Sunday, 15 September 2013


CSF Corporate Pty Ltd (‘CSF’) acting as the trustee for Mr Craig Faulkner’s trust held a 5% shareholding (‘the shares’) in William Buck Holdings (WA) Pty Ltd (‘William Buck’, the defendant).

CSF sought review in the statutory oppression action in the form of either:

  • the winding up of William Buck
  • orders requiring the purchase of the shares at a value to be determined.

William Buck engaged an expert valuer, Ms P, to prepare a valuation of CSF’s minority shareholding in William Buck. CSF objected to this expert evidence on the basis that:

  • timetabling directions did not address expert evidence
  • no leave to file expert evidence had been granted
  • underlying facts supporting the opinion had not been established in accordance with the Makita1 principles.

CSF argued that it would be prejudiced if the evidence was allowed to be adduced.

The involvement of experts

Justice Martin noted that “It is apparent that leave to adduce expert evidence at the trial is required.  Ordinarily, the exchange and receipt of such evidence would be routine and uncontentious, provided the issue is dealt with a reasonable period before trial, sufficient to allow each party the opportunity to secure the services of an expert, to obtain a report and for the experts to confer before trial in an endeavour to distil and crystallise true issues between them (if any).”

But in this case, it was contentious.

CSF stated that it had assumed that “were the court to conclude a buy out order for the minority holding of shares was the appropriate remedy (rather than winding up) that the hearing should stop at that point and an expert report commissioned, then for the matter to be brought back later for a subsequent value determination.”

Two months after receiving Ms P’s expert evidence, and more than a year after filing, CSF had:

  • not sought clarification with the Court as to whether its procedural assumption was valid
  • “Not yet even engaged its own expert valuer, let alone reached a point of being in a position to provide an expert report about the value of its minority shareholding interest, in order to exchange a report prior to trial or permit a pretrial expert conferral”
  • not even requested the financial documents required to prepare any valuation.

Justice Martin expressed his surprise and dismay at CSF’s lack of preparation several times, noting that:

  • “The 'sharp edge' of [CSF’s] statutory oppression action is all about the assessed value of the minority shareholding”
  • the expert valuation evidence was “plainly relevant, indeed at the heart of the action” of CSF’s alternate relief
  • Mr Faulkner was himself an accountant
  • “Not having yet engaged an expert to advise [CSF] as to the likely value of his minority shareholding in the corporate defendant is unhelpful”
  • he (Justice Martin) was “not attracted to the prospect of there being utility in carving off a valuation aspect of the present dispute for separate and later determination”
  • the parties had been to court-sponsored mediation and “it is difficult to see how any meaningful settlement discussion could occur in circumstances where the base value issue had not been professionally evaluated on both sides.”

The decision

“Regrettably, however, I assess it overall to be unjust to allow only one side to adduce expert evidence at trial, or to effectively deprive the other party of that opportunity [and the] necessary leave to adduce expert evidence has not been granted to this point.

In what are unsatisfactory circumstances overall, an unfairness in giving leave to adduce expert evidence in a practical sense to only one side now, leaving the other side vulnerable, is the prevailing consideration.”

However, after consulting with both sides, Justice Martin refused to provide leave to adduce the expert evidence on the grounds that both sides were amenable to using an independent assessor to decide the issue of the value of the shares. He saw this as a potential approach to resolve the issue of prejudice, but without a delay to the timetable.

The source of Justice Martin’s ‘regret’ may well be reflected in his wry opening comment that the proceedings “continue to generate high levels of interlocutory disputation seemingly unable to be resolved by the usual conferral processes.”


The Court must balance fairness and efficiency in its processes. More and more often, we see the Court intervening to ensure efficiency when relating to expert evidence. This case reinforces that fairness is the ‘prevailing consideration’, and will frequently triumph over efficiency concerns. This may apply even when the ‘unfairness’ is the fault of the party being prejudiced, and when that party had ample opportunity to seek correction or action at an earlier date.

Although Justice Martin managed to avoid a disruption to the timetable in this case and thus not lose efficiency, it appears from his tone that, had both sides not accepted the potential use of an independent assessor in relation to the expert valuation issue, he may have delayed the timetable rather than risk prejudice to one side.

To avoid doubt and potential trial delays, it is advisable to ensure leave to adduce expert evidence is granted early on, even if it appears obvious that it relates to the 'sharp edge' of the proceedings!