//
[2026] NSWSC 106
General information, not legal advice.
Supreme Court of NSW
2026-02-20
Parker J
Original judgment source is linked above.
Zoe will write a short plain-English brief of this judgment and email it to you: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Zacharatos v Western Agricultural Co Pty Ltd [2026] NSWSC 106
Hearing dates: 31 October, 16 December 2025; 20 February 2026
Date of orders: 18 December 2025; 20 February 2026
Decision date: 20 February 2026
Jurisdiction: Equity - Expedition List
Before: Parker J
Decision: See [127]-[131]
Catchwords: CORPORATIONS — share register — transmission of shares on death of shareholder — executor seeking registration as legal personal representative — absence of functioning board — whether formal transmission application required — power to order rectification of register — Corporations Act 2001 (Cth) ss 175, 1071F — equitable jurisdiction to rectify — executor entitled to registration — alleged capital gains tax risk arising from transmission of shares to executor — whether speculative — whether relevant hardship defeating rectification.
EQUITY — estates — executor’s duties pending challenge to probate — scope of “management” of estate — whether undertaking limiting distributions precludes litigation to secure control of estate assets — securing control of shareholdings to enable governance of companies.
INTERLOCUTORY PRACTICE — discretionary relief — whether to defer final relief pending related probate proceedings — alleged agreement to hold over proceedings — effect of interlocutory consensus.
RECEIVERS — application for appointment of receiver and manager to family companies and trusts — whether necessary where executor capable of administering through share control — conflict considerations — appointment refused.
PROCEDURE — expedition — estate assets unmanaged — tax compliance concerns — need for timely restoration of corporate control.
Legislation Cited: Corporations Act 2001
Companies (New South Wales) Code 1982
Income Tax Assessment Act 1997
Cases Cited: Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1
Beck v Tuckey [2007] NSWSC 1065
Monardo v Complete Hardware Ltd (1990) 20 NSWLR 489
Hua Cheng Property Pty Ltd v Xu [2013] NSWSC 1784
In the matter of Alon Pty Ltd [2021] NSWSC 1021
University of Western Australia v Gray (No 6) [2006] FCA 1825
Woods v Harrison, in the matter of Telco Service Holdings Pty Ltd [2017] FCA 732
The Estate of Lorenzo Antonio Pastrello [2024] NSWSC 734
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386
Texts Cited: Ian Spry, Equitable Remedies (9th ed, 2013, Thompson Reuters Australia)
Category: Procedural rulings
Parties: Originating Process:
Peter Ulysses Zacharatos (Plaintiff)
Western Agricultural Co Pty Limited (First Defendant)
Ian Leslie Pardey (Second Defendant)
Sarah Jane Ellis (Third Defendant)
Andrew William Pardey (Fourth Defendant)
Interlocutory process filed 28 October 2025:
Ian Leslie Pardey (First Applicant)
Andrew William Pardey (Second Applicant)
Peter Ulysses Zacharatos (Respondent)
Interlocutory Process filed 17 December 2025
Peter Ulysses Zacharatos (Applicant)
Western Agricultural Co Pty Limited (First Respondent)
Ian Leslie Pardey (Second Respondent)
Sarah Jane Ellis (Third Respondent)
Andrew William Pardey (Fourth Respondent)
Representation: Counsel:
Originating Process:
L Ellison SC/J Nolan/K Josifoski (Plaintiff)
M Condon SC (Second and Fourth Defendant)
Interlocutory process filed 28 October 2025:
M Condon SC (First and Second Applicant)
L Ellison SC/J Nolan/K Josifoski (Respondent)
Interlocutory Process filed 17 December 2025
L Ellison SC/J Nolan/K Josifoski (Applicant)
M Condon SC (Second and Fourth Respondent)
Solicitors:
Originating Process:
Bridges Lawyers (Plaintiff)
Key Point Lawyers (Second and Fourth Defendant)
Interlocutory process filed 28 October 2025:
Key Point Lawyers (First and Second Applicant)
Bridges Lawyers (Respondent)
Interlocutory Process filed 17 December 2025
Bridges Lawyers (Applicant)
Key Point Lawyers (Second and Fourth Respondent)
File Number(s): 2022/10504
Publication restriction: Nil
These proceedings concern a company which, due to the deaths of its founders, lacks not only a functioning board, but also sufficient registered living shareholders to convene a general meeting. Before the Court are competing applications for relief designed to allow the affairs of the company and its subsidiaries to be managed in a suitable way until the ownership of the shares in the company can be finally determined by the Court.
The company in question is named Western Agricultural Co Pty Limited (“WAC”). WAC was incorporated in 1952 at the instance of Mr Arthur Pardey, a businessman. It was used as a holding company for assets built up by Mr Pardey for the benefit of his family.
Among the assets held by WAC is a controlling shareholding in another Pardey family company named Parles Pty Limited (“Parles”). Parles was incorporated in 1959. It is the trustee of two discretionary trusts which were established in 1978, known as the “No 1 Pardey Trust” and the “No 2 Pardey Trust”. The assets of the two Pardey Trusts are currently worth about $32 million.
WAC holds controlling shareholdings in two other Pardey family companies, Pardey & Co Pty Limited (“Pardey & Co”) and JSW Pty Limited (“JSW”). I refer to WAC, Parles, Pardey & Co, and JSW collectively as the “Pardey companies”.
Mr Pardey was married to Adele (also known as “Bobbie”) Pardey. Together they had three children, to whom, for convenience and without intending any disrespect, I will refer by their given names. The children were: Ian Leslie Pardey (“Ian”); Sarah Jane Ellis (“Jane”); and Andrew William Pardey (“Andrew”).
Mrs Pardey died in February 2014. She left a will made in 1998, as amended by a codicil made in 2011. There were proceedings in this Court between the Pardey children and their father about her estate. In October 2017 the proceedings were resolved by consent orders. Under those orders, probate, in solemn form, was granted to Ian, Jane and Andrew as executors of Mrs Pardey’s 1998 will (with Mr Pardey renouncing); the 2011 codicil was not admitted to probate.
Mr Pardey died in December 2020. The last will made by him prior to his death was made in July 2016, with a codicil in January 2018. That will (as amended by the codicil) established a testamentary trust over the residue of Mr Pardey’s estate, known as the “Pardey Testamentary Trust”. Peter Zacharatos was appointed as Mr Pardey’s executor and as trustee of the Testamentary Trust.
In March 2021 Mr Zacharatos obtained a grant of probate, in common form, of the will (as amended in the codicil). That grant, however, has been challenged by Ian and Andrew. They seek to have the grant revoked on the ground that at the time the will was made, Mr Pardey lacked testamentary capacity. In its place they propound an earlier will of Mr Pardey, made in 2012.
Mr Pardey’s estate contains a controlling shareholding in WAC. Under the 2016 will, that shareholding passes to Mr Zacharatos as trustee for the Testamentary Trust. Under the 2012 will, it passes to the Pardey children, hence the dispute in these proceedings.
When it was incorporated, WAC’s constitution took the form of a memorandum of association and articles of association which was based on, but modified in certain respects, model articles appearing in table A in Schedule 2 to the Companies Act 1936. It does not appear to have been updated since.
Under WAC’s constitution, provision is made for two classes of share, ordinary shares and management shares. Only management shares confer a right to attend, and vote at, general meetings of the company (Art 109). The quorum for a general meeting is two holders of management shares (Art 110).
The transfer and transmission of shares in the company is governed by arts 17-21, which derive from Table A. Articles 19, 20, and 21 relevantly provide:
19. The directors may decline to register any transfer of shares, not being fully paid shares, to a person of whom they do not approve.
…
The directors may decline to recognise any instrument of transfer unless the instrument of transfer is accompanied by the certificate of the shares to which it relates, and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer.
If the directors refuse to register a transfer of any shares, they shall within one month after the date on which the transfer was lodged with the company send to the transferee notice of the refusal.
20. The legal personal representatives of a deceased sole holder of a share shall be the only persons recognised by the company as having any title to the share.
…
21. Any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such evidence being produced as may from time to time be properly required by the directors, have the right, either to be registered as a member in respect of the share or, instead of being registered himself, to make such a transfer of the share as the deceased or bankrupt person could have made; but the directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or bankrupt person before the death or bankruptcy.
108. The Company is a proprietary company and accordingly:-
a. The directors may in their absolute and uncontrolled discretion refuse to register any transfer of shares and shall not be bound to give any reason for such refusal.
The constitution provides that the number of directors of the company is to be not less than two and not more than five (Art 118). Article 121 requires, as a qualification for being a director, the holding of at least one management share. Following the appointment, the necessary qualification must be obtained within two months, failing which the director ceases to hold office (Art 72(a); Companies Act 1936, s 122).
At all material times, there have been five management shares on issue. As at the date of Mrs Pardey’s death in 2014, she held one management share, and Mr Pardey held the other four.
Under her will, Mrs Pardey’s management share in WAC was to pass to Mr Pardey. But this did not happen immediately. Instead, the share was transmitted to the Pardey children to be held by them as executors in equal shares.
According to the ASIC extract which is evidence, Mr Pardey and Mrs Pardey became directors of WAC in 1952 and 1966 respectively. The Pardey children were also appointed as directors: Ian in 1977; Andrew in 1999; and Jane in 2002. Mr Robert Evert Hayblok was appointed as a director in 2005. But he is recorded as having ceased to be a director in 2016, and he does not feature in any of the evidence before me.
Both Mr Pardey and Mrs Pardey held at least one management share in WAC, and therefore satisfied the qualification for holding office as a director of WAC. It seems that none of the Pardey children, however, satisfied that requirement. Although their initial appointments may have been valid, they therefore apparently ceased to be directors six months after their respective appointment dates. That however seems to have been overlooked by all parties. The Pardey children remained on the records of ASIC (and, presumably, in WAC’s register of officeholders) as directors.
Following the death of Mrs Pardey, Mr Pardey was the sole remaining validly appointed director of WAC. But the Pardey children (and Mr Hayblok) continued to be recorded as directors. It appears that the company continued to function as before, with them as purported directors.
The WAC ASIC extract records that in September 2017, Mr Zacharatos was appointed as a director of the company. But, as with the Pardey children, he did not thereafter acquire a management share in the company. Thus, he too ceased to be a director six months after his appointment, although he likewise continues to be recorded on the ASIC register (and, presumably, the WAC’s register of officeholders) as a director.
Under Parles’ articles of association, it has two classes of shares, ordinary and preferential. Only preferential shares have a right to vote: art 4(a)(i).
At all material times, Parles has had 1000 preference shares on issue. 998 of those are held by WAC. One is recorded as being held by Mr Pardey. The other is recorded as being held by the Pardey children jointly, and may formerly have been held by Mrs Pardey.
Ian Leslie Pardey, Sarah Jane Ellis and Andrew William Pardey will deliver a transfer properly executed of the deceased's management share in [WAC] to Arthur William Pardey within 28 days of the date of these orders.
Nothing appears to have been done to effect the transfer in accordance with the consent order during Mr Pardey’s lifetime. In July 2021, after Mr Zacharatos had obtained probate of Mr Pardey’s 2016 will, his solicitors wrote to the Pardey children enclosing a transfer of the share to Mr Zacharatos as executor of Mr Pardey’s estate, and asking them to sign it.
It appears that the transfer was signed, at least by Ian and Jane, but it was never returned. By November 2021, disputes had begun about the administration of Mr Pardey’s estate by Mr Zacharatos. Ian and Andrew retained solicitors to act for them.
The present proceedings (the “Company Proceedings”) were commenced in January 2022. The plaintiff is Mr Zacharatos. The first defendant is WAC. The Pardey children are the second, third, and fourth defendants.
In the Company Proceedings, Mr Zacharatos makes two main claims for relief. First, he seeks orders registering the transmission of the four management shares held by Mr Pardey to himself as Mr Pardey’s executor. Second, he seeks specific performance of the agreement to transfer the management share formerly registered in the name of Mrs Pardey, and now registered in the name of the children, to himself as executor of Mr Pardey’s estate.
All of the directors currently recorded on WAC’s register (Ian, Jane, Andrew, and Mr Zacharatos) have had the validity of their directorships questioned. WAC has played no active part in the Company Proceedings. Jane has entered a submitting appearance. The active defendants are Ian and Andrew.
The other proceedings to which I have referred (the “Probate Proceedings”) were commenced in March 2022. The plaintiffs are Andrew and Ian. The first defendant is Mr Zacharatos. The second defendant is Parles. Mr Zacharatos has cross-claimed. The first and second cross-defendants are Ian and Andrew. The third is Parles.
The Probate Proceedings involve three main claims for relief.
Ian and Andrew seek the revocation of the grant of probate for Mr Pardey’s 2016 will. Instead, they seek an order for probate in solemn form of the 2012 will. Mr Zacharatos cross-claims for an order for probate in solemn form for the 2016 will.
Ian and Andrew seek declarations that loans recorded as owing to the estate in the accounts of the No 1 Pardey Trust ($2.1 million) and the No 2 Pardey Trust ($14.9 million) are not due and owing. Apparently, this is on the basis that they are statute barred.
Ian and Andrew allege that Parles is indebted to the estate of Mrs Pardey in the sum of $805,000.
The two sets of proceedings were managed together in the Probate List. In May 2022 they came before Hallen J. One of the topics which arose concerned the relief sought in the Company Proceedings.
I note that in the event that the plaintiffs are unsuccessful in the associated Probate proceedings, the second and fourth defendants undertake to sign and deliver any necessary documents to which the plaintiff in these proceedings is entitled.
The two sets of proceedings returned for directions a month later before Hallen J. Ms Kennedy, appearing for Mr Zacharatos, noted that if Mr Zacharatos were unsuccessful in the Probate Proceedings, the Company Proceedings would fall away.
Discussion turned to the administration of Mr Pardey’s estate. His Honour indicated that, as the admission of the 2016 will probate was under challenge, in the usual course Mr Zacharatos would be required to deliver up the probate instrument (referred to as the “parchment”) unless a suitable interlocutory arrangement could be agreed. He invited the parties to agree to such an arrangement and adjourned the proceedings for further directions.
The Probate Proceedings were later referred to mediation before the Hon K Mason KC. There were mediation sessions before Mr Mason in late September and in November 2022. The mediation was attended by legal representatives of Mr Zacharatos; Ian and Andrew; Jane; and Mr Pardey’s grandchildren (the children of Ian and Jane). Parles has not been represented as it has no functioning board of directors.
The mediation sessions apparently resulted in some form of non-binding settlement understanding being reached between the parties who were represented, subject to the resolution of other issues. This required rulings to be obtained from the Commissioner of Taxation, resulting in a lengthy adjournment of the proceedings.
In August 2023, the two sets of proceedings returned for directions in the Probate List before Lindsay J. The question of custody of the parchment was raised again. By this stage Mr Zacharatos had delivered it up to the Registry, but he foreshadowed an application to have it returned to assist him in the administration of the estate. His Honour formally made a notation to this effect. He also noted that resolution of the Probate Proceedings would “be likely to resolve” the Company Proceedings.
In due course a notice of motion was filed for Mr Zacharatos seeking the return of the parchment. The motion came before Lindsay J for hearing in December 2023. After some debate, his Honour made a series of notations and orders on the subject, which were designed to allow the parchment to be returned to Mr Zacharatos on an interlocutory basis but restricted his powers under it, and in particular his power to make distributions.
The notations and orders included:
3. NOTE that the first defendant, as the executor named in the will dated 29 July 2016 as amended by the codicil dated 19 January 2018, presently holds the instrument of grant dated 11 March 2021 subject to any orders that may be made by the Court on an interlocutory basis.
4. NOTE that the first defendant gives to the Court an undertaking that, if permitted to use the instrument of grant pending the further orders of the Court, he will use it only to manage the estate in the ordinary course of business and pay the usual administrative and other estate expenses and (other than payment of a legacy of $200,000 to Mitchell Pardey) he will not make any distributions in respect of the estate.
5. ORDER, subject to further order, that the first defendant, as the holder of a grant of probate, be entitled to use the instrument of grant made to him on 11 March 2021 on his undertaking to use that instrument to manage the estate and pay the usual administrative and other estate expenses, and not to make any distribution from the estate (other than payment of a legacy of $200,000 to Mitchell Pardey), save that management of the estate is not to include a sale of any shareholding forming part of the estate of the deceased without leave of the Court.
Subject to an agreed variation in January 2024 which is not relevant for present purposes, order 5 remains in force.
Efforts continue for the settlement of the Probate Proceedings. A draft deed of settlement has been provided but not all of the issues have been resolved.
In the meantime, the accounting and tax affairs of the Pardey companies have not been attended to. By November 2024 the Australian Taxation Office was chasing an unpaid tax debt $67,000 from JSW. Also in evidence is an ATO “final warning” letter dated March 2025 concerning the failure by Parles to lodge a tax return for the No 2 Pardey Trust.
In August last year, Mr Zacharatos’ lawyers took steps to try to resolve the settlement deadlock. They filed a notice of motion seeking to have the disputes about whether the $17 million is owed by Parles to Mr Pardey’s estate (see [32] above) determined on a final basis, and that the hearing on that question be expedited.
The application came before me in the Expedition List on 5 September. While anxious to accommodate the parties, I was concerned that Parles would need to be represented in any hearing, but this would not be possible while it was effectively rudderless. I suggested that the effective way of achieving that outcome might be for Mr Zacharatos to take control of WAC so as to be able to exercise WAC’s powers as shareholder of Parles to appoint a board of directors to that company.
This suggestion was taken up by Mr Zacharatos’s legal representatives. An application was made on Mr Zacharatos’s behalf to have the Court deal on a final basis with the claim for registration of Mr Zacharatos as the registered proprietor of the four management shares owned by Mr Pardey at the date of his death. Consequential orders were also sought concerning the directorship of WAC, to which I will refer in more detail below. The application did not extend to the second main prayer of relief, namely the transfer of the management share which formerly belonged to Mrs Pardey and is now registered in the joint names of the Pardey children.
Initially counsel for Ian and Andrew simply opposed the making of the orders sought by Mr Zacharatos. But recognising, no doubt, the need to do something about the Pardey companies’ tax obligations, and otherwise to ensure due administration pending the outcome of the Probate Proceedings, they made a cross-application, by interlocutory process, seeking the appointment of a receiver to the companies pending the outcome of the Probate Proceedings. Counsel invited me, not to dismiss Mr Zacharatos’ application on its merits, but to decline to deal with it at this point in the litigation and defer it until the resolution of the Probate Proceedings.
Counsel for Mr Zacharatos submitted that the circumstances clearly called for the making of orders transmitting the four management shares belonging to Mr Pardey’s estate into Mr Zacharatos's name. The settlement negotiations had dragged on for more than two years and on any view the resolution of the Probate Proceedings was not imminent. The companies were rudderless and compliance with their tax obligations could no longer be ignored.
Counsel submitted that, even though there was a challenge to the grant of probate in Mr Zacharatos’ favour, he was the appointed executor and the right person to administer the Pardey family companies through the estate’s controlling shareholding in WAC until the Probate Proceedings had been resolved. In doing so he would of course be subject to the control of the Court, and, in particular, the order made in December 2023.
Counsel foreshadowed that the transmission of Mr Pardey’s four management shares to Mr Zacharatos would give him control of WAC and thus the ability to control its subsidiaries. Mr Zacharatos's intention, should the shares be transmitted, was to create a functioning board of directors for Parles consisting of himself and Mr Simon Prowse, the accountant to the Pardey family companies. Although counsel did not say so, I assume that similar arrangements would be made for Pardey & Co and for JSW. This would allow the outstanding tax matters, and any other matters which arise, to be dealt with.
Counsel for Ian and Andrew accepted that, as Mr Pardey’s legal personal representative, Mr Zacharatos was prima facie entitled to registration in his name of Mr Pardey’s four management shares. Counsel however argued, for five main reasons, that either it was not open to the Court to make the order sought by Mr Zacharatos, or, even if that was open, the Court should instead appoint a receiver and defer dealing with Mr Zacharatos’ claim for final relief.
The five arguments were as follows.
Essential requirements for the making of the transmission order had not been satisfied. Accordingly, the Court lacked power to order transmission, at least at this stage.
Mr Zacharatos’ application for final relief was not permissible in the face of the December 2023 order.
It was also contrary to the parties’ agreement to hold the Company Proceedings over until after the end of the Probate Proceedings.
A transmission order would expose Mr Pardey’s estate to an unnecessary risk of CGT liability if Ian and Andrew were ultimately successful in the Probate Proceedings and the shares in question had to be transferred to the Pardey children under the 2012 will.
It would also give rise to a conflict between Mr Zacharatos’ duties as executor in pursuing the debts allegedly owed by Parles to Mr Pardey’s estate, and the interests of Parles in resisting those claims.
Counsel for Mr Zacharatos contended that the Court had power to make an order for the shares on three bases. One was s 1071F of the Corporations Act 2001 (“CA”). The others were the power to rectify WAC’s share register under CA s 175 and an equivalent “inherent jurisdiction”.
CA s 1071F provides:
1071F Remedy for refusal to register transfer or transmission
(1) If a relevant authority in relation to a company:
(a) refuses or fails to register; or
(b) refuses or fails to give its consent or approval to the registration of;
a transfer or transmission of securities of the company, the transferee or transmittee may apply to the Court for an order under this section.
(2) If the Court is satisfied on the application that the refusal or failure was without just cause, the Court may:
(a) order that the transfer or transmission be registered; or
(b) make such other order as it thinks just and reasonable, including:
(i) in the case of a transfer or transmission of shares—an order providing for the purchase of the shares by a specified member of the company or by the company; and
(ii) in the case of a purchase by the company—an order providing for the reduction accordingly of the capital of the company.
(3) In this section:
relevant authority, in relation to a company, means:
(a) a person who has, 2 or more persons who together have, or a body that has, authority to register a transfer or transmission of securities of the company; or
(b) a person, 2 or more persons, or a body, whose consent or approval is required before a transfer or transmission of securities of the company is registered.
The power to order rectification of the register must clearly, I think, be in all cases discretionary. The person claiming rectification must show that he has some equity which the court will protect. If he is a shareholder, then prima facie he shows such an equity if he establishes that a name is wrongly included in or omitted from the register of his company. Some definite reason must be shown, I would think, for refusing rectification before rectification will be refused. But there may be circumstances which justify, or even compel, refusal.
…
[T]he power of a court of equity to order rectification is no more and no less than a part of its general jurisdiction to “act in personam” in aid of a legal right, and it must be subject to the same principles which apply generally to equitable remedies.
The legislation now uses the term “correct” in place of the earlier term “rectify”, but it is doubtful this makes any practical difference. An applicant for a “correction” order is, at least ordinarily, required to show that he or she has a personal equity that the Court will protect (Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 51 (Fullagar J); Whitehouse v Carlton Hotel Pty Ltd [1983] 1 Qd R 336 at 338-339 (Thomas J; affirmed on other grounds, Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 at 315)). At least prima facie, a member of a company shows such an equity by establishing that his, her or its name has been wrongly omitted from the company’s register (Grant v John Grant & Sons at 51). Such an equity can be demonstrated by proving an agreement to become a member (Whitehouse v Carlton Hotel at 339).
…
The purpose of s 1071F was to provide an easier remedy than rectification and to widen the power of the Court to do justice to the parties in the case of a dispute about registration of a transfer (Monardo v Complete Hardware Ltd (1990) 20 NSWLR 489). It reflects the principle that the holder of a share has a prima facie right to transfer it (Roberts v Coussens (1991) 25 NSWLR 171 at 187-189). The prevailing view is that the onus of showing an absence of just cause for the purposes of s 1071F remains with the applicant for registration, and that the corporation and the directors do not bear any onus of establishing just cause (Roberts v Coussens; Leaver v Taxi Combined Services (Launceston) Pty Ltd (2002) 10 Tas R 362 at [7]). However, that is not to say that, once it appears objectively that there is no such cause, an evidentiary onus may not easily shift to the directors to raise some cause (Roberts v Coussens); and while failure to give reasons does not of itself vitiate the decision or prove there is no just cause, at least where reasons are not required to be given, nonetheless, the failure to provide reasons may, in the context of the whole of the evidence, assist in the drawing of an inference that there is no good reason.
…
Where the corporate constitution provides that a transfer is to be registered, but at the same time confers on the directors a discretion to decline to register, the transferee is entitled to be registered unless and until the directors formally and affirmatively exercise their discretion to decline; and where the directors are evenly divided and there is no casting vote, there is no such exercise of discretion (Re Hackney Pavilion Ltd [1924] 1 Ch 276; Re Chas Jeffries & Sons Pty Ltd [1949] VLR 190 at 194; Moodie v W & J Shepherd (Bookbinders) [1949] 2 All ER 1044; Re Zinotty Properties Ltd [1984] 1 WLR 1249 at 1260; Bothranch Pty Ltd v Monitronix Ltd (1989) 15 ACLR 35 at 48; Sutherland v Robert Bosch (Aust) Pty Ltd (2000) 33 ACSR 680 at [42]).
Counsel for Ian and Andrew contended, however, that CA s 1071F was not available in the present case. This was because no application had actually been made by Mr Zacharatos to have the shares transmitted to him.
The starting point for counsel's argument was the decision of Young J in Monardo v Complete Hardware Ltd (1990) 20 NSWLR 489. In that case, a shareholder in a proprietary company reached agreement to sell his shares to a third party purchaser. He was however told that the purchase "would not be approved”. He commenced proceedings under s 186 of the Companies (New South Wales) Code 1982 (the predecessor of CA s 1071F) for an order for registration of the transfer. A transfer form was later prepared and signed, but it had not been in existence at the time the proceedings were commenced, or at the time refusal had been intimated on behalf of the company.
Young J held that the application failed. His Honour reasoned:
It must be remembered, however, that at the very least its purpose is to give an easier procedural remedy to a transferee than the traditional remedy under s 259 [rectification; s 259 was the predecessor to CA s 175], and also to give the court a wider power to do justice between the parties in a case of conflict over the registration of a transfer: vide s 186(2). I do not think, however, it goes so far as to alter the basal rights between the parties, that is, to affect the general proposition that it is the document of transfer itself which is efficacious to transferring the property, not the mere registration by the company.
In Hua Cheng Property Pty Ltd v Xu [2013] NSWSC 1784, another case which relevantly concerned the transfer of shares, his Honour's decision was cited with approval by White J at [28].
Counsel accepted that both of these decisions concerned transfers rather than transmissions. In the matter of Alon Pty Ltd [2021] NSWSC 1021, Rees J made an order for the transmission of shares under CA s 1071F (see at [47] to [55]). But as counsel pointed out, a formal transmission application had been made in that case. Counsel submitted that the decision was distinguishable on this basis.
If Counsel's argument were correct, the obstacle could readily be overcome. Mr Zacharatos could make a formal application for transmission in accordance with WAC's articles of association and serve it at WAC's registered office. Failure to register would follow inevitably. Counsel described the argument as “technical". But counsel submitted that the argument had legal merit and ought to be upheld by the Court.
The reasoning of Young J in Monardo treated the absence of a transfer as a substantive matter. Without a signed transfer, in his Honour's view, there was no contract between the shareholder and the purchaser and therefore no legal basis for the transfer of registration from one to the other.
Transmission to an executor is different. The executor’s entitlement to registration depends upon a right of succession existing at law, not a contract with the transferor. This is reflected in art 21, which requires only that sufficient “evidence” of the transmittee’s right to receive the shares be presented to the directors.
It seems inconceivable that there would be any proper basis for contesting Mr Zacharatos’ right to have Mr Pardey’s shares registered in his name. The fact remains, however, that under art 108(a) the directors of WAC are given a discretion which is equivalent to the discretion they would have for the transfer of the shares inter vivos. Arguably, therefore, the decision in Monardo does apply, creating a difficulty for Mr Zacharatos’ reliance on s 1071F.
There may also be a more fundamental difficulty with the application of s 1071F in the present case. Arguably the section assumes the existence of a board of directors (the “relevant authority”) who would be capable of considering the transmission application. It is hard to see how the language of the section could apply where, as here, it seems that there are no validly appointed directors at all, and no means of appointing such a board of directors.
It is not however necessary to consider these questions any further. Even if the power under s 1071F is not available, there remains the Court's power to order that WAC's share register be rectified.
Counsel for Ian and Andrew contended that, in prosecuting his claim for the transmission of the WAC shares, Mr Zacharatos was contravening the undertaking he gave in December 2023 to use the probate only for the management of Mr Pardey’s estate “in the ordinary course of business”. Counsel submitted that the power to manage an estate on an interim basis did not include the power to engage in litigation apart from defending the deceased’s will.
According to counsel, this interpretation of the undertaking flowed from the ordinary and natural meaning of its terms. But to the extent there was any ambiguity, it was proper to have regard to relevant parts of the matrix of fact, which included the conduct of the proceedings to that point.
Counsel contended that recourse to the surrounding circumstances reinforced the conclusion for which they contended. Counsel made the following points in particular.
The grant had been challenged, and in accordance with the usual practice stated by Hallen J, Mr Zacharatos would not ordinarily have been permitted to exercise any powers, or at least any contentious powers, under it.
The parties, in counsel’s submission, had previously agreed that it would be unnecessary to pursue the Company Proceedings, and they should wait until after the Probate Proceedings had been determined. The Court (through both Hallen J and Lindsay J) had been made aware of this agreement.
In receiving the undertaking and making the associated order in December 2023, Lindsay J, in counsel’s submission, had intended to maintain the status quo. His Honour’s concern had been to administer Mr Pardey’s estate “conservatively”. That was not consistent with the pursuit of final relief in the Company Proceedings.
Counsel for Mr Zacharatos contended that the language of the December 2023 order was wide enough, in the circumstances of this particular administration, to encompass the pursuit of a transmission order. If this was not correct, I was invited to exercise by my power to vary the order so as to permit the application, as the application was clearly in the interests of the estate.
In my view it is too extreme to say that the interim management of a deceased estate can never justify the executor being involved in litigation except for the purposes of defending the deceased’s will. The scope of the term “management” in this context must always depend upon the assets and circumstances of the estate. It is easy to imagine circumstances in which the circumstances of the estate would justify, or indeed make obligatory, legal action by the executor.
So it is in the present case. A fundamental duty of an executor in administering, or managing, an estate is to get in, or at least secure control of, the estate’s assets. Mr Pardey’s shareholding in WAC is an extremely valuable one. The circumstances are such that the estate’s rights, through that shareholding, to control the composition of the board of directors of the company, and hence the governance of its subsidiaries, can only be fully vindicated by litigation. In my view, the bringing of proceedings to obtain transmission of the shares into the name of Mr Zacharatos as executor fall squarely within the concept of management of that shareholding, and accordingly within the concept of management of the estate.
Counsel for Ian and Andrew emphasised that the grant of relief by way of rectification was discretionary. Counsel submitted that as a matter of discretion there was no justification in departing from the agreement by the parties (as counsel characterised it) to defer dealing with the Company Proceedings until after the Probate Proceedings had been completed.
It is true that in 2022 a formal undertaking was given on behalf of Ian and Andrew that if they were unsuccessful in the probate proceedings, they would execute a transfer of the management share formerly owned by Mrs Pardey, which would make the claim for relief with respect to that share unnecessary. But this undertaking did not apply to the management shares registered in the name of Mr Pardey.
In fact, as we have seen, no undertaking could have been given because action was required from the directors and whether the Pardey children validly held office as such was in dispute. Although the parties do not seem to have appreciated and to have turned their attention to this question at the time, prayers for relief concerning Mr Pardey’s management shares could not have been the subject of an equivalent undertaking and would inevitably have required an order from the Court.
Furthermore, I do not think it is accurate to characterise the dealings between the parties as amounting to some form of contractually enforceable agreement. Mr Zacharatos never agreed to give up his claims in return for the 2022 undertaking.
It is true that from 2022 onwards there was a consensus between the parties that the Company Proceedings would only be dealt with once the Probate Proceedings had been completed. But an interlocutory consensus of this type was not necessarily paramount. It was always open for reconsideration by the parties, or the Court, as circumstances developed. The position was, with respect, accurately reflected in the notation made by Lindsay J that it was “likely” that the Company Proceedings would await the determination of the Probate Proceedings.
For these reasons, the interlocutory consensus between the parties from 2022 onwards is not an answer to Mr Zacharatos’ claim for final relief with respect to the registration of Mr Pardey’s management shares. Whether it is relevant to the application the cross-application by Ian and Andrew for the appointment of a receiver will be considered below.
(1) This section sets out what happens if a CGT asset you owned just before dying:
(a) devolves to your legal personal representative; or
(b) passes to a beneficiary in your estate.
…
(2) The *legal personal representative, or beneficiary, is taken to have acquired the asset on the day you died.
Special rule for legal personal representative
(3) Any capital gain or capital loss the legal personal representative makes if the asset *passes to a beneficiary in your estate is disregarded.
Cost base rules for both
(4) This table sets out the modifications to the cost base and reduced cost base of the CGT asset in the hands of the legal personal representative or beneficiary.
[Table omitted; broadly speaking, it provides that the cost base is the cost base incurred by the deceased, in the case of an asset acquired after September 1985, and is the market value of the asset at the date of death, in the case of an asset acquired before that date.]
The transfer of any shares held personally by the deceased in either WAC, JSW and Pardey & Co to the legal personal representative (LPR) would ordinarily be entitled to capital gain tax (CGT) roll over relief under section 128-15(1). However;
i. Because of the uncertainty about who is the executor of the estate and which Will may be admitted to Probate, if the shares in WAC, Pardey and Co, JSW are transferred before the determination of the Probate proceedings, and are transferred to a person who is not the executor or who may not be the executor (because of a subsequent determination as to which Will should be admitted to Probate), then in my opinion there is likely to be potential significant tax consequences. That is, as the transfer is not to the LPR presently or to the LPR at the date the transfer occurs, then such a transfer may not benefit from section 128-15(1).
ii. To the extent the management shares in WAC have no right to either income or capital, then although the transfer of these shares would technically trigger a CGT event, the resulting capital gain may be nil, if the shares have no value.
iii. If the 2017 agreement stands, then the terms of the alleged contract may have resulted in a CGT event occurring in 2017, to which the LPR is now giving effect to. Should this have occurred, any subsequent transfer of the shares held by Mr Zacharatos, would not be eligible to the relief of division 128.
iv. If capital gains tax arises, or there is no capital gains tax rollover relief under Division 128, then capital gains tax consequences could be incurred twice as follows:
once arising from the transfer of shares to a person who is not the executor/LPR; then
subsequently (assuming the global deal goes ahead) in a transfer to the ultimate beneficiary/s.
Submissions: Counsel for Ian and Andrew emphasised that no judicial advice had been obtained about pursuing the transmission claim. This was of particular significance given the risk identified by Mr Raspin.
Counsel drew an analogy with the defence of hardship to a claim for specific performance. Counsel referred in particular to the statement, in Spry’s Equitable Remedies (9th ed, 2013, Thompson Reuters Australia) at 206, that the defence is available in cases where performance of the defendant’s obligations in specie would leave the defendant with a remedy in damages against an insolvent person; or expose the defendant to the payment of a large sum of money, occasioning “considerable financial distress”; or would expose the defendant to “uncertain and difficult litigation”. Counsel submitted that in the present case the beneficiaries should not be put in the position of having a CGT risk imposed on the estate, and then having to sue Mr Zacharatos in devastavit to recover any loss if the risk were to eventuate.
Counsel for Mr Zacharatos did not accept that the evidence demonstrated any substantial risk of additional CGT liability. Counsel referred in particular to the opinion expressed in subparagraph (ii) of Mr Raspin’s opinion quoted above.
Conclusion: In evaluating these submissions, the starting point is that the claim for rectification, so far as Mr Pardey’s four management shares are concerned, is a claim against WAC. The Pardey children may, as holders of the remaining share, have sufficient interest in that claim to justify their joinder as defendants. But no relief is sought against them on that claim.
In these circumstances, it is difficult to see why, even if the transfer of Mr Pardey’s shares to Mr Zacharatos created the potential for a capital gains tax liability on those management shares, that would involve any hardship to WAC itself. The company would not be liable for any such tax, which would fall on the owner of the shares at the time the liability was triggered.
Nor is it obvious that any such liability would fall on the estate, and therefore give rise to a cause of action against Mr Zacharatos in devastavit, even assuming that the failure to avoid a lawful tax liability could be seen as a form of actionable loss to the estate. If the result is no more than the beneficiaries of the estate incurring a larger CGT liability when they ultimately dispose of the assets to a third party, it is not easy to see why this is any relevant form of hardship at all.
Putting these questions aside for the moment, it is not easy to say precisely what concern was being expressed by Mr Raspin about potential CGT liability. Subparagraph (i) suggests that Mr Raspin was considering the possible transfer of shares in WAC, JSW and Pardey & Co. But, as counsel for Mr Zacharatos pointed out, (ii) suggests that there was no concern with the transfer of the WAC shares. Inferentially, the concern would therefore have been confined to the transfer of shares in Pardey & Co or JSW, and that is not happening. Subparagraph (iii) appears to be directed to the transfer of the management share formerly held by Mrs Pardey which is not the immediate concern of the Court in this application either.
Submissions: Counsel for Ian and Andrew identified the conflict as affecting the interests of Parles in the Probate Proceedings. It was in Mr Zacharatos’ interest (in fact it was his obligation) to recover the debts allegedly owing by Parles to Mr Pardey’s estate, and in Parles’ interest to resist those claims. If followed, in counsel’s submission, that if Mr Zacharatos were to assume control of WAC for the purpose of directing the affairs of Parles, he would find himself in a position of conflict.
Counsel for Mr Zacharatos submitted that this was not a valid reason for refusing relief. The conflict issue would be solved by the appointment of Mr Prowse, who could act independently of Mr Zacharatos in deciding what line should be taken on Parles’ behalf in the probate proceedings.
Conclusion: Counsel for Ian and Andrew did not identify why the potential conflict was said to be a defence to the claim for rectification of the register. In my view, it clearly would not be a defence to the claim, considered on a final basis. Mr Zacharatos is the executor. He is the proper party to bring the application for rectification. The existence of some conflict, personal to him, would not justify the Court in refusing relief to which the estate is otherwise entitled.
At best, therefore, this consideration might be relevant to whether the Court should appoint a receiver and defer dealing with the claim for relief on a final basis. I will return to it when I consider the cross-application for the appointment of a receiver, to which I now turn.
The application by Ian and Andrew was for the appointment of a chartered accountant, Mr Joshua Philip Taylor, as receiver. Mr Taylor is an experienced insolvency practitioner who is a registered bankruptcy trustee and liquidator. An issue was raised as a potential conflict (Mr Taylor's wife, who is a solicitor, acts for one of the Pardey grandchildren) but on the view I have formed it is not necessary to go into this. The interlocutory process sought an order appointing Mr Taylor as the receiver and manager not only of WAC, but also of Parles, JSW, Pardey & Co, and the No 1 and No 2 Pardey Trusts.
Counsel for Ian and Andrew went so far as to submit that, because it was not open to make the rectification order vesting Mr Pardey’s shares in Mr Zacharatos, the appointment of a receiver was the only option available to place the governance of the Pardey companies on a proper interlocutory footing. But even if a rectification order was open, counsel contended that it was preferable to have a control of the companies placed in the hands of a person who was independent of the present dispute.
In the course of argument, I asked counsel for Ian and Andrew whether, even if I appointed Mr Taylor as receiver, he might not find himself facing exactly the same obstacles as Mr Zacharatos allegedly faced as executor. Counsel sought leave to address further written submissions on this issue, to which counsel for Mr Zacharatos replied.
In the further submissions, Counsel emphasised that the application was to appoint a receiver directly to the Pardey companies (that is, the assets of the companies, including those held on trust) rather than to the shareholding in WAC. Counsel submitted that the Court had power to appoint a receiver to a deadlocked company without the applicant needing to establish a legal or equitable interest in the company’s shares: citing University of Western Australia v Gray (No 6) [2006] FCA 1825; Woods v Harrison, in the matter of Telco Service Holdings Pty Ltd [2017] FCA 732; The Estate of Lorenzo Antonio Pastrello [2024] NSWSC 734. Thus, it would be unnecessary for the receiver to go onto WAC's register of shareholders and the alleged difficulty concerning s 1071F would not arise.
In response, counsel for Mr Zacharatos submitted that even if there were a power to appoint a receiver, it should only be exercised in the last resort. Counsel submitted that this was far from the present case, where it had not been suggested that Mr Zacharatos was not doing his duty as executor and the appointment of a receiver would lead to the incurring of significant additional costs. Counsel submitted that there will be no practical improvement if all the receiver was likely to do was to exercise powers of WAC to call a meeting in Parles.
Conclusion: The appointment of a receiver is an interlocutory remedy. Like other forms of interlocutory order, it can only be justified to the extent that it preserves the subject matter of the proceedings in aid, and for the purposes of, a claim for final relief.
In my opinion the Court, in an appropriate case, may appoint a person as a receiver to an incorporated body to conduct or defend litigation on its behalf. The power may be exercised where the body is effectively paralysed by internal dissension or where for one reason or another those charged with its management are unable to be identified or, if identified, are unable to act for one reason or another.
Woods v Harrison concerned an application for the appointment of a receiver of a company by a creditor of the company. The grounds for the receivership order were stated at [41]. They included the need to protect assets from dissipation (at [41(a)]) as well as a gap in the company’s corporate governance ([41(d)]). It should also be noted that in a creditor’s application, there is a need to limit a receivership order to what is necessary to secure the creditor’s rights to final relief: National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 553.
In Pastrello, an order was made in estate litigation appointing a receiver to a trading company, the shares in which were a significant asset in the estate. But the parties agreed on the appointment of a receiver. The only area of dispute was the identity of the receiver to be appointed: see at [13] and [14].
In the present case, the dispute is about whether Mr Pardey’s shares in WAC are to be distributed in accordance with the terms of the 2016 will, or the 2012 will. It is common ground that the shares in WAC belong to the estate. There is no relevant dispute as to the corporate governance of WAC. Still less is there any corporate law dispute about the governance of the Pardey company subsidiaries. It is simply a matter of appointing directors to fill the vacancies.
This is reflected in the form of the receivership application. The application is being made by Ian and Andrew by interlocutory process in the Company Proceedings. But Ian and Andrew are defendants, not plaintiffs, in those proceedings, and they have not cross-claimed. They are not making any claim for final relief to which the appointment of a receiver could be ancillary.
In reality, the application is being made in aid of the claims made by Ian and Andrew in the Probate Proceedings. But the subject matter of those proceedings is the deceased’s estate, including the shares in WAC, not the Pardey companies themselves. Ian and Andrew’s claims could at most justify the appointment of a receiver to the WAC shares pending the determination of their claim to be entitled to receive and administer those shares as executors of the 2012 will. They would not justify the appointment of a receiver to WAC itself, and still less would they justify the appointment of a receiver to WAC’s subsidiaries or the trusts of which Parles is the trustee.
For this reason alone, the application by Ian and Andrew for the appointment of a receiver cannot succeed, and there is no practical alternative to registration of Mr Zacharatos as owner of the shares in his capacity as Mr Pardey’s executor. But if I am wrong in this view, I would still reach the same conclusion as a matter of discretion.
It is true, as already noted, that in 2022 and 2023 the consensus between the parties was that the Company Proceedings should be held over until the Probate Proceedings have been completed. But the simple fact is that the delay in completing the Probate Proceedings, and the need to ensure that the Pardey companies are properly administered, and in particular that they meet their tax obligations, has made the earlier consensus untenable.
The consequential orders sought by counsel for Mr Zacharatos would involve the Court in rectifying the register of officeholders of WAC so as to record Mr Zacharatos, and the Pardey children, as directors of WAC from the date of the order. Counsel sought this order as a practical method of creating a board for WAC through which Mr Zacharatos could exercise control over it and its subsidiaries. Because counsel were not pressing for transfer of the management share formerly owned by Mrs Pardey, no difficulty with share qualifications would arise.
It seems to me, however, that rectifying the register of officeholders is not necessary. The difficulty with WAC’s quorum requirements for a general meeting can be overcome either by requisitioning a meeting (article 94; the power in CA s 249F would also be available) or by invoking the Court's power to convene a meeting under CA s 249G. Any ongoing difficulties could be addressed by changing the articles of WAC; if as a result of the Probate Proceedings control of WAC changes, and direct control of WAC passes to the Pardey children, then they may change the articles back or adopt some different provisions concerning general meetings to reflect what is suitable to them as the new owners.
Nor is it necessary to retain the Pardey children has directors of WAC. Any problem with share qualifications and minimum numbers of directors could likewise be solved by amendments to the articles.
Nothing I have said should be understood as preventing Mr Zacharatos from appointing one or more of the Pardey children as directors of WAC or of its subsidiaries, if he considers that this be workable and in the interests of the companies. But I see no advantage in requiring Mr Zacharatos to do so, given the potential for dispute and deadlock at board level which might ensue.
In my view, there is no need to make the consequential orders sought in the matter. The remaining governance questions should be left to Mr Zacharatos to be dealt with as he sees fit. The Court will of course remain in residual control through its control over the administration of the estate through the Probate Proceedings.
Having reached the above conclusions, I convened a directions hearing on 16 December at which I announced that I proposed to make an order for rectification of WAC's share register as sought. I indicated that I would give formal reasons for my decision in due course. I also made directions for Mr Zacharatos to file an interlocutory process regularising his informal application for final determination of the share register.
The interlocutory process was filed on the next day, 17 December. On the following day, 18 December, I made a rectification order in a form which had been agreed between the parties.
On 27 January I issued to the parties a draft of the judgment to this point. I invited them to consider whether, in the light of my conclusions the Court should go on and deal with the remaining claim for relief in the proceedings concerning the management share formerly owned by Mrs Pardey, and questions of costs.
The proceedings were relisted before me on 20 February. I was asked by the parties not to proceed any further at this point so that discussions could take place between them about the resolution of the whole dispute between the parties including the probate proceedings. I accordingly adjourned these proceedings and the Probate Proceedings to a date agreed by the parties.
The rectification order I made on 18 December was:
Order that the register of shareholders of Western Agricultural Co Pty Ltd ACN 000 112 283 be rectified such that the 4 "Management shares" held in the name of Arthur William Pardey be registered in the name of Peter Ulysses Zacharatos (as executor of the late Arthur William Pardey).
[2] Amendment to party name (Western Agricultural Co Pty Limited)
[7] grammatical errors
[131] deletion of word
Zacharatos
Western Agricultural Co Pty Ltd [2026] NSWSC 106
(1950) 82 CLR 1
(1990) 20 NSWLR 489
(1987) 162 CLR 285
(1991) 25 NSWLR 171
(2002) 10 Tas R 362
The ASIC register extract for Parles records that Mr and Mrs Pardey were appointed as directors in 1972. Article 77 provides that, until otherwise provided by the AGM, Parles is to have not less than two and not more than five directors. No share qualification is necessary: art 78.
Following the death of Mrs Pardey, Mr Pardey was the sole remaining director of Parles. No steps appear to have been taken to appoint any further director, and Mr Pardey appears to have thereafter been regarded as a sole director of the company. This, however, is problematic, given the prohibition in art 77.
As already mentioned, the proceedings concerning Mrs Pardey’s estate were resolved in October 2017. One of the terms of the consent order was order 6(k):
Mr O'Brien, for Mr Zacharatos, proposed an amendment to the prayers for relief adding an order empowering the Registrar to execute the share transfer for Mrs Pardey’s former management share if the Pardey children failed to do so. Ms Ross-Maranik, appearing for Ian and Andrew, questioned the need for the amendment. It appears that by this point the transfer may have been executed by all of the Pardey children, although not handed over. At all events, Ms Ross-Maranik stated that if Ian and Andrew failed in their challenge to the 2016 will, the share would be transferred.
His Honour suggested that, if not executed already, the transfer should be executed and held in escrow. He made a notation as follows:
I will deal with these five arguments before considering Ian and Andrew's cross-application for the appointment of a receiver.
As executor, Mr Zacharatos has a clear and unquestioned legal right to be registered as the owner of Mr Pardey’s shares. In this context, Mr Zacharatos’ failure to make a transmission application is immaterial. It would be an empty formality to do so. In my opinion, there is no reason at all, let alone any “definite reason”, why he should not be so registered in the usual course.
As Brereton J said in Beck (echoing Young J in Monardo), the purpose of s 1071F was to widen the Court's ability to correct company registers. If in the present case there is some difficulty with exercising the s 1071F power, that is not a reason for refusing to exercise the Court’s general power of rectification. Rather, it is an argument in favour of doing so.
I do not think that there is any ambiguity in the undertaking which requires clarification by reference to the circumstances in which the undertaking was given. In any event I do not think that any of the points made by counsel for Ian and Andrew shed any relevant light on the scope of the term “manage” in this context.
Certainly, there was a concern to ensure that Mr Zacharatos would not proceed to distribute the assets of the estate, as his duties would otherwise have required, in accordance with the beneficiary as nominated in the 2016 will. But in my view that says nothing about limiting Mr Zacharatos’ power to bring legal proceedings so as to secure control over the assets of the estate to ensure that those assets are properly managed in the interests of whichever beneficiaries may ultimately be entitled to them.
Furthermore, and more fundamentally, Mr Zacharatos currently has the benefit of a grant of probate issued by this Court. There is no question that he is the legal personal representative for Mr Pardey’s estate. If the management shares are transmitted to him, he will receive them in that capacity. Subsequent revocation of the grant would not retrospectively deprive him of that status.
In any event, there is no suggestion that Mr Zacharatos will complete the administration of Mr Pardey’s estate before the Probate Proceedings are completed. Therefore, no question of any capital gain arising from the shares passing to a beneficiary would appear to arise.
If Ian and Andrew succeed in the Probate Proceedings, Mr Zacharatos will be obliged to transmit the shares to them as executors under the 2012 will. They will then become the legal personal representative of Mr Pardey’s estate. The later passing of the shares to the beneficiaries under that will would, on the face of it, plainly fall within s 128-15(3).
It is therefore difficult to see that there could be any adverse CGT consequence if the shares are transmitted to Mr Zacharatos and Ian and Andrew later succeed in the probate proceedings. Certainly Mr Raspin has not explained, in the light of these matters, how such an adverse consequence would arise.
Hardship is an affirmative defence. The onus lies on the defendant to establish it as a ground for refusing relief to which the plaintiff is otherwise entitled. Even if the incurring of an unnecessary capital gains tax liability is a relevant form of hardship, I am not satisfied that a sufficiently substantial risk of such a liability has been established.
There is no doubt that, in a proper case, the circumstances may justify the appointment of a receiver to control the affairs of a company. An example is where there is a dispute as to who, as a matter of corporate law, is entitled to manage the company's affairs. In such a case, a receiver may be appointed, pending the grant of final relief which will resolve the dispute.
But the power to appoint a receiver in such circumstances must be carefully exercised so as to ensure that the receivers’ powers are limited to the minimum required to preserve the subject matter of the claims for final relief in the proceedings. The mere commencement of proceedings does not give the Court a freestanding right to appoint a receiver for the purpose of interlocutory management of the affairs of the company in a way which seems to the Court to be preferable.
The authorities upon which counsel for Ian and Andrew relied are not inconsistent with this analysis.
In University of Western Australia v Gray French J said at [74]:
It is also true that a receiver appointed directly to Parles would have no obligations to the estate of Mr Pardey and the potential for conflict in defending the debt claim in the Probate Proceedings would not arise. But I do not think that that potential conflict is a matter of any great discretionary significance. It is simply a matter of ensuring independent legal representation is obtained for Parles on the issue. That can readily be done.
Furthermore, I agree with counsel for Mr Zacharatos that the appointment of a receiver would result in an additional layer of costs. In substance, for reasons I have given, the application is in effect an application to bifurcate the administration, appointing a receiver to manage the affairs of the Pardey companies but leaving Mr Zacharatos in charge of the other assets of the estate. Inevitably that would be more expensive than having all of the assets managed by one person.
Nor in my view would bifurcation be consistent with the earlier consensus between the parties and the Court about the administration of the estate. What was contemplated was that Mr Zacharatos would continue to administer the estate until the Probate Proceedings had been determined. Creation of a new regime for management of the Pardey companies would be a marked departure.