Australian Hardboards Ltd v Hudson Investment Group Ltd

Australian Hardboards Ltd and others (appellants) appealed and cross-appealed from orders made by Einstein J concerning the rectification of an Entitlement Deed. The dispute centred on whether a subsequent deed purporting to amend the Entitlement Deed was validly executed, and whether a letter dated 23 July 2003 constituted a binding agreement for the disposal of a 50% shareholding in Bremer by HTP to HIG. The trial judge had found that the letter did not create a binding agreement, citing the intention of the parties to enter into a further formal agreement, consistent with the principles in *Masters v Cameron*.

The court was required to determine the validity of the purported amending deed, specifically whether it was executed with the necessary board authority and whether any breach of fiduciary duty by common directors affected its validity. Additionally, the court had to consider whether the letter of 23 July 2003 was intended to be legally binding, or if it represented an agreement in principle subject to the execution of a formal contract. The court also had to assess the trial judge's findings regarding the reliability of witnesses and the interpretation of documentary evidence.

The court reasoned that the purported amending deed was not validly executed due to a lack of proper board authority and formalities required for board meetings. The court found that the common directors, purporting to act for both companies, had not obtained the necessary approvals. Regarding the letter of 23 July 2003, the court upheld the trial judge's conclusion that it did not constitute a binding agreement, finding that the parties intended to be bound only upon the execution of a formal contract, thus falling within the first category of *Masters v Cameron*. The court also considered the evidence regarding the Entitlement Deed and its amendment, noting that a revised version was prepared and sent to Mr McLeod, with a specific provision concerning the payment upon disposal of the Land.

The appeal and cross-appeal were dismissed, save for a variation to an order concerning the execution of mortgages by the Third Defendant in favour of the Plaintiff. The appellants were ordered to pay the costs of the appeal, and the cross-appellant was ordered to pay the costs of the cross-appeal.