Mount Gilead Pty Ltd v Macarthur-Stanham

Further background

1. The Trustee of the Trust, a company called Kalemon Investments Pty Ltd, holds all 10 ordinary shares in MGPL. MGPL in turn owned a property near Campbelltown named "Mount Gilead" comprising three lots, referred to as the Homestead Lot, the MDP Land and the Balance Land. The MDP Land comprised an area of approximately 182ha, whilst the Balance Land formed an area of approximately 448.9ha.
2. As the primary judge indicated, the proceedings in respect of which leave pursuant to s 237 of the Act was sought concerned a transaction in April 2015 (the "Lendlease Transaction"), by which MGPL, when under the control of Lee, granted Lendlease Communities (Mt Gilead) Pty Ltd ("Lendlease") options to purchase the Balance Land and the MDP Land for $120 million and $80 million respectively. It was common ground that Lendlease had exercised its option to purchase the MDP Land but was yet to do so in respect of the Balance Land, with the latter option set to expire in 2023 or 2024.
3. In the broadest of terms, the putative claim which the Applicant sought to bring in MGPL's name related to the circumstances in which the Lendlease Transaction came to be effected and asserted that it had been entered into at a significant undervalue. A contrast was sought to be drawn between that transaction and an earlier commercial agreement which had resulted in MGPL, in August 2004, entering granting options to Australand Holdings Ltd (Australand), to purchase a broadly similar parcel of land (approximately 605.42 hectares) for a price of "not less than $175 million" (the Australand Option Agreement).
4. Australand never exercised the options, paving the way, as it were, for the Lendlease Transaction. The Applicant sought to rely on the price negotiated in respect of the earlier transaction to support her contention that the Lendlease Transaction had been entered into at a significant undervalue.
5. The Australand Option Agreement was not in evidence before the primary judge although the Applicant deposed to her understanding that it included the following commercial terms: 1. Australand would apply for the rezoning of the land; 2. upon rezoning, Australand would have the option to purchase the land for the purposes of constructing a residential community development comprising several thousand dwellings; 3. the purchase price was a sum of not less than $175 million; 4. option fees totalling $14,500,000 would be paid over five years; and 5. there was a purchase price uplift mechanism benefitting MGPL.
6. The Applicant's essential complaint was that the Respondents were negligent in not causing or not advising that MGPL go to the open market (as it had done in 2004) prior to entering into the Lendlease Transaction and that this resulted in a "sale" at a significant undervalue to the detriment of MGPL. So much may be gleaned from Part A of the Commercial List Statement (CLS), which relevantly framed the nature of the dispute as follows: "6 Katrina contends that the Lendlease transaction was entered into at an undervalue and that, by causing MGPL to enter into that transaction, Lee breached his director's duty of care and skill both under section 180(1) of the Corporations Act 2001 (Cth) and under the general law. 7 The second defendant (Andrew Martin), either alone or with the third defendant (Old Mill Properties), acted as MGPL's adviser in relation to the Lendlease transaction and owed MGPL a duty to exercise reasonable care in advising MGPL. ... 9 Katrina contends that Andrew Martin, or Andrew Martin and Old Mill Properties … breached their duty of care to MGPL by failing to advise MGPL that the Lendlease transaction was at an undervalue and also by failing to advise MGPL to conduct an expression of interest campaign to generate competitive tension between interested purchasers, including Lendlease. 10 Katrina contends that, as a consequence of entering into the Lendlease transaction, MGPL has suffered loss and damage in a sum to be quantified. 11 Katrina apprehends that Lee, as governing director, will decline to permit MGPL to sue Lee. In any event, Lee cannot conduct an action on behalf of MGPL against himself. Katrina seeks leave under section 237 of the Corporations Act to bring these proceedings on behalf of MGPL pursuant to section 236." (emphasis added)
7. The Commercial List Statement also contained the following particulars in support of the claim that "[t]he sale to Lendlease of the right to acquire the MDP Land and the Balance Land was for a significant undervalue": "(i) The price obtained from Lendlease was less than what a developer in the market would have been prepared to pay for the MDP Land and the Balance Land, or the right to acquire the MDP Land and the Balance Land, having regard to rezoning and development opportunities for the land. (ii) The consideration to be paid by Lendlease per hectare (including option fees) was comparable to the consideration paid per hectare (including option fees) that Australand was prepared to pay under the Australand Transaction in circumstances where the Lendlease Transaction was entered into more than a decade after the Australand Transaction had been entered into. Over that period the median house price in Sydney's 'outer ring', including the Campbelltown area, had risen by about 50% (C Angus, 'Demand, deposits, debt: Housing affordability in Sydney', NSW Parliamentary Research Service, Briefing Paper No 1/2017 pp 15, 17). It is accordingly likely that, between 2004 and 2015, the value of land in Sydney's 'outer ring', capable of being developed for housing and other urban purposes, also increased significantly. (iii) The consideration under the Lendlease Transaction was to be paid over a period of 11 years, which was likely to be longer than the period over which the consideration or majority of the consideration payable under the Australand Transaction was to be paid …"
8. Under the Australand Option Agreement, the per hectare value of the land was said to have been $288,612.19 (had the option been exercised) as compared with $317,000.45 per hectare under the Lendlease Transaction, noting that at the time of the hearing at first instance, Lendlease had exercised its option with respect to the MDP Land but not the Balance Land.
9. In short, it was submitted that general movements in the market over a ten year period between Australand and Lendlease meant that there should have been a far greater differential in the value of land than the approximate $30,000 per hectare difference in the indicative figures noted above. This reasoning was relied upon in support of the contention of a sale at a significant undervalue for which the Respondents were said to have been responsible.

The s 236 Corporations Act application

1. Although the Applicant was never a shareholder of MGPL, it was not in dispute that she had standing to apply for leave to bring proceedings on behalf of MGPL in her capacity as a former director of that company, pursuant to s 236 of the Corporations Act. That section provides that: "Bringing, or intervening in, proceedings on behalf of a company (1) A person may bring proceedings on behalf of a company, or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them), if: (a) the person is: (i) a member, former member, or person entitled to be registered as a member, of the company or of a related body corporate; or (ii) an officer or former officer of the company; and (b) the person is acting with leave granted under section 237. (2) Proceedings brought on behalf of a company must be brought in the company's name."
2. The field of dispute on the hearing of the application before the primary judge was s 237(2) of the Corporations Act, the cumulative criteria of which must all be satisfied by an applicant for leave to commence a statutory derivative action. The Applicant for leave bears the onus of establishing each of those criteria on the balance of probabilities: see, for example, Huang v Wang (2016) 114 ACSR 586; [2016] NSWCA 164.
3. Section 237(1) and (2) of the Corporations Act provides that: "Applying for and granting leave (1) A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings. (2) 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."
4. As against Lee, the primary judge concluded that the Applicant was not acting in good faith and that there was no serious question to be tried. This conclusion turned principally upon his Honour's construction of a settlement deed (the Settlement Deed) that had been entered into relevantly by the Applicant, MGPL and Lee in relation to earlier proceedings in the Supreme Court in relation to the Estate of Lady Macarthur-Onslow.
5. The Settlement Deed was entered into on 22 February 2021, only some seven weeks prior to the commencement of the s 237 application and the Commercial List Proceedings. By cl 11.1(a) of that Deed, the Applicant agreed to "release and [did] unconditionally release Lee … from all claims Katrina has or may have against [him] in any capacity whatsoever" and, by cl 11.1(b), Katrina undertook "not to make, take or institute any claim Katrina has or may have against [Lee] in any capacity whatsoever". The primary judge held that cl 11.1(b) effectively operated to preclude and was a complete answer to the proposed claims against Lee in the Commercial List Proceedings. His Honour did not decide whether it also operated to preclude the very making of the s 237 application as against Lee.
6. As against Mr Martin, the primary judge concluded that there was no serious question to be tried as to the existence of a retainer between him and either Lee or MGPL which would found a duty of care to MGPL.
7. His Honour also concluded in respect of both OMP and Mr Martin that it had not been demonstrated that it was in MGPL's best interests to bring the proposed claims. In particular, his Honour said that he was not persuaded that the Applicant "has shown a sufficient evidentiary basis for the claim that MGPL has suffered loss or damage to establish that the proceedings are in MGPL's best interests": PJ [94].
8. His Honour also refused leave to bring a claim against JLL against whom no application for leave to appeal was pursued.
9. The primary judge's summary conclusion (PJ [101]-[102]) was as follows: "I am satisfied, for the purposes of s 237 of the Corporations Act, that it is probable that MGPL will not itself bring the proceedings, which was common ground between the parties; I am not satisfied that Katrina is acting in good faith in seeking to bring the proceedings, in respect of Lee who raised that issue; I am not satisfied that it is in MGPL's best interests that Katrina be granted leave to bring the proceedings, where Katrina has not adequately addressed the risk of disruption to MGPL's continuing dealings with Lendlease (and also other developers if Lendlease does not exercise the option for the Balance Land) by the continuance of the proceedings; and Katrina has not shown more than a speculative prospect of a recovery for MGPL from the proceedings. The indemnity offered by Katrina does not displace that difficulty, where the detriments which MGPL would suffer are not limited to the risk of costs of the proceedings. I am also not satisfied that Katrina has established a serious question to be tried in the proceedings. Where any one of the requirements essential to a grant of leave is not satisfied, the Court must not grant leave to bring the relevant proceedings, and here several of those requirements are not satisfied. Katrina's application for leave under s 237 of the Act should therefore be dismissed, and the substantive proceedings should also be dismissed where it is common ground that they involve only derivative claims and cannot proceed without such leave."
10. The Applicant now seeks leave to appeal from the orders of the primary judge other than those in relation to the application to bring proceedings in the name of MGPL against JLL.
11. The first three grounds of appeal in the draft Notice of Appeal relate to the primary judge's conclusion as to the operation of cl 11.1(b) of the Settlement Deed and his Honour's conclusion as to the non-satisfaction of the good faith requirement in s 237 of the Act.
12. As against OMP and Mr Martin, the Applicant's contention on appeal is that the primary judge erred in: "(a) refusing to admit into evidence Briefing Paper No 1/2017 by the NSW Parliamentary Research Service titled 'Demand, deposits, debt: Housing affordability in Sydney', authored by a C Angus: (b) finding, in circumstances where Jones Lang Lasalle (NSW) Pty Limited, in the course of advising MGPL on securing "the maximum sale figure" for the Property, had prepared an indicative marketing timetable for an expressions of interest campaign, that: (i) the evidence did not establish a real prospect that an expression of interest campaign or similar public marketing process would have led to a better result for MGPL than entry into the Lendlease Transaction (as defined in paragraph 17 of the CLS): J [82]; (ii) Katrina had not shown a sufficient evidentiary basis for the claim that MGPL had suffered loss or damage as a consequence of the respondents causing MGPL to enter into the Lendlease Transaction, to establish that the proceedings below were in the best interests of MGPL for the purposes of s 237(2)(c) of the Act: J [94]-[97]; and (iii) further, Katrina had not established a serious question to be tried that MGPL could recover substantial damages or compensation: J [89]; and (c) holding that there is otherwise no serious question to be tried in respect of the claims against the second and third respondents: J [80]-[83]."
13. There was no formal challenge in the form of a discrete ground of appeal to the primary judge's finding that the Applicant had not discharged her onus of demonstrating that the grant of leave to proceed on behalf of MGPL was in the company's best interests. There is a wide range of matters affecting the "best interests" calculus: see, for example, Swansson v R A Pratt Properties Pty Ltd (2002) 42 ACSR 313; [2002] NSWSC 583 (Swansson); Re Global Advanced Metals Pty Ltd (2019) 141 ACSR 222; [2019] NSWSC 1804.
14. On the hearing of the application for leave to appeal, the Applicant sought leave to adduce fresh evidence that had only come into her possession since the proceedings at first instance. Leave to adduce that evidence was granted orally. That evidence principally related to the proposed claims against Mr Martin and OMP, and is considered later in these reasons in the context of the appeal grounds concerning the primary judge's refusal to grant leave to proceed against them.

The appeal in respect of the proposed claim against Lee

1. As noted above, the primary judge refused the application for leave to proceed in relation to the proposed claim against Lee principally by reference to cl 11.1(b) of the Settlement Deed.
2. As his Honour observed, the Settlement Deed recited that Katrina was the plaintiff in the Supreme Court proceedings in respect of Lady Macarthur-Onslow's estate; that "Katrina has also made allegations against Lee, MGPL and Kalemon ("Katrina's Claims")" and that the parties had agreed to settle, inter alia, Katrina's Claims on the terms set out in the Deed. Clause 11.1 of the Settlement Deed sets out releases and undertakings given by Katrina as follows: "11.1 Katrina's Releases Upon the dismissal of the Proceedings, Katrina agrees subject to clause 11.3: (a) to release and does unconditionally release Lee, Steve, Neil, the Estate and MGPL, its officers employees and servants (the Defendants), from all Claims Katrina has or may have against any of the Defendants in any capacity whatsoever; and (b) not to make, take or institute any Claim Katrina has or may have against any of the Defendants in any capacity whatsoever."
3. The term "Claims" which was used in each of cl 11.1(a) and 11.1(b) was defined as follows: "Claim means any present and actual or contingent, claim, cause of action, complaint, liability, cost or expense that any Party has or might have in connection with or arising in any way from the facts or matters or circumstances giving rise to or in any way relating to the Proceedings, or Katrina's Claims or the matters referred to in this deed, whether or not such claim or cause of action is known to that person or to any other at the date of this deed."
4. The term "Katrina's Claims" was defined as: "Katrina's Claims means the contents of the document entitled "document prepared by Hugh [Keller] to assist settlement discussions between Lee and Katrina" provided by Katrina to [a party to the deed] on or about 7 February 2019" ["Keller Document"]
5. As the primary judge also noted, the Keller Document (which was in evidence before his Honour) identified complaints previously made by Katrina, characterised as Lee "not doing the right thing", including allowing Lendlease to take certain steps in respect of the Homestead Lot; failing to test the market; failing to negotiate an annual option fee on the MDP Land; giving Lendlease "carte blanche to exercise ownership rights" before payment; entering into a commitment with Lendlease which ran for many years after the vesting date of the Mt Gilead Trust; and entering into a 20 year commitment with Lendlease without including a price adjustment similar to that agreed in the Australand Option Agreement. The document also recorded complaints as to the "sale of MDP [Land] for an undervalue" and the sale of the Balance Land "on long term arrangements with no upside".
6. Clause 11.3 of the Deed provided that: "Nothing in this deed affects the entitlement and rights of any party to enforce the provisions of this Deed, including relief for any breach, and nothing in this Deed affects the entitlement and rights of Katrina as beneficiary of the Estate of Lady Dorothy Wolseley Macarthur-Onslow under the will of Lady Dorothy Wolseley Macarthur-Onslow or as shareholder of Kalemon or as a beneficiary of the MGT." The "carve out" in relation to certain rights of Katrina in various capacities does not extend to a carve out of her statutory right, as a former director of MGPL, to seek leave to bring a derivative proceeding on behalf of MGPL. It may be noted that the primary judge observed that the limitation of cl 11.1 under cl. 11.3 "is not material in this application": PJ [29]. The potential significance, however, of cl 11.3 to the overall question of construction to be determined was raised in the course of the hearing of the appeal.
7. The primary judge concluded that Katrina's Claims, as defined by reference to the Keller Document, included claims or complaints in respect of the Lendlease Transaction, the sale of the MDP Land and the sale of the Balance Land of the kind that were sought to be advanced in the Commercial List Proceedings in respect of which leave pursuant to ss 236 and 237 was being sought: PJ [31].
8. This conclusion was not challenged.
9. In relation to the operation of cl 11.1(b) of the Settlement Deed, the primary judge rejected the Applicant's argument that the proceedings were sought to be brought in MGPL's name and on its behalf (rather than the Applicant's) on the basis that, as a matter of substance, the claims brought in these proceedings were a "Claim" (as defined) that Katrina has or may have against Lee, although they were also properly characterised as a claim that she sought to bring in MGPL's name and on its behalf. His Honour emphasised that Part A of the CLS identified the Applicant as the maker of the claims against Lee setting out the "Nature of Dispute" (see [10] above and, in particular, the references to "Katrina contends …").
10. Later in his judgment (PJ [45]), his Honour said that the Applicant's contentions constituted: "a 'claim' or a 'complaint' directed against Lee that he had acted in that manner and caused that loss to MGPL, notwithstanding that Katrina would not, as a matter of corporate law, be able to pursue that claim or complaint to a successful outcome without obtaining leave to bring derivative proceedings in MGPL's name. That is also apparent, as a matter of substance, where Katrina, rather than MGPL by any corporate decision or decision by Lee as its governing director, has formulated and seeks to advance the claims made in the Commercial List Statement, although she can only do so in MGPL's name."
11. His Honour went on to hold that that conclusion was consistent with a proper understanding of the nature of derivative proceedings brought under ss 236-237 of the Corporations Act, noting that s 236 "relevantly provides that a person (here, Katrina) brings the proceedings on behalf of the company (here, MGPL)": PJ [46].
12. His Honour noted that the proposition that a statutory derivative action is brought in a plaintiff's personal capacity, although also "on behalf of" the relevant company, was consistent with Santow J's observations as to the nature of such an action in Keyrate Pty Ltd v Hamarc Pty Ltd (2001) 38 ACSR 396; [2001] NSWSC 491 at [18]-[19] (Keyrate). In those paragraphs, Santow J (as his Honour then was) accepted an argument that ss 236 and 237 did not require that the company in whose name a claim was brought actually be made a plaintiff in a fresh summons or statement of claim if it was already a defendant against whom relief was claimed. In particular his Honour accepted the submission that the statutory derivative action was created analogously with and against the background of an established procedure for bringing suits in equity and at common law in the name of a company (in accordance with the exceptions to the rule in Foss v Harbottle) by joining the company as a co-defendant with alleged wrongdoers, a submission which effectively recognises that the substantive moving party in a derivative suit is a person other than the company itself, albeit that the substantive plaintiff does not have the ability directly to seek relief for him, her or itself. (On appeal, the Applicant sought to confine Keyrate to its particular factual circumstances and procedural context.)
13. For the above reasons, the primary judge rejected the Applicant's application for leave as against Lee. Although it was not strictly necessary to do so, his Honour went on to hold, that in addition to being precluded from bringing the proceedings as a result of the operation of the Settlement Deed, the Applicant also failed to satisfy the criterion in s 237(2)(b), namely that the Applicant was acting in good faith in making the application.
14. His Honour's reasons for reaching this conclusion were summarised at PJ [61]. Although he assumed in the Applicant's favour that she had a subjective belief in the merits of the proposed claims, his Honour expressed the view that "a reasonable person in her position would recognise that there is currently no reasonable basis for that belief, which turns on a hope that evidence that has not presently obtained may emerge which establishes that her concerns are well-founded".
15. The primary judge concluded that the good faith requirement was not satisfied in circumstances where the Applicant had not been a director of MGPL since 2004; where she did not have any shareholding in MGPL; and where any benefit she would obtain from the proceedings was only as a beneficiary of a trust which would indirectly benefit from an increase in the consideration paid to acquire the Mount Gilead property and the consequential increase in value of the shares in MGPL.
16. Finally, his Honour noted that the fact that the proceedings in respect of the claims against Lee were commenced in breach of the Applicant's obligations under cl 11.1(b) of the Settlement Deed militated against the satisfaction of the good faith requirement. In this context, his Honour had earlier observed that the fact that the Applicant's avowed concerns about the Lendlease Transaction had existed for many years "highlights the issues in respect of her good faith in delaying the commencement of these proceedings until after the settlement of the other proceedings, in which she had obtained releases of the claims against her": PJ [58].
17. The essence of the Applicant's argument in support of the first ground of her appeal is that the language in cl 11.1 of "any Claim that Katrina has or may have against any of the Defendants" (emphasis added) connotes ownership or possession such that the rights sought to be vindicated by any Claim must be the Applicant's (which they were not). The Applicant also emphasised that, to the extent that she was bringing the proceedings on behalf of MGPL, she was not doing so in any personal capacity. It was submitted by reference to cl 11.1(a) that a "claim" or "complaint" must be something that can be the subject of a release.
18. These arguments are defeated by a number of considerations.
19. First, the release related to any Claim the Applicant has or may have "in any capacity whatsoever". This phrase tends strongly against connotations of possession or ownership (of a Claim) being conceptually exhaustive of the way in which a person may have a Claim, as urged by the Applicant. The Applicant has a Claim as a putative representative of MGPL on whose behalf she sought to commence and conduct the Commercial List Proceedings. True it is that this may not amount to the bringing of a Claim in a personal capacity but cl 11 of the Settlement Deed is not so restricted.
20. There was debate in oral argument on the appeal as to whether or not the words "in any capacity whatsoever" apply only to the Defendants against whom claims may be made or, on the other hand, also extend to Katrina. There are arguments that can be made either way but, even if the expression "in any capacity whatsoever" only extends to the Defendants (as defined in cl 11.1), that is not the end of the matter. The affairs of Mt Gilead and the Macarthur-Onslow estate were complex and the context of the Settlement Deed exposed the fact that Katrina's role in those affairs spanned a number of different capacities. So much is reflected in cl 11.3 to which cl 11.1 was expressly made subject and in which, as has been seen, the extent of the release given by Katrina in cl 11.1 is qualified to preserve claims she may have in certain other capacities. Tellingly, the Applicant's previous capacity as a director of MGPL, the very and sole capacity she necessarily relied upon to commence the application for leave to proceed, was not adverted to in cl 11.3.
21. The fact that cl 11.3 did not extend to carve out any action commenced by the Applicant in her capacity as a former director of MGPL militates against the Applicant's posited construction. At the very least, the omission of any reference to a carve out to preserve such a claim is consistent with the construction of cl 11.1(b) favoured by the primary judge and urged by Lee. I note in this context that the headings to individual clauses of the Settlement Deed were stated to be for convenience only "and do not affect interpretation": cl. 1.2(a).
22. A similar point as has been made in relation to cl 11.3 may be made by reference to cl 6.3 which relevantly provided that nothing in the Deed "prevented the Applicant from taking any action in relation to any proposal by or for any public authority whereby the Homestead Lot is or may become subject for siting of a road or railway line on the Homestead Lot which may materially affect the Homestead Lot." Once again, and as with cl 11.3, the parties were explicit as to what actions remained open to the Applicant following the execution of the Settlement Deed.
23. Secondly, the term "Claim", as defined, includes "complaint", which is a broad term which does not have as a component or requirement that the person having the complaint has a right to ventilate it, or a personal remedy if the complaint is ultimately vindicated. All that is required is that the complaint must be "in connection with or arising in any way from the facts or matters or circumstances giving rise to or in any way relating to the Proceedings, or Katrina's Claims or the matters referred to in this deed".
24. The reality or substance of the matter was reflected in the repeated phrase "Katrina contends" in Part A of the Commercial List Statement extracted at [10] above although the use of that language is not determinative of the issue, and was not, in my view, so determinative for the primary judge. But the Applicant's attempt to characterise the primary judge's reference to the language "Katrina contends" as "excessive formalism" on his Honour's part is neither fair nor accurate. His Honour was dealing with the language the Applicant's lawyers had deliberately deployed in the Commercial List Statement. If anything, it was the Applicant's attempt to walk away from that language on the basis that the Commercial List Statement was not a "pleading" that was excessively formalistic or, as his Honour described it, "somewhat technical": PJ [38].
25. The Applicant's Summary of Argument accepted that the Applicant "may have a 'complaint' in the colloquial sense of the term in relation to Lee's conduct". What the Applicant characterises as "colloquial" could equally be described as the ordinary or natural meaning of the term, and there is no reason to attribute to the parties to the Settlement Deed an intention to depart from that ordinary or natural meaning, especially when they chose not to give a bespoke definition to the term or one which departed from its ordinary meaning in the Deed itself.
26. It was correct for the primary judge to identify the complaint as that of the Applicant. The very reason for her seeking leave to bring derivative proceedings was precisely because (as was common ground) MGPL would not make a claim or complaint against Lee. In other words, it had no complaint against him that was being agitated. It was the Applicant who had such a claim or complaint, as reflected in her contentions in Part A of the Commercial List Statement.
27. Thirdly, that a claim brought pursuant to leave under ss 236-237 must be one "on behalf of a company" emphasises that it is not the company (or at least not solely the company) that is making the claim but the person who has sought and obtained the statutory leave: see Oates v Consolidated Capital Services Pty Ltd (2009) 76 NSWLR 69; (2009) 257 ALR 558; (2009) 72 ACSR 506; [2009] NSWCA 183 at [58]-[65]. This remains the case even though the cause of action will be that of the company and any benefits obtained as a result of subsequent litigation will enure to the company.
28. Fourthly, had the Applicant's construction been correct, the inclusion of complaint would have been superfluous in the definition of Claim because of the inclusion of "cause of action" in that definition. So, too, it might be added, the term "claim" would be superfluous. Related to this, the breadth of language employed both in the definition of Claim and in cl 11.1 also militate against the narrow reading of cl 11 propounded by the Applicant. Contrary to a submission advanced by the Applicant, to make this point is not to engage in "gap filling" in cl 11 of the Settlement Deed. It is to read the clause as a whole, to recognise its breadth of phrases and to attribute the ordinary, natural meaning to words such as "complaint" and "claim".
29. In oral argument on appeal, Dr Higgins SC, for the Applicant, submitted that "complaint within cl 11.1(b) does not capture expressions of grievance incapable of producing at least some legal or practical consequence for the person complained about". It could not be said that the Applicant's complaint met this description. The legal and practical consequences for Lee of the Applicant's complaint are self-evident.
30. Further, many of the claims or complaints in the so-called "Keller document" and described as "Katrina's Claims" were in fact claims or complaints which, if sustained, may have given rise to causes of action by MGPL. Yet, the definition of Claims in the Settlement Deed did not exclude or qualify "Katrina's Claims" and it would be distinctly odd to do so as a matter of construction, given the centrality of the Keller document which detailed those claims and complaints. In this context, it is also relevant to observe the terms of Recital D of the Settlement Deed: "The parties have agreed to settle the Proceedings and Katrina's Claims on the terms set out in this Deed". On the Applicant's construction of cl 11.1, that particular recital would not have been accurate because some of Katrina's Claims, namely her complaint about the Lendlease Transaction, would not have been caught by cl 11.1.
31. For these reasons, appeal grounds 1 and 2 must be rejected and the Applicant's application for leave to appeal in relation to the claim against Lee must fail.
32. For completeness, I would not uphold appeal ground 3 relating to the primary judge's finding that the Applicant had failed to demonstrate that she was acting in good faith in seeking leave to bring the claim against Lee on behalf of the company. Her complaint did not arise at the time she was a director of MGPL (prior to 2004) but rather related to the Lendlease Transaction which occurred more than 10 years after she had ceased to hold that office, that office being the source of her statutory ability to seek leave under s 237 of the Act. As the primary judge emphasised, the application was in fact made some 17 years after she had ceased to hold that office and almost six years after the Lendlease Transaction was entered into.
33. This delay, coupled with the fact that the Applicant refrained from seeking leave whilst she was securing her own releases under the Settlement Deed, were matters that the primary judge emphasised and took into account in conjunction with what he regarded as the breach of cl 11 of the Settlement Deed by the commencement of the Commercial List Proceedings. For the reasons already given, I would reject the Applicant's submission that there was no relevant breach of cl 11.
34. Further, as Lee submitted, the primary judge's conclusion as to the Applicant's failure to establish that she was acting in good faith was analogous to that reached by Barrett J (as his Honour then was) in Chahwan v Euphoric Pty Ltd [2006] NSWSC 1002 at [38], which aspect of the judgment was not disturbed on appeal.
35. In an important aspect of his reasoning on the question of good faith, the primary judge observed at PJ [59] that: "Dr Higgins fairly accepts that Katrina's claims must be connected with Katrina's former status, since otherwise the standing requirement would operate in an arbitrary fashion, where persons with otherwise identical interests would or would not be permitted to bring a derivative action, depending upon whether they had once been a director of a company many years before. Mr Studdy submits, and I accept, that Katrina has little real interest in the continued "good management" of MGPL, more than 17 years after she was removed as a director, although she plainly has the same interest in its economic affairs as any other person who is a beneficiary or potential beneficiary of the Mount Gilead Trust, who would not be entitled to bring a derivative claim on that basis." (my emphasis)
36. Consistent with the acceptance of the requirement for a connection with the Applicant's former status as a director of MGPL, the following exchange occurred on the hearing of the appeal: "BELL CJ: Are you accepting that where the claim sought to be brought on behalf of the company is brought by a former officer, that whether the former officer is acting in good faith is to be considered only through the prism of the interest of that person as former officer and not any other interest that that person would have, such as a beneficiary of the trust upon which her shares are held? HIGGINS: We accept that it must be connected with that status and that is what emerges both from Palmer J's reasons in Swansson and Tobias J's reason in Chahwan, it must be "connected with". … We accept before your Honours and we accepted below that it must be "connected with" …"
37. While there may be room for debate as to whether there is a requirement for the demonstration of a real or substantive connection between the loss or injury and the status of the particular applicant for leave to bring a statutory derivative action for the purposes of establishing good faith (as to which, see Chahwan v Euphoric Pty Ltd (2008) 65 ACSR 661; [2008] NSWCA 52 (Chahwan) at [70]; Swansson, what is clear is that there was no such nexus in the present case.
38. As noted above, there was no connection between the status the Applicant invoked to seek leave to bring proceedings, namely as a former director, and the claims sought to be agitated. The events leading to those claims did not arise on the Applicant's "watch" as a director, as it were, and did not reflect in any way on the discharge of her responsibilities or performance. The Lendlease Transaction, which is the focal point of the actions which the Applicant seeks leave to bring on behalf of MGPL, occurred more than 10 years after she ceased to be a director of the company. As a long-retired director of the company, the Applicant had no interest in or connection with the issues that formed the subject of her complaint; she had not been removed as a director, for example, in order to permit the Lendlease Transaction to proceed.
39. In addition to correctly rejecting the Applicant's submission that there was no relevant breach of cl 11 (a consideration that contributed significantly to the primary judge's conclusion that the good faith requirement was not satisfied), the primary judge pointed to the Applicant's delay in, and timing of, the s 236 application and the related commencement of the Commercial List Proceedings as being, in all the circumstances of the case, inconsistent with a demonstration of good faith on the Applicant's part. This was, of course, a matter upon which the Applicant bore a positive onus of proof. At least parts of the Applicant's submissions on appeal appeared to overlook where the onus lay. An example of this was the submission that "to say that a significant period of time has passed since Katrina last served as a director of MGPL does not of itself indicate, let alone establish, a want of good faith".
40. As a general proposition, the greater the gap in time between a person's ceasing to hold the office which entitles him or her to make an application under s 237 and the events that are sought to be made the subject of the claim brought on behalf of a company, the more difficult it will be to establish the requirement of good faith. In the present case, not only was there a lengthy gap between the Applicant ceasing to be a director and the happening of the events the subject of the putative claim, there was a further lengthy gap between those events and the making of the application for leave to bring proceedings. That gap was not explained by any lack of knowledge on the part of the Applicant of those events. On the Applicant's own evidence as recounted in para 30 of her Affidavit of 9 April 2021, the Applicant first complained to Lee about the Lendlease Transaction even before that transaction had been finalised, with the gist of her complaint that he should put the proposed transaction out "to tender to flush out the best offer".
41. To the extent that the Applicant sought to explain her delay in the present case in making the application for leave, the primary judge did not accept that explanation, concluding at PJ [58] that her refraining from agitating MGPL's claim during the negotiations which led to the Settlement Deed "was calculated to preserve the ability to promote, rather than avoid, further litigation in respect of these proceedings". There was no challenge to this factual finding.
42. It was open to the primary judge to find that the Applicant had not established that the application for leave was one made in good faith, and at least so far as the putative case against Lee was concerned, there was no error in his so finding.
43. The further reasons given below as to the Applicant's failure to satisfy the statutory requirements in relation to a serious issue to be tried in relation to loss and damage, and as to what was in the best interests of the company, discussed in the context of the appeal against OMP, apply equally to the appeal against Lee, and provide a further reason for the dismissal of the appeal as against Lee.

Ruling on admission of Briefing Paper

1. Before turning to the appeal grounds specific to OMP and Mr Martin, it is necessary to deal with appeal ground 4(a), which was to the effect that the primary judge erred in "refusing to admit into evidence Briefing Paper No 1/2017 by the NSW Parliamentary Research Service titled "Demand, deposits, debt: Housing Affordability in Sydney" authored by C Angus" (The Briefing Paper).
2. The specific pages of the Briefing Report sought to be tendered at first instance were pages 43 and 45 of the Report. The material on these pages was described by the primary judge in the course of his ruling on the objection to their tender as follows: "The first page, at court book p 624, starts by reference to Housing NSW figures in September 1991, then refers, without a direct attribution of the source, to the median price of Greater Sydney dwellings in September 2016, although that may also refer to Housing NSW figures so far as they are referenced elsewhere in the page. There is then a statement as to changes to the median dwelling prices in Sydney's three suburban rings between September 1991 and September 2016, each of which is compared with a price above a New South Wales median price. Plainly, those invoke statistical concepts, including the concept of a median price, a[though Mr Angus does not explain why he has chosen to adopt a median price, rather than engage in any more sophisticated statistical analysis. He in turn refers to the "outer ring", and the second page appears to be directed to identifying the "outer ring". Mr Ng was not able to draw my attention to any identification, within that report, of which suburbs or local government areas were within that outer ring. However, it appears from court book p 622 that the "outer ring", logically enough, is outside the inner and middle rings, although it is not apparent where the middle ring ends or the outer ring begins. The outer ring appears to extend, to the north, to something just short of the Newcastle region and, to the south. to something just short of the Wollongong region and, to the west, to an uncertain distance which may or may not be as far as the Blue Mountains."
3. The land the subject of the Australand and the Lendlease Transactions fell within the "outer ring".
4. The essence of the primary judge's reasons for rejecting this material is captured in the following passage from his ruling: "it seems to me that the question whether prices in the "outer ring", however defined, of Sydney have increased from $140,000 in September 1991 as a median price to $685,000 in September 2016 as a median price is plainly not a matter of common knowledge, whether among judges or members of the community generally. It is a matter that depends upon the accuracy of the source material and the validity of the statistical methods which are adopted to derive the median price as well as the validity of the definition of "outer ring", which here cannot be tested where what falls within it is not defined. For that reason, while l accept the proposition that proof is not required as to matters that are capable of verification by reference to a document the authority of which cannot reasonably be questioned, for the purposes of s 144 of the Evidence Act, it does not seem to me that this document is of that character for the specific proposition which it seeks to establish. It also seems to me to be doubtful that it is relevant to any matter in issue in the proceedings because, even if it were a question of common knowledge as to the extent to which prices in the 'outer ring' had increased in that period, that is not the question I have to determine. The question I have to determine here raised by the Plaintiffs' case relates to the price increase of the particular property to be sold as a development site."
5. The primary judge's rejection of this material was challenged on the basis that the excluded material at least provided a probative basis, albeit an "imperfect proxy", for satisfying the seriously arguable test in relation to the alleged undervalue of the Lendlease Transaction on the basis that the increase was so substantial that it could not rationally be said that there would not have at least been some increase in the land the subject of the Lendlease Transaction, even though that land was undeveloped.
6. The arguments that were advanced but rejected by the primary judge were essentially repeated on appeal. Most significantly, however, in oral argument on appeal, Dr Higgins, for the Applicant, accepted that the proposed use by way of broad analogy of movements in the median price data for Sydney's Outer Ring contained in the Briefing Report depended upon the validity of using the Australand Option Agreement and the purchase price in that agreement payable on exercise of the option as the comparator for the actual price struck under the Lendlease Transaction. Thus Dr Higgins candidly accepted that "if that comparator is not a sound one, it matters not what this report says".
7. For the reasons given at [107]-[111] below, the Australand Option Agreement comparator is not a sound one in circumstances where the option was never exercised. It is entirely a matter for speculation as to whether or not the putative purchase represented the market value of the land at the time the option agreement was entered into or an estimate of the value of that land over the duration of the option period. It is also a matter of speculation as to whether the reason why Australand did not exercise the option was because it did not consider the land to be worth the purchase price which had been struck at the time the option was originally entered.
8. The concession properly made that the material contained in the Briefing Paper would only have been of relevance and utility to the Applicant's case if the Australand Option Agreement stood as a valid comparator, coupled with my conclusion that it was not, means that appeal ground 4(a) may be readily dismissed.

The appeal in respect of the proposed claim against Mr Martin and OMP

1. At PJ [80], the primary judge concluded that a serious question to be tried was not established in respect of the claims against Mr Martin and OMP. His Honour also concluded that it had not been demonstrated that bringing such claims was in MGPL's best interests.

As against Mr Martin

1. In respect of Mr Martin, the claim depended foundationally on there being a serious question to be tried as to the existence of a retainer between Mr Martin personally and MGPL to advise it in relation to the Lendlease Transaction. The primary judge said in this respect at PJ [75]: "Ms Horvath submits, and I accept, that a prima facie case of a retainer between MGPL and Mr Martin in his personal capacity, which gave rise to a duty of care and skill, cannot be established where no evidence is led or identified to support that allegation. Ms Horvath also points out that, although it is alleged that Mr Martin, or Mr Martin and OMP, undertook the Martin Retainer (as defined) for reward, there is no evidence to suggest that Mr Martin was personally remunerated by MGPL, whereas there is evidence that OMP was to be remunerated by MGPL. Ms Horvath also points to Katrina's affidavit evidence, which refers to Mr Martin having given advice since 1990, but does not advance a claim that he did so in his personal capacity rather than as a director or representative of his former employers and subsequently OMP. Ms Horvath also points out, and I accept, that none of the documents to which Katrina has referred supports an allegation that Mr Martin personally was providing services, as distinct from his former employers or OMP doing so. She submits that the fact that the significant meetings were attended not only by Mr Martin but also by Mr Anderson, another director of OMP, suggests that OMP rather than Mr Martin personally was engaged in the transaction. Ms Horvath submits, and I accept, that there is not sufficient evidence to establish, even on a prima facie basis, a retainer between MGPL and Mr Martin, so that Mr Martin owed MGPL a duty of care and skill in the discharge of that retainer, or that Mr Martin breached that retainer or that duty so as to cause loss and damage to MGPL."
2. His Honour concluded at PJ [80] that: "There is no evidence of substance to support a claim that MGPL had retained Mr Martin personally and the limited evidence is inconsistent with that claim, so far as it suggests that MGPL had retained OMP, at least in respect of the matters set out in the Land Management Agreement, rather than Mr Martin in his personal capacity." The Land Management Agreement was an agreement entered into between OMP and MGPL on 21 February 2011 by which MGPL appointed OMP to achieve Rezoning of the MDP Land. The Project Control Group, the minutes of whose meetings both the Applicant and the primary judge referred to, was established pursuant to this Agreement.
3. The Applicant's written submission on appeal dealing with the claim against Mr Martin and, more precisely, the existence of a serious question to be tried as to the foundational issue of the existence of a personal retainer was as follows: "As for Mr Martin, the primary judge concluded that there was no evidence of substance to support a claim that MGPL had retained him personally: J [80]. However, the evidence suggests that, between July 2011 and May 2019, Mr Martin participated in meetings of what was known as the Project Control Group ("the PCG") with Lee, who represented MGPL. Insofar as several of the sales-related agenda items in the minutes of the meetings of PCG are concerned, Mr Martin was either nominated as the person responsible for the completion of various tasks or the person to whom potential purchasers expressed their interest in the possible acquisition of Mount Gilead. It is also significant that, in a letter dated 2 May 2014 and addressed, not to OMP, but to "Mr Andrew Martin C/O Old Mill Properties Pty Limited, JLL outlined a possible marketing timetable for the sale of Mount Gilead and expressed a willingness "to discuss with Mount Gilead the method of sale (e.g a private treaty, public expression of interest campaign, tender, etc) [and] likely buyers (both domestic and offshore)."
4. I would reject this submission. Mr Martin was a director of OMP. The fact that he attended Project Control Group (PCG) meetings did not generate an inference, even on an arguable basis, that he was personally retained by MGPL as opposed to having been present at those meetings in his capacity as an officer of OMP. This is especially so as other OMP directors were also present at PCG meetings. The PCG minutes recorded the presence of all the OMP directors at these meetings in the "Attendee" column by referring to the name of the director and a dash referring to OMP: for example, "Andrew Martin - Old Mill Properties".
5. As for the Applicant's reliance upon the fact that OMP denied that it was retained in the way alleged in the Commercial List Statement, this matter scarcely gives rise to the positive inference that Mr Martin must have been so retained. There was no issue that OMP had a retainer, as reflected in the Land Management Agreement to which the primary judge referred, but, consistent with its denial, that retainer was not of the kind pleaded by the Applicant.
6. Further, the fact that someone from JLL wrote to Mr Martin on 2 May 2014 care of OMP in relation to Mt Gilead similarly does not found a stable or proper basis for drawing an inference or establishing, even on a seriously arguable case basis, that Mr Martin had a personal retained with MGPL. As was submitted by Ms Horvath on behalf of Mr Martin: "the letter from JLL establishes nothing of consequence. Taken at its highest, it shows that on a particular date, JLL regarded Mr Martin as the point of contact for the purposes of the matters set out in that letter. There is no rational basis to conclude from it that there was a retainer between MGPL and Mr Martin personally, let alone the terms of any such retainer and the duties, if any, that flowed from that retainer."
7. In my opinion, the primary judge was correct to hold that the Applicant had not established a seriously arguable claim that Mr Martin had been personally retained by MGPL and had breached a duty of care arising under it. For this reason alone, his Honour was correct not to grant leave in respect of the proposed claim against Mr Martin.
8. That is not quite the end of the matter, however, as, on appeal, the Applicant sought and was granted leave to adduce further evidence in support of her case, as has already been noted. The documents she relied upon came into her possession following her appointment as a director of MGPL following her brother's death after the primary judgment had been given.
9. As against Mr Martin, two documents in particular were relied upon but neither, in my opinion, advances the Applicant's case on appeal. The first was an email from Mr Martin to John Beardrow dated 10 June 2010, under the subject line "Mount Gilead - Proposed Land Management Agreement with Old Windmill Properties Pty Ltd, JLL, etc", noting that Old Windmill Properties Pty Ltd became OMP. The email read as follows: "John, As a director of Mount Gilead, I would like to give you notice of potential conflicts of interest in relation to the following. 1. I will be a director of Old Windmill Properties P/L (OWP), the Development Manager under the proposed Land Management Agreement (LMA). An entity associated with me will hold shares in OWP. Therefore, if a success fee is due and payable under the LMA, an entity associated with me will participate in that success fee. 2. The proposed LMA also envisages that OWP, as agent on behalf of Mount Gilead P/L, will appoint Jones Lang LaSalle as the selling agent. I advise that I, or a related entity, will receive from JLL part of the agency fee for selling the rezoned land. 3. I would also like to advise that I may also become a director of Old Windmill Finance P/L, which under the proposed LMA, Mount Gilead P/L, will make certain advances with, in turn, those advances being on lent to OWP. I would be grateful if the above details could be recorded in any minutes of meeting of the directors of Mount Gilead P/L where the directors consider whether to enter into the above proposed agreements. Kind regards, Andrew Martin"
10. Far from supporting the existence of a retainer to which Mr Martin personally was a party, this document reinforces what subsequent documents demonstrated, namely that Mr Martin's involvement in the Lendlease Transaction was as an officer of what became OMP.
11. The second document sought to be called in aid in relation to the asserted retainer between MGPL and Mr Martin was an email from Mr Martin to Steven Rogers dated 20 August 2013 under the heading "Re: Macarthur-Onslow Estate". The email was as follows (with emphasis added): "Hi Steve, Thank you for your note below and it was good to speak to you just now. I spoke to Lee yesterday afternoon and he is agreeable to me renouncing my position as an Executor. However, he did say that he would like me to be available to provide advice on property related matters, as and when needed. I confirmed to that I would be happy to do this on a consultancy basis. Kind regards, Andrew Martin"
12. This letter was written in the context of Mr Martin renouncing his appointment as an executor of the will of Lee's mother, Lady Macarthur-Onslow. Reliance by the Applicant on the emphasised portion of this email to lay a platform for the existence of a reasonably arguable case that MGPL had a personal retainer with Mr Martin in relation to the sale of the relevant land was, with respect, tenuous in the extreme. The email was not evidence of any existing retainer, let alone on the terms alleged in the Commercial List Statement. At its highest it referred to a possible future retainer or retainers "as and when needed". Further, if it supported any retainer at all, it was one between Lee and Mr Martin. The date of the email, long before entry into the Lendlease Transaction, also points against its potential relevance.
13. This document, either alone or in combination with the other documents relied upon by the Applicant in relation to the claim based upon a personal retainer between MGPL and Mr Martin (or Lee and Mr Martin), did not improve the Applicant's position.
14. To the extent that other documents were adduced as fresh evidence in support of the claim that Mr Martin was acting in a personal capacity as opposed to acting as an officer of OMP, they did not advance the Applicant's case but quite the reverse. For example, in one of those documents, Mr Martin wrote to Andrew Flannery on 17 December 2014 as follows: "This is a quick note to let you know that Phil and l met with Lee and Steve this afternoon to talk through the proposal from Lend Lease (LL). Mount Gilead Pty Ltd have given approval to Old Mill Properties to finalise the Heads of Agreement and Exclusivity and Confidentiality documents with LL, subject to several changes that were discussed and agreed during our meeting. Accordingly Phil and I will be meeting with LL tomorrow morning to finalise both of the above documents, with a view to having both parties sign by close of business tomorrow." (emphasis added)
15. Another example of the fresh evidence relied upon was a letter sent by OMP to MGPL on 22 January 2015 which included the following: "As you know, OMP has been and will continue to represent MG as part of the due diligence process in connection with the sale of the MDP Land and Balance Land. These services to be provided by OMP for the benefit of MG will be paid for by LLC. The applicable fees for these services will be $100,000. LLC will pay this. LLC acknowledges that OMP will continue to represent Mt Gilead through the Balance Land rezoning process and LLC also proposes that it will separately engage OMP to provide consultancy and strategic development services to LLC for the purpose of satisfying the Balance Land Conditions Precedent (as set out in the Formal Offer). To perform these services OMP and LLC will enter into a separate engagement which will set out various fees. These fees will firstly, take the form of a monthly retainer (capped at $2.5 million,) and secondly, success fees of $2.5 million to be paid in two tranches. The total fees paid by LLC to OMP could be $5.0 million if rezoning If rezoning of the Balance Land is achieved."
16. This letter was quite inconsistent with Mr Martin having a separate personal retainer with MGPL in relation to the sale of the MDP and Balance Land.
17. To the extent that the fresh evidence adduced supported the contention that OMP's retainer with MGPL extended beyond the Land Management Agreement, and that there was a breach of that retainer, the primary judge's decision assumed these two matters in the Applicant's favour. The fresh evidence, in other words, did not advance the Applicant's case in this respect, as OMP did not challenge the assumed basis upon which the primary judge proceeded.
18. The primary judge was correct to refuse the Applicant leave to proceed on behalf of MGPL against Mr Martin.

As against Mr Martin and OMP

1. In addition to the primary judge's finding as to the lack of any individual retainer between either Lee and Mr Martin or MGPL and Mr Martin, his Honour also expressed the conclusion that, even if Mr Martin or OMP had been retained as alleged by the Applicant, there was no serious question to be tried either as to breach of the retainer or that any loss or damage had been sustained. This conclusion was challenged in appeal ground 4(b).
2. It is sufficient for present purposes to focus upon the primary judge's conclusion that there was no serious question to be tried as to the suffering of loss or damage.
3. The primary judge's dispositive reasoning in relation to these issues was at PJ [82]-[83] as follows: "Even on that assumption, it seems to me that the evidence does not establish a serious question to be tried that that amounted to a failure to exercise reasonable care and skill in the discharge of the Martin Retainer (as defined) because, even if that retainer were established, the evidence does not establish a real prospect that an expression of interest campaign or similar public marketing process would have led to a better result than the entry into the Lendlease Transaction. Katrina does not lead any evidence, beyond her subjective view, that Lendlease's offer was not such that it should properly have been accepted by MGPL, to the exclusion of an expression of interest or public sale process. I note, although it is not necessary to my findings, that the case law has also recognised, including in the context of sales by receivers, that it should not be assumed that the market value for a property can only be achieved by a public sale campaign and not by a private sale. In Swers v Central Mortgage Registry of Australia Pty Ltd [1989] ANZ Conv R 169; (1988) NSW Conv R 55-407, Cohen J pointed to the advantages of a sale of a property by private treaty, where a receiver had accepted an offer at market price and avoided delay, advertising expenses and a real estate agent's commission. The same approach was adopted in Florgale Uniforms Pty Ltd (recs and mgrs apptd) (in liq) v Orders (2004) 11 VR 54; (2004) 51 ACSR 699; [2004] VSC 65 at [443]; Vasiliou v Westpac Banking Corporation (2007) 19 VR 229; [2007] VSCA 113 at [54]; and in Re Australasian Barrister Chambers Pty Ltd (in liq) [2017] NSWSC 597 at [50]ff, appeal dismissed in Re Australasian Barrister Chambers Pty Ltd (in liq) [2017] NSWCA 117. There is also not sufficient evidence to establish a serious question to be tried as to Katrina's alternative claim that Mr Martin or OMP failed to negotiate a price with Lendlease which represented the highest price a willing but not anxious buyer in the position of Lendlease would have been prepared to pay for the MDP Land and the Balance Land, as pleaded in paragraph 41(b) of the Commercial List Statement, or that any failure to do so involved any exercise of reasonable care and skill in the discharge of the Martin Retainer, if that retainer was established. That allegation would at least require some evidence that a willing but not anxious buyer, purchasing one or two substantial parcels of land at very large prices, would have paid more than Lendlease agreed to pay, and there is no evidence to support that proposition."
4. The primary judge also dealt with the topic of whether any evidence of any loss had been pointed to in the context of his consideration as to whether or not the Applicant had demonstrated that granting leave was in MGPL's best interests within the meaning of s 237(2)(c) of the Act. After referring to his own decisions in:

• Re Imperium Projects Pty Ltd [2015] NSWSC 16 at [14] to the effect that it did not follow that it was in a company's best interests that a remedy be pursued, merely because it appeared to have suffered an actionable wrong, and any assessment of the company's best interests depended on matters including "the strength of the suggested claims"; and
• Re Sirrah Pty Ltd [2018] NSWSC 1802 at [21] where it was noted that, where a serious question to be tried exists, and there is a prospect of substantial recovery if the proceedings are successful, it may well be in a company's best interests that it have the opportunity to make that recovery, so long as it is not exposed to an unjustified risk of costs in doing so, his Honour pointed to the absence of any expert evidence led on the Applicant's behalf, as well as to the absence of any documentary evidence from which an inference could be drawn, that the Lendlease Transaction had been effected at a undervalue such that MGPL could recover non-trivial compensation.

1. To the extent that the Applicant relied upon the broad similarity in the per hectare price for the subject land as between the Australand Option Agreement and the Lendlease Transaction (see [7] - [13] above), his Honour pointed out, as was obvious, that the option under the Australand Option Agreement did not proceed. Further, the option in respect of the Balance Land had not been exercised at the time of the hearing or the hearing of the appeal.
2. Both at first instance and on appeal, the Applicant also endeavoured to call in aid evidence of the rise in house prices in "Sydney's outer ring" in the period between the Australand Option Agreement and the Lendlease Transaction as a basis for demonstrating that the Lendlease Transaction was at an undervalue. Although, as already noted, his Honour rejected some evidence upon which the Applicant sought to rely which was contained in the Briefing Paper, he proceeded on the assumed basis, favourable to the Applicant, that "prices of suburban houses in Sydney or parts of Sydney have risen over the last 10 or so years". His Honour went on to observe, however, that: "that fact does not seem to me to create any rational basis for an inference that the amount that a developer would pay for substantial parcels of undeveloped land would have increased proportionately or at all over the same period, where there is no particular reason to think that the regulatory requirements for development, the risks involved in development and the costs involved in development have not also increased over that period." His Honour also pointed out the disconformity in comparing the price of suburban houses with large development sites in rural areas pending rezoning.
3. In her submissions on appeal, the Applicant persisted in her reliance upon a comparison between the indicative per hectare price under the Australand Option Agreement and the Lendlease Transaction in light of the general significant increase in residential house prices during the period between the two transactions.
4. Submissions were also developed in writing and orally, albeit briefly in both cases, with respect to a further comparison between the price of $108,176.33 per acre for the Balance Land under the Lendlease Transaction (in respect of which Lendlease had not exercised its option at the time of the primary proceedings or the hearing of the appeal) and a transaction in respect of an 88 acre parcel of neighbouring land which Lendlease acquired in September 2018 (some three and a half years after the Lendlease Transaction) for $46.5 million, representing a per acre price of $528,409.09 (the Balance Land Comparison). This latter transaction which was referred to in a single sentence of the Applicant's evidence at first instance was not referred to in the primary judgment and had not been a focal point of the Applicant's submissions at first instance before the primary judge. It attracted more attention in the argument on appeal by Dr Higgins.
5. In his submissions on appeal, Mr Pike SC, who appeared with Mr Dooley for OMP, focussed his attention on the absence of any evidence of loss or damage sufficient to meet even the relatively low threshold of a seriously arguable case. He emphasised that there was no evidence from an expert, even on a preliminary basis, that the market value of the MGPL Land and the Balance Land exceeded that which Lendlease had paid in respect of the MGPL Land and had promised to pay in respect of the Balance Land in the event that the option in respect of that land were to be exercised. He embraced the critique by the primary judge as to the shortcomings of comparison to the Australand Option Agreement as a comparator of value and thereby a basis for founding a seriously arguable case of loss. He also submitted that, whilst an expert report was not mandatory, there was no other evidence or material put before the primary judge from which a rational inference could be drawn that the Lendlease Transaction was entered into at a significant undervalue.

Conclusion

1. Ultimately, the decision under appeal involved the exercise of a discretion by the experienced primary judge having regard to the various factors enumerated in s 237 of the Act. No error of law has been identified in his Honour's decision.
2. For the reasons I have given, the attacks on various intermediate conclusions made by the primary judge do not succeed and no convincing basis has been laid which would justify this Court interfering with his Honour's exercise of discretion.
3. I would grant leave to appeal but order that the appeal should be dismissed with costs.
4. WARD P: I agree with Bell CJ.
5. WHITE JA: I have had the advantage of reading in draft the reasons for judgment of the Chief Justice. Subject to one qualification, I agree with his Honour's reasons.
6. The qualification concerns the Chief Justice's reasons at [108]-[111] regarding the use that can be made in determining the value of land of an uncompleted contract or an option. The significance of an offer, an option, or an uncompleted contract for the sale of land will depend upon the circumstances. An offer may be of significant probative value (as in MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 at [95]-[97]). A call option and a put option may be meaningful in assessing a ceiling or a floor, and the significance of an uncompleted contract for sale may well depend on the reason the contract was not completed. Thus, if the contract entitles either party to rescind if the other party dies, and the right of rescission is exercised for that reason, the contract for sale may be significantly probative of the market value of land.
7. It is unnecessary to pursue these considerations by the Chief Justice. Neither the Australand Option Agreement, nor the Balance Land Comparison, provided a basis for concluding that it was seriously arguable that MGPL suffered a loss by entering into the Lendlease Transaction.
8. I agree with the orders proposed by the Chief Justice.

---

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 March 2023