Wollongong Coal Ltd v Gujarat NRE Properties Pty Ltd [2020] NSWSC 254

Supreme Court New South Wales

Medium Neutral Citation: Wollongong Coal Ltd v Gujarat NRE Properties Pty Ltd [2020] NSWSC 254 Hearing dates: 4, 5, 6, 7, 11 November 2019 Date of orders: 13 March 2020 Decision date: 13 March 2020 Jurisdiction: Equity Before: Rein J Decision: See [196]. Catchwords: CORPORATIONS – Directors and officers – Fiduciary duties and Directors' duties – Duty to act in good faith in the best interests of company and for proper purpose – Duty not to place oneself in position of conflict of interest between oneself and principal – Where plaintiff company sued two former directors for breach of fiduciary obligations, both in equity and pursuant to 181(1) and 182(1) of the Corporations Act 2001 (Cth) – Where the impugned conduct arose in connection with a 2008 board resolution authorising purchase and development of a house in Wollongong – Project involved plaintiff spending $10.153 million through a subsidiary company whose only asset was the house; all the shares in the subsidiary were sold to a third party in 2013 for $3.75 million, which is what the house was then valued at, leading to a loss for the plaintiff of $6.4 million – In promoting the project to the company's board, the defendant directors (a married couple) intended to, and later did, use the house as an exclusive rent-free residence for themselves and their children, but did not disclose this intention to the board; they instead advanced a contrary purpose to secure passage of the resolution and personally voted on it instead of recusing themselves – Where one of the two defendant directors cross claimed against the company secretary and the two non-defendant directors of the company who voted on the impugned resolution, contending that if he himself was found liable then these three cross defendants were similarly liable – Held: defendant directors in breach of fiduciary duties and liable to plaintiff for loss of $6.4 million plus interest. Cross claim failed, as the cross defendants were not shown to have been aware of the defendant directors' true purpose in promoting the purchase.