accordance with s 79 and s 80 of the Judiciary Act having regard to the principles stated by the High Court in Rizeq v Western Australia (2017) 262 CLR 1. 35 Quite apart from issues concerning jurisdiction, the defendants assert that Damian Lester does not have standing to sue in his capacity as co-trustee without the consent of David Lester. I will deal with that question in the course of identifying whether or not there is a prima facie case of the kind that Damian Lester advances.

Prima Facie Case 36 To my mind there is a prima facie case that by voting in favour of the Redemption Resolution, David Lester has sought to divert a commercial opportunity from the Estate to the benefit of himself or another person, namely Eleventh Klingon. 37 An issue to be tried is whether the Unit Trust Deed authorised David Lester to exercise powers in his capacity as a director of the trustee of the Unit Trust in a way that would otherwise constitute a breach of the fiduciary duties that he owed in his capacity as co-trustee of the Estate. More specifically, the question is whether cl 17(6) of the Unit Trust Deed authorised the conduct that is sought to be impugned in the proceedings. It was argued that by executing the Unit Trust Deed, Damian Lester, then a prospective director of Latrobe, provided his informed consent to David Lester acting as a director of Latrobe (the trustee of the Unit Trust). The question is whether cl 17(6) modified, in any way, the fiduciary duties David Lester would otherwise have owed to the beneficiaries of the Estate not to divert the commercial opportunity residing in the 380 units he held in his capacity as co-trustee of the Estate, to the benefit of Eleventh Klingon and ultimately himself. 38 The duty of a fiduciary not to use his position for profit or personal gain precludes the fiduciary gaining an actual financial advantage by way of, for example, acquiring for himself a trust asset at under value. But it is not limited to that. In the case of a trust, it may be sufficient to show that the trustee has acquired, at fair value, a proprietary asset that the beneficiaries would otherwise be entitled to enjoy. In the present case, it is at least arguable that David Lester's duties as co-trustee of the Estate may be breached if he diverted the commercial opportunity residing in the car park from the Estate for his own benefit or the benefit of another person in that sense. 39 The Court does not have before it evidence that the beneficiaries of the Estate (namely the beneficiaries named in the will of Masha Lester) gave their informed consent to David Lester to pass a resolution under cl 7(2) of the Unit Trust Deed that would constitute a breach of the fiduciary duties he owed to them. It is at least arguable that by executing the Unit Trust Deed containing cl 7(2) and cl 17(6) in his capacity as co-trustee of the Estate, Damian Lester did not (indeed could not) give the informed consent of the beneficiaries of the Estate for his co-trustee to act contrary to his duties. The Unit Trust Deed is silent as to how cl 17(6) might operate in the event that only one of the co-trustees of the Estate were removed as a director of Latrobe, as has occurred, since the Unit Trust Deed was executed. Nor does the Unit Trust Deed provide for the circumstance in which the two co-trustees of the Estate might be at odds as to how the discretion under cl 7(2) of the Unit Trust Deed should or could be exercised. The existence and quality of any consent by any beneficiary may also be relevant to the question of whether or not any one of the defendants has engaged in unconscionable conduct. 40 I express no view as to the relative strengths of the parties' cases. It is enough to find (as I do) that there is a real question to be tried sufficient to support the grant of an injunction.

Standing 41 On the question of standing, an issue arises as to whether or not an action for breach of fiduciary duty of the kind that has been identified in the course of submissions may be brought by Damian Lester without the consent of his co-trustee, David Lester. 42 For the purposes of the present interlocutory application, I am satisfied that there is no legal impediment to Damian Lester commencing this proceeding in that capacity or for that purpose notwithstanding that he does not have the consent of David Lester to do so. Moreover, I am satisfied that Damian Lester may, in his capacity as a beneficiary of the Estate, bring a proceeding of the kind described in the course of submissions. 43 To the extent that Damian Lester requires the leave of the Court to commence a suit of the kind I have identified against his co-trustee I would, for the limited purposes of hearing and determining the present interlocutory application, grant that leave. I do not otherwise express any final or emphatic view as to whether the proceeding commenced by Damian Lester in his capacity as co-trustee is one in respect of which he has standing or as to whether the proceeding is legally wrong-footed in any other way. 44 The issues are complex and may well be raised again by one of the defendants, whether at an interlocutory stage (as they have foreshadowed) or at the trial itself. It remains open to the defendants to assert that the proceedings are incompetent or that Damian Lester does not have standing, whatever the order I make today. 45 Further to the topic of standing, I should not be understood as expressing any view about whether Damian Lester may turn to the Estate for indemnification of his costs and expenses in respect of the proceedings or, for that matter, in respect of the undertaking as to damages he has given in his personal capacity. That, too, may well be an issue that arises for determination at the trial itself. It may, at least in part, turn on the terms of the will. Those terms are not before me.

Balance of convenience 46 On one view of the facts it might be said that the effect of the Redemption Resolution is to convert a real property asset into money that may be reinvested by the Estate. If it transpired that the value of the units held by the Estate was miscalculated or that valuations were otherwise obtained for an improper purpose, the loss suffered by the Estate may be compensable by an award of damages. However, there are other aspects affecting where the balance of convenience lies and, in particular, whether or not a final remedy in the nature of an award of damages or equitable compensation would suffice. 47 The evidence presently before the Court is to the effect that in 2016 the directors of Latrobe sought advice as to how they might exploit development opportunities in the car park, especially in relation to air space above it. At that time it seems that the development opportunities were regarded as not being feasible because of the state of the law relating to strata titles in Victoria. However, the directors were advised that should the relevant laws change (as I am told they have in New South Wales), exploitation of the development opportunity might well become feasible. 48 These matters do not appear to have been the subject of discrete calculation and consideration by the valuers responsible for performing the valuations in accordance with the terms of the Unit Trust Deed. That may be because the value of such a speculative opportunity is difficult, if not impossible, to value in a proprietary sense using ordinary valuation methods. In the present context it may be argued that damages may be adequately assessed by reference to loss of a chance, having regard to the contingency that the development law may change. An issue arises as to whether or not Damian Lester on behalf of the Estate should be confined to damages so assessed, as opposed to a final injunction at the conclusion of the trial. 49 I accept the submission that the value of a lost opportunity of that kind would be difficult to measure and I afford that circumstance some weight in assessing where the balance of the convenience might lie. 50 There is also evidence before me to the effect that the Estate (through its co-trustees) and Hamex provided security for a loan granted for the benefit of Latrobe to finance its purchase of the car park. There is some evidence to the effect that it is the intention of Latrobe that the redemption will occur in circumstances where the bank will release those securities. For the purposes of the injunction application I consider this to be an equivocal circumstance and I do not afford weight to it in the exercise of my discretion. 51 I accept the submission that the Estate may, at least in the short term, suffer a deprivation of income by the redemption of its units in the Unit Trust and I draw ordinary inferences to the effect that there will be a capital gains liability, so reducing the sum available for reinvestment. The effect of the redemption is that the Estate has no choice as to the timing of the capital gain. These matters are not the subject of substantive evidence before me. They are considerations to which I give little weight. 52 The trustee of the Unit Trust has not disclosed its reasons for exercising the discretion under cl 7(2). I draw no inference about those reasons, but it does create a situation where there is no evidence upon which I might base a finding that the Unit Trust would be prejudiced if the Redemption Notice were to be suspended. 53 Counsel for Latrobe has confirmed that she has been receiving instructions from Mr McKnight. Although David Lester was said to be in hospital there is no evidence to the effect that he was unable to give instructions in respect of the interests of Latrobe on the injunction application or in respect of his own personal interests in the outcome of the application. I am satisfied that the remaining defendants have been made aware of the injunction application hearing, but elected not to participate or to adduce evidence in opposition to the application. 54 David Lester and Mr McKnight are not criticised for adducing no evidence, however, the absence of evidence of any prejudice that might be suffered by them is relevant to my assessment of where the balance of convenience lies. 55 In my view the balance of convenience favours the retention by the Estate of its interests in the Unit Trust pending the outcome of the trial, essentially because they are interests of a proprietary nature. 56 The power to grant an interlocutory injunction is discretionary. In the exercise of that discretion I take into account the nature of the breach in respect of which a final injunction in the proceedings is sought. The breach is alleged under the general law and, in particular, in equity. Whilst equitable compensation might be available as an alternative remedy, in my view, should an anticipated breach of fiduciary duty of the kind alleged against David Lester be proven, the more appropriate form of relief would be to declare the Redemption Notice to be void and to otherwise restrain Latrobe, and its directors, including David Lester, from giving effect or purporting to give any effect to it. As Gray J said in Tambakis v Ferluga (2010) 107 SASR 246 at [33]: … A court should be reluctant to determine an interlocutory dispute such as that which arises in the within proceeding, so as to permit the possibility of occurrence of a breach of trust [see Wood v Richardson (1840) 49 ER 305 at 306], breach of contract [see Ampol Petroleum Ltd v Mutton (1952) 53 SR (NSW) 1 at 9-10], or a breach of any other legal duty. … 57 An injunction would, at least in my present view, be the most appropriate remedy on the grant of final relief in the substantive proceeding. That circumstance weighs very heavily in favour of the grant of an injunction at the interlocutory stage. 58 The reasons at [31] to [57] encapsulate what was said at the time that the injunction was granted. I now turn to consider Damian Lester's application for leave to pursue certain parts of this proceeding on behalf of Hamex and in its name.

LEAVE APPLICATION 59 On 29 June 2017 Damian Lester commenced a proceeding in this Court naming himself as plaintiff and Hamex as defendant: SAD 170 of 2017. The claimed relief was expressed in the following terms. 1. Leave to the plaintiff to bring proceedings on behalf of Hamex Corporation Pty Ltd. 2. Such further or other orders as this Honourable Court deems fit. 60 Five affidavits were filed in support of the application in SAD 170 of 2017, most relevantly an affidavit of Damian Lester sworn on 28 June 2017 (the 2017 affidavit). 61 The Court made orders requiring that the application be served on Hamex and on its co-director David Lester and fixing a date by which David Lester should file any application to be joined as a party. David Lester made no application to be joined. However, in the course of his submissions on the application, Counsel for Damian Lester properly brought the Court's attention to correspondence from a solicitor acting for David Lester. The letter stated that it was David Lester's position that the Court did not have jurisdiction in respect of the proceeding sought to be commenced on behalf of Hamex. 62 On 28 November 2017, the hearing of the application in SAD 170 of 2017 was adjourned part heard, principally because the Court required that the nature of the claims to be made in the proceedings (and hence the subject of the proposed grant of leave) be articulated with more precision. 63 On 19 December 2017 Counsel for Damian Lester provided minutes of order which confined the subject matter of the grant of leave to matters cross referenced to specific paragraphs of the 2017 affidavit. Orders were made in the following terms (2017 orders): 1. Pursuant to sections 236 and 237 of the Corporations Act 2001 (Cth) (the Act) leave is granted to Damian Richard Rohan Lester to bring proceedings on behalf of Hamex Corporation Pty Ltd (Hamex) for any: a. claim by Hamex relating to any alleged breach of sections 180, 181, 182 and 183 of the Act by David Richard Pelham Lester referred to in paragraphs 6, 48, 55 (the Latrobe Property investment), 29, 33, 73, 77, 78, 79, 80, 81, 89.7 (Hamex monies and assets), 89.5 (appointment of Ms Cecily Lester as alternate director), and 102 of the Affidavit of Damian Richard Rohan Lester sworn on 28 June 2017 and filed in the within action (the Affidavit); b. claim for compensation by Hamex pursuant to section 1317H of the Act referred to in the preceding subparagraph; and c. associated or accessorial liability claim against Ms Cecily Lester or Eleventh Klingon Pty Ltd referred to in paragraphs 6 and 102 of the Affidavit. 2. Damian Richard Rohan Lester shall be permitted to take any and all steps for and in the name of Hamex in respect of the proceedings referred to in paragraph 1 of these orders. 3. Damian Richard Rohan Lester shall indemnify Hamex in respect of any orders as to costs that the Court may make against Hamex in the proceedings referred to in paragraph 1 hereof. 4. Any action commenced by Hamex in accordance with the leave granted in paragraph 1: a. may be exercised by Hamex in its own right or in its capacity as the trustee of a trust; and b. shall be commenced and continued by way of pleadings. 5. Costs of and incidental to this proceeding are reserved. 64 This proceeding was commenced by originating application accompanied by a statement of claim filed on 12 March 2019. As I have mentioned, the originating application names Hamex as the first plaintiff and Damian Lester as the second plaintiff. The originating application and statement of claim each bore the endorsement "Filed pursuant to the leave granted by Justice Charlesworth on 19 December 2017". Despite that endorsement, it is common ground that some of the claim purportedly commenced in Hamex's name fell outside the scope of the leave granted by the 2017 orders. 65 After delivering judgment on the application for urgent interlocutory relief, I fixed a date by which Damian Lester was to file an amended statement of claim and any amended originating application to include material facts and causes of action upon which he had relied in support of his application for the injunction in his capacity as co-trustee of the Estate. I also fixed a date by which Damian Lester was to file any application for leave to commence a proceeding on behalf of Hamex in respect of any allegations not falling within the scope of the 2017 orders. 66 On 26 March 2019, the plaintiffs filed the application for leave, together with a second statement of claim (SSOC). The Court now has a "Substituted Second Statement of Claim" in the same terms of the SSOC, with the amendments appropriately marked up. 67 The relief sought on the leave application is as follows: 1. Pursuant to sections 236 and 237 of the Corporations Act 2001 (Cth) leave be granted to the second application bring [sic] proceedings on behalf of Hamex Corporation Pty Ltd (Hamex) in respect of the claims by Hamex against each respondent set forth in the Second Statement of Claim dated XX [sic] March 2019 filed in the within action, to the extent such claims for outside the scope of the leave granted by the Court on 19 December 2017. 2. That the second applicant shall be permitted to take any and all steps for and in the name of Hamex in respect of the proceedings referred to in paragraph 1 of these orders.

The proposed pleaded case 68 Counsel for Damian Lester subsequently clarified the application by identifying the subject matter in respect of which leave was sought by reference to specific facts and circumstances pleaded in the SSOC. The claims to which the leave application relates are pleaded at [44] - [55] and [88] - [91] (directorship claims) and [92] - [95] (redemption claims). 69 The allegations giving rise to the directorship claims are to the effect that: (1) Latrobe paid the purchase price for the car park by: (a) receiving credit for a deposit that had previously been paid (of which the Estate contributed one third after the purchase was complete) (SSOC [42], [44.1]); (b) borrowing about $10,000,000 from BankSA on a commercial bill facility secured by (among other things) a limited guarantee and indemnity by Damian and David Lester in their capacities as co-trustees of the Estate, an unlimited guarantee and indemnity given by Hamex and a first registered fixed and floating charge over its assets and undertakings (SSOC [44.2]); (2) on the incorporation of Latrobe it was agreed by Damian and David Lester and Mr McKnight that each of them would be directors of Latrobe (SSOC [45.1]); (3) it was agreed that Damian could delay his appointment as a director by withholding his consent, which he did, thus delaying his appointment until 5 October 2016; (SSOC [45] - [48]); (4) Damian was removed as a director of Latrobe at a shareholders meeting on 9 May 2017 by a resolution of David Lester on behalf of Eleventh Klingon and Mr McKnight on behalf of Sermacom (SSOC [50] -[55]); (5) at the shareholders meeting on 9 May 2017, Damian Lester asserted that the shareholders meeting should be closed or the resolution not otherwise passed because the meeting had not been called in accordance with the Corporations Act, because it was contrary to the terms of an agreement that Damian would remain a director, and because of conflicts of interest affecting David Lester's entitlement to vote in favour of the resolution on behalf of Eleventh Klingon (SSOC [54]); 70 The SSOC goes on to make the following claims against Latrobe, David Lester and Mr McKnight in relation to the directorship claims: PART 3 - Claims Removal of Damian as a director Latrobe 88. The Resolution and removal of Damian as a director of Latrobe was and is oppressive to, unfairly prejudicial to or unfairly discriminatory against Hamex. Particulars 88.1 The facts and matters pleaded in paragraphs 45, 46, 47, 48, 49, 50, 51, 52, 53 and 54 hereof are repeated seriatim. 88.2 Further to paragraph 88.1 hereof the removal of Damian as a director of Latrobe deprived Hamex of effective representation on the board of directors of Latrobe in circumstances where: 88.2.1 David has an interest in Klingon; 88.2.2 Hamex and Damian had given security for the loan to Latrobe as pleaded in paragraph 44.2 hereof. David and Keith 89. Further and in the alternative, the passing of the Resolution and removal of Damian as a director of Latrobe was knowingly in breach of the agreement with David and Keith that Damian was to be a director of Latrobe when he so wished. Particulars 89.1 The facts and matters pleaded in paragraph 45 and 47 hereof are repeated seriatim. 90. Further and in the alternative, David and Keith are estopped from denying the agreement to appoint Damian as a director of Latrobe or relying on the Resolution in circumstances where Hamex and Damian provided security for the loan by BankSA to Latrobe to purchase the Latrobe Property with the expectation that Damian would be appointed as a director of Latrobe. Particulars 90.1 The facts and matters pleaded in paragraph 44 are repeated seriatim. 90.2 in the circumstances referred to in paragraph 44, David and Keith each represented to Damian, and through Damian, Hamex, that Damian could be a director of Latrobe if he so wished. 90.3 Hamex relied on the representation by providing the unlimited guarantee and security over its assets, as referred to in paragraphs 44.2.1 and 44.2.2 above, which it would not have provided but for the agreement that Damian could act as a director. 90.4 Damian relied on the representation by providing the limited guarantee and indemnity referred to in paragraph 44.2.3 above, in his capacity as trustee of the Estate, which he would not have provided but for the agreement that he could act as a director. 90.5 Hamex would suffer detriment if David and Keith were to depart from the representation, in that it would remain exposed to unlimited liability in respect of the affairs of Latrobe but would have lost the ability to have any independent input into the management of Latrobe through an appointed director, given David's conflicts of interest. 90.6 Damian would suffer detriment if David and Keith were to depart from the representation, in that he would remain exposed to liability in respect of the affairs of Latrobe but would have lost the ability to have any input into the management of Latrobe. 90.7 in the circumstances, it would be unconscionable, as against both Hamex and Damian, for David and Keith to depart from the representation and to deny Damian any opportunity to act as a director of Latrobe. 91. Further and in the alternative, the passing of the Resolution by David and Keith: 91.1 put the interests in of Klingon and Sermocom ahead of Hamex; and 91.2 in the case of David conflicted with his duties as a: 91.2.1 director of Hamex; and 91.2.2 Trustee of the Estate. Particulars 91.3 The facts and matters pleaded in paragraphs 4.2, 4.3, 6.2, 6.3, 6.4, 6.5, 6.6, 8.1, 8.2, 8.3, 45, 46, 47, 48, 49, 50, 51, 53, 54 and 55 hereof are repeated seriatim. 71 As to the redemption claims, it is alleged that the Redemption Resolution: (1) was being pursued in circumstances giving rise to a breach by Latrobe of its obligations as trustee of the Unit Trust and for the ulterior purpose of benefiting Eleventh Klingon and Sermocom and to deprive the Estate of the investment in the car park and the opportunities associated with it (SSOC [92], [93]); (2) constituted unconscionable conduct contrary to s 20 of the Australian Consumer Law (comprising Sch 2 of Ch 2 of the Competition and Consumer Act 2010 (Cth) (SSOC [93A]) and s 12CA and s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) (SSOC [93B]); (3) constituted a breach of the duty David Lester owed as a trustee of the Estate (SSOC [93D]); (4) was oppressive to, unfairly prejudicial to or unfairly discriminatory against Hamex, in circumstances where Hamex had provided an unlimited guarantee and a fixed and floating charge over all of its assets in partial security of the bank loan facility that had been used to purchase the car park (SSOC [94]); and (5) was a decision by David Lester that put the interests of Klingon ahead of the Estate (SSOC [95.1]), and that "conflicts with his duties as a trustee" (SSOC [95.2]) and that "conflicts with his duties as a director of Hamex" (SSOC [95.3]). 72 Paragraph 93C of the SSOC requires separate attention. It is in the following terms: 93C. Further, or in the alternative, Latrobe is, within the meaning of s 79 of the Corporations Act, involved in contraventions by David and Keith of sections 181 and 182 of the Corporations Act, in relation to the service of the Notice and redemption of the Estate's units in the Unit Trust. Particulars 93C.1 In executing and serving the Notice to redeem the Estate's Units in the Unit Trust, David and Keith did not act in good faith in the best interests of Latrobe, having regard to the particulars to paragraph 93. 93C.2 Further, in executing and serving the Notice to redeem the Estate's Units in the Unit Trust, David and Keith had an improper purpose, being the purpose referred to in paragraph 93.7. 93C.3 In the premises, David and Keith have contravened s 181 of the Corporations Act. 93C.4 Knowledge of David's and Keith's lack of good faith and improper purpose, as the directors of Latrobe, is to be attributed to Latrobe. 93C.5 Accordingly, Latrobe knew, when serving the Notice, all of the essential elements of the contraventions by David and Keith of s 181, and were knowingly concerned in or party to their contraventions. 93C.6 Further, in executing and serving the Notice, David and Keith improperly used their position as the directors of Latrobe to gain an advantage for themselves or someone else (namely Sermocom and Klingon) and thereby contravened s 182. The particulars to paragraph 93 are repeated. 93C.7 Latrobe was knowingly concerned in or party to David's and Keith's contravention of s 182, in that it knew all of the essential elements of the contraventions by David and Keith of s182 when serving the Notice. 73 The relief sought to be claimed on behalf of Hamex includes orders pursuant to s 233 of the Corporations Act to the effect that David Lester be removed as a director of Hamex, that Damian Lester be appointed a director of Latrobe, that the Redemption Notice be set aside and that Latrobe be restrained from taking any step to redeem the units held by the Estate in the Unit Trust (SSOC [109.1] - [109.4]).

CRITERIA 74 Section 236(1) of the Corporations Act relevantly provides that a person may bring proceedings on behalf of a company if the person is an officer of the company and the person is acting with leave granted under s 237. Proceedings brought on behalf of a company must be brought in the company's name: s 236(2). Section 236(3) abolishes the right of a person at general law to bring or intervene in proceedings on behalf of a company. 75 As I have mentioned, Damian Lester is a director of Hamex and so has standing to make an application for leave to bring proceedings on its behalf: Corporations Act, s 236(1)(a), s 237(2). 76 Section 237(2) of the Corporations Act provides that the Court must grant the application if it is satisfied that: (a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and (b) the applicant is acting in good faith; and (c) it is in the best interests of the company that the applicant be granted leave; and (d) if the applicant is applying for leave to bring proceedings - there is a serious question to be tried; and (e) either: (i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or (ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied. (3) A rebuttable presumption that granting leave is not in the best interests of the company arises if it is established that: (a) the proceedings are: (i) by the company against a third party; or (ii) by a third party against the company; and (b) the company has decided: (i) not to bring the proceedings; or (ii) not to defend the proceedings; or (iii) to discontinue, settle or compromise the proceedings; and (c) all of the directors who participated in that decision: (i) acted in good faith for a proper purpose; and (ii) did not have a material personal interest in the decision; and (iii) informed themselves about the subject matter of the decision to the extent they reasonably believed to be appropriate; and (iv) rationally believed that the decision was in the best interests of the company. The director's belief that the decision was in the best interests of the company is a rational one unless the belief is one that no reasonable person in their position would hold. (4) For the purposes of subsection (3): (a) a person is a third party if: (i) the company is a public company and the person is not a related party of the company; or (ii) the company is not a public company and the person would not be a related party of the company if the company were a public company; and (b) proceedings by or against the company include any appeal from a decision made in proceedings by or against the company. Note: Related party is defined in section 228. 77 Damian Lester bears the onus of establishing that the requirements of s 237 are established on the balance of probabilities: Huang v Wang (2016) 114 ACSR 586 at [56], [58] (Bathurst CJ, McColl JA and Barrett AJA). 78 The application for leave does not require the Court to form a view as to the underlying merits of the proposed claim, except to the extent necessary to determine that there is a serious question to be tried. 79 The Court may make an order conditional upon Damian Lester undertaking to indemnify Hamex from any liability for costs it may incur in pursuing the action: Huang at [60]. 80 As will be seen, the defendants opposed the application on the basis that the requirements of s 237(b) and (c) are not satisfied. The remaining preconditions were either conceded or not the subject of submissions. 81 As counsel for Latrobe correctly submitted, the absence of submissions in relation to any one of the preconditions does not absolve the Court of the responsibility to satisfy itself as to their existence: In the matter of Orico Australia Pty Ltd [2019] VSC 313 at [30].

claims raising no serious question to be tried 82 For the purposes of the injunction application Damian Lester established that there was a serious question to be tried in respect of a claim asserted by him in his capacity as co-trustee of the Estate. Different issues arise in relation to the claims sought to be pursued on behalf of Hamex and in its name. For the purpose of the leave application, it must be established that there is a serious question to be tried within the meaning of s 237(2)(d) of the Corporations Act in respect of the particular relief to be sought on the company's behalf. A serious question will not arise if the claims are not claims in respect of which Hamex has standing to sue. 83 In determining whether there is a serious question to be tried, the following circumstance must be borne in mind. First, Hamex is neither an executor or trustee of the Estate nor a beneficiary of it. Second, to the extent that Hamex holds assets on trust for the beneficiaries of the Estate, those assets do not include the 380 units subject to the Redemption Notice. Third, whilst it may be accepted that as the corporate trustee of the Unit Trust, Latrobe owes duties to the unit holders, the unit holders do not include Hamex. Fourth, the duties of the directors of Latrobe, in their capacities as directors, are duties that are owed to Latrobe, not to Hamex. Fifth, the duties of a director of a company that conducts an enterprise acts as a trustee do not include a duty to return dividends from the enterprise to the company's shareholders. Sixth, failure of the enterprise conducted by the corporate trustee would not in the usual course cause a diminution in the value of the corporation's shares. 84 In light of these circumstances, I have concluded that there is no serious question to be tried on behalf of Hamex in respect of the matters pleaded at [92] - [93D] of the SSOC. 85 The facts and propositions of law pleaded at [92] and [93] of the SSOC are to be understood as alleging breach by Latrobe of its duties as trustee of the Unit Trust. As I have said, those duties are not owed to Hamex. 86 The facts and propositions of law pleaded at [93A] of the SSOC are to the effect that Latrobe engaged in unconscionable conduct by reason of the alleged undervaluation of the Estate's units in the Unit Trust, being units that are not held by Hamex in any capacity. The particulars of unconscionable conduct do not refer to the provision by Hamex of its guarantee and indemnity to BankSA. 87 The allegation at [93B] of the SSOC alleges that a unit in the Unit Trust is a financial product and that the issue of the Redemption Notice comprised conduct in relation to the provision of a financial service within the meaning of the ASIC Act. Assuming those propositions to be correct, it is not alleged that the financial services were provided to Hamex and it is difficult to comprehend how any such proposition could be made good on the material before the Court. 88 Paragraph 93C of the SSOC (extracted at [72] above) alleges a series of primary contraventions of the Corporations Act by David Lester and Mr McKnight, constituted of breach of duties they owe to Latrobe as directors of that company. The effect of the plea is that Latrobe was knowingly concerned with, or party to a breach of duties owed to itself. I cannot accept that such an allegation could give rise to a serious question to be tried for the purposes of s 237(2)(d) of the Corporations Act. If there be a cause of action founded on a breach of duties owed by the directors of Latrobe to Latrobe, it does not give rise to a cause of action vested in Hamex. 89 As a former director of Latrobe, Damian Lester has standing to apply for leave to commence a proceeding on behalf of Latrobe and in its name: Corporations Act, s 236(1)(ii), s 237(1). However, Damian Lester has not sought leave on that basis. The order sought is a grant of leave to commence an action on behalf of Hamex against each of the defendants, including Latrobe. 90 Similarly, whilst Hamex, as shareholder, may apply for leave to commence a proceeding on behalf of Latrobe, submissions advanced on behalf of Damian Lester did not address the criteria under s 237 of the Corporations Act from the footing that Hamex was proposing a derivative action of that kind and in that capacity, nor does the interlocutory application name Hamex as an actual or proposed applicant. Damian Lester's submissions did not adequately explain how the commencement of such an action could be in the best interests of Latrobe for the purposes of s 237(2)(c) of the Corporations Act, even assuming that Hamex could be regarded as an applicant for leave. In light of what I have said about the nature of the allegation, I would not grant Damian Lester leave to commence on behalf of Hamex a further application for leave under s 237(2) in respect of the allegations in [93C] of the SSOC, if that was what was intended. I do not understand Damian Lester to be seeking to commence a derivative action within a derivative action. 91 The allegation in [93D] of the SSOC is expressed as a breach by David Lester of his duty as a co-trustee of the Estate. Hamex does not have standing to sue a trustee of the Estate for breach of trust per se. 92 Interpreted generously, the allegation in [95] of the SSOC may be understood to allege a conflict between the duties owed by David Lester in his various capacities as a director of Latrobe, a director of Eleventh Klingon, a director of Hamex and a co-trustee of the Estate. If leave is to be granted in respect of the issues raised in that paragraph, it should be conditional on the plea being recast in terms that make the claim pleaded on behalf of Hamex distinguishable from any claim pleaded on behalf of Damian Lester as co-trustee. 93 If I am wrong in concluding that the pleas in [92] - [93D] do not give rise to any claim that may be pursued at the suit of Hamex, I would refuse Damian Lester leave to commence proceedings in the company's name in relation to the same matters on the independent basis that to do so would not be in the best interests of the company. It has not been established that pursuance of those particular claims would advance or protect the particular interests of Hamex that are potentially affected by the issue of the Redemption Notice. 94 It follows that the criteria in s 237(2)(b) and (d) of the Corporations Act are not satisfied in respect of the claims pleaded at [92] - [93D] and the application should be dismissed in respect of them. 95 The remaining claims allege breach of duties owed by David Lester as a director of Hamex and claims of oppression of Hamex in its capacity as a shareholder of Latrobe, and claims relating to an agreement that Damian Lester be a director of Latrobe for reasons relating to (among other things) the provision of the guarantee and indemnity by Hamex. I now turn to consider those claims in light of the submissions advanced on behalf of Latrobe and the Parent Defendants.

other CLAIMS 96 The submissions of Latrobe and the parent defendants may be distilled to three contentions. First, the proposed claims were subject to an estoppel of the kind recognised by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Secondly, Latrobe's action in issuing the Redemption Notice was undertaken in its capacity as trustee of the Unit Trust resulting in no real and substantive injury to Hamex, such that it could not be in the best interests of Hamex to pursue the claims. Thirdly, Damian Lester is not acting in good faith both because the claims cannot succeed and because he has an ulterior purpose in the context of a long running dispute with his father and co-trustee David Lester. There is considerable overlap in these contentions.

Anshun estoppel 97 The question in Anshun was whether the owner of a crane (the Authority) could bring a proceeding to enforce a right of indemnity against the hirer of the crane (Anshun) in circumstances where the indemnity had not been raised as a defence in an earlier suit brought by an injured workman against both of them. The majority (Gibbs CJ, Mason and Aickin JJ) upheld an order staying the Authority's action. The majority said that no res judicata or issue estoppel arose because the indemnity cause of action as between the Authority and Anshun had been neither tried nor determined in the earlier proceeding. The critical issue, their Honours said, was whether the case fell within this "extended principle" stated in Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 (at 319): … where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the party to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. 98 The majority in Anshun said that no estoppel would arise unless it appeared that "the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it" (at 602). It had generally been accepted, the majority said, that a party "will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment" (at 603). For conflict to arise it would be sufficient, their Honours said, if the judgments declared rights which were inconsistent in respect of the same transaction. The question of whether the Authority had a contractual right of indemnity against Anshun was, the majority said, so closely connected with the subject matter of the workman's action that it was expected that it would be relied upon as a defence to that claim. The existence of the indemnity would have obviated an enquiry into the rights of contribution vis-à-vis the Authority and Anshun. "If reserved for assertion in a later action," the majority said (at 604) "it would increase costs and give rise to a conflicting judgment". 99 In Bryant v Commonwealth Bank (1995) 57 FCR 287 the Full Court of this Court applied the Anshun principle to a case involving the failure by the applicants to plead the subject matter of their action by way of cross-claim in an earlier proceeding commenced against them by the respondent. Similar questions arose before the Full Court in Ling v Commonwealth (1996) 68 FCR 180. Wilcox J was a member of the Court on both appeals. In Ling his Honour summarised the principles as follows (at 182 - 183): As it seems to me, application of the principle to a failure to plead a defence will ordinarily not present a problem. It is not unreasonable to expect people who are sued promptly to consider what defences are available to them and put forward any that seem to have substance. The same statement may be made about a claim for indemnity, as between parties to the first proceeding, in relation to the claim made in that proceeding; as in Anshun itself. However, it cannot be made about cross-claims generally. As a member of the Full Court in Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287, I joined in holding that the Anshun principle might apply to a cross-claim. I adhere to that view, and also the actual decision in the case. Bryant was, in my opinion, a clear case for the application of the Anshun principle. The claim that Mr Bryant sought to make in the second action was intimately connected to the bank's claim against him in the first action. Both claims arose out of substantially the same facts and Mr Bright had originally pleaded the matters raised in the second case as a defence to the first. The decision in Bryant does not mean that it will always be appropriate to apply the Anshun principle to cross-claims. Some cross-claims have little or no connection with the claim in the action. There may be no more than an identicality of parties. It is difficult to see any justification for applying the Anshun principle to a case of that kind. Some cross-claims overlap the facts of the principal claim but involve additional facts. Where this occurs, a question of degree arises. It would be wrong to say that the Anshun principle is excluded whenever there are additional facts; to go so far would be to render it nugatory. However, where the additional facts are substantial, it may be appropriate to accept the reasonableness of separate proceedings. 100 To similar effect, Sundberg J said (at 193): It is one thing to say that a party could have raised a defence or cross-claim in an earlier proceeding. It is another to say that he should have. 101 All members of the Full Court in Ling concluded that it was not unreasonable for the subject matter of the action not to have been pursued by way of a cross-claim in the earlier proceedings. 102 The Parent Defendants submit that the claim sought to be commenced on behalf of Hamex involves the agitation of "much the same facts and issues" that were before the Supreme Court of Victoria in proceedings commenced by David Lester in action 4395 of 2017 (the Victorian proceedings) in which judgment was delivered on 16 October 2018: Lester v Lester [2018] VSC 611. The Victorian Proceedings were heard in June 2018, that is, after the Directorship Resolution but before the Redemption Resolution. 103 The Parent Defendants submit that in the course of the Victorian proceedings, Damian Lester "made specific representations to the Court, going to the heart of the issues he now seeks to agitate through the medium of Hamex" and that the Victorian proceedings "readily lend themselves to a determination of the matters now sought to be pursued in the name of Hamex". They rely on Lester v Lester at [47] - [51], [99] - [102] and [105] - [108]. 104 The Parent Defendants submit that the proposed claim by Hamex constitutes an abuse of process and evidences a lack of good faith on the part of Damian Lester for the purposes of this Court's consideration of the precondition in s 237(2)(b) of the Corporations Act. To similar effect, Latrobe submitted that Damian Lester "could have raised" the directorship claims in the Victorian proceedings "but he appears to have deliberately chosen not to do so". 105 The Victorian proceedings concerned the interpretation and application of the terms of the will of Masha Lester in relation to certain rights asserted by David Lester in connection with income derived from certain assets of the Estate. The trial judge described the issues arising for determination (at [2]) as follows: (a) Did the plaintiff hold a life tenancy in the estate's share of a property in Toorak pursuant to the Will? (b) Are net sale proceeds of estate assets income or capital? (c) How should cl 17 of the Will be construed? 106 The fact and outcome of the Victorian proceedings is the subject of pleaded allegations in the SSOC at [32] and [33]. Those paragraphs form no part of the claims sought to be advanced on behalf of Hamex. 107 The Court is not presently asked to determine whether the claim commenced by Damian Lester in his capacity as co-trustee of the Estate should be dismissed or stayed by reference to the principles stated in Anshun. The defendants have made no application for relief of that kind. The Court's present concern is to determine whether Damian Lester should be refused leave to commence a proceeding on behalf of Hamex on the basis that the proposed action would be liable to be dismissed or stayed because it could and should have been brought by or on behalf of Hamex in the context of the Victorian proceedings. 108 None of the defendants have suggested that the proposed claims could and should have been brought by way of a defence to what was effectively a construction summons and application for directions in the Trust, Equity and Probate list of the Supreme Court of Victoria. That is unsurprising. Hamex was not a party and the claims, if proven, could not supply a "defence" to the summons. 109 For the directorship claims to have been agitated in the Victorian proceedings it would have been necessary for Hamex to be joined as a party and for at least one additional party to be joined, namely Latrobe. To the extent that a cause of action vests in Hamex in connection with the removal of Damian Lester as a director of Latrobe, that cause of action could have no bearing at all on the outcome of the issues raised by David Lester in the Victorian proceedings. 110 To the extent that any defendant submitted that the redemption claims could have been agitated in an earlier proceeding, the submission must be rejected because of the chronology of events. 111 The defendants have not established that the reasons for judgment given in Lester v Lester give rise to an estoppel. Relevantly, the passages at [47] - [51] summarises submissions advanced on behalf of Damian Lester on the question of whether the net sale of the proceeds of assets forming part of the residuary estate are to be treated as income or capital. The passages at [99] - [102] and [105] - [108] summarise Damian Lester's submissions concerning the interpretation of cl 17 of the will, and more specifically concerning the application of the doctrine of acceleration to certain beneficiaries' interests. 112 Nor have the defendants established that the factual subject matter of the Victorian proceedings overlapped with the factual subject matter forming the basis of the directorship claims or the redemption claims in any way that might conceivably give rise to a risk that there might be inconsistent findings or conflicting judgments. It is unclear how resolution of the issues arising in the Victorian proceedings could have any bearing on the application of the facts or the law to the directorship claims or the redemption claims sought to be commenced on behalf of Hamex, or vice versa. 113 It may be accepted that the administration of the sizeable Estate of Masha Lester is bedevilled with inter-familial conflict and distrust. However, it does not follow that it was unreasonable for Damian Lester to fail to cause Hamex to intervene in the Victorian proceedings, assuming that he had leave under s 236 of the Corporations Act to do so. 114 Whilst the facts and outcome in Lester v Lester form a part of the pleaded case, it has not been shown that the proceedings sought to be commenced on behalf of Hamex constitute a collateral attack on the judgment and, as I have said, the claims forming the subject of the application presently before me do not rely on proof of the matters alleged at [32] or [33] of the SSOC. 115 Introduction of the proposed claims in the Victorian proceedings would have unnecessarily enlarged, delayed and complicated that proceeding, brought as it was under a special procedure for the resolution of questions of construction. 116 For the purposes of argument it may be accepted that all disputes arising out of or in connection with the administration of the deceased Estate of Masha Lester could have been sued upon by way of claims and cross-claims in the Victorian proceedings, including by the joinder of several additional parties. It does not follow that they should have been. As Wilcox J said in Ling, whether the principles stated in Anshun apply to preclude a suit that could and should have been brought by way of a cross-claim in an earlier proceeding involves questions of fact and degree. In all of the circumstances I am not satisfied that it was unreasonable for Damian Lester not to cause Hamex to commence (with leave) a cross-claim in the Victorian proceedings in connection with the directorship claims or the redemption claims. 117 As a consequence, I reject a related submission advanced by the Parent Defendants to the effect that the failure to join Hamex in the Victorian proceedings has the consequence that Damian Lester cannot establish that it is in the best interests of Hamex "to be drawn further into these proceedings". It may be accepted for present purposes that Hamex was formed for the purpose of receiving and applying income from the assets of the Estate and that its interests align with those of the beneficiaries of the Estate. However, I do not accept that Hamex has "foregone the option" of commencing the proposed claims merely because they were not pursued in the context of the earlier litigation relating to the Estate and to which it was not a party.

Best interests 118 I have already determined that leave should not be granted in respect of the allegations pleaded at [92] - [93D] of the SSOC on the alternate basis that pursuance of those claims would not be in the best interests of the company. 119 The remaining claims include a claim of oppression by Hamex (as shareholder) in respect of the conduct of the affairs of Latrobe (SSOC [88], [94]). These claims are proposed in circumstances where all of Latrobe's assets are held on trust pursuant to the terms of the Unit Trust Deed. It was submitted that, as Hamex is not a beneficiary of the Unit Trust, its interests are not affected by the alleged conduct such that relief under s 232 and s 233 of the Corporations Act would be either unavailable or inappropriate. 120 In Ciccarello, in the matter of Adelaide Property Development Pty Ltd ACN 118 023 868 v Cubelic [2008] FCA 141 (Mansfield J) at [28]: The preponderance of authority is to the effect that, where oppression has occurred in a company which is a bare trustee so that all its assets are held in trust, relief under s 232 and s 233 of the Corporations Act is inappropriate. Oppressive conduct by the trustee does not result in diminution in the value of the shares in the trustee company. See Kizquari Pty Ltd v Prestoo Pty Ltd (1993) 10 ACSR 606; McEwen v Combined Coast Cranes Pty Ltd (2002) 44 ACSR 244; Surf Road Nominees Pty Ltd v Tass James [2004] NSWSC 61. 121 In Vanmarc Holdings Pty Ltd v PW Jess & Associates Pty Ltd [2000] VSC 153; 34 ACSR 222, Mandie J considered a claim of oppression under what was then s 246 of the Corporations Law in the context of a trading trust. His Honour said that while the shares in trustee companies will usually be found to have no value so that relief should not granted, nevertheless relief under the oppression provisions could not be "ruled out in the case of a trustee company, however unlikely that prospect may be" (at [36]). His Honour continued: … In that regard, it must be remembered that the powers of the court under that section are not confined to orders for winding up or for the compulsory sale and purchase of shares but include orders restraining a person from engaging in specified conduct or from doing a specified act and requiring a person to do a specified act. 122 His Honour was there referring to a class of case in which the plaintiff shareholder of a defendant company was also a unit holder in the trust of which the defendant company was trustee. 123 There is force in the argument that where participants in a venture have structured their affairs in a trading trust it is the terms of the trust deed and not the oppression provisions of the Corporations Act to which they should have recourse. For a more comprehensive analysis of the principles see Emmett, the Hon AR, AO QC and Williams H, "Equity's childbearing years: the proposed extension of shareholder oppression remedies to the beneficiaries of trading trusts" (2018) 10 (July) Butterworths Corporation Law Bulletin. That principle must apply with all the more force in a case in which the shareholder claiming oppression holds no beneficial interest in the assets of the trust company, as is the case here. 124 However, the actions taken by Latrobe by resolution of its directors arguably affect the interests of Hamex in a way that is not the subject of consideration in the authorities upon which Latrobe and the Parent Defendants relied. The pleaded allegations (which do not appear to be disputed) are that Hamex contributed (albeit indirectly) to the acquisition of the car park (being the only asset of the Unit Trust) by guaranteeing Latrobe's obligations under a bank loan facility. The guarantee is secured by a fixed and floating charge over all of the assets and undertakings of Hamex. It is at least arguable that the contribution was made by Hamex as shareholder. The interest sought to be protected by Hamex is not the value of its shareholding but its exposure under the security (affecting all of its assets) in respect of the financial affairs of a company in which it has no representation on the board of directors. The exposure is a real one because Latrobe's obligations under the loan agreement are not yet discharged. 125 Whether Hamex provided the security by virtue of, or in its capacity as, a shareholder of Latrobe may well be contested at trial. However, it cannot be said that there is no serious question to be tried in respect of that issue. There is also a serious question to be tried as to whether David and Damian Lester were appointed as directors of Latrobe for purposes that related to the provision of the security and the management of the risk associated with it. The case proposed to be advanced by Hamex is that, by passing the Directorship Resolution and the Redemption Resolution, David Lester did not act in the best interests of Hamex in connection with its exposure under the guarantee and the charge, and that nothing in the Unit Trust Deed absolves David Lester from discharging the duties he owes to Hamex in that regard. 126 During the course of argument on the injunction application, the defendants adduced evidence to the effect that the bank had given an indication that if the Estate's units in the Unit Trust were to be redeemed, then the guarantee given by Hamex and the associated security may be revoked. However, there is no evidence that David Lester made any enquiries of the bank in relation to the interests of Hamex prior to voting on the Redemption Resolution or the commencement of these proceedings, and there is no evidence that the bank has committed to a final position. The Redemption Resolution was not made subject to Hamex being released from its obligations under the guarantee. As I have said, if Hamex is not released, its assets would be exposed to risk in a business conducted by a trust company in which it has no representation on the board of directors. It may be that that is the natural consequence of the commercial and legal relationship the parties have entered into, but that is a matter for trial. 127 The outcome may well turn on whether there exists a joint venture, whether Hamex is a participant in it and the extent to which the duties of David Lester are affected by it. If there be a joint venture and if Hamex be a venturer, then there is utility in granting leave to resolve a deadlock between the controlling interests in it: Metyor Inc v Queensland Electronic Switching Pty Ltd [2003] 1 Qd R 186; Fiduciary Ltd v Morningstar Research Pty Ltd (2005) 53 ACSR 732. 128 In the circumstances I have described, it is sufficiently arguable that remedies under s 233 of the Corporations Act are available to Hamex, notwithstanding the principles stated by Mansfield J in Ciccarello and the cases cited by his Honour. 129 In the circumstances I have described, no cause of action vests in Damian Lester personally in respect of Hamex's interests under and concerning the guarantee and associated security. The interests of the Estate in its unit holding are not the same as the interests of Hamex as guarantor of Latrobe's financial obligations. Accordingly, it cannot be said that Hamex is being brought into the litigation unnecessarily or "against its will" see Ragless v IPA Holdings Pty Ltd (in liq) (2008) 65 ACSR 700 at [35].

Good faith 130 In Swansson v R A Pratt Properties Pty Ltd (2002) 42 ACSR 313 Palmer J said: 36 Nevertheless, in my opinion, there are at least two interrelated factors to which the courts will always have regard in determining whether the good faith requirement of s 237(2)(b) is satisfied. The first is whether the applicant honestly believes that a good cause of action exists and has a reasonable prospect of success. Clearly, whether the applicant honestly holds such a belief would not simply be a matter of bald assertion: the applicant may be disbelieved if no reasonable person in the circumstances could hold that belief. The second factor is whether the applicant is seeking to bring the derivative suit for such a collateral purpose as would amount to an abuse of process. 37 These two factors will, in most but not all, cases entirely overlap: if the court is not satisfied that the applicant actually holds the requisite belief, that fact alone would be sufficient to lead to the conclusion that the application must be made for a collateral purpose, so as to be an abuse of process. The applicant may, however, believe that the company has a good cause of action with a reasonable prospect of success but nevertheless may be intent on bringing the derivative action, not to prosecute it to a conclusion, but to use it as a means for obtaining some advantage for which the action is not designed or for some collateral advantage beyond what the law offers. If that is shown, the application and the derivative suit itself would be an abuse of the court's process: Williams v Spautz (1992) 174 CLR 509 at 526; 107 ALR 635 at 648. The applicant would fail the requirement of s 237(2)(b). 131 The defendants' arguments concerning the requirement for good faith relied in large part on the asserted Anshun estoppel (which I have rejected) and on the contention that no cause of action existed for the benefit of Hamex in connection with the Directorship Resolution or the Redemption Resolution (which I have rejected in part). 132 The defendants further submitted that a lack of good faith may be inferred from the nature of the conflict between Damian Lester and his father David Lester. It is said that Damian Lester is motivated by a sense of ill will toward David Lester and so has an ulterior purpose in seeking to draw Hamex into the proceedings. The ulterior purposes were said to include a personal motivation to be reappointed as a director of Latrobe. For Latrobe it was submitted that the interfamilial dispute was a reason why Damian Lester could not remain on the board of Latrobe. I have some difficulty with that submission. The interfamilial dispute may equally be a reason why David Lester should not remain a director. Moreover, the dislike and dysfunction in the relationship may well have arisen as a result of the very factual and legal controversies that Damian Lester now seeks to have resolved. 133 In the proposed proceedings, an entitlement to have Damian Lester restored as a director of Latrobe is expressly asserted. That is a purpose for which they are to be commenced. To the extent that there is a serious question to be tried in respect of that asserted entitlement, there is nothing "ulterior" about it. 134 Finally, I have regard to Damian Lester's undertaking to bear the costs of Hamex in the proceedings forming the subject of any grant of leave. The giving of that undertaking is relevant to the question of whether Damian Lester is acting in good faith, although it is not determinative.

Conclusion 135 I am positively satisfied that Damian Lester has standing to bring the leave application. I am also positively satisfied that the criteria for the grant of leave are satisfied in respect of the pleaded claims save for the claims pleaded at [92] - [93D] of the SSOC. Leave will be granted in respect of the matters pleaded at [44] - [55], [88] - [91] and [94] - [95] of the SSOC subject to two conditions. First, the plea at [95] should be amended so as to clearly distinguish the breach asserted at the suit of Hamex from any breach asserted at the suit of Damian Lester. Second, Damian Lester is to bear the costs of Hamex (including satisfaction of any adverse costs orders made in relation to the company's claims), without affecting any entitlement for an award of costs in his favour should the claims brought on behalf of the company succeed. 136 The plaintiffs should serve on the defendants a proposed amended pleading giving effect to the Court's orders. Any dispute as to the proposed amendments should be the subject of application before the judge to which the matter will be allocated upon its transfer to the Victoria District Registry. I certify that the preceding one hundred and thirty-six (136) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.

SCHEDULE OF PARTIES SAD 48 of 2019 Defendants Fourth Defendant: DAVID RICHARD PELHAM LESTER Fifth Defendant: CECILY JOSEPHINE LESTER Sixth Defendant: KEITH MCKNIGHT

Corporations Act 2001(Cth)ss 180, 181, 182, 183, 232, 233, 236, 237

Judiciary Act 1903(Cth)ss 39B, 79, 80

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