Federal Court of Australia

J F Investment Holdings Pty Ltd (Trustee), in the matter of Golden Mile Milling Pty Ltd v Hargrave [2025] FCA 713

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to section 240 of the Corporations Act 2001 (Cth), the parties be granted leave to settle and discontinue the proceeding (including the Plaintiffs’ claim and the cross-claim of the First and Second Defendants).

2.    Pursuant to ss 37AF and 37AG of the Federal Court of Australia Act 1976 (Cth), the following are to be marked ‘Confidential’ and be placed in a sealed envelope that is not to be opened except with leave of the Court:

(a)    the affidavit of Evan Charles Goldman affirmed on 18 June 2025;

(b)    the affidavits of Lawrence Richard Hargrave sworn on 19 and 20 June 2025;

(c)    the plaintiffs’ submissions dated 19 June 2025.

3.    Liberty to apply on 3 days’ notice in writing.

4.    No order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LONGBOTTOM J:

1    In July 2022, the third and fourth defendants (GMM and Pure Gold) entered into an agreement for the sale of a gold production and processing facility “Lakewood Mill” (then owned by GMM) to Karora Resources Inc and Lakewood Mining Pty Ltd. Under the terms of the agreement, GMM was paid approximately $70,000,000 and 2,100,000 shares in Karora Resources and Pure Gold was extended a “preferential treatment right” with respect to the treatment of ore at the Lakewood Mill.

2    The shares in GMM were then, and are now, held by the first plaintiff (JFI) in its capacity as trustee of the Jones Trust and the second defendant (Lawhar) in its capacity as trustee of the Hargrave Family Trust. The respective shareholding in GMM was, and is, 40% (JFI) and 60% (Lawhar). The second and third plaintiffs (Neil Jones and Ben Jones) are beneficiaries of the Jones Trust. Neil Jones is also the sole director of JFI. The first defendant (Lawrence Hargrave) is a beneficiary of the Hargrave Family Trust. Mr Hargrave is also the sole director of GMM.

3    On 6 February 2024, JFI and the Joneses commenced proceedings under s 233 and s 461 of Corporations Act 2001 (Cth) seeking declaratory and other relief in connection with the conduct of the affairs of GMM. The relief sought included a declaration that GMM’s affairs have been conducted in a manner which is contrary to the interests of the members as a whole and is unfairly prejudicial to, and discriminatory against, JFI and an order that Mr Hargrave pay GMM a sum in excess of $56,000,000.

4    JFI and the Joneses subsequently sought, and were granted, leave under s 237 of the Act to bring derivative claims on behalf, and in the name, of GMM against Mr Hargrave, Pure Gold and the fifth defendant (LRH). The claims against LRH include a claim for specific restitution of a property it owns in Swanbourne, Western Australia. Mr Hargrave is the sole director and shareholder of LRH.

5    The hearing of a separate question on liability in respect to the claim and cross-claim took place before me in May 2025. The hearing was adjourned until 19 and 20 June 2025, for closing submissions.

6    In the intervening period, the parties agreed upon the resolution of the proceeding. The terms of the settlement agreement are contained in an affidavit of Mr Evan Charles Goldman which, for the reasons that follow, I am satisfied ought to be the subject of a confidentiality order.

section 240 of the corporations act

7    The parties require leave to settle and discontinue the proceeding because of the derivative claims to which I have referred above: Act, s 240. The discretion to grant leave under s 240 is unconfined except insofar as may be discerned from the subject matter, scope and purpose of the Act: Henry v Sandlewood Aboriginal Projects Limited (No 4) [2021] FCA 1655 at [15] (Rares J).

8    Those statutory indications relevantly include the considerations governing the grant of leave to commence claims under s 237 of the Act: Henry at [15]. Foremost amongst those considerations is the best interests of the company: Nation Energy (Australia) Pty Ltd v Paltar Petroleum Limited (Administrators Appointed) [2019] FCA 1473 at [15] (Stewart J).

9    Where, as here, the company is solvent, the best interests of the company will predominantly reflect the interests of the shareholders: Henry at [16], citing Huang v Wang (2016) 114 ACSR 586; [2016] NSWCA 164 at [60] (Bathurst CJ). In the particular context of the settlement of a proceeding, the Court will also be concerned to ensure that there has been no collusion between the parties and the proposed resolution is at arm’s length: Rafferty v National Bank Limited [2011] FCA 169 at [10]-[11] (Mansfield J).

leave to settle and discontinue

10    I am satisfied that this is an appropriate case for the grant of leave under s 240 of the Act to settle and discontinue the proceedings. That is for four reasons.

11    First, JFI and Lawhar have separate independent legal representation and have each agreed to the settlement and discontinuance of the proceeding. GMM’s sole director, Mr Hargrave, also agrees to that course. In view of those matters, the parties submit, and I accept, that the settlement is at arm’s length.

12    Second, having reviewed the settlement agreement, I am satisfied that its terms are not adverse to the interests of GMM and are, in some respects, favourable to the company. The fact that GMM’s shareholders (JFI and Lawhar) are parties to the settlement agreement lends further weight to that view.

13    Third, it is in the interests of GMM that the disputation the subject of this proceeding be brought to an end. It is apt to note in that regard that the relief sought in the proceeding included the winding up of the company.

14    Fourth, GMM filed a submitting notice and, as such, did not take an active role in the proceeding. There is no suggestion that GMM has incurred any legal costs in connection with the litigation.

CONFIDENTIALITY orders

15    As foreshadowed above, JFI and the Joneses seek an order that the affidavit of Mr Goldman be made confidential pursuant to s 37AF and s 37AG of the Federal Court of Australia Act 1976 (Cth). The evidence before me in support of the grant of leave also includes two affidavits of Mr Hargrave. One of those affidavits refers to the terms of the settlement agreement. The other affidavit includes matters relevant to the exercise of the discretion under s 240 of the Act, but by reference to material that can be the subject of a claim of legal professional privilege.

16    I am satisfied that it is necessary to prevent prejudice to the proper administration of justice to preserve the confidentiality of the terms of the settlement agreement and the other evidence relied upon by the parties to give effect to that agreement by obtaining the grant of leave to settle and discontinue the proceeding: c.f., Super Retail Group Limited v Farrell [2024] FCA 1214 at [11] (Wigney J) and Pigozzo v Mineral Resources Limited [2022] FCA 1166 at [145] (Feutrill J).

Associate:    

Dated:    20 June 2025

SCHEDULE OF PARTIES