Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37 Hearing dates: 19 April and 20 April 2016 Decision date: 08 June 2016 Before: Gleeson JA at [1]; Leeming JA at [2]; Payne JA at [7]. Decision: (1) Appeal dismissed; (2) The appellant is to pay the costs of the respondent of the appeal on a party–party basis as agreed or assessed, save for those costs referable to order 4; (3) The respondent's Notice of Motion dated 26 February 2016 is dismissed; (4) The respondent to pay the appellant's costs of the Notice of Motion on a party–party basis as agreed or assessed; (5) In relation to the cross-appeal: (a) the cross-appellant's written submissions of no more than five pages containing such orders (including costs) it submits should be made on the cross-appeal to be forwarded by email to Gleeson JA's associate by 5pm, 15 June 2016 and served on the cross-respondent at the same time. Those submissions should address whether the opportunity to make any further oral submissions is sought; (b) the cross-respondent's written submissions of no more than five pages containing such orders (including costs) it submits should be made on the cross-appeal to be forwarded by email to Gleeson JA's associate by 5pm, 22 June 2016 and served on the cross-appellant at the same time. Those submissions should address whether the opportunity to make any further oral submissions is sought; (c) the cross-appellant to provide any written submissions in reply of no more than two pages to be forwarded by email to Gleeson JA's associate by 5pm, 24 June 2016 and served on the cross-respondent at the same time; (d) liberty to apply to this Court on three days written notice. Catchwords: CORPORATIONS – employment as managing director – whether director engaged in serious misconduct; EQUITY – fiduciary duties – conflict of duty and interest – whether disclosure necessary to avoid conflict; CORPORATIONS – construction of s 200F of the Corporations Act 2001 (Cth) Legislation Cited: Corporations Act 2001 (Cth) ss 200AB, 200B, 200C, 200D, 200F Criminal Code Act 1995 (Cth) ss 6.1, 9.2 Supreme Court Act 1970 (NSW) s 75A Cases Cited: Adler v Australian Securities and Investments Commission [2003] NSWCA 131; 46 ACSR 504 Balston Ltd v Headline Filters Ltd [1990] FSR 385 Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24; 191 FCR 1 Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 Boardman v Phipps [1967] 2 AC 46 Breen v Williams (1996) 186 CLR 71 Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2014] WASCA 29 Chan v Zacharia (1984) 154 CLR 178 Concut Pty Ltd v Worrell [2000] HCA 64; 176 ALR 693 Fexuto Pty Limited v Bosnjak Holdings Pty Limited [2001] NSWCA 97; 37 ACSR 672 Fox v GIO Australia Limited (2002) 56 NSWLR 512; [2002] NSWIRComm 318 Friend v Brooker [2009] HCA 21; 239 CLR 129 GSK Australia Pty Ltd v Ritchie [2008] VSC 164 Hodgson v Amcor; Amcor v Barnes [2012] VSC 94 Hospital Products v United States Surgical Corporation (1984) 156 CLR 41 Howard v Commissioner of Taxation [2014] HCA 21; 253 CLR 83 LCM Litigation Fund Pty Ltd v Coope; Coope v LCM Litigation Fund Pty Ltd (No 2) [2015] NSWSC 992 LCM Litigation Fund Pty Ltd v Coope; Coope v LCM Litigation Fund Pty Ltd (No 3) [2015] NSWSC 1156 LCM Litigation Fund Pty Ltd v Coope; Coope v LCM Litigation Fund Pty Ltd (No 4) [2015] NSWSC 1158 Maguire v Makaronis (1997) 188 CLR 449 Manildra Laboratories v Campbell [2009] NSWSC 987 Noranda Australia v Lachlan Resources NL (1988) 14 NSWLR 1 Pilmer v Duke Group Ltd (In Liq) [2001] HCA 31; 207 CLR 165 Rankin v Marine Power International Pty Ltd [2001] VSC 150 Robb v Green [1895] 2 QB 1 Shepherd v Felt & Textiles (1931) 45 CLR 359 Tasman Capital Pty Limited v Sinclair [2008] NSWCA 248; 75 NSWLR 1 Woolworths v Kelly (1991) 22 NSWLR 189 Texts Cited: The Hon JD Heydon AC QC, "The duty to act in good faith in the best interests of the company, in light of Bell Group", Presentation at the Supreme Court of New South Wales Annual Corporate Law Conference: Directors' Duties: New Perspectives Category: Principal judgment Parties: Patrick Mark Coope (Appellant / Cross-Respondent) LCM Litigation Fund Pty Ltd (Respondent / Cross-Appellant) Representation: Counsel: J Clarke SC / Y Shariff (Appellant) A Sullivan QC / S Fendekian (Respondent) Solicitors: Esplins Solicitors (Appellant) Piper Alderman (Respondent) File Number(s): 2015/00257383 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2015] NSWSC 992 Date of Decision: 24 July 2015 Before: Stevenson J File Number(s): SC 2015/60819 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] headnote [This Headnote is not to be read as part of the judgment] These proceedings relate to an employment dispute between Mr Coope, the appellant and cross-respondent, and LCM Litigation Fund Pty Ltd ("LCM"), the respondent and cross-appellant. Mr Coope is a former joint-managing director of LCM. Clause 19.9(b) of Mr Coope's employment contract gave LCM the right to terminate Mr Coope's employment if he was "guilty of any serious misconduct". Clause 4.1(c) required Mr Coope to "bring to the Company's and the Board's attention any significant matters of which you become aware that would be of detriment to the Company". On 31 March 2015, LCM terminated Mr Coope's employment under cl 19.9(b), alleging that Mr Coope had engaged in serious misconduct on two occasions. LCM alleged that on each occasion, Mr Coope breached cl 4.1(c) of his employment contract and his fiduciary duties and contravened ss 181 and 182 of the Corporations Act by failing to disclose certain matters to the LCM Board. LCM commenced proceedings seeking a declaration that Mr Coope had engaged in serious misconduct. Mr Coope cross-claimed damages for wrongful termination. The primary judge found that, on the second occasion, Mr Coope had breached his employment contract and fiduciary duty, amounting to serious misconduct. The primary judge therefore dismissed Mr Coope's claim for damages. Factual background LCM is a litigation funder. The LCM Board comprised Dr King as chairman and Mr Coope and Mr Moloney as joint managing directors. LCM funded litigation projects from its own cash reserves, capital raisings and a joint venture agreement with Vannin Capital, a significant Jersey-based funder. The Vannin Joint Venture was due to expire on 31 March 2015. In about April 2014, Mr Coope, on behalf of LCM, entered into negotiations with Vannin Capital, about a number of commercial opportunities for Vannin to work with LCM in the future. However, by July 2014 it became clear that these negotiations had been unsuccessful. In early 2015, Mr Coope, on behalf of LCM, recommenced negotiations with Vannin about a possible merger, or other commercial arrangement between LCM and Vannin. The Wind Down Proposal The LCM Board held a meeting on 9 February, which included as an agenda item, "Vannin Proposals". Three days prior, on 6 February 2015, Mr Coope sent the other Board members a document containing five potential proposals for a commercial arrangement between LCM and Vannin. The first allegation of serious misconduct related to the way in which Mr Coope communicated the "Wind Down Proposal" to the Board in that document and also at the 9 February meeting. Relevantly, in communicating the Wind Down Proposal, Mr Coope did not disclose that, as part of the deal, he would receive 20 per cent equity in the proposed Vannin vehicle. The primary judge found that Mr Coope had not breached his employment contract or fiduciary duties on this occasion. The Separation Proposal By 9 February 2015 the relationship between Mr Coope and Mr Moloney was strained. At the conclusion of the Board meeting on that day, Dr King asked both Mr Coope and Mr Moloney to submit a proposal to the LCM Board on the terms on which each would be prepared to leave LCM. Shortly after the 9 February meeting, Mr Coope spoke to Mr Craddock, the principal of Vannin Capital, to discuss potential employment terms. On 12 February, Mr Coope sent Mr Craddock an "Employment Proposal". On the same day, he presented to the LCM Board a "Separation Proposal" in which he sought to be released from his non-compete restraints. The second allegation of serious misconduct related to Mr Coope's failure to disclose to the LCM Board that he had put the Employment Proposal to Mr Craddock and the omission of key features of that Employment Proposal from the Separation Proposal. The primary judge found that Mr Coope had breached his employment contract and fiduciary duties on this occasion. The primary judge did not make a finding regarding breach of ss 181 and 182 of the Corporations Act as the matter "was barely developed" by Senior Counsel then appearing for LCM. Issues on appeal 1. In relation to the Separation Proposal: (a) Mr Coope contends that his conduct did not breach his employment contract or fiduciary duties, and even if it did, this did not amount to serious misconduct. Mr Coope submits that he is entitled to damages for wrongful termination. (b) LCM, by Notice of Contention, submits that the primary judge should have found that, in addition to a breach of his employment contract and breach of his fiduciary duties, Mr Coope also breached ss 181 and 182 of the Corporations Act. 2. In relation to the Wind Down Proposal (a) LCM, by Notice of Contention, submits that the primary judge erred in failing to find that Mr Coope engaged in serious misconduct by failing to disclose the offer of a 20 per cent interest in Vannin to the LCM Board. LCM argues that this constitutes a breach of Mr Coope's employment contract and his fiduciary duties. (b) LCM also contends that if this aspect of its Notice of Contention is upheld, it should be granted leave to cross-appeal and that LCM should in those circumstances be entitled to an order for all of its costs, on a party–party basis, of the trial. 3. In relation to Mr Coope's claim of wrongful termination: (a) LCM, by Notice of Contention, submits that if this Court finds that Mr Coope's employment contract was wrongfully terminated by LCM: (i) any determination of damages should be limited by s 200F(2) of the Corporations Act; and (ii) Mr Coope was obliged to mitigate his loss. By Notice of Motion, LCM seeks an order pursuant to s 75A of the Supreme Court Act 1970 (NSW) to lead fresh evidence relating to the mitigation issue. Issue 1 Held, per Payne JA (Gleeson and Leeming JJA agreeing): 1. Breach of cl 4.1(c): The primary judge was correct to find that Mr Coope's failure to disclose key features of the Employment Proposal to the LCM Board when making his Separation Proposal did amount to a breach of cl 4.1(c): at [74]–[100]. In particular: • A proper construction of clause 4.1(c) reveals that an obligation to disclose a matter arises if, ascertained objectively, there is a real likelihood of LCM suffering detriment in the future; the clause does not require a definite detriment be established: at [74]–[75]; • LCM was entitled to know the identity of the competitor, Vannin, and Mr Coope's relationship with that competitor before deciding whether, as Mr Coope asked, he should be released from his non-compete obligation. In the present case, both of these matters, objectively, gave rise to a real likelihood of LCM suffering detriment: at [81]; • Dr King's request that Mr Coope prepare a proposal to leave did not release Mr Coope from his contractual obligations: at [89]. 2. Breach of fiduciary duties: The primary judge was correct to find that Mr Coope had failed to avoid a conflict of interest and duty in breach of his fiduciary duties: at [137]. In particular: • As a director, Mr Coope's actions in proposing the Separation Proposal went beyond mere acts preparatory to leaving a current employer: at [114]–[115]; • By failing to seek the informed consent of LCM to the Employment Proposal, Mr Coope did not exercise utmost candour and honesty in submitting the Separation Proposal. Mr Coope did not disclose the critical facts known to him: at [123]. 3. Serious misconduct: Having correctly found the breach of contract and breach of fiduciary duty, the primary judge was correct to conclude that Mr Coope's conduct warranted the description "serious misconduct": at [143]. 4. Sections 181 and 182 of the Corporations Act: the operation of ss 181 and 182 in the present case is indistinguishable from the way in which the breach of fiduciary obligation case was put. In these circumstances, there is no utility in the Court making a finding in relation to s 181 or s 182 in relation to this ground of contention: at [158]–[159]. Issue 2 Held, per Payne JA (Gleeson and Leeming JJA agreeing): 1. Breach of cl 4.1(c): The primary judge correctly concluded that the Wind Down Proposal would have been material to the Board if the proposal had gone ahead. However, the primary judge should have found that Mr Coope was obliged under cl 4.1(c) to disclose the 20 per cent interest he had been offered to the LCM Board in the Board paper he circulated on 6 February, and certainly no later than the commencement of this agenda item at the Board meeting on 9 February 2015: at [178], [185]. Held, per Payne JA (Gleeson and Leeming JJA agreeing): 3. Fiduciary duty: In making the written Board report on 6 February 2015 and participating in the discussion on 9 February 2015, Mr Coope, was in a position where there was "a real or substantial possibility" of a conflict of interest and duty and accordingly owed "a heavy duty to show the righteousness of the transactions": at [209]. Pilmer v Duke Group (In Liquidation) [2001] HCA 31; 207 CLR 165; Hospital Products v United States Surgical Corporation (1984) 156 CLR 41; Maguire v Makaronis (1997) 188 CLR 449. 3. Serious misconduct: The conduct engaged in by Mr Coope, in failing to seek fully informed consent for his breach of his fiduciary duty, was antithetical to the mutual trust and confidence between LCM and Mr Coope and warranted the description "serious misconduct": at [231]. Issue 3 Held, per Payne JA (Gleeson and Leeming JJA agreeing): 1. Unless an exemption or limitation applies, it is a contravention of the Corporations Act for a corporation to give a benefit to a managerial or executive officer who has retired (or a spouse, relative or associate of that person) unless member approval (to the giving of the benefit) has been obtained: s 200B: at [241] 2. Where a payment by way of damages for breach of contract is made pursuant to order of a court the exemption in s 200F(1)(aa) applies: [247]. Judgment 1. GLEESON JA: I agree with Payne JA. I also agree with the additional observations of Leeming JA. 2. LEEMING JA: I have had the considerable advantage of reading the reasons of Payne JA in draft. I agree with the orders his Honour proposes, and with his Honour's reasons. I provide the following additional observations because I, like Payne JA, have reached a different view from the primary judge on one aspect of the hearing – concerning the "Wind Down Proposal". What follows presupposes familiarity with the facts. 3. I would uphold LCM's Notice of Contention concerning the Wind Down Proposal. The question turns upon the failure to disclose the proposal that Mr Coope would receive a 20 per cent equity interest in the new Vannin company which would take over the business of LCM. It was common ground that that had been proposed some 10 days earlier in Mr Craddock's email to Mr Coope. There was no dispute that in the five options raised in Mr Coope's document sent on the afternoon of Friday 6 February 2015 (which is reproduced at [166]) he expressed the view that each of options 1, 2, 3 and 5 were unavailable or probably not available. Contrary to Mr Coope's submissions on the appeal, on a fair reading, that document must be read as advocating consideration of option 4, "LCM wind down", even if that were only the least worst of the options. As much is corroborated by the fact that it was accompanied by a "Wind Down Financial Model". 4. Clause 4.1(c) only applies to "significant" matters. However, the significance of the possibility that Mr Coope own 20 per cent of the acquiring company is emphasised by the fact that, in respect of option 5, Mr Coope positively disclosed that he would "end up with 5% of Australian business". 5. Mr Coope also contended that he intended to tell the Board that it was proposed that he have a 20 per cent equity interest in the company acquiring LCM's interest, but did not have a chance because the discussion only lasted "a couple of minutes" and the proposal was rejected. The primary judge relied on Mr Coope's unchallenged evidence that it was Mr Coope's intention to disclose his interest prior to LCM deciding to enter into any agreement: at [35] and [164]. With respect, I do not agree. 6. There were opportunities for Mr Coope to satisfy his obligation of disclosure (a) by supplementary email over the weekend or at any time before 4.30pm on the Monday; (b) at the commencement of the directors' meeting (irrespective of whether the chairman invited Board members to declare any interests); (c) before or after Mr Coope presented the first matter of business at the meeting; or even (d) at the commencement of this item of the agenda. According to Mr Coope's evidence, it was he who introduced this topic, and he did so in an open-ended fashion, inviting Board members to make comments. The short point is that it is no answer to breach of an obligation to disclose to the Board to say that the Board's discussion was short. Nor is it an answer to say that there would be disclosure before the company made a decision. The purpose of an obligation to disclose is to ensure that the Board's deliberations, long or short, and irrespective of the course ultimately determined, are fully informed. I respectfully disagree that a person in the position of Mr Coope is entitled not to disclose to his fellow directors information material to a proposal he was advocating until such time as it appears that a majority was inclining toward that proposal. 7. PAYNE JA: These proceedings arose out of an employment dispute between the appellant and cross-respondent, Mr Patrick Mark Coope and LCM Litigation Fund Pty Ltd ("LCM"), the respondent and cross-appellant. Mr Coope was a joint managing director of LCM. 8. In the proceedings before the primary judge, the respondent sought a declaration that the appellant had engaged in serious misconduct on two separate occasions, each of which justified the termination of his employment. The appellant cross-claimed against the respondent, seeking damages for the alleged wrongful termination of his employment contract. 9. The primary judge rejected the complaint about serious misconduct on the first occasion but found that the appellant had engaged in serious misconduct on the second occasion and therefore had not been wrongfully terminated: LCM Litigation Fund Pty Ltd v Coope; Coope v LCM Litigation Fund Pty Ltd (No 2) [2015] NSWSC 992. 10. Mr Coope appeals against the finding of serious misconduct and, in the event he is successful, submits that he is entitled to be paid for the remaining period of his contract of employment which, he submits, was wrongfully terminated by LCM. 11. LCM, by Notice of Contention, seeks to support the finding of serious misconduct by relying on the events the subject of the allegation of serious misconduct on the first occasion. In addition, the Notice of Contention contains grounds that: 1. The primary judge erred in failing to find that the appellant also contravened ss 181 and 182 of the Corporations Act 2001 (Cth); and 2. So far as the appellant's cross-claim was concerned (which the primary judge addressed on the basis that he was incorrect about his serious misconduct finding), the primary judge erred: 1. in his construction of s 200F of the Corporations Act which, it was submitted, provided a statutory cap on the appellant's damages for breach of contract should any be awarded; and 2. in not permitting the respondent to raise a mitigation of damages submission in reply. 1. By Notice of Motion the respondent also seeks leave to adduce fresh evidence on appeal, relating to mitigation of damages in the event that Mr Coope is successful on appeal and is entitled to damages for wrongful termination. 2. In a separate judgment, the primary judge awarded the respondent two-thirds of the costs claimed by it: LCM Litigation Fund Pty Ltd v Coope; Coope v LCM Litigation Fund Pty Ltd (No 4) [2015] NSWSC 1158. This costs order is the subject of the cross-appeal filed by LCM. Background facts 1. There was little dispute in this case about matters of primary fact, although there was a residual controversy over the characterisation of some events and the correct inferences to be drawn from documentary material. 2. LCM, a litigation funder, was established in 1997 by Mr Coope and others. At all relevant times Mr Coope was both a director and employee of LCM. 3. The essential business of LCM was to source and obtain clients with causes of action likely to generate a significant return, to enter into funding arrangements with those clients, and to supervise the performance of tasks by legal practitioners who would be retained to conduct the cases on behalf of those clients in court. Upon success (by settlement or verdict) LCM would take a percentage of the return. 4. Following some months of negotiations (conducted by Mr Coope), LCM entered into a Deed of Agreement with Vannin Capital Limited dated 24 April 2013. The term "Vannin Joint Venture" was used by the parties and will be used in this judgment. The contractual terms of the arrangement between the parties involved some complexity. 5. Vannin Capital Limited, incorporated in Malta, was also referred to as "Vannin Malta" by the parties. Vannin Malta is a wholly owned subsidiary of Vannin Capital PCC PLC ("Vannin Capital"). Vannin Capital is a significant Jersey based litigation funder. The primary judge referred to Vannin Malta simply as "Vannin", unless it was necessary to distinguish between the two companies. It is convenient to continue with this approach to corporate identification in this judgment. 6. Under the Vannin Joint Venture, Vannin Capital and Vannin Malta each agreed not to compete with LCM for two years and LCM afforded Vannin Malta a first right of refusal to fund projects valued over $5 million for a two year period. The Vannin Joint Venture, if not renewed, would come to an end on 31 March 2015, although there would be a considerable run-off period involving completion of cases commenced under the Vannin Joint Venture. 7. LCM's business required a significant capital commitment. LCM funded litigation projects from its own cash reserves, capital raisings and the Vannin Joint Venture. In May–June 2014, LCM completed a capital raising from new investors, unrelated to the parties the subject of this litigation. By early 2015, LCM was in need of further capital as its internal cashflow forecasts predicted that LCM would run out of cash in the second quarter of 2015. 8. Mr Patrick Moloney was a non-executive director of LCM from mid-2003. Prior to December 2013, he also practised as a solicitor. On 1 December 2013, he and Mr Coope commenced as joint managing directors of LCM under identical employment contracts signed on about 11 February 2014 (the "Employment Contract"). 9. Relevantly, cl 19.9(b) of the Employment Contract gave LCM the right to terminate Mr Coope's employment if he was "guilty of any serious misconduct". Clause 4.1(c) required Mr Coope to "bring to the Company's and the Board's attention any significant matters of which you become aware that would be of detriment to the Company". 10. Clause 17 provided a restraint of trade, which prohibited Mr Coope from "directly or indirectly" engaging in any of the activities identified in cl 17.2 (extracted below) during his employment or within 12 months from the Termination Date, in Australia, without the express written consent of LCM: 17.2 Activity: (a) approach, solicit, canvass, induce or encourage (or attempt to do any of the foregoing) any Restricted Person to leave the employment or agency of the Company or of an Affiliate, or otherwise engage or employ a Restricted Person; (b) solicit, canvass, approach or accept any approach, or perform any work for (or attempt to do any of the foregoing), any Client with whom you (or a Person reporting to you) have had direct dealings, or for whom you (or a Person reporting to you) performed work in connection with your employment during the 2 years immediately prior to the Termination Date; (c) interfere with or disrupt or attempt to disrupt the relationship (whether contractual or otherwise) between the Company (or an Affiliate) and any Client, Restricted Person or supplier of the Company or of an Affiliate, with whom you (or a Person reporting to you) had dealings or performed work in connection with your employment during the 2 years immediately prior to the Termination Date; or (d) be engaged in any capacity, including as a director, partner, owner, principal, agent, contractor, consultant, representative, shareholder, financier, trustee or employee by any Client or in any Competing Business or Entity. 1. Clause 19.1 provided for payment on termination, "other than where your employment is terminated for…serious misconduct". The clause provided that termination would be effected by LCM: (a) making a payment to you equivalent to your total remuneration and benefits for the unexpired Term where the unexpired Term exceeds twelve (12) months; or (b) if the unexpired period of the Term is less than twelve (12) months, by giving you twelve (12) months' written notice or making a payment in lieu of notice. 1. Upon their commencement as joint managing directors, Mr Coope and Mr Moloney each received a 20 per cent share of LCM's entitlements, via the LCM Trust, from the Vannin Joint Venture. 2. From 15 February 2014, and at all relevant times thereafter, Dr David King, as director and non-executive chairman, Mr Coope and Mr Moloney, as joint managing directors, comprised the Board of LCM. 3. The Vannin Joint Venture was due to expire on 31 March 2015. In about April 2014, Mr Coope, on behalf of LCM, entered into negotiations with Mr Daniel Craddock, the executive chairman and majority shareholder of Vannin Capital, about a number of commercial opportunities for Vannin to work with LCM in the future. However, by July 2014 it became clear that these negotiations had been unsuccessful. 4. In early 2015, Mr Coope, on behalf of LCM, recommenced negotiations with Mr Craddock about a possible merger, or other commercial arrangement between LCM and Vannin. These negotiations, and their immediate aftermath, comprise the principal events the subject of this appeal. The primary judgment 1. LCM's allegations of serious misconduct against Mr Coope related to negotiations between Mr Coope and Mr Craddock described in the evidence as: 1. the "Vannin Proposal" or "Wind Down Proposal" which Mr Coope communicated to the LCM Board on 6 and 9 February 2015 (which I will describe in this judgment as the "Wind Down Proposal"); and 2. the "Separation Proposal" which Mr Coope made to the LCM Board on 12 February 2015 (and followed up by Mr Coope with the LCM Board on 17,19 and 24 February 2015) and which had not been determined as at the date of Mr Coope's suspension from LCM, 26 February 2015. 1. The primary judge found that there was no serious misconduct on the part of Mr Coope established in relation to the Wind Down Proposal, but that serious misconduct had been proven in relation to the Separation Proposal. Relevant background–The LCM/Vannin negotiations in early to mid-2014 1. The primary judge made the following findings about the 2014 negotiations, which were not challenged on the appeal: 1. Mr Coope was appointed by LCM to negotiate on its behalf with Vannin. He and Mr Craddock met between May and July 2014; 2. The topics for negotiation between Vannin and LCM were: 1. a possible merger between Vannin and LCM; or 2. an LCM "wind down", where LCM would stop trading, Vannin would acquire all issued capital of LCM and, in return, LCM's shareholders would acquire shares in Vannin; 1. Mr Coope was not pursuing his personal interests independent of the interests of LCM in the 2014 negotiations. The primary judge found that during this period: the only discussions that Mr Coope had had with Mr Craddock to this point concerning his personal position were in the context of some negotiated ongoing commercial relationship between Vannin and LCM. The Wind Down Proposal 1. The Vannin Joint Venture was to come to an end on 31 March 2015. In November 2014, Mr Coope and Mr Craddock exchanged a number of emails for the purpose of organising a meeting between themselves and Dr King in London in January 2015 to re-visit the topic of a possible commercial arrangement between Vannin and LCM after the expiry of the Vannin Joint Venture. 2. On 21 January 2015, Mr Coope, Dr King, Mr Craddock and a Vannin employee attended a lunch meeting in London. That evening Mr Coope and Mr Craddock met and had dinner alone. 3. In correspondence exchanged ahead of these meetings, Mr Craddock asked Mr Coope whether there was anything that should not be discussed at the lunch (i.e. while Dr King was in attendance). Mr Coope's response was that: "Anything related to LCM can be discussed at lunch. Anything personal is best left for dinner". 4. The primary judge found that Mr Coope and Mr Craddock did not discuss the possibility of Mr Coope becoming employed by Vannin, independent of a commercial arrangement being reached between LCM and Vannin, ahead of their meeting in London. As to the dinner meeting, the primary judge concluded that Mr Coope and Mr Craddock had discussed commercial arrangements between LCM and Vannin, and what possible benefits Mr Coope could negotiate for himself if a commercial agreement between LCM and Vannin eventuated. 5. On 23 January 2015, Dr King and Mr Coope travelled to Amsterdam together to meet a potential employee. While there they had a conversation about LCM and Vannin wherein Mr Coope told Dr King that he had discussed with Mr Craddock whether he could negotiate for himself an arrangement with Vannin if a commercial agreement between LCM and Vannin eventuated. Mr Coope told Dr King, relevantly: I had a good discussion with Craddock. It seems like he is going to be more sensible this time. I think he is going to struggle with the cornerstone investor option because of tax. In any event he will want more than fifty percent (50%). The merger isn't going to fly because he still thinks Vannin is worth far more than LCM. I think he will come back with some variation of last year's proposed transactions. We had a discussion about my personal arrangements if there is a deal. Both of us are now more flexible and pragmatic. He has told me that he will give me the same deal I have now with LCM and I have told him I can live with that. (emphasis added) 1. The primary judge found that Mr Coope's position at that time was that any personal commercial arrangement with Vannin was "contingent on there being a deal" with LCM. 2. On 25 January 2015, Mr Craddock and Mr Coope communicated via email about the Wind Down Proposal (the terms of which were outlined in a subsequent email, see [39] below). In particular, Mr Craddock asked Mr Coope if he would be "wasting my time" by working on the proposal. Mr Coope responded that he was in favour, but said that he did not "know whether it will be acceptable to the other shareholders of LCM". His Honour concluded from this evidence that the proposal was not a private arrangement, rather one to be offered by Vannin to LCM and its shareholders. 3. On 27 January 2015, Mr Craddock sent Mr Coope an email that was marked "FYEO" [for your eyes only], which set out, relevantly, the terms of the Wind Down Proposal: 1. The Vannin Joint Venture would come to an end on 31 March 2015; 2. LCM would "sell" its business to Vannin Malta; 3. LCM would be renamed as "ABC"; 4. All LCM costs and staff would be transferred to Vannin Malta; 5. "ABC" would be left with its ongoing interest in all of the outstanding Vannin Joint Venture litigation projects, and with its existing non-Vannin Joint Venture cases, but these cases would be conducted by Vannin Malta "effectively free of charge" to ABC. There would be no ongoing costs or commitments to Vannin and there would be no further requirements for further capital raising or dilution; 6. Vannin Malta would be owned 80 per cent by a Vannin Group company and 20 per cent by Mr Coope; 7. Vannin Malta would be operated as a "standalone entity". 1. The 27 January email also contained an alternative to the Wind Down Proposal to create a combined business 75 per cent owned by Vannin Malta and 25 per cent owned by LCM. 2. On 6 February 2015, Mr Coope sent Dr King and Mr Moloney an agenda for a Board meeting scheduled to be held on 9 February 2015, which included as an agenda item: "6. Vannin proposals". Shortly afterwards he circulated a document to the same recipients headed "[t]ransaction options discussion with Vannin and present position" (the "Transaction Options document"). This document outlined five potential commercial arrangements between LCM and Vannin (including the Wind Down Proposal) and incorporated Mr Coope's comments on those arrangements. Mr Coope commented on the Wind Down Proposal that its terms were more favourable to LCM than the discussions which had occurred in early to mid-2014. 3. Significantly, the Transaction Options document circulated by Mr Coope to the other members of the LCM Board did not refer to the proposal that Mr Coope would acquire a 20 per cent equity stake in Vannin Malta as part of the Wind Down Proposal (as was offered by Mr Craddock in his email of 27 January 2015). 4. Mr Coope gave evidence that at the 9 February 2015 meeting he suggested that the Wind Down Proposal was the preferable option currently available to LCM from Vannin, but that "LCM shareholders would do better if they proceed with the proposed capital raising…". Proceeding with a capital raising would not necessarily involve any ongoing commercial relationship between Vannin and LCM, save for the conduct of the "run-off" of cases under the Vannin Joint Venture. 5. The primary judge found that at the Board meeting there was a short and cursory discussion about the Transaction Options document which moved quickly onto other items on the agenda. The LCM Board was not then interested in the Wind Down Proposal and did not consider it in any detail. 6. The primary judge found that if the LCM Board decided to pursue negotiations with Vannin in relation to the Wind Down Proposal it was Mr Coope's intention to disclose to the Board "any deal I could negotiate with [Mr] Craddock in respect of my future employment arrangements with Vannin". 7. The primary judge concluded that where the Wind Down Proposal was quickly and unanimously disposed of at the 9 February meeting, Mr Coope was not obliged to inform the Board of his personal interest in the Wind Down Proposal under the Employment Contract, ss 181 or 182 of the Corporations Act or by his fiduciary duties to LCM. 8. His Honour also concluded that the obligation of disclosure in cl 4.1(c) of the Employment Contract was not enlivened by reason of the LCM Board's lack of interest in the Wind Down Proposal: Any potential detriment to LCM which might otherwise have arisen by reason of Mr Coope having a 20 per cent shareholding in Vannin Malta upon implementation of the Vannin or Wind Down Proposal ceased to be of any moment in light of the board's decisive, and unanimous rejection of that proposal. 1. The primary judge accepted Mr Coope's evidence that he would have disclosed the personal benefits open to him under the Wind Down Proposal if the LCM Board had been interested in pursuing it. The Separation Proposal of 12 February 2015 1. It is clear on the evidence that by 9 February the relationship between Mr Coope and Mr Moloney was strained. At the 9 February meeting, Mr Coope voiced a concern that there would be problems in LCM conducting the proposed capital raising due to the conflict between himself and Mr Moloney. 2. At the conclusion of the Board meeting Dr King asked both Mr Coope and Mr Moloney to submit a proposal to the LCM Board on the terms on which each would be prepared to leave LCM. 3. The primary judge found that following this invitation to submit a separation proposal by Dr King, Mr Coope considered, for the first time, seeking employment with Vannin outside the context of a continuing commercial arrangement between Vannin and LCM. 4. Shortly after the 9 February meeting, Mr Coope spoke to Mr Craddock to discuss potential employment terms. Mr Coope needed to get LCM's approval before commencing employment with Vannin. In particular, he needed to be released from the restraint in cl 17 of the Employment Contract (see [23] above). 5. On 12 February 2015, Mr Coope sent Mr Craddock an employment proposal (the "Employment Proposal"), the relevant terms of which were that: 1. Vannin Malta would commence operations in Australia as a litigation funder in competition with LCM on 1 April 2015; 2. Mr Coope would become managing director of Vannin Malta in Australia and Asia commencing 1 April 2015 and bring his team from LCM or be entitled to recruit a new team; 3. Mr Coope would obtain a 20 per cent shareholding in Vannin Malta; and 4. Mr Coope would continue managing all existing Vannin Joint Venture projects, subject to LCM's agreement. 1. Mr Craddock subsequently (and no later than 17 February 2015) agreed, in principle, to the proposal. 2. On the same day as making the Employment Proposal, Mr Coope sent Dr King and Mr Moloney his Separation Proposal, the terms of which were, in essence that Mr Coope would: 1. be released from all obligations under the Employment Contract (and in particular the non-compete obligations) with effect from 31 March 2015 (the day before his proposed start-up date with Vannin); 2. resign as a director of LCM and related companies; 3. have an unrestricted right to use and retain possession of certain confidential information of LCM described as its "contacts register", "standard documents", "completed projects data", "all notebooks", "all Vannin JV transaction documents" and "all Fund 2 transaction documents and reports to investors"; 4. be entitled to retain "current and old laptops, all other office equipment, stationery and books"; 5. continue to manage all Vannin Joint Venture run-off projects after 31 March 2015 at no cost to LCM, with LCM retaining all "fee entitlements"; and 6. be free to employ two named prospective employees of LCM. LCM would: 1. advise all employees "that their probationary periods in their employment contracts are satisfied"; and 2. pay Mr Coope a termination payment of 12 months' salary, rather than what was "otherwise payable" under the Employment Contract. 1. The Separation Proposal also sought that Mr Coope's LCM shares be swapped for the equivalent interest in the LCM Trust, LCM should acquire Mr Coope's shares in a related company "for the amount of loan funds provided by Coope", and that all of Mr Coope's statutory entitlements be paid out. 2. Mr Coope considered it "obvious" from the terms of his Separation Proposal that he would be competing with LCM after resigning as a director. Mr Moloney and Dr King agreed that they thought, upon reading Mr Coope's Separation Proposal, that he would be free to compete with LCM from 1 April 2015. 3. The primary judge found that the other members of the LCM Board did not understand from the Separation Proposal that Mr Coope planned to become the head of a direct competitor in Australia, which competitor would be funded by Vannin Capital and further, that: In my opinion, what might have been "obvious" from Mr Coope's Separation Proposal is beside the point. It was not for Mr Coope's fellow directors to deduce from Mr Coope's Separation Proposal its full implications, absent simultaneous disclosure by Mr Coope of the Employment Proposal. 1. On 16 and 17 February 2015, Mr Coope exchanged e-mails with Mr Moloney about details of the Separation Proposal. On 17 February 2015, Mr Craddock responded favourably (in writing) to the Employment Proposal. 2. On 19 and 24 February 2015, Mr Coope sought from Dr King a response to the Separation Proposal, and asserted that acceptance of it was beneficial to LCM and its shareholders. 3. The primary judge found that the terms of the Employment Proposal were very likely to cause detriment to LCM and this was a "significant matter" such as to enliven the obligation of disclosure in cl 4.1(c). His Honour found that Mr Coope's failure to inform the Board about the Employment Proposal constituted a breach of contract. 4. The primary judge also found that, as a fiduciary, Mr Coope had a duty not to put his own interests in conflict with the company's interests. While accepting that Mr Coope owed no positive fiduciary duty to disclose the Employment Proposal, the primary judge found that in Mr Coope's circumstances the only way to avoid the conflict of interest was to seek the fully informed consent of the LCM Board to the Employment Proposal. 5. The primary judge did not make a finding regarding breach of ss 181 and 182 of the Corporations Act as the matter "was barely developed" by Senior Counsel then appearing for LCM. 6. His Honour concluded that by not disclosing the terms of the Employment Proposal with his Separation Proposal Mr Coope had engaged in serious misconduct that was "repugnant to the relationship of employee and employer", citing Rankin v Marine Power International Pty Ltd [2001] VSC 150 at [250] per Gillard J. 7. The primary judge emphasised that even though Mr Coope had been invited to make the Separation Proposal to LCM, he remained a co-managing director of LCM at the time and was still bound by his director's duties (both under the Corporations Act and his fiduciary duties) and his duties under the Employment Contract: in order to eschew the conflict of interest in which Mr Coope found himself, it was necessary that he obtain LCM's consent not only to the terms of his Separation Proposal, but also to the undisclosed circumstance that, the very next day after he proposed to leave LCM, he proposed to head up its current major funder and joint venturer as a competitor. He could only do that by disclosing to the LCM board that, simultaneously with making the Separation Proposal to LCM, he had made the Employment Proposal to Mr Craddock. 1. Subsequent to delivery of his Honour's first judgment, an error in the transcript of the proceedings was identified. The primary judge addressed this error in LCM Litigation Fund Pty Ltd v Coope; Coope v LCM Litigation Fund Pty Ltd (No 3) [2015] NSWSC 1156. The transcript had recorded Mr Coope as saying "I agree with that" in answer to a question about whether he understood that his employment with Vannin Malta would be disastrous for LCM. When corrected he was found to have said, "I don't agree with that." The primary judge had referred to that question and answer in his original judgment, however, upon being informed of the error, concluded that the correction of the error did not cause him to change his finding of serious misconduct. The original judgment was republished with an addendum to this effect: LCM Litigation Fund Pty Ltd v Coope; Coope v LCM Litigation Fund Pty Ltd (No 2) [2015] NSWSC 992. The issues on this appeal 1. The first group of issues on this appeal relates to the finding of the primary judge that the appellant was engaged in serious misconduct in relation to the Separation Proposal: 1. Mr Coope contends that the trial judge erred in finding that a failure to disclose the Employment Proposal was a breach of cl 4.1(c) and, in the absence of informed consent, a breach of his fiduciary duties. Mr Coope also contends that even if his conduct breached cl 4.1(c) and/or his fiduciary duties, this did not constitute serious misconduct within the meaning of the Employment Contract. Accordingly, Mr Coope submits that his employment was wrongfully terminated and he is entitled to damages for breach of the Employment Contract by LCM; 2. LCM, by Notice of Contention, submits that the primary judge should also have found, in addition to a breach of cl 4.1(c) and breach of his fiduciary duties, that Mr Coope contravened ss 181 and 182 of the Corporations Act in making the Separation Proposal to LCM without also disclosing the Employment Proposal. 1. The second group of issues on this appeal relates to Mr Coope's failure to disclose the offer by Mr Craddock to him of a 20 per cent equity stake in Vannin Malta as part of the Wind Down Proposal which was otherwise conveyed to LCM in the Transaction Options document on 6 February 2015 or at the LCM Board meeting on 9 February 2015: 1. LCM, by Notice of Contention, submits that the primary judge erred in failing to find that Mr Coope engaged in serious misconduct by the failure to disclose the offer of a 20 per cent equity stake when passing on the Wind Down Proposal in the Transaction Options document on 6 February 2015 or at the LCM Board meeting on 9 February 2015. It is submitted, in the circumstances of the communication of the Wind Down Proposal which was otherwise made, that this constituted a breach of cl 4.1(c) and a breach of Mr Coope's fiduciary duties; 2. By its draft Notice of Cross-Appeal, LCM submits that if this aspect of its Notice of Contention is upheld, it should be granted leave to cross-appeal and that LCM should in those circumstances be entitled to an order for all of its costs, on a party–party basis, of the trial. 1. The third group of issues on this appeal concerns the remaining grounds in LCM's Notice of Contention, which arise on the hypothesis that Mr Coope's appeal succeeds and LCM's Notice of Contention otherwise fails and this Court is required to assess the damages payable to Mr Coope for breach of the Employment Contract by LCM. If this Court finds that Mr Coope's Employment Contract was wrongfully terminated LCM contends that: 1. any determination of damages should be limited by s 200F(2) of the Corporations Act; and 2. Mr Coope was obliged to mitigate his loss. By Notice of Motion, LCM seeks an order pursuant to s 75A of the Supreme Court Act 1970 (NSW) to lead fresh evidence relating to the mitigation issue. The first group of issues –The Separation Proposal 1. Before turning to the arguments advanced on the appeal, it is necessary to set out in a little detail the Employment Proposal Mr Coope made to Vannin on 13 February 2015. That proposal was as follows: Coope proposal for employment by Vannin Malta ("VM") Key issues 20% shareholding in VM Salary of $450K per annum plus superannuation contributions of $30K per annum 12 month notice period from each party Free to compete in Australia if employment ceases Bring existing team with me or, if that isn't possible, a replacement team to be recruited Keep managing all existing JV projects (LCM to agree) What happens on a Vannin IPO? Issues to discuss Does VM have any other assets or liabilities What are the operating costs of VM What tax is payable by VM on its profits How will VM be funded by VC and at what costs What happens if VC doesn't provide VM with required funding Will there be any FX risks in VM and if so, how to be dealt with How will money be paid out of VM as it successfully resolves projects Internal management of VM Rights of access to company records Audit Drag along and tag along rights Restrictions on issues of shares or other securities that convert into shares Pre-emptive rights on transfers Restrictions on its activities to litigation funding in Australia and Asia Exit rights if Craddock sells out of VC or is no longer the majority shareholder What happens to shareholding if employment ends Will VM meet all legal costs of documenting arrangements My shareholding in ATE insurance broking business in Australia Detail Commencement date of 1 April 2015 (nothing to be read into this!) Managing Director of Australia and Asia VM undertakes all Australian and Asian projects of Vannin Capital ("VC") and VC agrees not to compete in those jurisdictions with VM 6 weeks paid holidays a year (current LCM arrangement) Same travel policy as for LCM Pay for mobile phone (LCM does) (emphasis added) Breach of clause 4.1(c) of the Employment Contract 1. There was no dispute on the appeal about the correct legal principles which apply in addressing the question of construction of the Employment Contract. The obligation in cl 4.1(c) of the Employment Contract must be construed by reference to the objects of the Employment Contract and in a businesslike way. A construction must be given to the clause so as to avoid commercial nonsense. 2. Clause 4.1(c) of the Employment Contract provided: During your employment, you must: (c) bring to the Company's and the Board's attention any significant matters of which you become aware that would be of detriment to the Company 1. It was submitted by the appellant that the primary judge erred in concluding that the obligation of disclosure in cl 4.1(c) of the Employment Contract was enlivened in the present circumstances. It was submitted that, for five reasons, the Employment Proposal did not need to be disclosed when making the Separation Proposal to the Board of LCM: 1. First, the primary judge erred in finding that the Employment Proposal was a significant matter that "would be of detriment to the company" within the meaning of cl 4.1(c). Clause 4.1(c), it was submitted, did not apply because the terms "would be of detriment" required that a certain or definite detriment must be established, and there was no evidence of a certain or definite detriment before the primary judge. It was submitted that Mr Coope's intention to compete with LCM was or should have been obvious from the terms of the Separation Proposal and that no additional detriment, beyond the fact of that competition, had been established; 2. Second, the primary judge erred in finding that cl 4.1(c) was enlivened in circumstances where Dr King had asked Mr Coope to consider the terms on which he would leave; the necessary implication being, it was submitted, that Mr Coope was free to act solely in his own interests in putting forward the Separation Proposal; 3. Third, it was submitted that the primary judge erred in that there could be no detriment to LCM as the Separation Proposal was incomplete and non-binding; it could only go ahead if LCM agreed; 4. Fourth, it was submitted that there could be no detriment occasioned to LCM (and therefore no breach) because LCM had "implicitly rejected" the Separation Proposal; 5. Fifth, it was submitted that the clause was not enlivened "in circumstances where the Board is already aware of the matter". 1. As to the first submission, that the terms "would be of detriment" required that a certain or definite detriment be established, it seems to me that on its correct construction the clause did not require proof of a certain or definite detriment to be engaged. 2. In my view, the primary judge was correct to conclude that it was sufficient to engage the obligation of disclosure if, ascertained objectively, there was a real likelihood of LCM suffering detriment in the future by reason of the matters identified in the Employment Proposal. 3. Clause 4.1(c) of the Employment Contract does not require proof of certain or definite detriment before there is an obligation of disclosure. The clause is future looking. The clause obliges an employee to bring to the attention of the LCM Board "significant" matters of which the employee becomes aware which would be, in the sense of would now or in the future be, of detriment to LCM. That future looking aspect of the obligation is important. It requires an employee, in respect of significant matters (that is, matters which are now or are likely in the future to be important to LCM), to bring to the Board's attention those matters which would be of detriment (that is, would now or would likely in the future result in LCM suffering detriment). 4. It would make no commercial sense of the obligation in the Employment Contract to construe it as limited only to those occasions where a certain or definite detriment, after the event, was proven. So to conclude would mean that an obligation of disclosure would only arise for an employee in respect of significant matters when, after the event, LCM could prove that it had suffered detriment by reason of the non-disclosure. That the parties should be understood as having bargained to oblige an employee to disclose in such limited circumstances, which can only be determined after the event, seems to me a farfetched proposition. 5. A critical element in the appellant's case about cl 4.1(c) of the Employment Contract was a submission concerning "additional" detriment – that LCM would not suffer any additional detriment by Mr Coope becoming the managing director of Vannin Malta, as opposed to any other competitor. 6. A key step in this argument is that it was obvious and known to the other directors of LCM that, if released from his obligations under cl 17 of the Employment Contract, Mr Coope would compete in some way with LCM. Accordingly, so the argument goes, there was nothing further to disclose to discharge his contractual obligation. I do not accept that this is so. 7. In my view, there is no warrant for importing an obligation to prove additional detriment to engage the obligation of disclosure in cl 4.1(c) of the Employment Contract. 8. Given the significance of the matter, LCM was entitled to know the identity of the competitor, Vannin Malta, and Mr Coope's relationship with that competitor before deciding whether, as Mr Coope asked, he should be released from his non-compete obligation. In the present case, both of these matters, objectively, gave rise to a real likelihood of LCM suffering detriment. 9. This is because Vannin was no ordinary potential competitor of LCM's in the Australian and Asian litigation funding markets. Vannin was an important counter-party to contracts with LCM and a major funder of LCM's existing business. More than any other potential competitor entity, Vannin had an intimate knowledge of LCM's business and its relative strengths and weaknesses, including its capital constraints. Vannin had engaged in an exercise of valuing LCM for the purposes of a possible takeover or equity investment and had had access, via Mr Coope in the course of the 2014 and 2015 negotiations, to intimate details of LCM's strategic planning. Whatever happened regarding a possible further Vannin investment in LCM, LCM and Vannin would remain locked in a relationship after the expiry of the Vannin Joint Venture, in dealing with the run-off of the cases managed pursuant to that arrangement. 10. By reason of the Employment Proposal, which Mr Craddock had accepted in principle by telephone on 11 February and in writing no later than 17 February 2015, Mr Coope knew that a Vannin entity was entering the Australian litigation funding market and that, if the Separation Proposal was accepted, he – the current joint managing director of LCM – would commence working the very next day for that Vannin entity. 11. The Separation Proposal and the Employment Proposal, when viewed side by side, reveal that Mr Coope would be able to commence his employment with Vannin Malta with no restraint of trade, no restrictions on client base and no time gap. These matters, in circumstances where Vannin had been LCM's principal funding source, where Vannin had an intimate knowledge of LCM's business (including that LCM would likely run out of cash in the second quarter of 2015) and where Vannin and LCM were locked in a relationship concerning the remaining cases in the run-off from the Vannin Joint Venture, were obviously likely to cause LCM detriment. 12. It is one thing for LCM to be asked to permit Mr Coope to take another position with an existing competitor in the litigation funding industry; it is a completely different thing for the Board of LCM to consider whether to release Mr Coope to join an entity which had been a principal funder of LCM, and which they knew had access to a ready source of capital. The thing that was constraining LCM's business was the lack of capital. 13. These were matters which, in the circumstances observed objectively, would be of detriment to LCM and needed to be disclosed by Mr Coope under cl 4.1(c) when making the Separation Proposal. 14. As to the second submission, that Mr Coope was authorised to act in his own interests by Dr King's act of asking him to prepare the Separation Proposal and thereby released from his obligation of disclosure in cl 4.1(c) of the Employment Contract, I do not accept that that is so. 15. There was nothing contained in Dr King's request for Mr Coope to make a Separation Proposal which impliedly or expressly released him from his obligation of disclosure under cl 4.1(c) of the Employment Contract. This is especially so in circumstances where Mr Coope was seeking, by the Separation Proposal, to be released from the non-compete obligations in cl 17 of the Employment Contract. 16. At the time of making the Separation Proposal, Mr Coope remained the joint managing director of LCM. It was not suggested that Dr King's invitation to submit a proposal was a breach of the Employment Contract, much less that it was a repudiation of the Employment Contract by the employer or amounted to a constructive dismissal. Further, Mr Coope's evidence was that at the time he made the Separation Proposal he was nonetheless intending to continue to be employed by LCM. This also tends against acceptance of the submission that he was expressly or impliedly released from his contractual obligations in cl 4.1(c) by Dr King's suggestion that he submit a Separation Proposal. 17. LCM could, of course, decide to accept or reject the Separation Proposal. In making that decision, LCM was entitled to have disclosed to them matters known to Mr Coope which would be of detriment to LCM should they accept (or reject) the Separation Proposal. 18. Approaching the issue by reference to the objects of the Employment Contract and in a businesslike way, an objective observer would conclude that LCM would approach the Separation Proposal in a very different manner if they knew that the day after they had agreed to it, Mr Coope was to commence employment as managing director of a new competitor, funded by LCM's former joint venture partner with whom it had an ongoing relationship in the conduct of cases under the Vannin Joint Venture. There was no express release of the obligation under cl 4.1(c) by Dr King's suggestion and in my view, whatever modification of the terms of employment may be required to accommodate that request, such as an implied permission to use work hours to construct the Separation Proposal, there is no reason to imply a release of a fundamental obligation to disclose significant matters known to Mr Coope which would be of detriment to LCM. 19. As to the third submission, that there could be no breach of the obligation in the Employment Contract as the Separation Proposal was incomplete and non-binding, this submission should not be accepted. The submission does not address the real issue of the content of the obligation contained in cl 4.1(c) of the Employment Contract. 20. Any proposal that a company is considering is "non-binding" until a decision is made by the Board to progress that proposal and a legally enforceable agreement made or decision reached. To so conclude says nothing about whether the matters known to Mr Coope and contained in the Employment Proposal (and Mr Craddock's response) would be of detriment to LCM in the future. 21. The critical question is whether Mr Coope had information (as a result of the Employment Proposal and his written and oral discussions with Mr Craddock) pertaining to matters which was highly material to LCM – in the sense of being likely to cause LCM detriment – in making its decision whether to accept or reject the Separation Proposal. 22. Mr Coope was aware of significant matters (as a result of the Employment Proposal) which were highly material to LCM in the sense of those matters being likely to cause LCM detriment and, accordingly, Mr Coope was bound to disclose those matters in compliance with his obligation under cl 4.1(c) of the Employment Contract. It is not an answer to say that the Separation Proposal was "theoretical". 23. As to the fourth submission, that there could be no detriment occasioned to LCM (and therefore no breach) because LCM had "implicitly rejected" the Separation Proposal, this is merely an amplification of the first submission which I have rejected. 24. It is not correct to say it does not matter that there was no disclosure because the proposal was impliedly rejected anyway. Mr Coope was a founder of LCM with special knowledge of the company. The proposal was under consideration until Mr Moloney discovered the Employment Proposal when searching Mr Coope's computer. 25. Even assuming that the Separation Proposal had been impliedly rejected, LCM was entitled to be told by Mr Coope that Vannin planned to set up operations in Australia as soon as the Vannin Joint Venture came to an end and, for this purpose, was prepared to offer Mr Coope the inducements contained in the Employment Proposal as discussed with Mr Craddock. 26. LCM was about to be placed in a position where it needed to compete with Vannin, a former joint venture counter-party with intimate knowledge of LCM's business and a funder with considerable investment power. This was obviously a matter likely to cause LCM detriment. Mr Coope knew details of that proposed competition and the lengths Vannin was prepared to go to secure Mr Coope's services. Clause 4.1(c) of the Employment Contract obliged him to disclose those matters to LCM, even on the assumption that LCM had impliedly rejected his Separation Proposal. 27. As to the fifth submission, that the clause was "not enlivened where the Board is already aware of the matter," again I disagree. The submission involves ascribing knowledge to the Board, comprised of individuals not all of whom have the same level of knowledge. It was not submitted that the fact that Mr Coope, a Board member, was aware of the matter meant that cl 4.1(c) did not apply, but the submission did not descend into whether it was necessary for both of the other Board members to be aware before the obligation was "not enlivened". More directly, I see no sound reason to construe the obligation as subject to an exception when (perhaps entirely capriciously and perhaps unknown to Mr Coope) one or more other Board members are already aware of the matter. Conclusion re breach of Employment Contract 1. For these reasons, I consider the primary judge was correct in finding that the obligation in cl 4.1(c) was breached by Mr Coope's failure to disclose the Employment Proposal to the Board of LCM at the time of making the Separation Proposal. Further, the obligation was ongoing and whilst employed, he remained obliged to disclose the Employment Proposal. 2. Ground 1 of the Notice of Appeal should be dismissed. The primary judge's finding of a breach of fiduciary duty 1. There was only a limited dispute on the appeal about whether the primary judge had correctly identified the correct legal principles in addressing the question of a breach of fiduciary duty. 2. The primary judge found that: …there was also a conflict between Mr Coope's interest in negotiating a platform from which he could compete with LCM on the one hand, and his continuing duties, as joint managing director of LCM, to promote LCM's interests on the other. As a director of LCM, Mr Coope was in a fiduciary relationship with LCM and subject to a duty not to place himself in a position where his personal interest and duty to LCM conflicted. The obligations imposed on a fiduciary are proscriptive (for example Breen v Williams [1996] HCA 57; 186 CLR 71 per Gaudron and McHugh JJ at 113), and do not include a positive obligation of disclosure. However, disclosure may be the only way to avoid breach, by obtaining the informed consent of the party (here LCM) to whom the duty is owed (for example Black Magic Design Pty Ltd v Overlise [2011] FCAFC 24 at [105] - [108] per Besanko J)… Here, my opinion is that in order to eschew the conflict of interest in which Mr Coope found himself, it was necessary that he obtain LCM's consent not only to the terms of his separation proposal, but also to the undisclosed circumstances that, the very next day he proposed to leave LCM, he proposed to head up its current major funder and joint-venture as a competitor. He can only do that by disclosing to the LCM board that, simultaneously with making the separation proposal to LCM, he had made the employment proposal to Mr Craddock. 1. A fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is a conflict, or a real or substantial possibility of a conflict, between the personal interest of the fiduciary and those to whom the duty is owed: Pilmer v Duke Group (In Liquidation) [2001] HCA 31; 207 CLR 165 at [78] per McHugh, Gummow, Hayne and Callinan JJ. A conflict arises if there is a real and sensible possibility that the personal interests of the fiduciary divide the loyalty of the fiduciary with the result that he or she could not properly discharge their duties to the beneficiary: Maguire v Makaronis (1997) 188 CLR 449 at 465. 2. Not all personal interests come within the conflict rule. The interest must give rise to a conflict or a real or substantial possibility of conflict: Hospital Products v United States Surgical Corporation (1984) 156 CLR 41 at 103 per Mason J. An expectation or hope of future advantage may be sufficient to constitute a relevant interest: Hospital Products at 104 per Mason J. 3. The object of the conflict rule is to prevent a person who has undertaken to act for someone else from allowing any personal interest to sway or influence that person away from the proper performance of his or her duty to the principal: Chan v Zacharia (1984) 154 CLR 178 at 198 and 199 per Deane J. The concept of fiduciary duty cannot be applied unrealistically or in an uncommercial way, particularly to a company director: Chan v Zacharia at 205 per Deane J. 4. The content of "duty" refers to the function or responsibility the fiduciary has assumed or undertaken to perform for or on behalf of the beneficiary. What that function or responsibility is, is a question of fact: Howard v Commissioner of Taxation [2014] HCA 21; 253 CLR 83 at [110] per Gageler J. 5. The test for the existence of a conflict or a real and substantial possibility of a conflict is objective. It is to be determined from the standpoint of the objective observer with knowledge of all relevant facts and circumstances: Boardman v Phipps [1967] 2 AC 46 at 124. 6. A breach of fiduciary duty is excused "by way of defence" if the fiduciary shows that the beneficiary has given informed consent to the breach. What is required to demonstrate fully informed consent is a question of fact in all the circumstances and there is no precise formula which will determine in all cases that fully informed consent has been given: Maguire v Makaronis at 466. 7. As to the content of the fiduciary obligation when seeking fully informed consent, the High Court said in Maguire v Makaronis at 465: there is a long-standing principle whereby those in a fiduciary position who enter into transactions with those to whom they owe fiduciary duties labour under a heavy duty to show the righteousness of the transactions. 1. It was submitted on behalf of the appellant that the primary judge erred in concluding that, in the circumstances of making the Separation Proposal, Mr Coope's fiduciary duties to LCM obliged him to seek the informed consent of LCM to his conflict of interest and duty reflected in the Employment Proposal and his written and oral communications with Mr Craddock about that proposal. This was for the following reasons: 1. First, Mr Coope did not have a duty to disclose the Employment Proposal; he, permissibly, took "preparatory steps to compete against his or her current employer". In this regard it was submitted that Blackmagic Design Pty Ltd v Overliese [2011] FCAFC 24; 191 FCR 1 and Manildra Laboratories v Campbell [2009] NSWSC 987 demonstrated that an employee can compete with an employer after his or her employment has ended and can prepare to compete while still employed. It was further submitted that Balston Ltd v Headline Filters Ltd [1990] FSR 385 and its application in Hodgson v Amcor; Amcor v Barnes [2012] VSC 94 and GSK Australia Pty Ltd v Ritchie [2008] VSC 164 led to the conclusion that here there was no breach of fiduciary duty as Mr Coope had merely taken preparatory steps to compete with his current employer. In essence, the LCM Board knew everything they needed to know, since it was "obvious" Mr Coope would compete with LCM if released from his Employment Contract. Thus, there was no obligation to seek informed consent for the Employment Proposal; 2. Second, it was submitted that the obligations imposed on a fiduciary are dependent on the particular circumstances of the fiduciary relationship: Woolworths v Kelly (1991) 22 NSWLR 189. It was submitted that "[e]xcept in the defined area, a person under a fiduciary duty retains his own economic liberty": Noranda Australia v Lachlan Resources NL (1988) 14 NSWLR 1 at 15. It was submitted that Chan v Zacharia supported the proposition that a commercial application of fiduciary duty means that a director who has a conflict "imposed upon him", as it was submitted it had been here, is in a different situation as regards the duty to avoid conflict. Here, it was submitted, the relevant duty had been sufficiently modified or released by the circumstances of the Separation Proposal that Mr Coope owed no fiduciary duty to LCM in matters connected with making the Separation Proposal (which necessarily included the Employment Proposal). Senior Counsel for the appellant accepted that any modification of the appellant's fiduciary duty by the Constitution of LCM, and in particular article 47 of that Constitution was not put in issue by the pleading. 3. Third, it was submitted that if a conflict of interest and duty had arisen, Mr Coope was not yet required to disclose it, because the Separation Proposal was in draft, not final terms, and not capable of being accepted. 1. Dealing with the appellant's first submission, that here there was no breach of fiduciary duty as Mr Coope had merely taken preparatory steps to compete with his current employer, the submission should be rejected. 2. Each of the cases cited by the respondent is clearly distinguishable. It is quite a different thing to merely engage in acts preparatory to leaving a current employer, on the one hand, and failing to seek informed consent for a conflict of interest and duty arising in a director asking a company to consider a Separation Proposal made to that employer, which was the case here. 3. The cases relied upon do not avail the appellant here: 1. In Blackmagic Design Pty Ltd v Overliese, the Court found that there was no "absolute" prohibition on an employee making arrangements during his employment to compete with his employer after his employment is terminated. The Court found that it was equally clear that an employee cannot prepare a position to which he could retreat with a considerable part of his employer's business should it become necessary or desirable to do so: at [102]. In my view, the present case is much closer to the second category; 2. Each of the remaining cases cited, Manildra Laboratories v Campbell, Balston Ltd v Headline Filters Ltd, Hodgson v Amcor and GSK Australia Pty Ltd v Ritchie, are clearly distinguishable and take the matter no further. Each provide instances where the particular steps taken to compete with an existing employer were characterised as merely preliminary or preparatory steps. 1. When the appellant sent the Separation Proposal to the Board for consideration, he was still LCM's joint managing director. Mr Coope was asking to be free of his existing contractual restraints and was negotiating to have those restraints removed. In this context he knew something which was critical to the decision of LCM in considering the Separation Proposal, namely, that he was, if released, intending to commence employment with Vannin Malta the next day as its new managing director. 2. In essence, Mr Coope submitted that it should be inferred that the Board knew everything they needed to know, since it was "obvious" he would compete with LCM. 3. Accepting, for present purposes, that it was "obvious" that Mr Coope intended to compete with LCM in some way if released from his Employment Contract, it was not obvious to the other members of the Board of LCM that immediately upon his release from the restraint of trade in cl 17 of the Employment Contract he intended to become the managing director of an immediate competitor in the Australian market, being a counter-party to the Vannin Joint Venture. 4. This becomes clear when the Separation Proposal is viewed against the Employment Proposal – there were a number of key features of his negotiations with Vannin that Mr Coope did not disclose to LCM: 1. First, the termination and commencement dates. In the Separation Proposal, Mr Coope proposed his termination be "[e]ffective 31 March 2015". He did not disclose that if the Employment Proposal went ahead he would commence employment with Vannin Malta on 1 April 2015; 2. Second, Mr Coope had negotiated a significant equity stake for himself in Vannin Malta. If released, he would have, in addition to his salary, an equity stake in a close competitor of LCM's; 3. Third, that Mr Coope was, to borrow the language of Mason J in Hospital Products, "pursuing" a windfall gain. The Separation Proposal would require LCM to pay Mr Coope a termination payment of 12 months existing salary (as opposed to the approximately four years that would otherwise be payable). However, Mr Coope did not disclose to the Board that through his Employment Proposal he had negotiated a salary, presumably to be payable from 1 April 2015 as follows: 1. Mr Coope proposed a "Salary of $450K per annum plus superannuation contributions of $30K per annum" 2. Mr Craddock responded that "Because VM would have no AUS footprint it would only be able to pay you the $450K Gross, you would then sort out your own tax affairs." 1. Fourth, the effect of the release of Mr Coope's non-compete obligations and extent of his proposed role at Vannin Malta. The Separation Proposal made to the Board was that, "The parties release each other from all obligations under Coope's employment contract." This would have allowed Mr Coope to take up the role of "Managing Director of Australia and Asia" for Vannin Malta proposed in his Employment Proposal. Mr Coope also proposed to Mr Craddock that, as part of the deal: VM undertakings [sic] all Australian and Asian projects of Vannin Capital ("VC") and VC agrees not to compete in those jurisdictions with VM. 1. In my view it is clear that Mr Coope was in a position of conflict between his personal interest in having the restrictions in cl 17 of the Employment Contract removed and his duty of loyalty to LCM. 2. The primary judge concluded that the obligations imposed on a fiduciary are not prescriptive: Breen v Williams (1996) 186 CLR 71 particularly per Gaudron and McHugh JJ at 113. 3. It may be accepted for present purposes that the fiduciary obligation here engaged did not include a positive obligation of disclosure. However, disclosure was the only defence to the breach, by obtaining the informed consent of the party, here LCM, to whom the duty was owed. 4. In my view, by failing to seek the informed consent of LCM to the Employment Proposal, Mr Coope did not exercise utmost candour and honesty in submitting the Separation Proposal. Mr Coope did not disclose the critical facts known to him. 5. In my view, Mr Coope's decision not to inform the Board of LCM about his proposal to Mr Craddock to join Vannin and Mr Craddock's subsequent in principle agreement to that appointment was because Mr Coope knew that if those matters were known to the Board of LCM they would be material to their decision to release him from his existing contractual restraints and to permit him to leave on the other terms he had suggested. 6. So far as the second submission is concerned, as a general proposition I accept that the obligations imposed on a fiduciary are dependent on the particular circumstances of the fiduciary relationship. It is clear that the expression of principle in Robb v Green [1895] 2 QB 1 that, in the case of an employee, the fiduciary's obligation exists up until the very last moment he or she leaves their employment, must be tailored to the particular circumstances: Chan v Zacharia at 205 per Deane J. 7. I do not, however, accept that the relevant duty had been sufficiently modified or released by the circumstances of Dr King seeking the Separation Proposal such that Mr Coope owed no fiduciary duty to LCM at all in matters connected with making the Separation Proposal. Put another way, in making the Separation Proposal, Mr Coope remained in the "defined area" where his fiduciary duty applied, to borrow the language of Noranda Australia v Lachlan Resources NL at 15. 8. In my view, given that Mr Coope was asked by Dr King to submit a proposal to leave LCM, his fiduciary duty of loyalty was tailored to the extent that he was permitted to seek to explore other employment opportunities and to use working hours to explore those possibilities and formulate his Separation Proposal. 9. I do not accept, however, that the relevant fiduciary duty had been sufficiently modified or released by the circumstances of the Separation Proposal that Mr Coope owed no fiduciary duty of loyalty to LCM regarding the Separation Proposal. Mr Coope remained the joint managing director of LCM. 10. Mr Coope's continuing duty of loyalty extended to, at least, a duty when making the Separation Proposal and seeking a release from the contractual restraint of trade upon him, not to provide incomplete or misleading information to the LCM Board. 11. It was plainly material to a consideration of the release, the request for confidential information and the payment of a year's salary to know that: 1. Vannin Malta would commence operations in Australia as a litigation funder in competition with LCM on 1 April 2015; 2. Mr Coope would become managing director in Australia and Asia of Vannin Malta commencing 1 April 2015 and bring his team from LCM or be entitled to recruit a team; 3. Mr Coope would obtain a 20 per cent shareholding in Vannin Malta; and 4. Mr Coope would continue managing all existing Vannin Joint Venture projects, subject to LCM's agreement. 1. This was not only because Vannin was a potential competitor but also because it was LCM's principal funder with an intimate knowledge of LCM's business affairs. As has been noted, Vannin had valued LCM when considering a merger with it in 2014. 2. This information casts a very different light on the proposal that LCM should agree to release Mr Coope from his contractual constraints. The conflict between the appellant's personal interests and his duty to the company was accentuated because what he was seeking to do was to be released from the non-compete clause of the Employment Contract. Without that he could not go to Vannin Malta and compete in the way he intended to compete, not simply in managing the run-off book of cases from the Vannin Joint Venture, but competing in all aspects of LCM's business against his former employer, and enjoying a significant equity stake in that competitor. 3. Mr Coope was in a position of conflict. To be excused from this conflict of interest and duty, he was obliged to seek the informed consent of LCM to the Employment Proposal when making the Separation Proposal. 4. Turning then to the third submission, that if a conflict of interest had arisen (which I consider it did) Mr Coope was not yet required to disclose it, because the Separation Proposal was in draft, not final terms, and not capable of being accepted. I reject the submission. 5. A company is no less entitled to be asked to give its informed consent by a director under a conflict of interest and duty when looking at a proposal at a "conceptual" rather than a "decision" stage. 6. It is not correct as a matter of principle that informed consent to a conflict of interest and duty need only be sought by a director in the context of a final decision being made by a company. It will be recalled that in Pilmer v Duke, four members of the High Court described the relevant fiduciary obligation as being not to promote the personal interests of the fiduciary by, relevantly, pursuing a gain in circumstances in which there is a conflict or a real or substantial possibility of a conflict between the personal interest of the fiduciary and those to whom the duty is owed. By putting a draft Separation Proposal before the LCM Board, Mr Coope was pursuing a gain in circumstances in which there was a real or substantial possibility of a conflict between his personal interests and those of LCM. 7. I reject the submission that the primary judge erred in concluding that Mr Coope had a conflict of interest and duty which required him to obtain the informed consent of LCM to that conflict by disclosure of the Employment Proposal. In those circumstances, the primary judge correctly found that Mr Coope breached his fiduciary duty to LCM. 8. Ground 2 of the Notice of Appeal should be dismissed. The primary judge's finding of serious misconduct within the meaning of clause 4.1(c) of the Employment Contract 1. There was no dispute on the appeal that the primary judge had correctly identified the correct legal principles in addressing the question of whether "serious misconduct" had been proved. It is clear that conduct which is repugnant to the employer/employee relationship and which destroys the mutual trust and confidence between employee and employer will, generally, be a ground for summary dismissal: Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81; Concut Pty Ltd v Worrell [2000] HCA 64 at [51]; 176 ALR 693 at 707. 2. It is equally clear that a breach of contract and a failure to give full and frank disclosure and thereby avoid a conflict of interest and duty may each justify summary dismissal for "serious misconduct": Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2014] WASCA 29 at [143]; Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 at [68]. 3. The appellant submitted that Mr Coope's actions in submitting the Separation Proposal were not repugnant to the employer/employee relationship. His conduct, it was submitted, was compatible with a continuing employment relationship, for these reasons: 1. First, following the correction of the transcript, there was no evidence that the Employment Proposal would be detrimental to LCM; 2. Second, Mr Coope was complying with a request made by Dr King and he had no intention of leaving LCM prior to this; 3. Third, the proposal was "for discussion purposes", and Mr Coope did not intend to compete with LCM without seeking a release from his obligations; and 4. Fourth, Mr Coope submitted that any breach of cl 4.1(c) was a "technical breach only" and a "one-off mistake". He submitted that "isolated conduct usually would not suffice" as constituting serious misconduct: Rankin v Marine Power International Pty Ltd at [250] per Gillard J. 1. As to the first submission, the primary judge expressly held that the transcript correction did not alter his conclusions. In my view the primary judge was correct in considering whether the failure to disclose the Employment Proposal was a sufficiently serious breach of contract and fiduciary duty to warrant the description "serious misconduct". Both parties written submissions refer to the transcription error however, this was not emphasised in oral submissions. 2. Having correctly found the breach of contract and breach of fiduciary duty, the primary judge was correct to conclude that Mr Coope's conduct warranted the description "serious misconduct". Mr Coope's omission to disclose the Employment Proposal (and his subsequent communications with Mr Craddock) to LCM was deliberate, as Mr Coope accepted in cross-examination. Thus, the Separation Proposal deliberately omitted material information that was likely to be of detriment to LCM. The consequences for LCM, if it had consented to the Separation Proposal were likely to be dramatic, a fact Mr Coope must have known, despite his denial of the proposition in cross-examination. It was and must have been obvious to Mr Coope that if he were permitted to become the head of Vannin Malta, a new direct competitor of LCM's, the day after the Vannin Joint Venture came to an end, there would be significant consequences for LCM. 3. As to the second submission, that Mr Coope was simply complying with a request from Dr King, I reject it. Mr Coope went far beyond what he was invited to do – make a proposal to the Board about the terms on which he would be prepared to leave – in simultaneously negotiating a personal arrangement with LCM's major funder and joint venture counter-party Vannin. This conduct was plainly the basis of the repugnancy found by the primary judge and warranted the description "serious misconduct". 4. As to the third submission, that the Separation Proposal was "for discussion purposes" and incomplete, as his failure to disclose was a breach of contract and a breach of fiduciary duty, it does not avail Mr Coope to point out that the Separation Proposal was not a concluded agreement. 5. The breach of contract and breach of fiduciary duty found was sufficiently serious to warrant the description "serious misconduct" and, notwithstanding the fact that each proposal was not yet a concluded agreement, Mr Coope's summary dismissal was justified. 6. As to the fourth submission, that this was a "technical breach" and a "one off mistake", I do not agree. Whilst it may be accepted that isolated conduct by an employee would not suffice to warrant the description "serious misconduct" in some cases, each case turns on its own facts. Here Mr Coope was no ordinary employee. He was the joint managing director of LCM. His breach of duty and interest, which he chose not to disclose, far from being "technical" went to the heart of LCM's business. To characterise the conduct as a "mistake" is to trivialise what, objectively, was conduct which in my view destroyed the mutual trust and confidence between Mr Coope and LCM and warranted the description "serious misconduct". 7. In my view, Ground 3 of the Notice of Appeal should be dismissed. It follows that Ground 4 of the Notice of Appeal, which is dependent upon success in one or more of the earlier Grounds, is also dismissed. Notice of Contention Ground 1 – the Separation Proposal and breach of ss 181 and 182 of the Corporations Act 1. The respondent submitted that in addition to the findings made by the primary judge concerning breach of contract and breach of fiduciary duty, it is also entitled to findings under ss 181 and 182 of the Corporations Act in respect of the Separation Proposal. 2. Those sections provide: 181 Good faith—civil obligations Good faith—directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith in the best interests of the corporation; and (b) for a proper purpose. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 182 Use of position—civil obligations Use of position—directors, other officers and employees (1) A director, secretary, other officer or employee of a corporation must not improperly use their position to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 1. Whilst it is clear that it was pleaded that LCM was entitled to relief under these sections of the Corporations Act, the trial judge noted that this aspect of the case was "barely developed" by Senior Counsel then appearing for LCM. 2. In essence, the primary judge found that in circumstances where he had concluded that there was a breach of the contractual provision and a breach of fiduciary duty, sufficient to find there was serious misconduct, there was no utility in making a further finding in relation to statutory claims which had barely been addressed. 3. The appellant submitted that there was no relevant difference in the way the respondent had put the argument about breach of the statutory prohibitions in the Corporations Act to that put in relation to the contractual claim and the fiduciary obligation claim. Accordingly, it was submitted that the Notice of Contention should be dismissed in this respect as there would be no utility in the Court making its own findings in relation to the statutory breaches. 4. In oral address in this Court, Senior Counsel for the respondent concentrated on the terms of s 181 of the Corporations Act. In particular, the submission was made that s 181 contained no relevant restriction so far as prescriptive obligations were concerned. Thus, it was submitted, that if the Court concluded that the primary judge had impermissibly identified a fiduciary duty prescriptive in nature, it was nevertheless open to the Court to find a breach of s 181 (and by implication s 182) of the Corporations Act. 5. For the reasons I have given, I do not believe that the primary judge identified a fiduciary obligation which was prescriptive in nature. Rather, his Honour, consistently with what the High Court had said in Breen v Williams and repeated on numerous subsequent occasions, (see, for example, Howard v Commissioner of Taxation at [31]; Friend v Brooker [2009] HCA 21; 239 CLR 129 at [84]; Pilmer v Duke Group Ltd (In Liq) at [74]), found only a breach of a proscriptive fiduciary obligation namely the conflict of interest and duty. The failure to disclose the Employment Proposal meant that Mr Coope could not rely on the defence of fully informed consent. 6. It is to be noted that s 181 is limited to the circumstances of a director "exercising powers" and "discharging duties". The way in which the discharge of duties was put in the present case by the respondent was an obligation to disclose in order to avoid a breach of duty. 7. Section 182 requires that the officer of a corporation must not improperly use his or her position. Whilst this was not addressed squarely by the respondent, it is clear that in the way the relevant contravention was argued it is indistinguishable from the conduct the subject matter of the breach of fiduciary obligation finding. 8. Put this way, the operation of ss 181 and 182 in the present case is indistinguishable from the way in which the breach of fiduciary obligation case has been put. 9. In these circumstances, I accept the submission of the appellant that there is no utility in the Court making a finding in relation to s 181 or s 182 in relation to this ground of contention. The Court should not do so given the failure of the respondent properly to put this case to the primary judge. 10. There are no doubt difficult questions arising from the interaction between the statutory duties of directors and their corresponding fiduciary duties. (See, for example, the Honourable JD Heydon AC QC's presentation, "The duty to act in good faith in the best interests of the company, in light of Bell Group", presented at the Supreme Court of New South Wales Annual Corporate Law Conference: Directors' Duties: New Perspectives, especially at page 13.) I would prefer to address those issues in the context of a case that squarely raises them. The present is not such a case. 11. Ground 1 of the Notice of Contention should be dismissed. 12. For the foregoing reasons, I would dismiss the appeal against the primary judge's findings regarding the Separation Proposal and the Notice of Contention so far as it relates to the primary judge's findings regarding the Separation Proposal. The second group of issues – The Wind Down Proposal 1. By its Notice of Contention LCM submitted that the primary judge erred in failing to find that Mr Coope's failure to disclose his personal interest in the Wind Down Proposal was a breach of cl 4.1(c) and a breach of Mr Coope's fiduciary duties amounting to serious misconduct. 2. To understand those submissions it is necessary first to compare the relevant terms of the Wind Down Proposal and the Transaction Options document. 3. The Wind Down Proposal, as put by Mr Craddock to Mr Coope in an email dated 27 January 2015, provided as follows: Vannin Proposal There really is only one solution for Vannin, which although I accept may be unpalatable for you and your Investors, I hope you can see that I have tried hard to find a solution that works for all parties. As of March 31st Vannin ends the current JV agreement LCM agrees to "sell" to Vannin Malta (VM) LCM renames to ABC All LCM costs and staff transfer to VM ABC is left with: Its ongoing interest in all of the outstanding JV claims Its existing non-JV cases These cases run by VM effectively free of charge No ongoing costs or commitments No requirements for further capital raises or dilution Vannin Malta is owned 80% Vannin Capital PPC PLC 20% Patrick Coope Shares held under Nominee (if required) The name LCM is replaced with Vannin Capital Vannin Malta is operated as a standalone entity with its own P&L and Balance Sheet There are a lot of positives of this move: Coope Certainty of salary and equity No capital raises or dilution 1 shareholder as opposed to 30+ after the next rounds No Moloney Realistic IPO prospects No requirement to explain to existing/new LCM shareholders the current debt to VM own (~$6m and rising) LCM Shareholders No ongoing costs or commitments No requirements for further capital raises or dilution If your target Investor is in the Oil & Gas sector – according to King – I fear you will have an uphill battle King is not required to be active in the business Non-JV cases are run by Vannin Malta effectively free of charges Far better ROC than under current guise (no $2m p.a. costs) Removes uncertainty of an LCM IPO There are of course negatives: Moloney Obvious LCM Shareholders No big IPO in the future – see below (emphasis added) 1. The Wind Down Proposal was presented by Mr Coope in option 4 in the Transaction Options document circulated on 6 February 2015 in the following terms: Transaction options discussed with Vannin and present position Extend JV – on same or renegotiated terms Vannin says it isn't interested (because the returns to it are low compared to what it generates from its own projects) Vannin also says this isn't possible if LCM raises more equity capital but I don't understand why (I think the bigger problem will be for LCM raising new equity when Vannin gets first option on all qualifying cases) Notwithstanding, I suspect this may be an option with Vannin but I am not sure it can work for LCM Vannin / LCM merger Vannin not interested – Craddock still holds the view that Vannin is worth far more than LCM Vannin becoming a cornerstone investor in LCM by way of an LCM equity swap for Vannin's interest in the LCM/Vannin JV Vannin says it isn't interested – I think the 2 key problems are Vannin would want control and Australian tax would need to be paid on Australian profits I don't think this option is available LCM wind down A variation of what was discussed in June and July last year although the terms sounds like they would be more attractive for LCM than was discussed then LCM ceases trading at an agree [sic] date and Vannin takes over its business. Vannin funds completion of LCM's existing cases (plus, I would propose, new projects up to an agreed cut off date) This is analysed in more detail in the attached Wind Down Financial Model – note that I haven't discussed the underlying assumptions (particularly those that apply to what I have called the 2 new JVs) in any detail with Craddock so I don't know his views. I also note that this model still needs some work but it is indicative of how this proposal might work Sale of LCM to Vannin Malta ("VM") Option raised by Vannin – Craddock's initial thought was that LCM shareholders might end up with 25% of VM This is really just another way of doing option 3 Would need more work on an exit strategy – presumably an exchange of equity in Vannin Malta for equity in Vannin when it does its IPO (but what happens if it doesn't do an IPO?) Craddock says that, because I would end up with 5% of Australian business, he would want me locked in for 5 years 1. It can immediately be seen that the parts of the Wind Down Proposal identified in bold in paragraph [165] above were not conveyed to the LCM Board in the 6 February document. It is also clear on the evidence that no reference was made to those matters by Mr Coope at the meeting on 9 February 2015. 2. In addition, Mr Coope provided two financial models with the 6 February Board papers. One of these related to the cornerstone investor proposal contained in option 3 of the Transaction Options document. The other model gave the projected outcomes of option 4 – the Wind Down Proposal. The model relating to the Wind Down Proposal did not disclose the 20 per cent interest Mr Coope would have in Vannin Malta if the deal went ahead. The importance of this omission is that, in addition to his interest in the arrangement provided by LCM, Mr Coope would also have a 20 per cent interest in the counter-party to the transaction, Vannin Malta. 3. Whilst it was submitted that this 20 per cent interest was not relevant in the time frame of the LCM run-off of cases shown in the modelling, Mr Coope's 20 per cent interest was nevertheless a startling omission from a financial projection presented for the LCM Board's consideration. 4. Mr Coope himself explained in affidavit evidence that he did not refer to the 20 per cent of the profits generated by Vannin because that profit share would not apply to projects covered by the "wind down" of Vannin Joint Venture projects (where Mr Coope would continue to receive his profit share via his LCM interest), but rather, his "20% profit share would only be in respect of new cases commenced by Vannin after 1 July 2015". 5. In addition, it is of significance that in relation to option 5 on the Transaction Options document, "Sale of LCM to Vannin Malta", which Mr Coope considered not to be a viable option, he did include the following commentary: "Craddock says that, because I would end up with 5% of Australian business, he would want me locked in for 5 years". 6. That is, Mr Coope did make a disclosure to the LCM Board about some of the personal benefits he had been offered by Mr Craddock, namely those in relation to the sale option, but not in relation to option 4 which he described as "more attractive for LCM than was discussed [in 2014]" and the only option that Mr Coope believed might be available to the directors of LCM. 7. The issue raised by LCM in its Notice of Contention is whether the non-disclosure of the matters identified in bold in paragraph [165] above or the failure to seek the informed consent of the LCM Board to the breach of interest and duty created by those matters, amounted to a breach of cl 4.1(c) of the Employment Contract or a breach of Mr Coope's fiduciary duties to LCM. Breach of clause 4.1(c) 1. I have set out above at [76] – [77] what I regard as the correct construction of cl 4.1(c) of the Employment Contract. 2. The primary judge found that: Mr Coope accepted that his potential interest in Vannin Malta was a "material" matter for LCM and its board to consider "if this proposal were to go ahead" or "if there was a transaction" … He thus agreed that if the proposal were to have gone ahead, he would have had to reveal the 20 per cent interest which he omitted from his 6 February 2015 document. In those circumstances, my conclusion is that, as at 9 February 2015, the point had not been reached where, in order to discharge his obligations as a director of LCM under ss 181 or 182 of the Corporations Act 2001 (Cth) ("the Act") or to avoid any conflict between his personal interest in advancing his own position and his duty to act in the interest of LCM, he was obliged to disclose what he stood to gain (that is, a 20 per cent shareholding in Vannin Malta) if the matter went further. Nor had the occasion arisen for Mr Coope to make any disclosure to LCM by reason of cl 4.1(c) of the Employment Contract… Any potential detriment to LCM which might otherwise have arisen by reason of Mr Coope having a 20 per cent shareholding in Vannin Malta upon implementation of the Vannin or Wind Down Proposal ceased to be of any moment in light of the board's decisive, and unanimous rejection of that proposal. 1. Accordingly, the primary judge found that there was no obligation of disclosure and thus, no breach of contract by Mr Coope. 2. The primary judge correctly concluded that the Wind Down Proposal would have been material to the Board if the proposal had gone ahead. I do not agree, however, with his Honour's finding that the point had not yet been reached where an obligation to disclose under cl 4.1(c) of the Employment Contract was engaged. 3. In my view, the primary judge should have found that the material identified in bold in paragraph [165] above was information that Mr Coope was obliged to disclose as it was a "significant" matter about which Mr Coope was aware which would likely now or in the immediate future result in LCM suffering detriment. 4. The time for disclosure within the meaning of cl 4.1(c) of the Employment Contract had arisen at the time of making the 6 February document and the obligation was a continuing one, such that the complete offer made by Mr Craddock to Mr Coope should have been disclosed orally no later than the time immediately before the matter becoming the subject of discussion at the LCM Board meeting on 9 February. 5. During that period (6–9 February 2015) the LCM Board was giving consideration to the Transaction Options document and it was material to that consideration that Vannin was apparently prepared to go ahead with the Wind Down Proposal on a basis that gave a 20 per cent interest in the participating Vannin vehicle to Mr Coope. 6. Ascertained objectively, there was a real likelihood of LCM suffering detriment in the future by reason of the Board being asked to consider an important proposal without disclosure of the matters identified in bold in paragraph [165] above for these reasons: 1. First, the Vannin Joint Venture was still a significant part of the commercial operations of LCM. It involved cases with a potential recovery of over $5 million and the "run-off" of those cases would ensure that a relationship between Vannin and LCM continued for some time to come. The parties had been in negotiations for a considerable period in 2014 about commercial structures to continue some form of broader relationship between Vannin and LCM and, as the evidence makes clear, had been in close negotiations for a period in 2015 prior to this 9 February Board meeting; 2. Second, if a commercial arrangement with Vannin could not be reached, LCM faced the prospect in the short term of needing to raise significant capital. Its commercial choices were, broadly speaking, on the one hand to reach a commercial arrangement with Vannin and, on the other, to seek to raise capital from the public; 3. Third, when considering these various proposals from Vannin the Board of LCM was, in my view, clearly looking to Mr Coope to provide it with full and complete information about what proposal may be available from Vannin. This is amply demonstrated by the fact that Mr Coope had been designated by the LCM Board as the person on behalf of LCM to negotiate with Vannin for some considerable time, without involving the other LCM Board members. He was specifically designated as the person to conduct the negotiations with Vannin and bring any potential commercial arrangement with Vannin to the LCM Board. Vannin was the current funder of the most lucrative part of LCM's business. Vannin's intentions regarding LCM, including its intentions to compete in the future and its appetite for a commercial arrangement with LCM, were obviously important to LCM. As such any detailed knowledge about Vannin's plans that Mr Coope had was both "significant" and clearly material to a consideration of Vannin's various offers contained in the Transaction Options document; 4. Fourth, the primary judge correctly concluded that the Vannin offer to Mr Coope of a 20 per cent equity stake in Vannin Malta, together with the commercial structure that it was prepared to offer Mr Coope, was material to LCM. That was because the prospect that Vannin would be prepared to permit Mr Coope to have a 20 per cent equity stake in the Vannin entity which would conduct its business in Australia was a matter highly significant to LCM in considering any potential transaction with Vannin. To so conclude is not to say that the present is a diversion of corporate opportunity case, but rather to find that the LCM Board was entitled to know the whole picture, so far as it was known to Mr Coope, about Vannin's negotiating strategy. The prospect of LCM being able successfully to negotiate a commercial outcome with Vannin may have looked very different to the LCM Board had they known that Vannin was prepared to offer Mr Coope a significant equity stake in Vannin Malta to secure a commercial arrangement with LCM; 5. Fifth, it is in my view obvious that an experienced business person in the position of Mr Coope would understand the obligation in cl 4.1(c) as requiring disclosure of the matters identified in bold in paragraph [165] here. Ascertained objectively, there was a real likelihood of LCM suffering detriment in the future by reason of the non-disclosure of those matters identified in bold. In this regard, it is significant that in relation to the much less viable option 5, "Sale of LCM to Vannin Malta", Mr Coope disclosed to the LCM Board that "Craddock says that, because I would end up with 5 per cent of Australian business, he would want me locked in for 5 years". It was obviously relevant to the LCM Board to have before it information that Vannin, despite what it might otherwise have said, was willing to go ahead with Option 4 on the basis that Mr Coope would obtain a 20 per cent stake in the Vannin vehicle; 6. Sixth, the financial projections provided by Mr Coope to the LCM Board, and Mr Coope's explanation that he omitted reference to the 20 per cent of the Vannin profits he would be entitled to "in respect of new cases commenced by Vannin after 1 July 2015" are a cogent demonstration of the significance of the omitted information and the real likelihood of LCM suffering detriment now or in the future by reason of the omission to provide that information. Mr Coope knew, but did not disclose, that Vannin was prepared to offer him 20 per cent of the profits of its new venture which would operate, on this hypothesis, in place of LCM in respect of new business. The value of that offer was surely capable of financial analysis by Mr Coope. LCM may have viewed the matter quite differently, or had available to it alternative commercial strategies, if the Board had available to it the information that Mr Coope withheld. This is detriment likely to be suffered by LCM as a result of significant information, known to Mr Coope, being withheld. 1. So far as the primary judge's determination that the time for disclosure had not yet arrived and would not do so unless the deal had "gone ahead", in my view the Wind Down Proposal, for relevant purposes, had "gone ahead" when Mr Coope circulated the Transaction Options document to the other members of the LCM Board on 6 February 2015. In doing so, Mr Coope effectively asked the LCM Board to consider the transaction. In my view, considering a transaction plainly includes rejecting it and, for the purposes of cl 4.1(c), it is likely to cause detriment to LCM to be asked to consider an important commercial transaction on the basis of fundamentally incomplete information, which missing information was material to that determination. 2. Further, even if it is accepted that Mr Coope planned to supplement the Transaction Options document orally at the Board meeting on the 9th, it is plain that by the time the matter was reached on the agenda of the meeting on 9 February the Wind Down Proposal "went ahead". 3. In effect, the LCM Board was being asked to make a decision about a matter of importance on the basis of only a limited selection of the material facts known to Mr Coope. Those circumstances, and Mr Coope's knowledge, clearly indicated that he was obliged pursuant to his Employment Contract to bring the 20 per cent stake he had been offered to the attention of the LCM Board in the 6 February document, and certainly no later than the commencement of discussion of this topic at the meeting on 9 February 2015. 4. So far as the events at the meeting on 9 February are concerned, there was ample opportunity for Mr Coope to inform the Board about his personal interest prior to the discussion of the Wind Down Proposal. 5. Accordingly, Mr Coope was in breach of his obligations pursuant to cl 4.1(c) of the Employment Contract in failing to bring that matter to the attention of the LCM Board on 6 February and at any time prior to the commencement of the discussion at the meeting on 9 February. 6. That matter, being sufficiently serious to itself warrant the description "serious misconduct" is an additional reason supporting the summary dismissal of Mr Coope by LCM. 7. Even if this were the only breach of cl 4.1(c) of the Employment Contract that I had found, the Board's decision summarily to dismiss Mr Coope would have been justified by his deliberate decision to withhold information about his personal interest in the Wind Down Proposal in breach of cl 4.1(c). This conclusion does not depend on the LCM Board being aware of the breach at the time of Mr Coope's summary dismissal: Shepherd v Felt & Textiles (1931) 45 CLR 359. 8. This breach was sufficiently serious to constitute serious misconduct, given the matters I have found at paragraphs [180] to [184] and the fact that the LCM Board trusted Mr Coope to be the sole negotiator on its behalf in its discussions with Vannin. It is clear that the conduct I have found was repugnant to the relationship and corrosive of the mutual trust and confidence between LCM and Mr Coope. 9. For these reasons, I would uphold Ground 2 of LCM's Notice of Contention. Breach of fiduciary duty 1. I have dealt with at [105] to [111] above the conflict of interest and duty rule and the need for fully informed consent. 2. As I have summarised above, at [31], [47] and [175], the primary judge found about this topic that: 1. Mr Coope "had made no decision to negotiate with Mr Craddock a position at Vannin Malta in the absence of an ongoing relationship between LCM and Vannin"; 2. The LCM Board had in 2014 and 2015 consistently been dismissive of any future Vannin "deal", and the matter was dealt with "peremptorily" at the Board meeting; and 3. in those circumstances, at the 9 February meeting, "the point had not been reached" where Mr Coope was required to disclose his proposed 20 per cent stake in Vannin Malta. 1. The first issue is whether Mr Coope faced a conflict between his interest and duty at the time of preparing the 6 February document and attending the 9 February meeting. 2. As the primary judge found, Mr Coope gave no reasonable explanation for not including the 20 per cent equity interest in the Transaction Options document. This omission is even more significant given that he did disclose that he would receive a 5 per cent interest as part of the Hybrid Proposal (contained in option 5 of the Transaction Options document, see above at [166]) as a quid pro quo for him agreeing to stay with the company for five years. 3. LCM contended that at the time Mr Coope circulated the Transaction Options document on 6 February and at the meeting on 9 February he was in a position of conflict between his personal interests, being to advance the proposal containing an offer of 20 per cent of the equity in Vannin Malta, and his duty to LCM. 4. Mr Coope submitted that the correct view of the "conflict rule" is that a director has a duty to act in the best interests of the company and avoid conflict in performing those duties. Mr Coope argued that he had done this because: 1. the Transaction Options document was expressed to be a work in progress that was to be discussed at the meeting on 9 February; 2. Mr Coope gave evidence that he intended to disclose his personal interest if the Board was interested in the deal, but the need for this did not arise; and 3. in any case, Mr Coope had avoided any conflict by not advocating for the Wind Down Proposal and choosing to act in the interests of LCM by promoting the capital raising instead. It was submitted that Mr Coope did not "actively" pursue or promote his personal interest in relation to the Wind Down Proposal. 1. In my view, Mr Coope faced a conflict between his interest and duty at the time of preparing the 6 February document and attending the 9 February meeting. 2. As regards the particular transaction that was being considered by LCM, Mr Coope had a particular personal interest in the outcome as well as LCM having its own potentially different interest. His fiduciary obligation was not to pursue a gain in circumstances where there was a real or substantial possibility of a conflict between his personal interests and those of the company. The characterisation that Mr Coope seeks to give to his pursuit, as "not active", is not justified in circumstances where, in relation to option 5, he did disclose the much smaller interest he had been offered by Vannin. 3. The Transaction Options document contains the following positive statement about option 4, the Wind Down Proposal: A variation of what was discussed in June and July last year although the terms sounds like they would be more attractive for LCM than was discussed then (emphasis added) 1. Whilst the LCM Board, if fully informed consent had been sought, may have concluded that its interests and those of Mr Coope coincided here, that is not necessarily the case. As at 6 and 9 February 2015, the appellant's potential interest of 20 per cent in Vannin Malta was potentially inconsistent with his duty to secure the best commercial arrangement for LCM. LCM, had it known about the 20 per cent interest in Vannin offered to Mr Coope and its value, could have sought to negotiate with Vannin a more attractive arrangement for itself at the expense of Mr Coope's interest. 2. It was submitted that Mr Coope could not have a conflict of interest and duty as his interest was "too theoretical". In my view Mr Craddock's offer was sufficiently formulated to constitute a relevant "interest" in the sense of an interest creating "a real or substantial possibility" of a conflict. It follows from the fact that Mr Coope was putting the matter to the LCM Board for their consideration that he too regarded the proposal made by Mr Craddock to be sufficiently serious to warrant consideration by the LCM Board. 3. It is not correct in those circumstances to describe the proposal as "theoretical". That description carries with it the implicit premise that the Wind Down Proposal could not have gone ahead. Even if the LCM Board was not interested in the Wind Down Proposal presented in the Transaction Options document, this does not mean the proposal was theoretical. The parties were clearly interested in negotiating some arrangement; both Vannin and LCM had dedicated time and resources in attempting to negotiate a deal, both in 2014 and early 2015. In circumstances where the LCM Board was presented with materially incomplete information about that proposal, I do not accept the submission that the LCM Board would necessarily have reacted in the same way to the proposal if Mr Coope had disclosed all of the material features of the offer. 4. The fact that the Transaction Options document was a "work in progress" is not determinative of the existence of a conflict of interest and duty. It is not correct to say that a director does not have a conflict of interest and duty until an offer made to that director (which contains an element of personal interest) becomes binding or legally enforceable. Mason J in Hospital Products makes clear that an expectation or hope of future advantage may be sufficient to constitute a relevant interest. In my view the present is such a case. 5. LCM was entitled to Mr Coope's undivided loyalty in accepting or rejecting the proposal to advance negotiations with Vannin. In making that decision (whether to advance the proposal), Mr Coope was in a position of a real or substantial possibility of a conflict between his personal interests and those of the company. 6. The submission that Mr Coope did not have a conflict of interest and duty until such time as the LCM Board evinced interest in the deal, if correct, would seriously undermine the content of his fiduciary duties as a director of LCM. If the submission were correct, LCM could be asked by a director with an undisclosed material personal interest in a transaction to spend time and money progressing that proposal to the stage that it was capable of becoming a legally enforceable agreement, only to have the director, at that much later time when a contract is about to be signed, disclose that material personal interest. In such a case the company will potentially have wasted a great deal of time and money. It is possible to imagine circumstances where, by reason of the conduct of the company in the course of negotiations, for example, conduct giving rise to an estoppel or a claim for misleading and deceptive conduct, the company is effectively forced to enter a transaction that it would never have entered if the conflict of interest were known at the outset, or pay compensation for failing to do so. 7. The submission that Mr Coope avoided a conflict of interest and duty becuase he advocated against acceptance of the proposal at the 9 February Board meeting confuses the existence of the conflict and the obligation to seek fully informed consent. Mr Coope had a relevant conflict and his obligation was to seek fully informed consent on the 6th and before the matter was discussed at the Board meeting on the 9th. Being in a position of conflict, and subsequently, without seeking informed consent, advocating against acceptance of the proposal which gave rise to the conflict does not "avoid" a conflict of interest and duty; the only remedy for such a breach is fully informed consent. 8. Factually, the submission that Mr Coope "avoided" the conflict by advocating against the proposal is without foundation here as well. The Transaction Options document contained the positive commentary about the Wind Down Proposal from Mr Coope I have set out above at [199]. What Mr Coope actually said about the transaction at the 9 February meeting was that the Wind Down Proposal was the only real option proposed by Vannin. After Dr King expressed the view that neither of the Vannin options seemed to be a great deal, Mr Coope responded that he thought Vannin shareholders would be better off if they proceeded with a proposed capital raising. He went on to say, however, that the capital raising was "not a real option because of the current internal problems. With these problems it will be very hard to raise money." In truth, rather than "advocating against" acceptance of the Wind Down Proposal, Mr Coope was suggesting at that Board meeting that LCM had no realistic survival alternatives in its current form (with Mr Moloney remaining as joint managing director). 9. It is not to the point that Mr Coope apparently believed that the Wind Down Proposal was unlikely to go ahead or that, if it did go ahead it would be both in his interests and in the interests of the company. What matters is that it is clear, and must have been clear to Mr Coope, that the proposal made by Mr Craddock that he, Mr Coope, receive 20 per cent equity in Vannin Malta should LCM agree to the Wind Down Proposal put him in a position where there was "a real or substantial possibility" of a conflict of interest and duty. 10. In those circumstances Mr Coope was obliged to seek the informed consent of LCM to his conflict of interest and duty. In making the written Board report on 6 February 2015 and participating in the discussion on 9 February 2015, Mr Coope was in a position where there was "a real or substantial possibility" of a conflict of interest and duty and accordingly owed "a heavy duty to show the righteousness of the transactions". 11. Mr Coope cannot be heard to say that he intended at some time in the future, if the matter went forward, to make the full and frank disclosure which was required. Actual disclosure of the conflict of interest and duty is a necessary step in negativing what would otherwise be a breach of Mr Coope's fiduciary duties. 12. As to whether Mr Coope had sufficiently disclosed his conflict so as to have obtained the fully informed consent from the LCM Board, it was submitted by Mr Coope that it was unrealistic to view the events of 6 and 9 February 2015 in isolation. It was submitted that: 1. First, he had already effected adequate disclosure of his 20 per cent interest in Vannin Malta in the course of his discussions with the Board regarding the 2014 negotiations, described at paragraph [31] above; 2. Second, he had already told Dr King about the essence of Mr Craddock's offer in the Amsterdam conversation, see above at [36] – [37]; 3. Third, he was intending to tell the LCM Board if anything came of the negotiations, by which he meant he would disclose the offer if the parties moved closer towards a legally enforceable agreement; and 4. Fourth, it was unnecessary for disclosure to be made in writing in the Transaction Options document on 6 February, given: 1. the imminent Board meeting the following Monday at which point disclosure would have been made but for, 1. the fact that time did not permit him to disclose his conflict at the meeting on 9 February; and 2. the fact that disclosure was irrelevant once the Board had shown no interest in progressing the Wind Down Proposal. 1. None of these responses detract from the breaches resulting from Mr Coope's conflict of interest and duty and his decision not to seek informed consent of LCM of his personal interest. When providing information regarding a possible transaction, Mr Coope's fiduciary duty required of him, in terms of the content of the information to be provided, to seek the informed consent of LCM to the conflict of interest and duty he found himself in by reason of the Vannin offer of the 20 per cent equity stake. 2. As to the first submission, the appellant placed considerable weight on this early 2014 period as shaping the correct approach to the critical questions to be determined on the appeal. While I accept that this early period illuminates the relevant background, I do not consider it has the importance attached to it by the appellant. 3. In my view, any knowledge the Board had about the 2014 negotiations was not sufficient in the present circumstances. It was not established by Mr Coope that the Board knew, or should have known from the 2014 negotiations, that Mr Coope would gain 20 per cent equity under the Wind Down Proposal in 2015. 4. The primary judge found that Mr Coope had kept Dr King informed about the prospect that, if an LCM/Vannin deal was negotiated, "he might be employed by Vannin or have equity in one of the Vannin entities". However, the primary judge found that Dr King's evidence was that while he understood that Mr Coope "was looking to have an equity position in whatever vehicle he ended up working in", he did not know the specific equity offer. 5. Mr Coope, in evidence accepted that if the proposal went forward he would then disclose the offer made to him by Mr Craddock. This tends strongly against the submission that Mr Coope understood that sufficient disclosure had already been made. In short, Mr Coope did not "show the righteousness of the transactions": Maguire v Makaronis. 6. As to the second submission, that Mr Coope had already told Dr King about the essence of Mr Craddock's offer in the Amsterdam conversation, in my view Mr Coope cannot rely on the Amsterdam conversation as obtaining fully informed consent: 1. First, he only told the chairman, Dr King, and not the other member of the Board, Mr Moloney. His obligation was to obtain the fully informed consent of LCM. It is not sufficient to obtain the fully informed consent of the company by making a disclosure to some only of the relevant Board members: Adler v Australian Securities and Investments Commission [2003] NSWCA 131; 46 ACSR 504 at [554] at point (4). 2. Second, Mr Coope did not actually tell Dr King all that he needed to tell him to obtain fully informed consent. Mr Coope's recollection of the conversation in Amsterdam, the substance of which Dr King accepted, was that Mr Coope said that Mr Craddock would "give me the same deal I have now with LCM". This type of general disclosure, made without specific reference to the terms of the offer made to Mr Coope by Mr Craddock [set out at [39] above], did not constitute full and frank disclosure of the relevant conflict between interest and duty. This is made clear by a consideration of the financial model attached to the Transaction Options document. Mr Coope himself explained that this model showed the 20 per cent profit share he would obtain from the projects covered by the "wind down" of Vannin Joint Venture projects, where Mr Coope would continue to receive his profit share via his LCM interest. It did not show his 20 per cent profit share in respect of new cases commenced by Vannin after 1 July 2015. That is, Mr Coope would not have "the same deal I have now with LCM" (as he told Dr King in Amsterdam) if the transaction went ahead but rather, two income streams – one from LCM and one from Vannin Malta. 1. As to the third submission, that Mr Coope was intending to tell the LCM Board if anything came of the offers, it is not enough for Mr Coope to say, retrospectively, that he had an intention to tell the Board about his personal interest if it appeared that anything was going to come of the proposals. In this regard Mr Coope's evidence is instructive: Q. Why didn't you disclose the fact that you would have a 20 per cent interest in the ongoing business of the company? A. In the 6 February document? I was analysing it from the point of view of LCM… Q. Didn't you think it was material for LCM and its board to know that you have a 20 per cent equity interest in Vannin Malta if this proposal were to go ahead A. Yes. 1. It is telling that Mr Coope understood the materiality of the offer which had been made to him by Mr Craddock and decided to keep it back from the LCM Board until he was sure that the proposal would go further. 2. As to the fourth submission, that time did not permit him to disclose his conflict at the meeting on 9 February, in my view Mr Coope's contention that the time for disclosure (if required at all) was at the 9 February meeting and not when he circulated the Transaction Options document on 6 February, should be rejected. There are considerable difficulties for Mr Coope in attempting to excuse his conduct by reference to a disclosure he planned to make at the subsequent meeting. Mr Coope's acceptance that he intended to make a disclosure at the meeting demonstrates an acknowledgement that he had a conflict of interest and duty. He plainly recognised it himself. His answer is simply that the occasion had not yet arisen for him to seek fully informed consent to that conflict of interest and duty on the 6th and that time ran out on the 9th to make that disclosure. I do not accept that this is so. 3. It is part of a director's duty to bring to the company all material information because it is only when the Board has available all of that material information it is fully apprised of the nature of the transaction before it: Fexuto Pty Limited v Bosnjak Holdings Pty Limited [2001] NSWCA 97; 37 ACSR 672. 4. Even accepting, for the purposes of argument, that it was not necessarily a breach of duty in circulating the Transaction Options document on 6 February without seeking informed consent, there was a complete failure by Mr Coope to seek informed consent at the commencement of the meeting on 9 February, prior to the matter being discussed at the meeting. 5. There is no warrant for concluding that it was appropriate for Mr Coope to fail to seek informed consent in circumstances where there is no binding decision to be made but, rather, a "conceptual" discussion. Neither is there any basis to conclude that there was no opportunity for Mr Coope to make a disclosure, either at the commencement of the Board meeting or immediately prior to the discussion of the relevant item. 6. LCM was no less entitled to be informed by its directors and employees of the conflict Mr Coope had between his personal interest and his duty to the company when looking at a proposal at a conceptual stage as compared to a decision stage. 7. For these reasons I have concluded that Mr Coope did not make the full and frank disclosure required of him and that the primary judge should have concluded that Mr Coope was in breach of his fiduciary duties regarding the Wind Down Proposal in asking the LCM Board to consider the Transaction Options document without seeking the fully informed consent of LCM to that conflict. 8. So far as "serious misconduct" is concerned, I have set out the appropriate principles above at [139] – [140]. In my view, having concluded that Mr Coope was in breach of his fiduciary obligations to LCM, LCM was entitled to summarily dismiss Mr Coope for this additional reason. 9. I do not accept that this was a technical breach and of no consequence. Even if this were the only breach of fiduciary duty that I had found, the Board's decision to summarily dismiss Mr Coope would have been justified by his deliberate decision to withhold information about his personal interest in the Wind Down Proposal when circulating the Transaction Options document. 10. This breach was sufficiently serious to constitute serious misconduct. Mr Coope was entrusted by LCM to be the sole negotiator with Vannin in circumstances where Vannin was an important source of funds and counter-party contracts at the heart of LCM's business. The Board was relying on him faithfully to negotiate the best possible arrangement with Vannin, both about future funding matters and the run-off of cases from the Vannin Joint Venture. LCM would run out of cash in the next quarter and if a deal could not be struck with Vannin its only option was to raise money from the public. 11. Instead of reporting, in full, to the LCM Board on his negotiations with Mr Craddock, Mr Coope chose to keep back important details of his negotiations. I have rejected the submission that he advocated in favour of an alternative proposal at the Board meeting. He says himself that he told the Board that the only other option, raising money from the public, was "not a real option". 12. Mr Coope, deliberately, kept the Board in the dark about the offer made to him which, had the Board been told, could have formed the basis for further negotiation with Vannin seeking to obtain a more attractive arrangement for itself at the expense of Mr Coope's interest. 13. The conduct I have found Mr Coope engaged in, in failing to seek fully informed consent for his breach of his fiduciary duty, was antithetical to the mutual trust and confidence between LCM and Mr Coope and warranted the description "serious misconduct". 14. For this additional reason I would also allow Ground 2 of the respondent's Notice of Contention. LCM's Cross-Appeal re costs 1. As noted at the outset, the primary judge awarded the respondent only two-thirds of its costs of the hearing before him. This was on a variety of bases, including the fact that the appellant failed in persuading him that the non-disclosure of the Wind Down Proposal was a breach of contract or (in failing to seek fully informed consent) a breach of fiduciary duty warranting summary dismissal. 2. I have found that the failure of Mr Coope to seek the informed consent of LCM to the conflict of interest and duty he found himself in at the time of describing the Wind Down Proposal on 6 and 9 February 2015 was a breach of the Employment Contract and of his fiduciary duty to LCM. It warranted his summary dismissal. 3. On the other hand, the primary judge plainly had regard to other matters in awarding LCM only two-thirds of its costs of the trial. While submissions were made by both parties (which I will not describe here), those submissions arose against a background of a different determination about the Wind Down Proposal issue by the primary judge than the conclusion I have reached. 4. Accordingly, I propose to invite the parties to exchange brief written submissions about the orders the Court should make in relation to the cross-appeal in light of these reasons, and also to make submissions about whether any further oral hearing is necessary. The third group of issues – damages Damages and s 200F of the Corporations Act 1. Given the conclusions that I have reached about the primary judge's findings and my conclusion on the Notice of Contention so far as it affects the Wind Down Proposal, it is not strictly necessary to address the third group of issues. 2. Nevertheless, given the matter was the subject of full argument and it may be relevant to the Court's determination of the issues on the cross-appeal, I propose to address the argument made about s 200F of the Corporations Act. 3. The relevant sections are contained in Part 2D.2 Division 2 of the Corporations Act which is headed "Termination Payments". 4. What the Division requires, in general terms, is that retirement "benefits" (as defined in s 200AB) given to certain managerial or executive officers of a corporation be submitted for member approval: s 200B. 5. Unless an exemption or limitation applies, it is a contravention of the Corporations Act for a corporation to give a benefit to a managerial or executive officer who has retired (or a spouse, relative or associate of that person) unless member approval (to the giving of the benefit) has been obtained: s 200B. It is also a contravention of the Corporations Act for a managerial or executive officer who has retired from a corporation to receive a benefit if the giving of the benefit contravenes s200B: s 200D. 6. The contraventions of ss 200B and 200D each create an offence of strict liability as defined in s 6.1 of the Criminal Code Act 1995 (Cth). A contravention of ss 200B or 200D is punishable by 180 penalty units or imprisonment for 6 months, or both: Corporations Act sch 3. 7. Section 6.1 of the Criminal Code provides that in cases where the offence provision does not provide a fault element for any physical element of the offence, the defence of mistake of fact is available under s 9.2 of the Criminal Code. The defence of mistake of fact operates so that a person is not criminally responsible for a strict liability offence, as defined in s 6.1 of the Criminal Code, if: 1. at or before the time of conduct constituting the physical element, the person considered whether or not facts existed, and is under a mistaken but reasonable belief about those facts; and 2. had those facts existed, the conduct would not have constituted an offence. 1. It is in this context that the terms of s 200F come to be construed. Section 200F at the relevant time created exemptions and limitations to the operation of s 200B: (1) Subsection 200B(1) does not apply to: (a) a benefit that is a payment made in respect of leave of absence to which the person is entitled under an industrial instrument; or (aa) a benefit given under an order of a court; or (b) a benefit given in prescribed circumstances. (2) Subsection 200B(1) does not apply to a benefit given in connection with a person's retirement from an office or position in relation to a company if: (a) the benefit is: (i) a genuine payment by way of damages for breach of contract; or (ii) given to the person under an agreement made between the company and the person before the person became the holder of the office or position as the consideration, or part of the consideration, for the person agreeing to hold the office or position; and (b) the value of the benefit, when added to the value of all other benefits (if any) already given in connection with the person's retirement from offices or positions in the company and related bodies corporate, does not exceed the amount worked out under whichever of subsections (3) and (4) is applicable. (subsections (3) and (4) omitted)(emphasis added) 1. The text of the two limbs of s 200B each address a different subject matter. The exemption in s 200F(1)(aa) applies to circumstances where a benefit, as defined in s 200AB(1), is "given under an order of a court". On the hypothesis I am here addressing, any payment of damages ordered in favour of the appellant would, prima facie, be a benefit "given under an order of a court". 2. The limitation in s 200F(2)(a), on the other hand, provides that section 200(B)(1) does not apply to a benefit given in connection with a person's retirement from office or position in relation to a company if the benefit is a "genuine payment by way of damages for breach of contract" and the value of the benefit does not exceed an amount worked out in accordance with sub-sections (3) and (4). This limitation applies to a different circumstance, namely where a company has made a genuine payment by way of damages for breach of contract in an amount not exceeding that calculated elsewhere in the section. 3. The submission of the respondent, in effect, is that where pursuant to s 200F(1)(aa) a benefit the subject of an order of the court is one also properly characterised as a "genuine payment by way of damages for breach of contract" this provides a qualification to the exception provided by section 200F(1)(aa). That is, where a genuine payment by way of damages for breach of contract is made (including by order of a court), it is s 200F(2) which provides the relevant (and more limited) exemption from the operation of s 200B and not the broader exemption in s 200F(1)(aa). 4. If correct, this submission would substantially alter the clear operation of the text. Further, the Explanatory Memorandum to the Bill which introduced s 200F(1)(aa) into the Corporations Act explicitly states that the section was being introduced "to provide that shareholder approval is not required for a payment made pursuant to an order of a court." 5. This purpose has been recognised in interpreting the prohibitions and exemptions to termination payments: Clearly a balance has been struck between regulating questionable payments and allowing acceptable transactions and mandatory payments to proceed unhindered: Fox v GIO Australia Limited [2002] NSWIRComm 318 at [56] per Walton J. (emphasis added) (See also Fenwick C and Sheehan K, "Share-based remuneration and termination payments to company directors: What are the rules?" (2008) C&SLJ 71 at 76.) 1. It was submitted by the respondent that the construction they propose is necessary to avoid what would otherwise be a construction which does not conform with what was submitted to be the statutory purpose of Part 2D.2 of the Corporations Act; to ensure shareholder approval is sought for benefits paid to former officers. 2. It was submitted by the respondents that if their construction were not correct, it would be possible for the statutory purpose to be subverted by parties to a contract of employment approaching the court and, by consent, having orders made for a payment upon retirement – which they would characterise as damages for breach of contract – rather than, if no proceedings had been issued, proceeding under s 200F and making a genuine payment by way of damages for breach of contract, which payment would be limited by the provisions in the formula in ss 200F(3) and (4). 3. To understand the respondent's construction argument it is sufficient to hypothesise a case in which a court makes an order that a former officer of a corporation be paid an amount in excess of his or her notional entitlement under s 200F(2), in circumstances that also meet the description of "a genuine payment by way of damages for breach of contract". The receipt by the former officer of that court ordered payment (made in contravention of s 200B) would be a strict liability offence: s 200D. There would be no relevant defence as the "error" made by the recipient (being that s 200F(1)(aa) applied as an exemption to the prohibition in s 200B) would be one of law and not fact: s 9.2 of the Criminal Code. 4. In my view, the construction advanced by the respondent should be rejected. It is not supported by the text or the relevant extrinsic materials. The evident purpose of the legislation is also expressed too broadly by the respondent. The statutory purpose of the provisions is, broadly speaking, to ensure shareholder approval is sought for benefits paid to former officers, but that prohibition is subject to the exemptions and limitations for which the legislation specifically provides. 5. If correct, the respondent's construction would provide that a person who had been ordered by a court to make a payment (which was also capable of falling within the relevant definitions of benefit to a retired officer or employee) and the person who received such a payment would be faced with a criminal sanction. It would not be a defence to those proceedings that there was any relevant mistake of fact, which would provide the only defence available to a person charged. 6. Failing to make a payment ordered by a court could also have potentially drastic consequences for the corporation involved. 7. Accordingly, on the construction advanced by the respondent, parties who were doing no more than complying with an order validly made by a court would be open nonetheless to criminal prosecution, without the availability of a defence under the Criminal Code. 8. This consequence of the construction of the section advanced by the respondent also makes it clear in my view that it cannot be correct. The sections are capable of operating in harmony without the construction advanced by the respondent and each has work to do as I have indicated above. 9. Finally, before leaving this issue, I should record that I do not accept that a court faced with a contrivance of the kind suggested by the respondent is without power to bring that matter to the attention of relevant regulatory authorities who may seek to intervene and make submissions on the topic. If necessary, the court could appoint counsel to address the court on the issue. 10. Given the highly removed circumstances of the example given by the respondent to the facts of this case I would prefer to express no concluded view on this issue beyond what is necessary for the construction argument addressed above. 11. For the above reasons I would dismiss Ground 3 of the Notice of Contention. Mitigation of damage and the application to lead new evidence 1. LCM submits in the final ground of its Notice of Contention that the primary judge was in error in failing to entertain submissions concerning mitigation of damage. 2. In closing address in reply before the primary judge, LCM made a submission regarding mitigation of damage. This was the first occasion upon which LCM had made such a submission. Failure to mitigate had not been pleaded in the defence or been the subject of submissions prior to that point. Mitigation of loss was not the subject of any specific evidence nor, critically, any cross-examination of Mr Coope. 3. The primary judge, after noting that mitigation was not pleaded, found that Mr Coope had no opportunity to deal with the submission and that Mr Coope may well have sought to adduce evidence to answer a plea of mitigation. His Honour concluded, in those circumstances, that he would not be prepared to entertain that submission: [J[197]]. 4. There was, on that occasion, no application to amend the pleading, and no such application was made to this Court. 5. LCM's submissions in this Court focused upon the distinction in mitigation of loss between avoidable loss and avoided loss, referring to Tasman Capital Pty Limited v Sinclair [2008] NSWCA 248; 75 NSWLR 1. It submitted that in this Court LCM is now solely seeking to address avoided loss and that, at the time of the trial, avoided loss could not have properly been pleaded or proved. 6. The further evidence which was proposed to be tendered established that Mr Coope is now employed by a Vannin entity, however, that evidence is silent as to the terms of that employment. Senior Counsel now appearing for LCM invites this Court to infer on the basis of evidence which was tendered at the trial that the terms are likely to be the same or similar namely a salary of $450,000 and 20 per cent profit share of some part of the business conducted by Vannin (in an amount which, could not at this point be calculated). 7. Whilst I accept the distinction made by the respondent that avoidable loss and avoided loss are different aspects of the plea of failing to mitigate, the problem with the submission made on behalf of LCM is that it seeks to take advantage of what it submits was established at the trial, namely that it was probable Mr Coope would obtain alternative employment in the near future on certain terms, whilst at the same time accepting that this was not an issue before the primary judge. If mitigation had been raised as an issue no doubt Mr Coope could have addressed this subject by evidence. He was not given this opportunity by reason of the conduct of the case by LCM. If, contrary to the way the trial was conducted below, there had been a plea of failing to mitigate based on avoidable loss and cross-examination of Mr Coope directed to that subject (and an opportunity given to him to address that topic) I may have been more sympathetic to the submission that evidence on appeal of subsequent matters going to avoided loss should be permitted. 8. What is determinative here is that this Court would not be in a position, even if the fresh evidence were admitted, to make any sensible calculation of the amount Mr Coope would have earned under the LCM contract compared to that he is alleged now to be earning under his contract with Vannin Malta (including distributions by reason of any shareholding in Vannin Malta). There is no evidence of Mr Coope's current salary (even if the fresh evidence were to be admitted). In addition, Mr Craddock gave evidence that he estimated prior to Mr Coope's dismissal that Mr Coope's interest in LCM was worth approximately $10 million over 3 years. Of course, this is not valuation evidence but provides a basis for caution in this Court making any comparison of Mr Coope's financial position before and after his summary dismissal. Mr Coope's financial position was not explored at the trial, including what impact Mr Coope's summary dismissal had on that position, given that he remained a shareholder in LCM after that time. 9. I do not accept the respondent's submission that there was any flaw, let alone a fundamental flaw, in the primary judge's reasoning that it was unreasonable for LCM to seek to rely on a mitigation submission made orally the first time in reply in circumstances where that issue had not been pleaded and no evidence had been led and no cross-examination conducted of Mr Coope on the topic. Further, I do not accept that, absent any attempt to amend its pleading to now rely on a mitigation defence, LCM is entitled to rely on "avoided" loss. 10. In my view, Ground 4 of the Notice of Contention should be dismissed and the Notice of Motion dated 26 February 2016 containing an application to lead fresh evidence contained in the two affidavits of Mr Grieve sworn 26 February 2016 should be rejected. Conclusion 1. For the reasons above, I propose the following orders: 1. appeal dismissed; 2. the appellant is to pay the costs of the respondent of the appeal on a party–party basis as agreed or assessed, save for those costs referable to order 4; 3. the respondent's Notice of Motion dated 26 February 2016 is dismissed; 4. the respondent to pay the appellant's costs of the Notice of Motion on a party–party basis as agreed or assessed; 5. In relation to the cross-appeal: 1. the cross-appellant's written submissions of no more than five pages containing such orders (including costs) it submits should be made on the cross-appeal to be forwarded by email to Gleeson JA's associate by 5pm, 15 June 2016 and served on the cross-respondent at the same time. Those submissions should address whether the opportunity to make any further oral submissions is sought; 2. the cross-respondent's written submissions of no more than five pages containing such orders (including costs) it submits should be made on the cross-appeal to be forwarded by email to Gleeson JA's associate by 5pm, 22 June 2016 and served on the cross-appellant at the same time. Those submissions should address whether the opportunity to make any further oral submissions is sought; 3. the cross-appellant to provide any written submissions in reply of no more than two pages to be forwarded by email to Gleeson JA's associate by 5pm, 24 June 2016 and served on the cross-respondent at the same time; 4. liberty to apply to this Court on three days written notice. ********** Amendments 08 June 2016 - "prescriptive" changed in "proscriptive" in the quote at [104] "loyalty of the beneficiary" changed to "loyalty of the fiduciary" at [105] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 June 2016