Re Estate Soulos

At her funeral the officiating priest opened his eulogy with a declaration that “the Iron Lady of Strathfield is no more”.

He may have spoken too soon. In the several proceedings between her four children she has manifested an afterlife as the central personality in the proceedings. A proud product of Sparta, her self-perception was that of a “strong person”. Her children remember her, at least in her prime, as a dominant, dominating personality. She was not, however, a sophisticated person. As she aged, she became frail, troubled by a loss of hearing and erratic. She was fiercely proud of her family. She was a prolific will-maker. She left her affairs in a mess.

Irene (known as Rene) Soulos (“the deceased”) was born in Greece in November 1919. She arrived in Australia in or about 1935 or 1936. She died on 27 January 2018, aged 98 years, leaving a will dated 13 March 2017 (her last will) probate of which was granted on 31 March 2021 to the executors named in the will: her accountant Con Kristallis (“Mr Kristallis”), her solicitor Trevor Ian Cork (“Mr Cork”) and her son, Nicholas Andrew Soulos (“Nick”).

The instrument of grant was issued on 31 March 2021 pursuant to an order made on 12 February 2021 (in the proceedings numbered 2018/00050908) for its admission to probate in solemn form.

Pending the grant of probate, the executors administered the estate of the deceased pursuant to an interim grant of administration made by the Court on 10 December 2018.

The deceased was married once only, to Andreas “Tatsos” Soulos, known as Andrew Soulos. The marriage took place in or about November 1940.

Andrew Soulos was born in Greece in July 1904. He arrived in Australia in or about 1925. He died in December 2003, aged 98 years leaving a will dated 3 February 2003 probate of which (not in evidence) was evidently granted to the executors named in the will: Nick, Nick’s son John; and Andrew, a son of the testator’s son, James.

By that will, as she survived him, Andrew Soulos left the whole of his estate to his wife, Rene the deceased in the current proceedings.

The four children of their marriage survived them:

At the time of her death, the deceased had 12 grandchildren and several great-grandchildren. One of her grandchildren (Andrew, a son of Maria) has since died, leaving a son for whose welfare Maria is particularly solicitous.

James married Margaret (against the express wishes of his parents) in February 1971. They have four children:

Maria moved to Greece in 1969. She married Christos Pagones in June 1970. They have two surviving children. Their eldest child, Nikolai (Nikos) was born in March 1971 and is now aged 51 years. Their second child, Andrew was born in May 1972 and died in April 2019, aged 47. Their third child, Charalambos (Babi) was born in March 1976 and is now aged 46 years.

Dennis married Kerrie in March 1978. They separated in October 1994 and were divorced in 1998. There are three children of their marriage:

Dennis and Kerrie agreed upon a matrimonial property settlement which was formerly recorded in a document styled “Terms of Settlement” and dated 21 November 2000, shortly thereafter made the subject of orders by the Family Court of Australia.

Nick married Christina on a date not disclosed in the evidence. They have two children:

At the time of her death, the deceased was a wealthy woman with ownership or control of substantial parcels of land (mostly in the inner western suburbs of Sydney) including, through Esperia Court Pty Ltd (“Esperia Court”), property in Strathfield Town Centre.

Her estate included other assets (about $759,000 with the National Australia Bank, shares worth about $3,300 in a public company, loans said to be owed by James and the sons of Nick and three plots at Rookwood Cemetery) but her landholdings are at the centre of attention in these proceedings.

For probate purposes, her executors estimated that her estate (comprising all forms of property) had a total value of about $35.854 million.

At the time of her death, she was the registered proprietor of substantial parcels of land in her own name (in NSW) with a total estimated value of about $16.95 million. Those properties comprised:

At the time of her death, the deceased also owned a unit in Tripoli, Greece, of comparatively lesser value, worth about $80,000.

The property at 77 The Boulevard, Strathfield was (with the consent of Nick, to whom it was gifted under the will of the deceased) sold by the deceased’s executors to fund expenses in administration of her estate. The other identified properties remain within the control of the executors.

The sale of 77 The Boulevard, Strathfield may require the executors, before the distribution of any estate property, to give close consideration to section 46C(2) of the Probate and Administration Act 1898 NSW and Part II of the Third Schedule to the Act.

Against the marginal note “Administration of Assets”, section 46C(2) is in the following terms:

Section 46C(3) of the Act defines the word “solvent” to mean, for the purpose of the section, “sufficient”. In the context of the section, the meaning of the word “solvent” is informed by the definition, in section 46C(3), of the word “insolvent” which is defined to mean “insufficient for the payment in full of the debts and liabilities of the deceased person”.

Part II of the Third Schedule is headed “Order of Application of Assets Where the Estate is Solvent”.

Under that heading it sets out the following list of assets:

The Court has not been invited, in the determination of the current proceedings, to consider the operation of section 46C(2) or Part II of the Third Schedule.

Under cross-examination, Mr Cork disclaimed any intention to exercise his right as an executor to apply to the Court for commission. Whether he adheres to his declared intention not to claim commission remains a matter for him. In the absence of debate, I decline to proceed on the footing that he no longer has a right to claim commission.

Mr Kristallis expressly reserved whatever rights he might have as an executor to claim commission.

No part of the deceased’s estate has yet been distributed by her executors. They appear to have taken the view that, given the multitude of competing claims made in these proceedings, prudence has dictated that, pending determination of the proceedings, they leave management of Esperia Court in the hands of its directors (Nick and his son John) and otherwise maintain the status quo.

The deceased enjoyed control of land through her ownership of management shares in the main corporate vehicle of the Soulos family (to put the point neutrally), Esperia Court, and her ownership of shares in another family corporate vehicle, A&R Management Pty Ltd (“A&R”). For probate purposes her executors estimated that her Esperia Court shares were worth $14.775 million and her A&R shares were worth $2.8 million.

Esperia Court Pty Ltd. Esperia Court was at the time of the deceased’s death, and remains, the registered proprietor of the following parcels of land in or about the Strathfield town centre:

At the time of the deceased’s death Esperia Court also owned an 80% interest in 12-14 (often described as “12”) Churchill Avenue, Strathfield (Lot 1 in deposited plan 305568) as a tenant-in-common with Nick and his son John, who held their 20% interest as joint tenants. The title to the property remains registered in the names of Esperia Court, Nick and John.

Much controversy in these proceedings attends the acquisition of 12 Churchill Avenue, Strathfield (known as the Symond Arcade) by Esperia Court, Nick and John in 2017. They purchased the property, by contracts exchanged on 28 March 2017 and completed on 14 November 2017, for $30 million, including a $3 million deposit, with finance provided by National Australia Bank.

Controversy also attends that part of 2-10 Churchill Avenue, Strathfield upon which Esperia Court once conducted a private hotel business in the nature of a boarding house (known as the Strathfield Private Hotel) which the company leased to SPH Holdings Pty Ltd (“SPH”), a company owned and controlled by Nick, on terms said to be uncommercial.

The acquisition of the Symond Arcade and the SPH lease both lie at the heart of allegations by Maria that the affairs of Esperia Court have been managed in a manor oppressive of her as a shareholder in the company.

A&R Management Pty Ltd. A&R was at the time of the deceased’s death, and remains, the registered proprietor of 10 Chapman Street (Lot 8 of section B in deposited plan 482), “10 Chapman Street”.

10 Chapman Street was purchased for $350,000 in the name of A&R in or about September 1998. The memorandum of transfer (dealing number 5491301) is undated but it was apparently stamped on 14 October 1998 and it was registered by the Registrar General on 23 December 1998.

Controversy attaches to beneficial ownership of 10 Chapman Street because Dennis claims a beneficial entitlement to all the shares in A&R (excluding perhaps shares claimed by Maria) or the property itself arising from inter vivos dealings with the deceased.

A&R has not been separately represented in these proceedings, I infer, because of uncertainty as to the identity of the person or persons entitled to shares in the company. Nevertheless, all competing interests are before the Court.

Overlaying disputes about particular parcels of land are disputes about entitlements to shares in Esperia Court and in A&R; a claim by Maria (supported by James and Dennis) for Esperia Court to be wound up in oppression proceedings (brought under sections 232-233 of the Corporations Act 2001 Cth) against the deceased’s estate, Nick and John; and claims for family provision orders (under Chapter 3 of the Succession Act 2006 NSW) brought against the estate of the deceased by each of James, Maria and Dennis.

Maria’s allegation of oppression is accompanied by allegations that Nick and John, as directors of Esperia Court, breached obligations they owed to the company as fiduciaries, and comparable obligations owed by reference to sections 180, 181 and 182 of the Corporations Act 2001 (Cth).

Questions about the valuation of land and shares held by the deceased in Esperia Court loom large in both the oppression proceedings and the family provision proceedings.

Although the constitution of the several proceedings before the Court takes a more complex form, because of a need for separate representation of the estate of the deceased (by, at least, the two executors not children of the deceased) and Esperia Court (currently under the day-to-day management of Nick and his son John as directors of the company), a major focus of the real questions in dispute in the proceedings is upon:

Maria, for her part, also seeks orders against Nick and his son John designed, in one way or another, to have Nick and John account for benefits received by them arising from their acquisition of an interest in Symond Arcade and for benefits received by SPH arising from its leasing of the Strathfield Private Hotel.

At the commencement of the hearing a solicitor acting for Nick in his personal capacity (Mr E Herman) appeared before the Court, in the proceedings brought by James and Dennis, to announce that Nick had “withdrawn his separate defence”. Precisely what was meant by that became clear when Mr Herman sought, and was given, an opportunity to make closing submissions on behalf of Nick. In essence, those submissions were to the effect that Nick relied upon the submissions made by his co-executors (Messrs Kristallis and Cork) and the submissions made on behalf of Esperia Court (presently under the day-to-day control of Nick and his son John).

Nick’s core submission on his own account was that the Court should not make any order for the winding up of Esperia Court or for dilution of his control of the company through ownership of all management shares in the company (because that would be contrary to the deceased’s testamentary intentions) but “a moderate and a just and wise outcome” would be to adopt changes to the constitution of the company proposed by the lawyers for the company.

The proposal of the company (which is to say, under its current management, Nick and John by another name), as recorded in MFI X35 (a solicitor’s letter dated 18 August 2022) is for a suite of amendments to the articles of association of Esperia Court, inter alia, to “equalise the payment of dividends”; to make provision for the company’s books to be audited each year, at the cost of any member who requests an audit; and to regulate remuneration predicated upon an assumption of Nick retaining control of the company.

At the beginning of the hearing of the proceedings I made, without objection by any party, an order (confirming an order earlier made) that the four sets of proceedings listed for hearing by the Court be heard together with evidence in each set of proceedings to be evidence in each other set of proceedings so far as may be material.

Although disputes between the deceased’s children (and Nick’s son, John) are many and varied, an unusual feature of the proceedings is that much of the evidence adduced in the proceedings was adduced without objection or cross-examination. Perhaps the most striking examples of this are:

Not far removed from these examples is the evidence of Nick about the circumstances in which he and his son John came to join with Esperia Court on 28 March 2017 in their entry into a contract for the purchase of the Symond Arcade. The facts necessary to establish the allegations of “oppression” made by Maria (with the support of James and Dennis) can be discerned in the affidavit evidence of Nick himself. The basic narrative of what occurred is there, although supplemented by the evidence of his sons, Andrew and Nick, the deceased's professional advisers (the accountant, Mr Kristallis and the solicitor Mr Cork) and the real estate agent (Mr Pignataro) who, although acting as agent for the vendor of the Symond Arcade, liaised closely with Nick in negotiations leading to an exchange of contracts. A broader examination of the evidence does not displace the basic narrative presented by Nick.

During the course of the final hearing, the parties jointly applied to the Court for orders under section 27 of the Succession Act 2006 NSW for rectification of clauses 6-9 (inclusive) of the deceased’s will to correct a misdescription of shares in Esperia Court gifted to James, Dennis and Nick. All affected parties having joined in the application, and the parties having persuaded the Court that it was proper to do so, rectification orders were made as sought.

An affidavit sworn by the solicitor for the executors of the estate of the deceased confirms that all persons affected by:

All persons served with notice of the proceedings (including the deceased’s grandchildren) were adults at the time they were served.

The deceased’s will dated 13 March 2017 having been admitted to probate in solemn form, the present relevance of the service of notice of proceedings is that parties affected by the applications for family provision relief before the Court have been given an opportunity to appear in the proceedings to contest the applications or otherwise to protect their interests. None have appeared in response to the notices served upon them.

Questions of credit do not loom large in these proceedings save possibly in connection with an assessment of the evidence of Nick and, more particularly, his son John relating to the acquisition of the Symond Arcade and the conduct of the Strathfield Private Hotel by Nick’s company, SPH. Their self-perception that they acted only at the direction of the deceased in their capacity as directors of Esperia Court is not one that can, objectively, be embraced.

The evidence of members of the extended Soulos family was, perhaps, coloured by their perspective of dealing with the deceased as the family’s matriarch and by their perceptions of what might be a fair, and proper, outcome of the proceedings.

The evidence of the deceased’s accountant (Mr Kristallis) and her solicitor (Mr Cork) was more objective but, perhaps, more circumspect than it might otherwise have been because it might not unreasonably be said of them that it was under their watch that the deceased conducted her affairs, and those of Esperia Court, with a disrespect for formalities that, with her demise, has created uncertainty within the Soulos family. In retrospect, her dominance of the family has left (literally) doubtful legacies.

The evidence of James, Dennis and Maria is not without an element of exaggeration in matters of peripheral significance in dealing with the principal questions for determination in the proceedings. That is, perhaps, a product of combining claims for family provision relief with other types of claim, and the deployment in these proceedings of evidence which appears to have its origins in a now-resolved probate suit. There is much evidence which, with the same discipline demonstrated by counsel in their cross-examination of witnesses, could have been refined.

In assessing the evidence of the deceased’s children an allowance needs to be made for the fact that they are no longer young. James, in particular, is dependent upon his son Andrew (an accountant) for management of his affairs. As witnesses, all of James, Maria, Dennis and Nick presented themselves as weary of the Soulos family’s experience of protracted litigation and bewildered by it. In the case of James, Maria and Dennis a large part of their bewilderment appears to have origins in disappointed expectations of what would occur on their parents’ deaths.

What was different about the evidence of Nick and John was a strong belief on their part that they are entitled, as successors in business of the deceased, to exercise control of Esperia Court; to determine, as they see fit, whether, when and how other members of the Soulos family benefit from the family business; and to intermingle their personal affairs with those of Esperia Court if and to the extent necessary to develop real estate.

Nick is so persuaded of the desirability of developing Esperia Court’s prime real estate in Strathfield that he finds the opposition of his siblings to his plans almost incomprehensible. In particular, he shares the deceased’s simmering resentment that, before the deceased’s death, James sought to reclaim his shares in Esperia Court and to have their underlying, net-asset value realised for the benefit of himself and his family. Nick also resents what he sees as Maria’s assertion of unmeritorious claims over Esperia Court; unmeritorious because, living in Greece, she was always too remote to play any constructive role in the Company’s day-to-day operations.

Nick has been reinforced in his sibling rivalry by the objective fact that the deceased was anxious to have Esperia Court’s real estate developed and the company retained in the ownership and control of the male line of the Soulos family. As a son of the deceased, and with two sons (but no daughters) of his own, he was well-placed to humour the deceased and serve her purposes. Whether he was closer to the deceased than his siblings because he was her youngest child and stayed near at hand as they carried on with their lives was not, in terms, explored in the evidence.

Nick regards himself as the person responsible for the conduct of the Company’s business in the last years of the deceased’s life and development opportunities arising from acquisition of the Symond Arcade. He presents himself as the bearer of burdens imposed on him by the deceased, both in the acquisition of the Symond Arcade and in the conduct of the business of the Strathfield Private Hotel. He seems unaware that some of the tension between himself and James arises from the fact that, during the deceased’s latter years, Nick took over routine leasing work that James had formerly done for the deceased.

There is a contradiction at the heart of Nick’s case. On the one hand, he invites the Court to accept that he (and John) never wanted to acquire an interest in the Symond Arcade (they wanted Esperia Court to acquire 100 percent of it) and Nick never wanted to take a lease of the Strathfield Private Hotel (he only arranged for his company SPH to take a lease to oblige the deceased). He took on these burdens, reluctantly he says, at the request or direction of the deceased. On the other hand, he has fought an adversarial battle to retain the benefit of the “burdens” he says he was reluctant to assume.

This contradiction is perhaps explained by Nick’s conviction that Esperia Court’s real estate should be retained and developed (as the deceased intended by her will) and he is only an agent of sorts for the deceased and the Soulos family of her imagination.

John’s evidence reflects an over-enthusiastic acceptance by him of his father’s perspective of the Soulos family and the opportunities available to him personally in his conduct of Esperia Court under the control of Nick and himself. Like his father, he seeks self justification in a belief that his decision-making has been motivated, not by self interest, but by a desire to benefit the whole Soulos family.

Notable for its greater objectivity is the evidence of Nick’s other son, Andrew. He was on the fringe of intense discussions that took place on the morning of 28 March 2017 leading to Esperia Court, Nick and John that day entering a contract to purchase Symond Arcade. He resisted pressure from the deceased to join Nick and John in the acquisition of a personal interest in the Arcade. He expressed doubts about the fairness of a transaction that privileged his branch of the Soulos family over those of his uncles and auntie.

At the end of the day, although the different perspectives and interests of members of the Soulos family may play a part in an assessment of their evidence, much of the evidence is largely uncontroversial and the questions for determination by the Court focus attention on objective facts.

The most difficult questions for determination are those about the legitimacy of how Esperia Court has been managed in the past and whether there is any proper foundation for the Court to make orders (and, if so, what orders) affecting its ongoing operation. Those questions arise most directly in connection with Maria’s “oppression” suit and the family provision applications of James, Maria and Dennis.

In the course of the hearing of these proceedings some disputes have been resolved or left to the Court to make a determination in the absence of active opposition. The central, intractable problem that affects all the children of the deceased and, incidentally, others is whether it is open to the Court to make orders (and, if so, should the Court make orders):

Under the pressure of his siblings’ claims Nick has advanced a proposal for opening up to his siblings a limited role in management of Esperia Court with the prospect of dividends shared on an equal basis. He seeks, nevertheless, to retain control of Esperia Court and, with that control, to pursue proposals for development of the company’s properties.

Esperia Court, Nick and John also made an “open offer” (by a solicitor’s letter dated 6 September 2022, Exhibit E14) to purchase Maria’s shares in the company for $7 million on extended and highly qualified terms. The offer was formally rejected by Maria by a solicitor’s letter dated 14 September 2022 (Exhibit M44). No similar offer was made to James or Dennis.

In his own words, Nick wants “to grow and improve [Esperia Court’s] assets for the benefit of [his] family and [his] siblings and their families”. That aspiration implicitly entails any economic interest of James, Maria and Dennis being subordinated to Nick’s management control of Esperia Court and pursuit of his proposal for the development of the company’s properties in Strathfield. Whether they might ultimately be persuaded of the merits of Nick’s proposals for the commercial development of property, they resist his insistence upon control of Esperia Court, and impaired personal relationships within the Soulos family militate against co-operation.

Constitution. Esperia Court was incorporated (registered) on 6 May 1964 with two shareholders. As appears in the company’s memorandum of association and its articles of association (both dated 5 May 1964) the deceased and her late husband (Andrew Soulos) each subscribed for a single management share.

The Articles of Association were amended at an annual general meeting held in November 1969. A significant feature of the amendments made to the articles at that time was the introduction of the office of a “Governing Director”.

Shareholders. The articles record that the nominal share capital of the company of $25,000 is divided into:

The issued share capital of the company comprises:

According to the company’s Register of Members, on 30 June 1964:

According to the Register of Members:

In evidence is a stamped Transfer of Shares form dated 2 April 1972 (signed by James as transferor and by his parents as transferees) evidencing a transfer of James’ shares in the Company for “nil” consideration.

Dennis’ transfer of his shares to the deceased on 30 September 1999 is consistent with the 1998, 1999 and 2000 annual returns of the Company, read together.

On the death of the deceased’s husband in December 2003, the shares then registered in his name were transferred to the deceased. She thus received from him:

James’ evidence is that he was required by the deceased to transfer his 3,000 “B” class shares to his parents because they did not approve of his marriage to Margaret in February 1971. He says that his loss of these shares was a price he was obliged by parental pressure to pay for his decision to marry his wife.

James’ evidence is corroborated by minutes of meetings of the Company relating to declarations of dividends to shareholders. He alone was excluded from a declaration of dividends for the year ended 30 June 1970. The minutes for subsequent years are consistent with the absence of any declaration of dividends in his favour. When, in 1974, there was an adjustment of the Company’s profits for the 1972 year James was again the only family member excluded. The fact that no dividends declared in favour of the children appears ever to have been paid does not diminish the force of James’ exclusion.

Any inconsistency in dates attributed to James’ transfer of his shares does not detract from the fact that there is a cluster of significant events around the date of his marriage. That is consistent with his complaint that he was, by parental pressure, obliged to surrender his shares to his parents as a form of punishment.

Dennis’ evidence is that his 3,000 “A” class shares were transferred to the deceased at the insistence of his parents because they wanted to preserve them within the Soulos family during a period when he was engaged in family law proceedings associated with his divorce from Kerrie. He says that his parents insisted upon this transfer, but told him that they would in due course transfer the shares back to him. The evidence includes contemporaneous documentation that supports Dennis’ contention that, when she took a transfer of his shares in September 1999, the deceased regarded herself as holding the shares on trust for him.

Dennis’ evidence is that Kerrie was aware of this when they effected their property settlement. For her part, Kerrie’s evidence is that she always believed that Dennis owned one quarter of the shares in the Company, and that she always disclaimed any personal interest in them.

Whether or not Dennis’ evidence is to be accepted in every respect, his claim to ownership of the 3,000 “A” class shares initially issued to him has been vindicated by orders made in these proceedings, with the consent of all parties, on 9 September 2022.

An ASIC search of the company as at 9 September 2022 records the identity of its shareholders as being the following:

The deceased’s “A” class shares represent those initially issued to Dennis and subsequently transferred to his parents at their request. Her “B” class shares represent those initially issued to James and subsequently transferred to his parents at their request. No consideration passed from either parent to either son for either transfer.

With the consent of all parties to the proceedings, on 9 September 2022 orders were made to the effect, inter alia, that:

Directors. The deceased’s husband was a director of Esperia Court from the date of its incorporation until the date of his death. The deceased likewise was a director of the company from the date of its incorporation to the date of her death.

Nick’s son John became a director of the company in December 2003, upon the death of his grandfather. Nick became a director of the company in December 2016. They both remain directors. They are the only directors of the company.

Secretary: The deceased was the secretary of Esperia Court between the date of its incorporation and her death. Nick has been secretary of the company since 30 July 2019.

Rights Attaching to Shares: Articles 7 and 8 of Esperia Court’s articles of association define the rights attaching to shares in the Company.

Those articles are in the following terms:

Article 9 provides that “[the] shares [in the Company] shall be under the control of the Directors who may allot or otherwise dispose of the same to such persons on such terms and conditions and either at premium or at par, or (subject to the provisions of the Companies Act) at a discount and at such times as the Directors think fit …”. This provision needs to be read in the context of the powers of a Governing Director of the Company under article 86 of the Company’s articles of association.

There has been no debate in these proceedings about whether it would be open to the directors of the Company, since the death of the deceased and her husband, to allot the unissued shares in the Company in a manner that would operate to the detriment of one or more of the deceased’s children without varying rights attached to any shares.

The Office of “Governing Director”: Esperia Court’s articles of association (as amended) make provision for the office of a “Governing Director”, the occupant of which enjoys almost absolute powers of management over the affairs of the Company.

It is sufficient for the moment to extract articles 75, 76, 86 and 107:

Under the heading “Interpretation”, article 2 includes a provision that “[words] importing the masculine gender only shall include the feminine gender”.

Observations. The deceased at no time appointed a Governing Director of the Company in succession to herself.

The parties agree that the last paragraph of article 75 was enlivened upon the death of the deceased. However, no general meeting of the Company has been convened for the purpose of electing a Board of Directors pursuant to article 75 pending the determination of these proceedings.

No dividends appear ever to have been paid in favour of any holder of the “A” to “D” class shares.

Minutes of meetings of the Company (usually the deceased and her husband, whether in the character of directors or that of shareholders) for the years ending 30 June between 1967 and 1996 inclusive record that dividends were declared for 1967-1972 and 1974. No dividends were declared for the 1972 year until (upon an adjustment of accounts) 1973. The practice of dividends being declared appears to have come to an end at the end of that time or possibly in 1974 or 1975.

The fact that dividends were “declared” does not mean that they were ever “paid”. There is no evidence of an accumulation of dividends for the children in loan accounts with the Company. It is likely that declarations of dividends were unaccompanied by payments of any kind.

In these proceedings, Nick and John are accused by Maria of acting in breach of fiduciary and statutory duties, owed by them to the Company as directors of Esperia Court, when engaging in what might be characterised as “self dealing transactions” involving their acquisition of an interest in the Symond Arcade and (in the case of Nick) the grant to Nick’s company SPH of a lease for the Strathfield Private Hotel on terms commercially favourable to him.

The significance of the Governing Director provisions of the company’s articles (particularly article 86) is that Nick and John contend, in relation to the impugned transactions, that:

The contention of Nick and John that they acted at the direction of the deceased in her capacity as the Governing Director of the Company evidently does not depend upon knowledge by them of the existence of the office of Governing Director or the deceased’s occupation of it.

On their own evidence, they were not aware of the existence of the office of Governing Director until after the death of the deceased. If their evidence that they acted at the direction of the deceased is accepted, a factor in their obedience to the will of the deceased was likely to have been knowledge that she held the Management Shares in the Company. It is just as likely, however, that their obedience to her will was a combination of social convention within the Soulos family and enlightened self-interest as she favoured those who conformed to her will.

Ultimately, the contention that Nick and John acted at the direction of the deceased “as they were obliged to do”, focuses attention on the form of the constitution of the Company rather than Nick and John’s knowledge of its provisions. The critical factor is that with the power (by virtue of her ownership of all management shares) to control all meetings of the Company, the deceased might be taken to have authorised, or ratified, any breaches by Nick and John of fiduciary obligations they owed to the Company as its directors, and the content (if not the existence) of their obligations must be examined in the context of the deceased’s “exclusive” powers of management.

Nick and John rely heavily upon the judgment of Brereton J in Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; 59 ACSR 373; 24 ACLC 1308 at [100] and [102]-[103], here reproduced in the context of associated paragraphs (with emphasis added):

Even if article 86 provides, in substance, a defence for Nick and John against allegations of breach of fiduciary and statutory duties, it does not displace the operation of sections 232-233 of the Corporations Act 2001 Cth in an “oppression suit” under those sections. The text of article 86 itself recognises that limit on the powers of a Governing Director in use of the expressions “so far as the law allows” and “subject to the [Companies] Act”. However, the registration of a company pursuant to the companies legislation must be taken, in any event, to create an entity governed by the legislation, including, in this case, sections 232-233 of the Corporations Act 2001.

Constitution: A&R was incorporated (registered) on 31 July 1963 with the name A&R Soulos Investments Pty Ltd. It changed its name to A&R Management Pty Ltd on or about 7 September 1998. The Company’s memorandum of association and its articles of association are not in evidence but I infer, from the Company’s register of members, that the deceased and her late husband (Andrew Soulos) each subscribed for a single share, and the nominal capital of the company comprises 1,000 ordinary shares of £1 ($2) each.

Shareholders. The register of members of the Company records that on 5 September 1963 shares were issued to each member of the family:

There is some confusion in reconstructed records of the company as to whether any or all of the shares of the children were later transferred to their parents. That confusion focusses upon a diary note of a meeting held on 26 April 2018 attended by two of the executors of the deceased’s estate (Nick and Mr Kristallis) and Mr Kristallis’ son, Andrew, an accountant. The diary note was disclaimed by Mr Kristallis. It was apparently prepared by his son Andrew.

It records an observation that ASIC records at that time showed Andrew Soulos and the deceased each owning 500 shares in the company, a total of 1,000. It records an opinion that the ASIC records were incomplete because share transfers from the Soulos children to their parents “were never executed nor stamped correctly and therefore never happened (per advice from Trevor Corke [sic])”, coupled with a notation that Andrew Kristallis was “to adjust ASIC records”.

The diary note also contains an entry suggesting that Nick bore some responsibility for ensuring that the executors obtained legal and tax advice in relation to the share ownership and whether market rent needed to be charged to, and paid by, Dennis for his occupation of 10 Chapman Street.

For his part, in his cross-examination Mr Cork denied giving any advice in terms attributed to him in the diary note and he expressed uncertainty as to whether the deceased owned 1,000 shares in the Company at the time of her death. He was not at the meeting diarised.

At most, the diary note evidences an attempt to reconstruct the company’s share register upon an assumption that the membership of the Company recorded in the register of members as at 5 September 1963 remained the true position because purported transfers of the children’s shares to their parents were legally ineffective. In my opinion, that assumption is misplaced or, at least, an unsafe guide to ownership of the Company’s share capital.

Some clarity might be thought to emerge from the minutes of a meeting of directors of the Company (the deceased and her late husband) on 22 June 1982, signed by the deceased as “ chairman” of the meeting.

Against a marginal note, “Transfer of Shares”, the following appears in those minutes:

In evidence are copies of the register of members of the Company which, read as a whole, are consistent with this resolution. Each entry relating to each child records a transfer of shares (issued on 5 September 1963) resulting in “nil” shares being held by that child. The entries relating to Dennis and Nick are dated 22 June 1982. The entries relating to James and Maria are undated.

Entries in the register of members relating to Andrew Soulos and the deceased are more complete. They record that on 22 June 1982 the shares of Nick and James were transferred to Andrew, and the shares of Dennis and Maria were transferred to the deceased.

The same entries record that on the date of Andrew’s death his 500 shares in the Company were transferred to the deceased, bringing her total share ownership to 1,000. Those entries are consistent with Andrew’s will in favour of the deceased.

The evidence includes an email dated 15 December 2021 addressed by the solicitor for the executors of the deceased’s estate to the solicitors of other parties in the proceedings. In substance, it is in the following terms:

The enclosed “zip file” appears to have included a diary note prepared by the executor’s solicitor on 22 May 2014, the minutes of the directors’ meeting of 22 June 1982; and incomplete “share transfer forms” signed respectively by Dennis, James, Nick and (allegedly) Maria.

The handwritten diary note (on an extract of an ASIC record) reads as follows:

Each of the share transfer forms signed by the children is incomplete. None of them identifies a transferee or consideration for the transfer. None of them is stamped. The transfer forms signed by Dennis and Nick are both dated 22 June 1982. The transfer forms signed by James bears no date. The transfer form signed by Maria is totally blank, but for her (alleged) signature, on a different printed form than those used for her siblings.

The transfer form signed by Nick appears to have been signed by his father, as transferee, consistently with the directors’ minutes. However, the transfer form signed by James was signed by the deceased as transferee, not her husband as the minutes record. The transfer form signed by Nick appears to have been signed by the deceased’s husband as transferee, not by the deceased as contemplated by the minutes.

The directors’ minutes are consistent with the company’s annual return dated 31 December 1994 referred to in the solicitor’s handwritten note in so far as they record that, by whatever means, by that date the only shareholders of the company were the deceased and her husband, each owning 500 shares (the total issued capital of the company).

ASIC searches of the company dated 11 March 2021 and 17 September 2021 both record that (as at that date):

Those ASIC searches (which may take the form they do because of the diarised meeting of 28 April 2018) suggest that a primary document recording the shareholdings of the deceased and her husband was the 1994 annual return of the company, and that the primary document recording the shareholding of the children was the company’s annual return for 1990.

There are at least two irregularities in the 2021 ASIC searches. The first is that, although the deceased’s husband was recorded as a shareholder in 2021, he died in December 2003. The second is that he is also recorded as having served as director of the company from the date of its incorporation in 1963 until 12 September 2007, an afterlife of sorts.

The Company’s 1993 annual return (relating to the financial year ending 30 June 1993 and an annual general meeting held on 31 December 1993), signed by the deceased’s husband on 29 January 1994, records that each of the deceased and her husband then held 300 shares in the company and that each of their four children held 100 shares.

The Company’s 1994 annual return (relating to the financial year ending 30 June 1994 and an annual general meeting held on 31 December 1994), signed by the deceased’s husband on 31 December 1994, records that the only shareholders in the company at that time were the deceased and her husband, each holding 500 shares.

A comparison of the 1993 and 1994 annual returns, without more, suggests that a transfer of the children’s shares to their parents was, in some sense, formally recognised at some time in the 1994 calendar year. That is consistent with the handwritten diary note of the executors’ solicitor. It is not consistent with the minutes of the meeting of directors of the Company dated 22 June 1982.

Director and Secretary. Prior to the death of the deceased’s husband Andrew, he and the deceased both occupied the office of director of A&R and she also occupied the office of secretary. From the date of Andrew’s death in 2003, it appears to be common ground that the only director and secretary of the company was the deceased. Her occupation of those offices dated from the date of incorporation of the company.

No party to these proceedings has contended that the Soulos parents lacked authority to represent A&R or to bind the company as officers of the company. In particular, no party has contended that Andrew and the deceased lacked authority to bind the company in representations made to Dennis about ownership of, or dealings with, 10 Chapman Street.

Observations. James and Nick appear not to have regarded themselves as holders of shares in A&R for an indefinite period of time, if ever. Neither listed his shares in the company as a personal asset for the purpose of these proceedings. Neither claims relief to confirm, or establish, an ownership of A&R shares.

Dennis and Maria each claim an entitlement to 100 shares in the company in these proceedings.

Maria’s claim is based upon her evidence that: (a) from a discussion with her late father, she knew that she was a shareholder in A&R; (b) to the best of her recollection, she did not sign the blank share transfer form purporting to bear her signature; and (c) her purported signature on the share transfer form does not resemble her signature.

This evidence was unchallenged in cross-examination of Maria. I accept it as probative of the fact that she did not execute the share transfer form said to have been executed by her. There is insufficient evidence to support an inference that she, by means of the disputed transfer form, or otherwise, authorised a transfer of her shares to the deceased.

Dennis’ claim requires closer attention in the context of his claim to beneficial ownership of all the shares in the company or 10 Chapman Street. That is because his evidence is that he was the intended purchaser of the property until he was persuaded by his parents to make way for A&R on the basis that, upon their deaths, all the shares in the company would be left to him. Upon their assurance of that, he says, he deferred to them: he took possession of the property nominally as a tenant and effected renovations which he would never have effected without his parents’ encouragement to believe in his ultimate ownership of the property through A&R.

On his own admission, Dennis has no recollection of ever owning (or transferring) shares in A&R. He “first learned about these matters” after the commencement of these proceedings.

Maria’s evidence entitles her to orders for rectification of the A&R share register to record her as the holder of the 100 shares issued to her on 5 September 1963. The internal records of the company evidencing a transfer of her shares to the deceased are not corroborated by evidence of a transfer in fact having been effected, and her evidence militates against a finding of transfer.

Turning to the shares issued to Maria’s brothers: Leaving aside problems for the executors of the deceased (and the beneficial owner, or owners, of the shares in A&R) arising from what appears to have been a failure to pay stamp duty on share transfers ostensibly effected by the children on or about 22 June 1982, I am inclined to infer (from the Company’s register of members, the admittedly incomplete share transfer forms, the assertion by the deceased and her husband of a capacity to leave all the shares in the Company to Dennis upon their deaths, and the absence of any assertion by the boys before the commencement of these proceedings that they were entitled to A&R shares, and acquiescence within the Soulos family to Dennis’ occupation of 10 Chapman Street) that the true position as to ownership of the A&R share capital is as follows:

Before acting upon this analysis I propose to allow the parties an opportunity to make submissions about it. In the meantime I reserve any concluded opinion about the whereabouts of beneficial ownership to shares in the Company.

Under the will of the deceased, as rectified by orders made in these proceedings, the deceased’s principal beneficiaries are her four children, with specific pecuniary legacies to members of the deceased’s extended family.

In several clauses of her will, the deceased expresses a wish that Esperia Court remain within the Soulos family and that particular properties also be retained within the family. Her commonly acknowledged preference for the male line of the Soulos family also finds expression in the will. She appears to have had a dynastic tendency of mind.

Some of the affidavits read in these proceedings appear to have been prepared in aid of a challenge to the validity of the deceased’s will, implicitly grounding in these proceedings an invitation to the Court to infer, inter alia, that she did not know or approve the contents of the will. The proximity in time between the date of execution of the will (13 March 2017) and the date upon which Esperia Court contracted to acquire the Symond Arcade (28 March 2017) has also been used forensically to suggest a link between the two, directed towards a submission that Nick and his son John, acting in their own interests, and in disregard of their obligations as directors of Esperia Court, improperly exercised influence over the deceased in their management of Esperia Court.

My purpose in noting these forensic undercurrents is to expose them to view as of marginal, if any, relevance to pleaded questions for determination by the Court. They may have relevance to questions of credit but, it should be noted, the deceased’s will was admitted to probate in solemn form and there has been no collateral attack on the validity of the will in these proceedings. I must take the will of the deceased as evidencing the last duly expressed, testamentary intentions of a free and capable testatrix.

Under the deceased’s will as rectified Nick was given:

In light of the orders made in these proceedings on 9 September 2022, it must be taken that the deceased had no “A” class shares in Esperia Court to give to Nick because those shares were beneficially owned by Dennis, whose entitlement to be registered as the holder of them has been accepted by all parties.

Under the will of the deceased as rectified James was given:

A practical problem with the deceased’s testamentary gift of 79 The Boulevard to James is that that property is occupied by Nick as his family home.

Under the deceased’s will as rectified Dennis was given:

The deceased’s gift of “A” class shares in Esperia Court to Dennis must be taken to have fallen away in light of the parties’ acceptance on 9 September 2022 that Dennis is entitled, independently of the deceased’s will, to be registered as the holder of all 3,000 “A” class shares issued in Esperia Court.

In gifting her shares in A&R to grandsons (children of Nick, Dennis and James), the deceased noted that Dennis resided (as he still resides) at 10 Chapman Street (owned by A&R) and she expressed a wish that her grandson beneficiaries “continue to lease” the property to Dennis during his lifetime.

Under the will of the deceased as rectified, Maria was given:

At the commencement of the final hearing of these proceedings Dennis claimed a beneficial interest in the Parsons Avenue property, but that claim was abandoned during the course of the hearing.

Under her will as rectified, the deceased gave 1/15 The Esplanade, Balmoral Beach to the sons of Nick (Andrew and John). She also forgave a debt owed by them arising from her sale to them during her lifetime of a factory unit at Bankstown.

Under her will as rectified the deceased provided for the following pecuniary legacies:

Although the deceased left her residuary estate to her four children, the proceedings were conducted on the basis that, after allowing for testamentary expenses and costs, there is no residuary estate for them to inherit.

The scheme of the deceased’s will bears examination through the prism of Esperia Court bearing in mind that:

The uncontested expert evidence before the Court is that the “A”, “B”, “C” and “D” shares (which have the same characteristics) have no commercial value in the absence of a winding up because no voting rights attach to them; but, having regard to the underlying net asset value of the Company, each 1,000 of the shares would, upon a winding up, be worth $3 million.

Upon an assumption that Nick receives all management shares in the Company (as intended by the deceased’s will), his siblings will have no power (independently of any constraints imposed on him by the Corporations Act 2001 Cth) to realise the value of their shares upon a winding up. They cannot, by an exercise of rights under the Company’s constitution, compel Nick to wind up the Company. Any value in their shares is locked in, dependent upon an exercise by Nick of rights attaching to the management shares.

By gifting, or purporting to gift, Nick 1,000 “A” class shares and 1,000 “B” class shares (to be held by him in addition to his 3,000 “D” class shares) the deceased can be taken also to have intended that he have the major interest of all members of the Company in a winding up of the Company, with a total of 5,000 (out of 12,000) shares of equal ranking able to participate in a winding up. The gift of shares to Nick is, of course, diminished to the extent that the parties have accepted in the course of these proceedings that Dennis, not the estate of the deceased, is entitled to be registered as the holder of all “A” shares issued in the Company.

By gifting 2,000 “B” class shares to James, the deceased can be taken to have intended that there be returned to him two-thirds of his original shareholding of 3,000 shares in the Company.

By gifting Dennis 2,000 “A” class shares, the deceased can be taken to have intended that there be returned to him two-thirds of his original shareholding of 3,000 shares in the Company. As has been noted, that gift can have no practical effect because the parties have agreed that Dennis is entitled, independently of the deceased’s will, to be registered as the holder of all “A” class shares in the Company.

By gifting no shares in the Company to Maria, the deceased can be taken to have intended that Maria be left only with the 3,000 “C” class shares issued to her at the time the Company was established.

Each of James, Dennis and Maria contends in these proceedings that:

With the devoted acquiescence of her children, throughout her shared life with them the deceased (in combination with her husband during his lifetime and on her own account after his death) effectively maintained ownership and control of property ostensibly acquired on behalf of the family, and performed the role of a benevolent matriarch empowered to confer benefits on her children, or to withhold benefits, according to her discretion.

A&R was incorporated as an “investment” company in 1963 but, on the evidence before the Court, it appears to have remained inactive until, in 1998, it was renamed as a “management” company and it acquired 10 Chapman Street for Dennis.

Although the deceased’s children were issued with shares in A&R shortly after the Company’s incorporation, and they (or, at least, the boys) appear to have surrendered their shares to their parents in 1982, the parents always retained control of the Company. It appears to have played no part in the life of any of the deceased’s children except for Dennis.

It was a vehicle through which the parents purchased 10 Chapman Street for Dennis, encouraging and allowing him to cede his matrimonial home to his wife, Kerrie. They appear to have approached Dennis’ divorce constructively. In or about September 1998 they facilitated transfer of the matrimonial home to Kerrie, bought alternative accommodation for Dennis, and arranged for him to rent that accommodation from A&R in anticipation of full ownership. In September 1999, they sought (probably unnecessarily) to protect the family’s core property interests from the risks of family law proceedings by requiring Dennis to transfer his 3,000 “A” class shares in Esperia Court to the deceased, upon a promise that he would, in due course, have them transferred back to him.

Esperia Court was incorporated in 1964 and, shortly thereafter, shares were issued to the family on the basis that the deceased and her husband retained control of the Company through management shares and the children were, in effect, given an expectancy of future benefit through an equal allocation of designated classes of shares. The parents’ intention to retain control of the Company was reinforced by their creation of the office of “Governing Director” in 1969. At that time their children were young adults, aged between 18 and 28 years. Within two years Maria would be married and within three years James married well but against his parent’s wishes.

During their growing years, each of the children enjoyed a close and loving relationship with their parents. Each of the children, before and after those years, strove to maintain that relationship with their parents. Each worked in the family business so far as they were able, although Maria’s marriage took her to Greece in 1969-1970, with return visits from time to time.

The children were not paid dividends on their shares in Esperia Court but their parents, as it pleased them, provided material assistance to each of them.

A fair inference from the constitution of Esperia Court, and the first allocation of shares in the Company, is that the deceased and her husband anticipated that their children would at some indefinite future time enjoy in equal measure a material benefit from their ownership of shares in the Company.

Departures from that scheme occurred as the children’s lives took different turns. Maria moved to Greece and consequently away from day-to-day interaction with her parents. James stepped out of the mould that his parents had cast for him. Dennis’ marriage collapsed. Nick, as the youngest child, stayed close at hand.

By leaving all her management shares in Esperia Court to Nick, and ostensibly giving him some of the shares once earmarked for James and Dennis, she appears to have intended that the discretion vested in her in management of the Company be vested instead in Nick, leaving the other children dependent upon an exercise of discretion by him for any prospective benefits from share ownership.

Between 17 January 1995 and 13 March 2017 Mr Cork prepared 16 wills for the deceased, the last one of which was admitted to probate. Some of those wills bear dates in close proximity, indicating shifting instructions at the time a will was made, necessitating early changes.

A close analysis of particular provisions of the deceased’s many wills would be of doubtful utility. However, some patterns in her will-making might be thought relevant:

From the earliest days after the establishment of Esperia Court in 1964, the deceased and her husband from time to time made statements to their children that the children held shares in Esperia Court and would, by reason of those shares, inherit substantial wealth in due course.

Those statements were made with the intention that they be relied upon by the children, encouraging them to work in the family business without remuneration, assured that they would be well provided for.

The clearest expression of this in the evidence is in the evidence of Maria. She, for example, deposes to conversations with her father, in the presence of the deceased, in which conversations to the following effect took place:

James’ evidence was not as expansive as this. However, he did record the following in one of his affidavits:

James’ evidence is consistent with the following observations made by Nick in his evidence:

Dennis’ evidence includes evidence to the following effect:

Dennis’ evidence records that, having transferred his shares to the deceased for the sake of appearances during his divorce proceedings, he trusted the deceased to transfer the shares back to him. He says that, in or around 2008, he discovered that he apparently had no shares in the Company; he confronted the deceased, to her embarrassment, at which time she told him to speak to Mr Kristallis; he spoke to Mr Kristallis, who told him that, although it was correct to say that he then held no shares in the Company, he would get them back when the deceased died as they would be left to him in her will; when he later spoke to the deceased she told him words to the effect, “your dad and I gave [your shares in the company] to you for nothing, we can take them away for nothing too. But don’t worry, you will get them back when I die.”

Dennis’ evidence also includes evidence to the following effect:

None of this evidence was challenged during the course of the hearing. It is consistent with the structure of the share capital of Esperia Court; the designation of the deceased’s husband and the deceased herself, in succession, as Governing Directors of the Company; and an expectation that the children would be able to realise the full value of their shares upon the death of the survivor of their parents. Upon the basis of that expectation, the children waited patiently, but with rumbling discontent, to come into their inheritance.

The deceased and her husband appear never to have told their children explicitly that Esperia Court would, or must, be wound up upon their deaths. However, the children were told that they would inherit wealth; they were never paid dividends from the company; and any inherited wealth that could come their way, as they themselves aged, could come only from access to capital of the company. They have been left with shares which, in the absence of a winding up, have no commercial value and, under the management of the holder of the company’s management shares, no certain right to dividends.

The statements the deceased made to her children about ownership of shares in Esperia Court were accompanied by similar statements made to other members of the family.

The evidence of James’ son Andrew (now an accountant who assists with management of James’ finances) includes evidence to the following effect:

Andrew’s evidence also includes evidence to the following effect:

None of this evidence of Andrew was challenged during the course of the hearing.

The fact that James and Dennis had both surrendered their shares in Esperia Court to their parents appears to have been common knowledge within the extended Soulos family.

That knowledge appears to have been accompanied by an expectation (of variable strength from time to time) that James and Dennis would get their shares back in the deceased’s will, coupled with an acceptance that that should happen.

The evidence of Nick’s son John includes the following:

In disclaiming an opportunity to participate personally in the purchase of Symond Arcade in 2017, Nick’s son Andrew was sensitive to claims by his uncles and his auntie to benefit from the operations of Esperia Court.

His affidavit evidence included the following:

In cross examination of Andrew the following exchange occurred:

Nick says he knew nothing of any of the deceased’s wills until after she died, and she never told him that she intended to leave her management shares in Esperia Court to him. After the deceased’s death, when Nick and John say they first became aware of her will, their attitudes to competing claims of James, Dennis and Maria appear to have hardened. A major factor in this appears to have been their desire that Nick take control of Esperia Court so as to promote development of its property as part of the Strathfield Town Centre.

During the deceased’s latter years, Nick was involved in securing from Strathfield Council (on 16 November 2017, two days after completion of the contract for the purchase of the Symond Arcade by Esperia Court, Nick and John) development consent for the demolition of the three existing buildings on 1 The Boulevard, 3-9 The Boulevard and 2-10 Churchill Avenue, and the construction of an 11 storey mixed-use development across the three sites. He was also engaged in negotiations with Lendlease Development Pty Ltd in relation to a proposed joint development of Esperia Court’s properties and other properties around the Strathfield Square.

The flipside of the determination of Nick and John to control Esperia Court is the probability that James, Dennis and Maria will be unable to realise the potential capital value of their shares in the Company under Nick’s management, and will be dependent upon discretionary decisions made by him (as the sole beneficiary of the deceased’s management shares in the Company) for the payment of any dividends on their shares in the future. That is because Nick’s aspirations for the development of the Company’s property depend in large measure on retention of the Company’s assets within his control.

The competing expectations and aspirations of James, Dennis and Maria (on the one hand) and Nick and his son John (on the other hand) come into play, particularly, on an assessment of James’ application for a family provision order that the 1,000 “B” class shares withheld from him by the deceased in her will be given to him, and on the applications made by or with the support of each of James, Dennis and Maria that Esperia Court be wound up so that they can realise the value of their shares on a winding up.

James, Dennis and Maria object to the capital value of their shares being locked up in a company controlled by Nick and John in circumstances in which they were led by their parents to believe that they would come into possession of assets of substantial value upon the death of the parents.

Nick and John rely heavily upon their self confidence that their ongoing management of the Company will “ultimately” be for the benefit of all shareholders and upon the deceased’s oft-expressed desire that the property of the Company be kept within the Soulos’ family and developed. They hold out the possibility that, under their management, dividends will in the future be paid by the Company on an equitable basis to all shareholders.

Shares in Esperia Court. Dennis’ claim to recover his 3,000 “A” class shares in Esperia Court was vindicated by orders made during the course of the final hearing of these proceedings.

8 Parsons Avenue. During the course of the final hearing Dennis abandoned his claim to 8 Parsons Avenue which, subject to any orders made under Chapter 3 of the Succession Act 2006 NSW affecting the property, or in administration of the deceased’s estate, can pass to Maria under the will of the deceased.

10 Chapman Street (and A&R). A major part of Dennis’ case is his claim, against A&R, to beneficial ownership of 10 Chapman Street.

Incidental to that claim is Dennis’ claim to beneficial ownership of all shares in A&R, subject only to such (if any) entitlement Maria may have to an order that the share register of A&R be rectified to record her as the owner of 100 shares in the Company.

If (as I find) Dennis’ equitable claims have been made out, the practical reality might be that Maria’s entitlement to 100 shares in A&R has no significant value. That is because, as I presently understand the evidence, the company’s only substantial asset is its legal title to 10 Chapman Street. If it holds that property on trust for Dennis, the commercial value of Maria’s share entitlement may be merely nominal.

The evidence Dennis gave in support of his claim to beneficial ownership of 10 Chapman Street (and, further or in the alternative, all the deceased’s shares in A&R) was not challenged by any other party to the proceedings.

Between the time of Dennis’ separation from Kerrie and their property settlement, or thereabouts, Dennis was encouraged by his parents to transfer his shares in Esperia Court to them (on their promise to restore his ownership of the shares after any property settlement); to allow Kerrie to enjoy most of the proceeds of sale of the former matrimonial home, upon a parental promise to assist him to obtain an alternative property for himself; to submit to purchase of his replacement home (10 Chapman Street) in the name of A&R for the convenience of the parents’ tax arrangements; and to occupy the property as his permanent residence, as a tenant (for rent), upon a promise of his parents that they would give him “A&R” when they passed away so that he would own 10 Chapman Street. Dennis relied upon his parents’ promises in complying with their directions as to management of his affairs.

Shortly after A&R purchased 10 Chapman Street, Dennis renovated the property in circumstances in which he invited the deceased (representing A&R) to pay for the renovations, and she responded with words to the following effect:

It was upon that assurance that Dennis effected renovations, involving expenditure of time, effort and money on his part. His parents reimbursed him for some, but not all, of expenses incurred by him.

Towards the end of renovation work on 10 Chapman Street, Dennis suffered a heart attack which kept him from work for six months. His parents told him, at that time, that he need not continue paying rent on the property. Nevertheless, he continued to pay rent until shortly after his father’s death.

Shortly before his father’s death, his father said to him, words to the following effect:

Shortly after his father’s death, the deceased had a conversation with Dennis to the following effect:

Dennis continued to pay the utility expenses on the property. However, at times he could not fulfil his commitment for health reasons and, in those circumstances, the deceased voluntarily paid such expenses through A&R.

Between 2000 and mid to late 2016, all the members of Dennis’ immediate family (his parents and siblings), as well as professional advisers to the deceased, made statements to him to the following effect: “The Chapman Street property will be yours one day”.

The first time that Dennis realised that he was not going to receive the Chapman Street property in the deceased’s will was when he read the will in February 2018, after the deceased’s death.

His evidence is that, had the deceased told him that he would not receive the Chapman Street property via ownership of the shares in A&R (either during her life or pursuant to her will) he would not have undertaken the renovation work he did to the property at his own expense.

Dennis claims that A&R holds 10 Chapman Street (and that the deceased’s executors hold her shareholding in A&R) on a constructive trust for him arising from an application of principles governing proprietary estoppel. He acted in reliance upon multiple assurances given to him by his parents (on their own account and as directors of A&R) that he would be given title to 10 Chapman Street and the shares in A&R on the death of the survivor of his parents. If those assurances are not made good he will suffer significant detriment such that any departure by the executors of the deceased or A&R from those assurances would be unconscionable.

No party to the proceedings has contested Dennis’ claim. The deceased’s executors, by a non-admission of the claim, have put him to proof of it.

In circumstances where the elements of a proprietary estoppel claim, as stated in Delaforce v Simpson-Cook (2010) 78 NSWLR 483 and Sidhu v Van Dyke (2014) 251 CLR 505, are spelled out in Dennis’ unchallenged evidence, I find that Dennis’ claim has been made out. I propose, accordingly, to make a declaration that A&R holds 10 Chapman Street on trust for Dennis, a declaration that the executors of the deceased hold her shares in A&R on trust for Dennis, and consequential orders designed to vest the legal estate of trust property in Dennis.

Family Provision Claim. A primary concern of Dennis, apart from securing title to his home at 10 Chapman Street, is whether (and, if so, how) he can realise the net asset value of his shares in Esperia Court.

In the event that the Court finds (on Maria’s application) that its power to make orders under section 233 of the Corporations Act 2001 Cth is enlivened, Dennis supports the making of an order that Esperia Court be wound up by an exercise of that power. He did not, in his originating process, make a claim under section 233 because, I infer, he had not at that stage established his beneficial entitlement to his shares in the Company.

By a claim for family provision relief under Chapter 3 of the Succession Act 2006 NSW he seeks, on his own account, orders to the effect that:

In pursuit of his family provision claim, Dennis contends that what the deceased’s will actually reveals, in substance but not in form, is an assessment by her that “adequate provision” for Dennis comprises him having:

By his family provision claim, Dennis invites the Court to embrace that assessment and to give effect to it to the extent that it is not given operative effect by other orders made in these proceedings. That focuses attention upon unlocking the net asset value of Dennis’ shares in Esperia Court and confirming his entitlement to 10 Chapman Street.

Esperia Court. In her will as rectified (on an application made by James under section 27 of the Succession Act 2006 NSW) James receives 2,000 “B” class shares in Esperia Court. Under the will as rectified, the further 1,000 “B” class shares formerly held by James have been left to Nick.

In substance, through an application for family provision relief under Chapter 3 of the Succession Act 2006, James seeks to recover the 1,000 “B” class shares not returned to him by the deceased, and to obtain orders for Esperia Court to be wound up so that he can realise the net asset value of the shares.

As he will, in any event, hold at least 2,000 “B” class shares in Esperia Court, James has a personal interest in, and supports, Maria’s application for the Company to be wound up upon an exercise of jurisdiction under the Corporations Act 2001 Cth, sections 232-233.

79 The Boulevard. James also seeks, by his family provision application, to be released from any obligation under the will of the deceased to give Nick and Nick’s sons a right of first refusal should he wish (within five years of the deceased’s death) to sell 79 The Boulevard, Strathfield. The passage of time, day by day, diminishes the need for an order of this character.

Release from $117,500 loan. James has an additional concern that does not fit neatly into the paradigm of claims made in these proceedings. By the final clause of her will the deceased purported to release James from any indebtedness arising from a loan of $117,500 she records herself as having made to James on 10 December 2002. James acknowledges that he received assistance from his parents, in the sum of $117,500 when, in 2002, he and his wife purchased a property in Brunswick Avenue, Strathfield; but his evidence is that he was uncertain whether that assistance was provided as a loan or a gift (and on the sale of the property in 2008) he offered to repay what he had received, only to be told by the deceased that she required no repayments.

James is concerned about two things. First, he apprehends that the assistance provided to him in 2002 may have been funded by Esperia Court rather than his parents personally. Secondly, he apprehends that the deceased’s disclaimer of any obligation on his part to repay the assistance provided to him was not communicated to the family accountant, as a result of which some demands for repayment have since been made of him.

James’ evidence about this “debt” is not contested. However analysed, it seems to me he has no present indebtedness. I accept that the deceased (either in her personal capacity or in her capacity as Governing Director of Esperia Court) released him from any liability he might otherwise have had. No party has sought in these proceedings to recover the debt (if that is what it was) from James. There is no need for him to call in aid the provisions of the Limitation Act 1969 NSW despite their apparent availability.

Maria’s claims are designed:

In so far as Maria seeks a family provision order in the form of a lump sum, she invites the Court to make an order that the burden of such provision be borne by the net sale proceeds available from a sale of 8 Parsons Avenue and, as to the balance, by her brothers in equal shares.

In so far as she seeks a family provision order by way of a transfer of management shares in Esperia Court to her she proposes that the burden of the provision made for her be borne by Nick who, on the face of the deceased's will, would otherwise receive those shares from the deceased.

On the provisional view I have expressed, Maria has an entitlement to an order for rectification of the share register of A&R to record her as the holder of 100 shares in that company.

With the support of James and Dennis, Maria alleges (within the context of sections 232-233 of the Corporations Act 2001 Cth) that:

Maria claims standing as a member of Esperia Court to include in her claim for relief under section 233 of the Corporations Act 2001 Cth a claim, on behalf of the Company, that the Company be compensated for the breaches of duty she alleges. She has not sought, or obtained, a grant of leave under section 237 of the Corporations Act 2001 Cth to pursue a “derivative action” on behalf of the Company. The course thus taken is authorised by section 233: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672 at [527]-[528]; Parker v Auswild; Bergmuller v Auswild [2022] VSCA 8 at [133]-[138]; In the Matter of Imperium Projects Pty Ltd [2015] NSWSC 16 at [15].

Oppression. In Chapter 2F of the Corporations Act 2001 Cth (entitled “Members’ Rights and Remedies”) under the heading “Part 2F.1 – Oppressive conduct of affairs”, sections 232 and 233 of the Act are in the following terms:

Section 461 of the Act (referred to in section 233(2) of the Act) empowers the Court, on specified grounds, to order that a company be wound up. It is headed “General grounds on which company may be wound up by Court”.

Statutory Duties. In Chapter 2D of the Corporations Act 2001 Cth (entitled “Officers and Employees”), in “Part 2D.1 - Duties and powers” and, more particularly, in Division 1 of that Part (entitled “General Duties”) sections 180, 181 and 182 of the Act are in the following terms:

Introductory Observations. In formal terms, Maria’s case under sections 232-233 of the Corporations Act 2001 Cth embraces both limbs of section 232, characterising impugned conduct as “contrary to the interests” of the members of Esperia Court as a whole (section 232(d)) and “oppressive, unfairly prejudicial or unfairly discriminatory” (section 232(e)).

In presentation of that case, greater emphasis has been given to the second limb. For that reason, primary attention is given to it.

Both limbs require an acknowledgement that each case must be considered on its own facts and circumstances and by reference to the conduct of the affairs of the company as a whole.

An unusual feature of the present case is that the questions for determination by the Court involve a largely common factual matrix about the nature, purpose, governance and operation of Esperia Court in the context of: (a) the Corporations Act 2001 Cth, sections 232-233; and (b) the Succession Act 2006 NSW, Chapter 3, especially sections 59(1)(c) and 59(2).

In the context of section 233, the Court has been invited to take particular notice of the acceptance by Spigelman CJ in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97 at [159] of the proposition that “the time at which the Court must formulate [an] opinion about oppression or unfair prejudice is the date of institution of the proceedings. The issue of relief must, however, be determined as at the date that the statutory discretion falls to be exercised.”

As it happens, Chapter 3 of the Succession Act 2006 NSW mandates an assessment of an application for a family provision order by reference to the time at which the Court is considering the application. Section 59(1)(c) requires the Court to be satisfied, at the threshold, that “at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life [of the applicant] has not been made …”. Section 59(2) empowers the Court to make “such order or provision out of the estate of [a deceased person] as the Court thinks ought to be made for the maintenance, education or advancement in life of the [applicant], having regard to the facts known to the Court at the time the order is made”.

Before final orders are made in a case in which relief is claimed under both section 233 of the Corporations Act 2001 Cth and Chapter 3 of the Succession Act 2006 NSW, prudence may dictate that the questions for determination be viewed through the prism of both statutes at the same time, but care needs to be taken not to merge the questions for determination or to depart from the text of legislation which has, in the case of each statute, an independent operation.

On the facts of the present case, it is convenient, if not necessary, to turn attention to the proper determination of Maria’s oppression suit before turning attention to the family provision applications of James, Dennis and Maria. The nature and value of the deceased’s estate cannot be known with any clarity (for the purpose of the family provision claims) until such time as the oppression suit is determined.

In dealing with the proper approach to a grant of relief under section 233 of the Corporations Act 2001 Cth, the parties have invited the Court to take notice of the judgment of Young J in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 at 741-742 where his Honour made the following observations:

In Zong v Lin [2022] NSWCA 136 at [79] the Court of Appeal made the following similar observations:

Oppression. A convenient statement of principles commonly applied in an oppression case, focussing on section 232(e), can be found in the judgment of Stevenson J in Munstermann v Rayward [2017] NSWSC 133 at [22]:

Recent examples of this statement of principles being adopted by other judges of the Court are In the matter of Computer Room Solutions Pty Limited [2021] NSWSC 845 at [88] and In the matter of QB Foods Pty Limited [2021] NSWSC 1227 at [60] (Black J); and In the matter of L&B Seafood Pty Ltd [2022] NSWSC 100 at [91] (Henry J).

Another commonly applied summary statement of principles (approved by Black J in In the matter of QB Foods Pty Limited [2021] NSWSC 1227 at [59] and by Henry J in In the matter of L&B Seafood Pty Ltd [2022] NSWSC 100 at [90]) is that formulated by Austin J in Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [39] (not challenged on appeal in Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104 at [140]:

Contrary to the Interests of the Members as a Whole. In the absence of detailed submissions by the parties as to the operation of section 232(d) of the Corporations Act 2001 Cth, I adopt the following summary statement of principles formulated by Sackar J in Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Ltd (No 3) [2015] NSWSC 1639 at [82]-[84]:

Statutory duties. I adopt for the purpose of this judgment the summary statement of principles regarding the operation of sections 180, 181 and 182 of the Corporations Act 2001 Cth set out in the judgment of Brereton J in Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; 59 ACSR 373; 24 ACLC 1308, extracted above.

The Context of a Family Company with Special Powers conferred on Management. Taking care not to gloss the statute, the provisions of the Corporations Act 2001 Cth under consideration in these proceedings may be seen as several means by which, expressly or by implication, standards of behaviour can be enforced in management of the affairs of a corporation registered under the Act.

Sections 180-182 expressly impose duties, and section 232 defines conduct, which may have legal consequences for which the Corporations Act 2001 Cth provides.

The operation of each of these sections must be assessed, objectively, in the context of the facts and circumstances of the particular case, including the constitution of the particular company under scrutiny. In In the matter of Tzavaras & Sons Pty Ltd [2022] NSWSC 359 at [102] Ward CJ in Eq accepted, as I do, that “in a family situation, fairness [upon an assessment of allegedly oppressive conduct] must be considered against the background of the fair treatment of the whole body of shareholders, in the light of the history of the company and the family and the purpose for which the company was formed (see In the matter of Ledir Enterprises Pty Ltd (2013) 96 ACSR 1; [2013] NSWSC 1332 at [178] per Black J) …”.

In a case such as the present (where the constitution of Esperia Court provides for a “Governing Director” and “management shares” with privileges not enjoyed by ordinary shareholders in management of the affairs of the Company) there is, or may be, a tension between the operation of the constitution and the operation of those provisions of the Corporations Act 2001 Cth directed towards maintenance of standards of behaviour.

Any such tension may melt away because of the courts’ insistence upon close analysis of the facts and circumstances of each case. What is required of a company, its officers and members may vary from case to case.

Nevertheless a corporation registered under the Corporations Act 2001 Cth is, by its very nature, governed by the Act, the provisions of which cannot, independently of the Act, be excluded from the operation of provisions like sections 180-182 and 232-233.

A genuflection in that direction can be found in the opening words of article 86 of the articles of association of Esperia Court which read, “[the] Governing Director shall as far as the law allows, have power …”.

The exclusive entitlement to vote at any meeting of Esperia Court conferred upon the holders of management shares in the Company by article 7 of its articles of association does not, of itself, entitle the holders of management shares to disregard the interests of other shareholders or the interests of the Company as a whole.

I am mindful of the force of cases that privilege the powers of a Governing Director, or the holder of management shares with special powers, over the rights of ordinary shareholders (particularly those from whom no consideration has moved in return for their shares) in a family company. Representative of those cases are the observations of Jacobs J in Levin v Clark [1962] NSWR 686 at 701:

To like effect, Burchett J in Re Lowes Park Pty Ltd; Headlam v Lowes Park Pty Ltd (1994) 62 FCR 535 at 553E remarked that “… the position of the recipient of a locked gift [of shares in a family company set up to reduce death duty] is not to be compared with that of an investor who discovers that his own money has become trapped in a company from which he cannot extricate himself.”

I appreciate that the reasoning of these cases may inform either or both (section 232(d)-(e)) limbs of an oppression suit or, directly or indirectly, a derivative claim for compensation for a breach of a statutory or general law duty.

I do not, however, accept as a matter of principle that a dominant director (such as the deceased was in her capacity as Governing Director or as the holder of all the management shares in Esperia Court) can act in disregard of the interests of other shareholders. The dominant director must have regard to those interests, in the context of the interests of the company as a whole, in a manner that conforms to the standards mandated by sections 180-182 of the Corporations Act 2001 Cth.

All directors (including, in this case, the deceased, Nick and John) were required:

The distinction between a dominant director and a company cannot be reduced to nothing by empowerment of a Governing Director, with or without the reinforcement of management shares. A director, charged with power for the purpose of managing the affairs of a company, is not entitled in exercise of the power to abuse the purpose for which it exists. Directors are not entitled to treat the company as though it is their own, in disregard of the interests of the members as a whole.

Nor is a director who serves on a Board of Directors with a dominant director permitted to abrogate his or her responsibilities as a director by servile deference to the dominant director. He or she must, at least, counsel against an abuse of power, resist abuse, and decline to participate in or benefit from it.

In broad terms, Maria’s allegation of oppressive conduct of the affairs of Esperia Court focuses attention on two events (or, more correctly, two series of events) which overlap in time and which need, ultimately, to be viewed together.

The events arguably the first in time focus attention on steps taken between 11 July 2014 (when Nick agreed with the deceased that he would lease the Strathfield Private Hotel from Esperia Court) and 18 March 2020 (the date of a registered lease of the Hotel in favour of SPH), between which dates Nick’s company SPH came to hold the registered lease of the Hotel, which is currently operative.

The history of those events can be traced back to an earlier time during which Nick (and his wife) managed the Hotel in partnership with Esperia Court. Nevertheless, the focus of attention is on a period during which Nick, on behalf of Esperia Court, was actively pursuing proposals for redevelopment of the Company’s Strathfield properties, which proposals contemplated that the Company’s buildings would be demolished and rebuilt.

The events arguably the second in time focus attention on steps taken between 28 March 2017 and 14 November 2017 or thereabouts, those dates representing the dates upon which Esperia Court, Nick and John entered and then completed the contract for their purchase of the Symond Arcade with a view to its incorporation in the Company’s evolving proposals for a “demolish and rebuild” development.

A connecting link between the two series of events is the fact that SPH’s lease (currently registered number AP998983) does not include provision for the lessor (Esperia Court) to terminate the lease in aid of a decision by it to demolish the demised land. The lease, as now registered, was for a term of five years terminating on 31 December 2024 with an option to renew the lease for a further five year term. It was executed by Nick and John as directors of Esperia Court on behalf of the Company. It was executed by Nick as the sole director of SPH.

Maria’s allegation of oppression relating to SPH’s leasing of the Hotel from Esperia Court identifies January 2015 as the commencement of arrangements for SPH to lease the Hotel because on 25 November 2014 a meeting of directors of Esperia Court (attended by the deceased and John) resolved that a lease be granted to SPH for five years commencing on 1 January 2015 with two options to renew the lease each for a further five years, thus providing for the possibility of an extended lease term of 15 years in total.

Nick’s evidence is that he does not recall discussing a demolition clause with the deceased when on 11 July 2014 he and the deceased signed a handwritten agreement setting out the terms upon which Esperia Court would lease the Hotel to Nick, an agreement which was recast when Nick decided to operate the Hotel through SPH.

The Conveyancing Process. The Symond Arcade was purchased by Esperia Court, Nick and his son John by a contract exchanged and dated 28 March 2017 which defined the interests of the purchasers as follows:

The contract price was $30 million, payable by a deposit of $3 million on exchange and the balance on completion, scheduled for seven months after the contract date.

The contract was completed on 27 October 2017 with the benefit of funds borrowed from the National Australia Bank. For about one year in the first instance, the Bank lent to the purchasers $29,050,000 on security that comprised, in substance:

On or about 5 February 2018 NAB extended the term of its loan from one year to two years, expiring on 31 October 2019.

In October 2019 the term of the loan was extended to 31 October 2022. The securities given by SPH and Cyan Holdings Pty Ltd were released at that time.

The Bank’s correspondence about its loan and extensions of its loan appear consistently to have been addressed to Nick and John (not the deceased) on behalf of Esperia Court and themselves.

The purchasers were registered on the title as proprietors of the Symond Arcade (by memorandum of transfer number AM885460) on 14 November 2017.

A copy of the vendor’s counterpart of the contract is in evidence, but not a copy of the purchasers’ counterpart. The evidence is silent as to whether the purchasers’ counterpart was executed by the deceased as a director of Esperia Court.

The Then Members and Officers of Esperia Court. At and about the time of purchase of the Symond Arcade by Esperia Court, Nick and John (between 28 March and 14 November 2017 and thereabouts):

We now know (but there is no evidence that the deceased, Nick and John realised at the time) that the deceased held the 3,000 “A” class shares in the company on trust for Dennis, as has been determined in these proceedings.

The deceased would have known (but Nick and John deny that they knew) that she had made a will, on 13 March 2017 (since rectified by the Court to express her true testamentary intentions) that provided for:

Neither Maria nor Dennis was consulted by the deceased, Nick or John about the terms upon which the Symond Arcade might be acquired at or in connection with its proposed sale by a public auction on 28 March 2017.

Nor was James consulted, although he had previously had (on 2 February 2015), with Nick, a preliminary meeting with Dr Richard Freyer (the managing director of Freyer Family Holding Co Pty Ltd), the then owner of the Symond Arcade.

The Factual Narrative. Considerable attention has been given by the parties to events that occurred on the morning of 28 March 2017 as Nick (in consultation with the deceased, John and Andrew) discussed the terms upon which an attempt would be made to purchase the Symond Arcade before the public auction scheduled for 10:30 am that day.

Nevertheless, the story of what happened on that day begins much earlier and the events of that day take some colour from subsequent events.

The story begins in or about July 2008 when Strathfield Council publicly exhibited a master plan depicting options for a redevelopment of the Strathfield Town Centre at about the same time as Nick was moving towards retirement from his employment as an engineer.

Nick was concerned that, if Esperia Court did not develop its own properties in Strathfield, it would be disadvantaged by redevelopment of the nearby Strathfield Plaza by its owner, Memocorp Australia Pty Ltd.

Between 2008 and 2014, Nick had several discussions with the deceased about the Strathfield Town Centre master plan, the Council’s plan to reclassify the Strathfield Square, and the Strathfield Local Environment Plan 2012. In 2014, he had a conversation with her to the following effect:

It was in early 2014 that Nick commenced discussions with Dr Freyer with a view to arranging a joint venture between Freyer Family Holding Co Pty Ltd and Esperia Court or for Esperia Court to buy the Symond Arcade from Freyer Family Holding Co Pty Ltd.

After contacting Dr Freyer, in early 2014, Nick had a conversation with the deceased about buying the Arcade in the following terms:

Nick pursued negotiations with Dr Freyer in 2014, 2015 and 2016. Through SPH he was, for much of the same time, leasing the Strathfield Private Hotel on terms that did not, and do not now, include a “demolition clause”. He might well have contemplated that SPH would agree to surrender its lease in aid of a development proposal adopted by Esperia Court, but the absence of any demolition clause could, objectively, be seen as conferring upon Nick (as the alter ego of SPH) a degree of special influence, if not control, over the course of any development proposals likely to be adopted by Esperia Court.

In late 2016 or thereabouts Nick commenced early discussions with Lendlease about a joint development project.

Through Nick, Esperia Court also progressed its own development aspirations for its three sites, planning for the possibility that it could not reach an agreement with Dr Freyer to do a joint development in relation to the Symond Arcade. It lodged a development application with Strathfield Council on 30 May 2016 which resulted in a development consent granted on 16 November 2017, two days after completion of the contract for the purchase of the Symond Arcade by Esperia Court, Nick and John dated 28 March 2017.

On or about 6 March 2017 Nick became aware that on 3 March 2017 Freyer Family Holding Co Pty Ltd had listed the Symond Arcade for sale by a public auction scheduled to take place at 10.30 am on 28 March 2017. By his own admission, he was “in a panic” as a result of that news, fearing that Memocorp Australia Pty Ltd would outmanoeuvre and outbid Esperia Court to purchase the Arcade and incorporate the Arcade in its plans for development of the Strathfield Plaza.

On 9 March 2017, on notice to James, Nick sought a conference with Esperia Court’s solicitor, Andrew Chalk.

In his affidavit evidence he records that: “on or after 10 March 2017, Esperia decided that its strategy would be to purchase the Arcade before the auction. I suggested this to my mother, and she agreed. However, Esperia did not have any finance arranged or any recent valuations for its properties. It did not know how much it was able to borrow to make an offer for the Arcade”.

A few days after 10 March 2017 Nick met with Sam Catanzariti, Ryan Johnston and John Amanatidis from the National Australia Bank, Mr Kristallis and his son Andrew at the office of Kristallis Accounting in Leichardt, a meeting organised by Mr Kristallis.

Nick deposes to the following in his affidavit evidence about that meeting:

Nick’s evidence is that he owns no real property personally but that:

In March 2017 Cyan Holdings Pty Ltd was the registered proprietor of factory land at Silverwater.

At the same time, Nick’s sons (Andrew and John) were the registered proprietors of factory premises in Homedale Avenue, Bankstown, as a result of financial assistance provided to them by the deceased. (By clause 14 of her will the deceased forgave any indebtedness Andrew and John had to her in respect of the Bankstown land.)

I infer that when Nick said at the meeting “I am prepared to put my property at Silverwater in” and “we also have the factory at Bankstown” he was referring to the land of the Cyan Trust at Silverwater and the land of his sons at Bankstown.

Between 4.30 pm and 6 pm on 15 March 2017 a directors meeting of Esperia Court was held at the home of the deceased, at 77 The Boulevard. In attendance were the deceased, Nick, and (after his late arrival at 5.30 pm) John, the three directors of the company. Also present were Mr Kristallis (the deceased’s long-standing accountant), Messrs Amanatidis and Catanzariti (of the National Australia Bank) and Robert Pignataro (a long time associate of the Soulos family and, as it happens, the selling agent for the Symond Arcade).

Nick’s evidence is that the meeting was organised by Mr Kristallis and the deceased.

The minutes of the meeting (written in the handwriting of Mr Kristallis and signed by the deceased) record the following substantive business:

Nick’s evidence is that, as a result of the meeting on 15 March 2017, he was “pretty confident” that that NAB could lend the $25 million for a year, and then for the loan to be looked at again.

In the hope that NAB would be given comfort by knowledge that Esperia Court was talking to Lendlease about a joint development project, Nick (on 21 March 2017) arranged for an officer of Lendlease to send to him and his son John an email in the following terms:

On the same day (21 March 2017) Nick, expressly, in his capacity as a director of Esperia Court, sent to Mr Amanatidis of the NAB Bank an email (copied to his son John and the solicitor Mr Chalk), the substance of which was in the following terms:

Between 22-27 March 2017 (inclusive) Mr Chalk negotiated with the solicitor for the vendor (Freyer Family Holding Co Pty Ltd), via email, amendments to the draft contract for the sale of the Symond Arcade in favour of Esperia Court in aid of a prospective offer to purchase the Arcade. In the first email in a chain of emails Mr Chalk introduced, in the following terms, the business at hand:

On or shortly before 24 March 2017 Nick had a meeting with Mr Pignataro in which Mr Pignataro said words the effect:

After receiving Dr Freyer’s note on 24 March 2017 John (as “chairperson”), Nick, and (as “managing director”), the deceased signed a minute of meeting of the Board of Directors of Esperia Court (said by John to have been prepared by their solicitors) recording the following resolution

Nick’s evidence is that sometime between 24-27 March 2017 “Esperia” signed a contract for the purchase of the Symond Arcade for $25 million and on 27 March 2017 Mr Pignataro took the contract to Dr Freyer to get it signed.

On the afternoon of 27 March 2017 Mr Pignataro called Nick and had a conversation in the following terms:

Later that evening, Nick says that Mr Pignataro called him and said of Dr Freyer: “He did not sign it. Can you meet me at the office?”, to which Nick responded “Yes” and went straight to Mr Pignataro’s office.

At around 8 or 10 pm on 27 March 2017 Nick and John met Mr Pignataro outside the office of Strathfield Partners where a conversation took place in words to the following effect:

Nick deposes, in an affidavit, to the following:

This, then, brings the narrative to the early morning of 28 March 2017.

There are some differences between the accounts of that day given in evidence by Nick, John and Andrew, with a broad correlation between the evidence given by Nick and Andrew.

Nick’s affidavit evidence conveys a sense of immediacy that bears upon the nature and quality of the decision-making on 28 March 2017 that led to the purchase of Symond Arcade in the names of Esperia Court, Nick and John.

For that reason, with editorial amendment, I here set out paragraphs 126-147 of the affidavit sworn by Nick on 18 August 2021:

The first of the two “resolutions” referred to by Nick (signed by the deceased as “chairperson” and by Nick and John as “directors”) was in the following terms:

The second of the two “resolutions” referred to by Nick (signed by the deceased as “chairperson” and by Nick and John as “directors”), was in the following form:

John prepared the two sets of resolutions, using as a precedent the former resolution passed on 24 March 2017 prepared by Esperia Court’s solicitors. He says that the two resolutions were signed at the same time because he, Nick and the deceased were uncertain what form of resolution was appropriate. In my assessment, Nick’s evidence about this is more plausible: that the second resolution superseded the first.

Be that as it may, the form of contract exchanged later in the morning conformed with neither form of resolution. It reflected a division of property interests which Nick described as “the 20/80 compromise” not documented otherwise than in the contract itself.

Although the contract provided for a 10% deposit ($3 million) to be paid on exchange, the deposit was actually paid by instalments between 23 March 2017 and 21 April 2017 (inclusive). In anticipation of a contract, Esperia Court paid $2 million into the trust account of the vendor’s agent on 23 March 2017. The deceased contributed $150,000 by a bank cheque dated 28 March 2017. John contributed $140,000 by a bank cheque for $80,000 dated 29 March 2017 and a direct deposit of $60,000 on 30 March 2017. Cyan Holdings Pty Ltd contributed $710,000 by several bank cheques bearing the dates 29 March 2017 ($490,000), 6 April 2017 ($120,000), 21 April 2017 ($30,000 and $70,000). John and (through his family trust) Nick together contributed 28.33% of the deposit paid for the Arcade purchase.

Thereafter, Nick struggled to arrange finance for the payment of stamp duty on the contract and for funds sufficient to complete the purchase. Shortly before stamp duty was due, James informed him that stamp duty was payable; he says, “I was not aware of this until Jim told me”. In his own words, as late as 16 October 2017, he was “desperate to secure the NAB loan”. As he says, “[we] were very close to settlement at this point and NAB had given no clear indication to me by the date that they were going to offer us a loan”.

As it happened, NAB issued a letter of offer on 25 October 2017 which was signed by Nick and John on behalf of themselves and Esperia Court on 26 October 2022. By that means, NAB provided to Esperia Court, Nick and John a loan for $29,050,000 (with guarantees from SPH and Cyan Holdings Pty Ltd) for approximately one year ending 31 October 2018. Nick and John signed on behalf of Esperia Court. The deceased did not.

On 4 October 2019 Nick and John, on behalf of themselves and Esperia Court, accepted NAB’s fresh letter of offer, rolling over the loan of $29,050,000 until 31 October 2022, with SPH and Cyan holdings Pty Ltd released from their obligations to provide security.

At the time of the hearing of these proceedings, Nick had not yet obtained a further extension of the loan, although he was confident of his ability to do so.

In the account this far of the events relating to the purchase of the Symond Arcade, I have largely adopted Nick’s evidence.

What is striking about that evidence is that, despite the extraordinary nature of the business being transacted (involving a dramatic shift in focus from a commercial enterprise to property development, bank finance of near enough to 100% of the purchase price of the Symond Arcade and an intermingling of the affairs of Nick and John with those of the Esperia Court), no consideration was given to the interests of Maria as a shareholder of the Company beyond:

In the context of Maria’s oppression suit, I find that the deceased, Nick and John totally disregarded Maria’s interests as a shareholder.

The corollary of this is that Nick and John deliberately preferred their personal interests over those of Maria in decision-making on behalf of Esperia Court.

Nick and John did not consciously act at the direction of the deceased in her capacity as Governing Director of Esperia Court; they did not know that she held that office, although they did know that she held the office of Managing Director and the management shares in the company.

Nor is it factually correct to say that Nick and John acted at the direction of the deceased. They acted in consultation with her on 28 March 2017 and, on Nick’s evidence, he deliberately led her into an agreement that secured for John and himself a 20% interest in ownership of the Symond Arcade.

If the deceased had any role to play in the acquisition of the Symond Arcade, or the formulation of proposals for the development of Esperia Court’s properties, after Nick and John departed her company on the morning of 28 March 2017, bound for the auction, it was unlikely to be prominent.

Between mid-2008 and the morning of 25 March 2017 Nick and John played an increasingly active role in management of the affairs of Esperia Court, both routine and strategic. After their meeting with the deceased on the morning of 28 March 2017, they dominated management of the company’s affairs generally in their capacity as directors.

Although the deceased remained a strong character, her capacity to engage in active management of the affairs of the company might reasonably be supposed to have been in decline in the last year or so of her life. She was frail, troubled by a loss of hearing and erratic.

Even on Nick’s account of his discussions with her on the morning of 28 March 2017, this was on display. He chose to play upon her emotions to secure her agreement for the purchase of the Symond Arcade by Esperia Court, John and himself as co-owners. She agreed to Nick’s proposal for an increase of $5 million (from $25 million to $30 million) in the “offer price” for the Symond Arcade without any reasoned discussion of the economic merits of such an increase and for no other reason than that Nick thought that such an increase was necessary to pre-empt a competitive bidder, Memocorp Australia Pty Ltd. Even his initial bid of $25 million lacked any form of due diligence inquiry beyond advice that that amount was the vendor’s “asking price” and preliminary inquiries of NAB as to whether (with additional security provided by interests associated with Nick and John) it would be prepared to lend whatever funds might be required to entice the vendor into a contract. The deceased’s role in decision-making was passive but for her desire to prefer the interests of Nick and John over any other branch of the Soulos family, including Maria as a shareholder of Esperia Court.

Shortly after the deceased’s death, on 13 February 2018, Nick convened a meeting of his siblings at which he outlined his vision of a development project with Lendlease which, if realised, would provide opportunities for all the deceased’s children to acquire units in the development with a view to rental or sale as they may see fit. Nick’s siblings appear not to have embraced the vision.

On 7 June 2018 Nick and John, on behalf of themselves and Esperia Court, signed a two year exclusivity agreement with Lendlease as an aid to negotiation of a development agreement.

On 11 February 2020 Lendlease offered Esperia Court, Nick and John a draft Development Management Agreement Heads of Agreement which disappointed Nick’s expectations. Esperia Court, under the management of Nick and John, did not agree to the DMA. The exclusivity agreement came to an end on 7 June 2020, with no follow-up negotiations with Lendlease.

The Partnership Between Esperia Court, Nick and John. Following their completion of the purchase of the Symond Arcade, Esperia Court, Nick and John formed (without a written agreement) a partnership for the conduct of the business of the Symond Arcade, renting space in the Arcade and managing the building. That partnership continues.

Nick’s evidence is that the partnership has been continued on the basis that the partners share the profits and losses of the Arcade in an 80/20 split with Esperia Court taking or bearing the 80% and Nick and John together taking or bearing the 20%.

According to Nick, the Arcade partnership’s total operating expenses, which have included the interest paid on NAB’s loans, has exceeded the income made in several financial years, and he and John have paid their 20% contribution to losses by drawing on the $250,000 they had “overpaid” for the Arcade deposit (being the amount paid by “them” above $600,000, 20% of the deposit) and by making additional payments.

The current state of the accounts as between Esperia Court, Nick and John may need to be reviewed in light of whatever orders are made by the Court in disposition of these proceedings.

In the meantime, it might be noted that the decision to purchase the Symond Arcade with near enough to 100% borrowings carried a risk that, unless the Arcade was resold or incorporated in a redevelopment without undue delay, it would prove a risky investment, not generating sufficient income to cover the expenses of holding onto it.

On Maria’s case, the affairs of Esperia Court have been, and are being, conducted in a manner that is contrary to the interests of the members of the Company as a whole and in a manner oppressive to, unfairly prejudicial to or unfairly discriminatory against her in relation to the leasing of the Strathfield Private Hotel by the Company to SPH from January 2015 or thereabouts on terms which were not at arm’s length or commercially reasonable.

The Conveyancing Process. SPH has leased the Hotel from Esperia Court since 1 January 2015 pursuant to a lease for a five year term with two further five year terms available at its option. The first five year term expired on 31 December 2019.

SPH exercised its right of renewal on 27 September 2019. The current lease (executed by Nick and John as directors of Esperia Court and by Nick as the director of SPH) was dated 18 March 2020 and has since been registered.

The first five year lease was executed by the deceased and John as directors of Esperia Court, but not registered because of delays in the delivery up by James of the certificate of title for 2-10 Churchill Avenue until about the time of the purchase of the Symond Arcade.

The Then Members and Officers of Esperia Court. The share register of Esperia Court and the identity of the officers of the Company were, between mid-2014 (when Nick agreed with the deceased to manage the Hotel) and the time of the deceased’s death (on 27 January 2018), the same as they were at the time the Symond Arcade was acquired.

The Factual Narrative. The story of SPH’s leasing of the Hotel commences well before SPH was registered in 2014.

Between the years ending 30 June 2000 and 30 June 2013 Esperia Court and Nick managed the Hotel in partnership. The burden of managing the Hotel fell squarely on Nick and his wife, in consequence of which they became tired of the constant workload.

On or about 11 July 2014 (the date of a handwritten agreement) Nick, at the request of the deceased, returned to management of the Hotel.

When Nick decided to conduct the hotel business through a corporate vehicle, SPH was registered for that purpose and, on 25 November 2014, Esperia Court resolved to grant a lease to SPH, on terms earlier identified.

The rent reserved by the lease, as renewed, can be accepted as below the rent that might have been charged by Esperia Court if the Hotel was leased at a market rental or, as Nick urged the deceased, converted into commercial office space. The rent appears to have been set at a level designed to cover the lessor’s expenses rather than to secure a commercial return.

The deceased was not prepared to acquiesce in Nick’s proposal that the Hotel premises be used otherwise than as an hotel because, she told him, she wanted to preserve the licence attached to the premises. She needed to entice him back as manager.

Viewed in that light, I am not prepared to find that any oppressive conduct attached to the grant of a lease to SPH at less than market rental.

The vice in the leasing arrangements, if there be any, was, and remains, the absence from the lease of any term that would enable the lease to be terminated by Esperia Court in the event of its making a decision to develop the leased property, coupled with the length of the lease, viewed in the context of contemporaneous consideration (by Esperia Court, effectively under the management of Nick as the active promoter) of proposals for development of Esperia Court’s various properties.

The absence of any demolition clause and the length of SPH’s lease have together conferred on Nick an economic power to impede, or materially influence, any decision that might be made by Esperia Court to sell or to develop its properties.

There is no indication in the evidence that at any time, in or about or after mid-2014, any consideration was given by any of the deceased, Nick or John to the interests of Maria as a member of Esperia Court. Decisions appear, on the contrary, to have been made in the interests of the deceased and Nick personally in disregard of Maria’s interests and without any consultation of her.

Has Section 232 been Engaged? Maria’s oppression suit was commenced by an originating process filed on 19 April 2021, subsequently amended on 21 May 2021, and conducted at the final hearing by reference to an amended statement of claim filed on 15 November 2021.

As the case was argued before me, I accept that, in making a determination about whether section 233 of the Corporations Act 2001 Cth has been engaged (by reference to one or the other, or both, of the limbs of section 232(d)-(e) of the Act), it is necessary to form an opinion about the existence, or otherwise, of “oppression” by reference to the date of institution of the proceedings: 19 April 2021.

A common thread in analysis of the acquisition of the Symond Arcade (in 2017) and the leasing of the Strathfield Private Hotel to SPH (in and from January 2015) is:

I am satisfied that this characterisation of the conduct of the deceased (until her death on 27 January 2018) and Nick and John in their exercise of their respective powers as directors of Esperia Court is an accurate statement of how the affairs of the Company were managed from at least January 2015, continuing to today.

I am satisfied that Maria has, objectively, established that the affairs of Esperia Court have been, and are being, conducted in a manner that is contrary to the interests of the members of the Company as a whole (within the meaning of section 233(d) of the Corporation Act 2001 Cth), and in a manner oppressive to, unfairly prejudicial to and unfairly discriminatory against her (within the meaning of section 232(e)) in relation to:

In my opinion, the notional objective commercial bystander would be satisfied that the affairs of Esperia Court were, and are, being conducted unfairly in that the directors of the Company have treated, and continue to treat, the Company as their own.

I am satisfied that that is the case notwithstanding that, shortly after the death of the deceased, Nick convened a meeting of his siblings to try to enlist them in his vision of how the properties of Esperia Court could be developed; in 2019 he floated a proposal for equalisation of shareholder entitlements to dividends from Esperia Court, a variation of which he continues to hold out to them; and, during the course of the final hearing, he and John, on behalf of themselves and Esperia Court, offered to buy out Maria’s shares for a substantial sum, but less than their full potential value. A constant feature of the thinking of Nick and John is their retention of control of Esperia Court.

The fact that the deceased held the position of Governing Director of Esperia Court, and all the management shares in the Company, when the Symond Arcade was acquired and SPH was granted its lease over the Strathfield Private Hotel, provided no justification for her disregard of the interests of Maria as a member of the Company, more particularly (but not only) because of the expectation of material benefit from the Company that she and her late husband had created and fostered in Maria (and her siblings).

The fact that the deceased held a dominant position in the management of Esperia Court (because she occupied the office of Governing Director and held all management shares in the Company) provided no justification for Nick or John to disregard the interests of Maria as a member of the Company, to acquiesce in decisions of the board of directors adversely affecting the interests of Maria; or to obtain and retain personal benefits contrary to the interests of the Company as a whole and contrary to the interests of Maria, in particular.

In the context of the determination of Nick (with the active support of John) to deploy Esperia Court’s property in a redevelopment project, the grant by Esperia Court to SPH of a long term lease without the benefit of a demolition clause, and the acquisition of the Symond Arcade by Esperia Court in co-ownership with Nick and John, were major steps (outside the ordinary course of any business of Esperia Court) affecting the nature and conduct of the business conducted by Esperia Court as a family company. The acquisition of the Symond Arcade, in particular, stretched, and continues to stretch, the financial resources of the Company, rendering it heavily dependent upon external finance.

In my opinion, each of the deceased, Nick and John (by pursuit of their self-interests in disregard of those of Maria) breached their duties (under each of sections 180(1), 180(2), 181(1) and 182(1) of the Corporations Act 2001 Cth as directors, primarily in the acquisition of the Symond Arcade on what were essentially speculative terms given the strained finances of Esperia Court, but also in the grant by Esperia Court of a long term lease of the Strathfield Private Hotel to SPH on terms that were less than commercial in so far as they empowered Nick, through SPH, to have a special power in evolving proposals for development of the Company’s properties.

In my opinion, these breaches of statutory duties (or comparable general law duties) serve not as a means of holding the directors to account for the payment of compensation to the Company but to inform the nature and extent of the relief necessary, and appropriate, to put an end to the “oppression” found to have affected the conduct of the affairs of Esperia Court.

The Nature of Section 233 Relief. The issue of what, if any, relief should be granted to Maria under section 233 of the Corporations Act 2001 Cth falls to be determined as at the date of the hearing of the proceedings or, more particularly, at the time final orders are made in disposition of the proceedings.

The object of a grant of relief is to terminate the effects of oppression. Any grant of relief must be proportionate to that end.

This is not a case in which it can be said that there is no continuing oppression because the constitution of Esperia Court, the ownership and operation of the business of Symond Arcade, and the terms of SPH’s lease of the Strathfield Private Hotel (in combination with the determination of Nick and John to maintain their control of Esperia Court and its property) militate against the conduct of the affairs of Esperia Court without the taint of oppression.

In my opinion, there is no proper foundation for an order that Nick and John “buy out” Maria in circumstances in which, by the open offer made to Maria in the course of the hearing of the proceedings, Nick and John demonstrated an incapacity to pay to Maria the full amount of the value of her shares predicated upon a winding up of Esperia Court, and an unwillingness (and financial incapacity) to buy out the shareholdings of Dennis and James confirmed during the course of these proceedings. A “buy out” order is beyond the financial capacity of any party to fund.

Although Esperia Court is financially stretched, I proceed to assess the relief to be granted to Maria upon an assumption that the Company is solvent and that an order for its winding up by the Court would be a disproportionate form of remedy.

It might be that, in the aftermath of these proceedings, the shareholders of Esperia Court will, in general meeting, take any one of a number of alternative courses of action. They might resolve to wind up the Company, to liquidate the Company’s assets, to redevelop its real estate, or to manage its affairs in the ordinary course of business. However, decisions of that nature can, and in my opinion should, be left to the members and directors of the Company once the effects of oppression have been terminated.

Subject to allowing the parties to be heard as to the form of orders to be made under section 233 of the Corporations Act 2001 Cth, I propose to make orders to the effect that:

I am mindful that it may be appropriate to review this scheme of orders in light of evidence of the terms upon which (after the conclusion of the final hearing) the NAB loan due to be repaid on 31 October 2022 was (if it was) refinanced.

An object of the scheme is to facilitate an orderly transition of the management of Esperia Court to a regime untainted by oppression.

I am not minded to make orders to the effect that, upon an exercise of the Court’s jurisdiction under section 233 of the Corporations Act 2001 Cth, Nick and John pay compensation to the Company referable to acquisition of the Symond Arcade or the grant of a lease of the Strathfield Private Hotel to SPH. The rights of the Company can be accommodated by orders to the effect that the interest of Nick and John in the Arcade be held on trust for the Company and that the Company be empowered to terminate the Hotel lease without cause.

Maria’s submission that Nick and John should pay compensation to the Company for their acquisition of an interest in the Arcade is predicated upon an assumption that they retain that interest. Although the Hotel lease reserves for the Company less rent than might be available if it were converted to office space or let to an outsider, it was open to the deceased to choose to preserve the licence under which the Hotel apparently operated pending any decision about redevelopment of the Company’s land.

The vice in the conduct of the affairs of the Company has been the closed regime of management which has facilitated decision making that disregards the interests of the Company as a whole (and the particular interests of Maria) and locks ordinary shareholders into dependency upon the discretion of directors with an adverse interest. The proposed orders are intended to address that vice.

James, Maria and Dennis have each made an application for a family provision order under Chapter 3 (sections 55-100) of the Succession Act 2006 NSW.

Each of their applications was made within the time limited by section 58(2) of the Act: 12 months from the date of death of the deceased (27 January 2018). An application is generally taken to have been made at the time when a claim is first made for a family provision order in an applicant’s originating process. Maria’s application was made in a summons filed on 25 January 2019, upon which she relied at the final hearing. James’ application was made by a cross claim filed on 16 January 2019, although he relied on an amended pleading at the final hearing. Dennis’ application was made on by a summons filed on 25 January 2019, although he too relied upon an amended pleading at the final hearing.

Each applicant has standing to make an application for a family provision order because, as a child of the deceased, he or she is an “eligible person” within the meaning of sections 57(1)(c) and 59(1)(a).

The large questions for determination on each application are:

Section 60 is in the following terms:

There is no need in the present proceedings to consider whether any property should be designated as notional estate of the deceased. The deceased’s actual estate is ample enough to meet any family provision order that might conceivably be made, and no application has been pressed by any applicant for an order designating property as notional estate.

There is no need to consider the operation of any indigenous customary law. Each of the applicants and the person most likely to bear the burden of any family provision order that might be made (Nick) are Australians born of Greek heritage.

An exercise of the Court’s family provision jurisdiction requires an evaluative process of reasoning. In Bassett v Bassett [2021] NSWCA 320 at [171] the Court of Appeal described the following statement as a “useful summary” of the approach to be taken:

In each case the criteria for which the Succession Act provides must be applied to the facts of the particular case without resort to normative generalisations. Although it is customary for practitioners to discuss cases using shorthand expressions to refer to the criteria for which sections 59(1)(c) and 59(2) provide, any analysis must remain focused on the text of the legislation. It does not, in terms, require an applicant to establish a “need” or call for an assessment of a deceased’s “moral duty” despite the practical utility of those expressions in some cases.

The concepts of “adequate” and “proper” embedded in section 59(1)(c) are relative to the facts of the particular case: Pontifical Society for the Propagation of the Faith v Scales (1962) 17 CLR 9 at 19-20. Decision making on such topics is fact sensitive. Nevertheless, it is sometimes said that “adequate” is concerned with the quantum of provision, whereas “proper” is concerned with a standard of maintenance, education and advancement in life of an applicant for relief: Devereaux-Warnes v Hall (No 3) (2007) 35 WAR 127 at [72]-[77]. What is “adequate” and “proper” in a particular case depends on the circumstances of the case.

Upon an exercise of family provision jurisdiction, the Court is not necessarily constrained by a deceased person’s statements of testamentary intention. That is inherent in the nature of the jurisdiction and the necessity for its exercise on evidence of facts that may not have been known to the deceased person. Nevertheless, a deliberate scheme of testamentary dispositions by a capable testator is entitled to respect: Slack v Rogan; Palffy v Rogan (2013) 85 NSWLR 253 at [127], approved in Sgro v Thompson [2017] NSWCA 326 at [1]-[2] and [83]-[87].

In the present proceedings, notice must be taken of the deceased’s firm views. She had a strong concept of “family”. She wanted the Soulos family to work together to develop the property that she, her husband and her children had accumulated. She favoured the male line of the family. As a member of the family who shared her vision of the future, she favoured Nick and his branch of the family even though, according to her lights, she sought to make generous provision for each branch of the family.

Although respect must be shown for the deceased’s testamentary intentions, the scheme of her will has been undermined by erroneous assumptions. The need for an order that the will be rectified to correct misdescriptions of shares in Esperia Court left to James and Dennis may be left to one side. Fundamentally, the will was predicated upon a false assumption that the deceased was beneficially entitled to all of the shares in A&R and to Dennis’ shares in Esperia Court, as well as a false assumption that A&R was beneficially entitled to 10 Chapman Street. The deceased also evidently had no regard to James’ moral claim to the return of all the shares in Esperia Court he dutifully surrendered as a price paid for his love match marriage. Nor did she have regard to the possibility that, if she placed Esperia Court within the control of Nick and he pursued his plans for development of the Company’s properties, any benefits conferred on his siblings by their shareholdings in the Company could be illusory, dependent upon the discretion of a person unable to command the respect given by all family members to her in her lifetime.

As any relief granted under Chapter 3 of the Succession Act 2006 NSW and any relief granted under section 233 of the Corporations Act 2001 Cth must be assessed at the date of determination of these proceedings, allowance must be made in both contexts for the potential interaction of each form of relief.

Despite tensions within the Soulos family, and a breakdown in the relationships between the deceased’s children in the wake of her death, fairness to all concerned requires an acknowledgement that each of the children (James, Maria, Dennis and Nick) had a close and loving relationship with the deceased throughout her lifetime, as they did with their father throughout his lifetime. That is true of James, no less than his siblings, even though his choice of spouse attracted parental disapproval.

It is equally pertinent to note the advanced ages of each of the deceased’s children and the primacy given to each of the applicants for family provision relief to their legitimate expectations of material wealth associated with the conduct of the affairs of Esperia Court, and their hope to be able to pass on wealth to their own children and grandchildren.

I am not minded, in disposition of any of the applications for family provision relief before the Court, to make an order that Esperia Court be wound up so that the applicants can realise the net asset backing value of their shares in the Company. There is, however, in my opinion, strong force in Maria’s submission that a gift which is subject to the exercise of a discretion by a third party, such as may be made by way of a discretionary testamentary trust or (as in the present case) shares without rights of participation in the management of a company, is not a proper provision in favour of a donee. Such a gift is illusory because the discretion in question may never be exercised in favour of the donee: William Bkassini v Sonya Sarkis [2017] NSWSC 1487 at [304]-[305], citing with approval Hedman v Frazer [2013] NSWSC 1915 at [180]-[185].

The illusory character of the rights attaching to the “A”, “B”, “C” and “D” class shares of Esperia Court absent any intervention by the Court is tangibly illustrated by expert evidence that they have no commercial value unless the Company is wound up but, if the Company were to be wound up, a value of $3 million would attach to every 1,000 shares.

There is no evidence attributing a particular value to the shares if Esperia Court is not wound up, but the rights of shareholders to participation in management of the affairs of the Company and to any surplus assets on a winding up, are equalised. Nevertheless, a reasonable inference is that shares with rights uniform with all other shares in the Company may have a substantial value and be able to be sold or used as security for a borrowing of funds.

In my opinion, each of James, Maria and Dennis has been left without adequate provision for his or her maintenance, education or advancement in life if and to the extent they are unable to unlock the asset-backed value of their “A”, “B” and “C” class shares in Esperia Court and they remain without a voice in management of the Company. That is because they were, throughout the joint and several lives of their parents, encouraged in an expectation that the shares would enable them to enjoy substantial material wealth in their mature years and the shares, in themselves, provide a measure of what the parents regarded as proper provision for their children. For this reason, I propose to make orders (supported by orders made under Chapter 3 of the Succession Act 2006 NSW, as well as orders made under section 233 of the Corporations Act 2001 Cth) to the effect that, in addition to any provision made for them in the will of the deceased, they each receive 125 of the 500 shares held by the deceased in her lifetime in the character of management shares in Esperia Court.

James’ application for a family provision order is the most challenging of the three applications before the Court, at least as regards his claim for the remaining 1,000 “B” class shares in Esperia Court left by the deceased to Nick rather than to him.

There are five fundamental reasons for that. First, although James’ case is able to be presented as that of an impecunious claimant his impecuniosity is in part due to a decision, of his own making, to place property in a discretionary trust for the benefit of his family, rendering him reliant upon the continuing support of his wife and children in management of the trust. Secondly, respect needs to be given to the deceased’s deliberate intention that Nick be favoured over James, albeit that the favour the deceased showed towards Nick was in part a response to Nick’s displacement of James in the performance of work for Esperia Court after 2008 or thereabouts; Nick’s displacement of James’ soured relationships between James (on the one hand) and Nick and the deceased (on the other hand). Thirdly, James’ claim is essentially grounded less on “need” than upon a “moral” claim for return to him of all the shares which his parents, he submits “unjustly”, required him to surrender as a consequence of a marriage of which they disapproved. Fourthly, James’ claim is based on an expectation, fuelled by the deceased during her lifetime, that his shares (upon which no dividends had ever been paid to him) would be returned to him upon the deceased’s death so that, in common with his siblings, he could enjoy substantial material wealth. Fifthly, James’ advanced age might be thought to limit the extent of any personal, future “need” on his part beyond the satisfaction he might experience from passing family wealth onto his own children.

Paying attention to all these factors, and the extent of the deceased’s bounty as expressed in her will (particularly, 2,000 shares in Esperia Court and ownership of 79 The Boulevard, which has an agreed value of $2.3 million), the Court might reasonably conclude that James has not been left without “adequate” or “proper” provision from the estate of the deceased.

The constraint imposed by the will on his ability to sell freely and without qualification 79 The Boulevard might well have warranted an intervention of the Court. But, whether or not that is the case, the effluxion of time has nearly erased the burden of the constraint. The operation of the constraint, for the period of five years from the death of the deceased on 27 January 2018, is about to expire.

What would a wise and just testatrix in the position of the deceased do with James’ application, taking into account community standards and the whole circumstances of the case?

In my opinion, in the circumstances of the present proceedings the question of what is “adequate and proper” for the purpose of section 59(1)(c) is closely associated with the question of what, if any, family provision order “ought” to be made in disposition of James’ application for relief upon an exercise of the discretion for which section 59(2) provides. That is because I accept that, within the community of the deceased (her extended family) if not also within the broader community, the allocation of 3,000 shares to each of the deceased’s children was long seen as necessary and appropriate to make proper provision for them. This was in recognition of the roles they played in helping the family to acquire the wealth embedded in the assets of Esperia Court, including the fact that they acquiesced in the absence of any payment of dividends to them throughout what must be seen as the better part of their lives. The expectation of James and other members of the Soulos family was that James’ shares would be returned to him. Nick, for his part, had no expectation that he would be the beneficiary of any of the shares formerly held by James.

In my opinion, wisdom and justice point to the making of an order that, in addition to the provision made for James in the will of the deceased, he receive the 1,000 shares in Esperia Court given to Nick and that Nick bear the burden of that order for provision.

This outcome is consistent with what, in my opinion, is demanded by wisdom, justice and community standards in so far as it makes good the injustice of the deceased’s confiscation of James’ shares at the commencement of what appears to have been, in retrospect, a long and happy marriage.

In my opinion, for the reasons I have articulated, James should have the benefit of all 3,000 of the shares formerly held by him, together with 125 of the 500 shares formerly held by the deceased as management shares. Nothing more can be justified in circumstances in which the deceased’s testamentary constraint on James’ disposal of 79 The Boulevard is about to expire and, in any event, if required to be complied with, it does not diminish the value of James’ enjoyment of the value of the property.

There is no need to make an adjustment under Chapter 3 of the Succession Act 2006 NSW in favour of Nick as compensation for his “loss” of the 1,000 shares gifted to him but, by the Court’s orders, returned to James. That is because: (a) Nick retains the 3,000 shares held by him in Esperia Court independently of the will of the deceased; (b) he retains under the will of the deceased 125 of the 500 “management shares” formerly held by the deceased; and (c) he also retains a right, in due administration to be compensated for the executors’ sale of 77 The Boulevard (for $4,201,000), gifted to him in the deceased’s will. His sons, to whom he is close, retain the deceased’s Balmoral Beach unit with an agreed value of $2.1 million, with any indebtedness to the estate for finance provided for acquisition of property forgiven.

In my opinion, Maria has been left without “adequate and proper” provision for her education, maintenance and advancement in life from the estate of the deceased only in so far as she has not been given, by force of the deceased’s will, 125 of the 500 shares formerly held by the deceased as management shares.

In my opinion, that measure of the inadequacy of “proper” provision made for Maria in the will of the deceased informs an exercise of the discretion to be exercised in her favour under section 59(2) of the Act.

In my opinion, there is no foundation for the making of a family provision order in the form of a legacy in lieu of the gift of 8 Parsons Avenue made to Maria in the will. She retains her 3,000 shares in Esperia Court and the deceased’s Greek property.

On the evidence before the Court, 8 Parsons Avenue has a value in the vicinity of $1.35-1.5 million.

Dennis’ application for family provision relief invites analysis in terms similar to those applied to Maria’s application.

In common with James and Maria, he should receive 125 of the 500 shares formally held by the deceased as management shares in Esperia Court. That is necessary for him, and them, to have an entitlement to participation in management of the affairs of Esperia Court and, so, to realise the underlying value of the 3,000 shares all parties now acknowledge to be his entitlement independently of the will of the deceased.

Had Dennis’ claim to beneficial ownership of 10 Chapman Street and the deceased’s shares in A&R not been successful, a family provision order that vested in him all the deceased’s shares in A&R might conceivably have been an appropriate application of sections 59(1)(c) and 59(2) of the Succession Act 2006 NSW. Dennis might be said to have been left without “adequate” or “proper” provision for his education, maintenance and advancement in life out of the estate of the deceased had his ownership of 10 Chapman Street (directly or indirectly) not been vindicated, and orders necessary to secure his ownership of that property might, in all the circumstances of the case, have been relief that “ought” to have been made. But maybe not.

Hesitancy about that conclusion arises from the fact that Dennis has secured his ownership of shares in Esperia Court and, by the deceased’s will, he has been left 132-134 Smith Street (a property with an estimated value within the range of $3.4-5.8 million).

Before any final orders are made in disposition of these proceedings, I propose to entertain such, if any, submissions that might be made about:

As presently advised, I propose to deal with any disputes about orders for costs after final orders are made in disposition of all substantive disputes.

In the meantime, I record the following summary of the types of orders that appear necessary to determine the proceedings: