Two mates built a $24 million earthmoving business. When one died, their unsigned replacement deal became the fight.
The Supreme Court of Western Australia delivered its decision on September 23 in Iron Horse Machines Pty Ltd v Olmate Holdings Pty Ltd [No 2] [2026] WASC 393. At its core was a question insurance professionals will recognise instantly: which agreement governs when the parties started updating their succession arrangements but never signed the new deed?
The two directors had been friends since high school. From 2008 they ran an earthmoving and civil works business in the Bunbury area through their respective corporate trustees, each holding half the shares in the operating and holding companies. In December 2013 they signed a Business Succession Agreement that gave the surviving director's entity the right to buy out the other's equity on death or total and permanent disability. A suite of insurance policies - life, TPD, and trauma - was structured to fund the purchase.
In early 2021, the directors engaged a financial planner to review their insurance arrangements. The planner recommended increasing death and TPD cover to $15 million each, split between a $10 million personally owned policy to fund the equity purchase and a $5 million company-owned key man policy to reduce business debt. The pair also agreed to remove trauma cover from the succession agreement altogether, keeping it as personal protection only.
They instructed their lawyer to draft amendments. A marked-up replacement deed was delivered in September 2021. Their financial planner reviewed it and flagged one outstanding change. Their CFO followed up with the lawyer to finalise it.
None of it was ever signed.
In February 2022, one of the directors was diagnosed with mesothelioma. The BT insurance application he had lodged for the new cover could no longer be processed. The replacement agreement, which depended on those revised policies being in place, stalled.
Within days of the diagnosis, the ill director lodged a trauma claim. In April 2022, his insurer paid $3,102,656.41 into his account. The question was what to do with it.
The business's CFO emailed both directors, telling them the money needed to go into a joint trust account "as per the agreement until any changes are agreed to and formalised." The ill director did not push back. He arranged for the funds to be deposited into a term account in both directors' names - exactly what the 2013 agreement required.
Counsel for the surviving director's side called this exchange "the most important piece of evidence" on which agreement the parties treated as binding. The court accepted the underlying point: the CFO's language identified a single, presently operative agreement and treated any variation as a future event that had not yet occurred.
The ill director elected to continue in the business on July 3, 2023. Under the 2013 agreement, that election meant the trauma payment was owed to the operating company. He died 27 days later.
The deceased director's estate, through his brothers as executors, ran six arguments. The first five sought to displace the 2013 agreement or recover the trauma payment on other grounds. All five failed. The sixth - an oppression claim under the Corporations Act - succeeded.
On the primary question, the court found that signing the financial planner's authority to proceed was, at most, an authorisation for the planner to obtain the recommended insurance. It was not an agreement between the directors on the terms of their succession arrangements. As to the broader claim that the parties had agreed to be bound by the 2021 draft, the court identified eight reasons to reject it. Among them: the draft was sent only to the CFO and never directly to either director; the insurance schedule remained incomplete; the terms were still being settled as late as November 2021; and after the mesothelioma diagnosis, it was no longer possible to put the revised insurance arrangements in place.
The part performance, restitution, misleading conduct, and estoppel arguments each failed on related grounds. There was no concluded contract to partly perform. There was no operative mistake giving rise to restitution. The conduct relied on did not constitute a representation that the draft agreement would be honoured. And the court did not find that the deceased director had assumed the draft governed the relationship - he, too, had been working towards finalising a replacement.
Where the estate succeeded was on a different track entirely: oppression under the Corporations Act.
The court found that the operating company's retention of the full $3.1 million trauma payment was an "unintended consequence" of how the 2013 agreement worked in practice. When the ill director elected to stay in the business, the trauma funds became company money. But those funds were then excluded from the valuation of his equity - a result that meant his estate received less than fair value for his shareholding. The court called the retention a "windfall" for the surviving director's side.
The conduct was lawful. It involved no breach of fiduciary duty. But the court held it was nonetheless oppressive.
The remedy was to treat 50% of the trauma payment as an asset of the company for valuation purposes, effectively adding it to the purchase price. From that, a $240,000 advance the deceased director had drawn to buy a boat would be deducted.
The court valued the business at $23,816,331, making the deceased director's 50% equity worth $11,908,165.50. After applying the Asteron life insurance payment of $10,551,581, the surviving director's entity owed a balance of $1,356,584.50 under the 2013 agreement. The oppression remedy adds approximately half the $3.1 million trauma payment - plus accrued interest, less the $240,000 advance - on top of that.
The figures are preliminary. The court will hear from the parties on interest, some subsidiary accounting issues, and the form of final orders.
For brokers and planners advising on business succession insurance, the case is a sharp illustration of what can go wrong in the gap between "agreed in principle" and "signed and in force." A partly implemented strategy carried no legal weight - and the contractual mechanism the parties fell back on produced an outcome neither of them intended.
The proceedings concerned civil claims between the parties. No findings of dishonesty or breach of fiduciary duty were made against any party.
