Former Wesfarmers director Dick Lester explains why he took legal action valued at over $1.6 million to make his one-time farm neighbor Rod Culleton bankrupt.

WHEN Dick Lester looked out over a pile of freshly harvested oats on his Williams farm in WA’s south-eastern Wheatbelt over seven-years ago, while chatting with his then neighbour Rod Culleton, little did he realise their seemingly banal business conversation would play a pivotal role in terminating one of the most colourful and controversial chapters in Australian political history.

Today, the Full Court of the Federal Court dismissed an appeal by Mr Culleton on the bankruptcy ruling handed down on December 23 last year against him, which was earned after persistent legal action taken by Mr Lester and his company Balwyn Nominees, which commenced in mid-2010.

That decision before Christmas led to Mr Culleton’s formal disqualification from the federal Senate earlier this month, which he subsequently appealed but that process has now been exhausted due to today’s decision.

Mr Lester said his unyielding desire to reclaim a debt of about $205,000 linked to the sale of oats and the lease and potential $13.2 million sale of his property “Rathgar”, to his one-time friend and neighbour, had nothing to do with politics.

But it had everything to do with reclaiming the money that he believed – and the court agreed – was rightfully owed to him.

He said he could not foresee the court’s ruling would make Mr Culleton ineligible for the federal Senate and he was “gobsmacked” when his one-time business associate was elected for One Nation at last year’s federal poll, on a supposed promise of representing and fighting for farmers in dire troubles with bank-debts.

“I embarked on this journey in 2010 and once you embark on these things you have to keep going,” he said.

“The case took two years plus to get listed at a hearing in April 2013.

“It was all under way well before Rodney was even thinking about going for the Senate and neither he nor I had any knowledge of the future and his future involvement with the Senate.

“I was gobsmacked when he was elected because I could not believe that such a silly person could put himself forward to be endorsed and then to be elected by the people of Western Australia.”

Mr Lester said he stopped counting his legal costs at $1.6m last year but has paid between $3000 to $5000 per month since, which he’s grateful has been a level of payment eased by his dutiful lawyers King & Wood Mallesons.

But what motivated him to take on Mr Culleton - a notorious dog-with-a-bone litigant - in such an epic legal fight which was only ever destined to be an exhaustive court room battle with more rounds and canvass resurrections than a Rocky movie?

He said it all came about in early December 2009 when the two farmers and neighbours were standing looking out and surveying a big stack of oats from his 2009-10 harvest, measuring about 2800 tonnes.

“Rodney wanted to negotiate to buy those oats and he constantly kept peppering me to sell them to him,” he said.

“I said, ‘Rodney I’m not going to sell these oats to you until we complete the deal in terms of the property’.

“That was going to come first and the oats were going to come second.

“We eventually progressed with the property transaction and it came to the point where it wasn’t appropriate for us to sell the property to Rodney then, because he wasn’t in a position to buy it, and so what we did was enter into a lease agreement for one year.

“During that year, he expected and I expected that he would get into a lot better financial position, as a result of having his horse feed business progress, and I saw that as a very good business model.”

Mr Lester said while he and Mr Culleton were standing there talking about that big stack of oats, his neighbour said something that sent alarm bells ringing in terms of his appetite for litigation.

“Rodney turned to me and said, ‘You know Dick, I always put 2 per cent of my turnover away in a special bank account to cover legal fees for grain disputes with farmers’,” he said.

“I was a bit taken aback about that and said to him, ’Well, what’s all that about Rodney’ and he said, ‘Well farmers they just go to water as soon as you threaten legal action and they never come back again’.

“Now bearing in mind this was December 2009, I said, ‘Rodney how are you going to buy grain in 2015 if you’re going to do that?’ And he said, ‘Ah well Dick, there are lots of farmers out there and they’ve all got grain so I’ll have no trouble getting grain’.

“So I put that away in my grey matter and thought to myself, ‘this is a guy who is a bit stupid’.

“If someone comes up to me and says, ‘I always put 2pc of my turnover into a fighting fund for legal fees to fight farmers and they just go to water’ and then you turn around and it’s happening to you a bit later, you have to stand up and fight for what’s right.”

Mr Lester said he and Mr Culleton did a deal on the oats and the farm sale and lease arrangement but it all “went bad” and he cancelled the deal in early 2010.

He said after that, he sent Mr Culleton several tax invoices but eventually wrote-off the money that was owed to him.

“It was a lot less money than what the judge finally awarded me,” he said.

“So I was just continuing to go about my business and had forgotten about Rodney Culleton and wrote the debt off and got on with other things.

“But then on July 7, 2010, it was a Tuesday, my office door came flying open and my secretary/receptionist put an envelope on my desk.

“It was a letter from Kott Gunning who claimed to be Rodney Culleton and Elite Grain’s (Mr Culleton’s company) lawyers demanding that I pay to Elite Grains $580,000 by 4pm on Friday of that week or they’d take me to the Grain Trade Australia’s disputes committee.

“So here it was now happening to me – the 2pc fund of Rodney’s was going to be used to fight me in court and they expected me to just pay the money and just go to water but I didn’t do that.

“There are a lot of farmers who have had to walk away from various debts of Rodney’s and they’re all lined up now.

“They’re mainly concentrated around the Williams, Wagin and Narrogin area of WA but they are elsewhere as well, to whom he owes money.

“He’s getting his just deserts.”

Mr Lester said the oats on the farm from his 2009-10 harvest were disappearing and the court ultimately proved Mr Culleton wasn’t paying according to the agreed method.

“Rodney was lifting grain and not keeping record of it and not accounting for it in the manner in which we had agreed to and that’s what the court found,” he said.

“The means by which he was going to administer the lifting of that grain and pay for it is a perfectly normal grain transaction which happens around the country all of the time where recipient generated tax invoices are involved.

“There’s a certain amount of trust between purchaser and vendor and there’s a certain administrative process that happens on a weekly and monthly basis and there are checks and balances within that.

“When I was checking I found that the balance was inappropriate and I raised the matter and he wasn’t able to satisfy me.”

Mr Lester said Mr Culleton’s Senate election represented a “stain” on Australian democracy but his legal foe, once elected, displayed a major lack of discipline in the way he conducted himself on the floor of the Senate and around parliament house.

“Rodney’s election has caused the weaknesses of our electoral system to be played out but fortunately it’s all being brought to an end, in a range of ways now,” he said.

But Mr Lester said he did not believe it was his role to warn the Australian public about his legal matters concerning Mr Culleton’s business dealings and debts.

“My focus is getting paid what’s due to me and that has always been my focus; not the fact he became a Senator subsequently,” he said.

“I did not see it as my role to be protecting the Australian public in any way – it’s all about the money.”

Mr Lester said when it became clear he was unlikely to get any money because of Mr Culleton’s financial position “deteriorating markedly”, he was open to other assets, including intellectual property linked to his former neighbour’s Grain Keg invention.

“When I came to suspect that Rodney wasn’t going to be able to pay me what he owed me, I look around for other assets that would be of interest to me,” he said.

“I have no idea how I’ll handle the IP if I got it - but it has some merit and if it’s of value I can deal with it and rather than getting nothing, I’d be getting something.

“I’m a candidate right now to get nothing.”

Mr Lester said the toughest part of his extensive seven-year legal battle was initially presenting the case to obtain the original judgment of District Court Judge Jeremy Curthoys handed down in October 2013.

“Once that judgment was achieved in the resounding success that it was achieved, we’ve been frustrated by Rodney’s constant appeals and prevarication and delay tactics,” he said.

“They’ve been very concerning and expensive and time consuming and frustrating but the pressure is off now because right has been on our side.

“Rodney’s lost every one of those legal moves, including the one yesterday.”

Mr Lester said since Mr Culleton’s election, he’d received positive feedback from other farmers and people involved in the agricultural and rural sector, especially around the Williams region, encouraging him to go on and win the legal case, conclusively.

“They can’t believe such an idiot could be elected into the parliament of Australia,” he said.

“Rod’s done a lot of bullying of farmers and they’ve been financially hurt and they’re unhappy he was in the Senate but to me that’s been a side issue; all I’m focussed on is getting paid.”

Yesterday, the Western Australian Court of Appeal dismissed Mr Culleton’s application to re-open the Court of Appeal’s decision from 2015 in relation to the case against Mr Lester and Balwyn Nominees and was ordered to pay legal costs.

In 2015, the appeal against the 2013 trial decision was also wholly dismissed and Balwyn Nominees was awarded its costs, said Mr Lester’s lawyer Michael Lundberg of King & Wood Mallesons.

Outside the court yesterday, Mr Lester told media, “It means that the original case that was won by Dakin Farms, my company, and Balwyn Nominees, my company, against Rodney and Ioanna Culleton has been confirmed, and all courses of appeal have been exhausted and that the matter of Rodney Culleton's bankruptcy is a very alive issue”.

Mr Culleton denied he’d ever told Mr Lester in late 2009 that he put 2pc of his business income into an account to litigate farmers that “go to water” after being threatened with legal action.

“I’ve done multiple contracts with multiple growers and have always conducted very good business,” he said.

“I’ve never put 2pc away for litigation.

“I hadn’t had any problems with litigation before 2010 – my litigation problems all started with the ANZ Bank - they created such havoc everywhere.

“Dick’s seems to have had a brain wave – I don’t know where’s he’s come up with that comment.

“It’s just a flippant comment - I didn’t have a lot of conversations with Dick Lester.”

The High Court also handed hand down its judgment in Canberra today, unanimously declaring Mr Culleton was not eligible for last year’s federal election as per constitutional rules.

The Court was adjudicating on a matter referred to it by the federal Senate late last year - sitting as the Court of Disputed Returns - concerning Mr Culleton’s eligibility for election due to being convicted at the time for larceny.

The High Court’s ruling also determined that Mr Culleton will be replaced following a recount of votes which is set to be his brother-in-law Peter Georgiou who was send on the One Nation ticket.

“Today the High Court unanimously held that Rodney Norman Culleton was a person who was convicted and subject to be sentenced for an offence punishable by imprisonment for one year or longer at the time of the 2016 federal election, and therefore was incapable of being chosen as a Senator under s 44(ii) of the Constitution,” the judgment said.

“The Court held that Mr Culleton was convicted and subject to be sentenced for an offence punishable by imprisonment for one year or longer at the date of the 2016 election, both as a matter of fact and as a matter of law.

“The subsequent annulment of the conviction had no effect on that state of affairs.

“The Court held that the resulting vacancy should be filled by a special count of the ballot papers.”

Mr Culleton has described the extended legal battle over Rathgar against Mr Lester as being “personal” compared to his many other legal fights.

He has continually claimed he’s solvent and can repay his debts but has also expressed concerns about ongoing legal costs while vowing he would accept the court’s ultimate decision, once all legal avenues were exhausted.

Today the court ordered that the appeal against Mr Culleton’s bankruptcy be dismissed with costs and all proceedings under the sequestration order made on December 23 last year against him, be stayed until midnight Monday February 6.