Dalkeith Resources Pty Ltd v Regis Resources Limited

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 10323 of 2009

BETWEEN

DALKEITH RESOURCES PTY LTD (ACN 061 721 453)	Plaintiff
v
REGIS RESOURCES LIMITED (ACN 009 174 761)	Defendant

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JUDGE:	MACAULAY J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 – 25 May 2012
DATE OF JUDGMENT:	29 June 2012
CASE MAY BE CITED AS:	Dalkeith Resources Pty Ltd v Regis Resources Limited
MEDIUM NEUTRAL CITATION:	[2012] VSC 288

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CONTRACT — Whether contract for services validly terminated — Contract for services as managing director — Provisions in constitution and in Corporations Act for removal of director concurrent and alternative — Director removed from office under s 203D Corporations Act — Valid termination under contractual right where managing director ‘vacated office’ by ceasing to be a director under the Corporations Act.

CONTRACT — Contractual entitlement to “earn a contract bonus” — Whether terms of bonus orally agreed — No oral agreement — No authority to contract.

CONTRACT — Contractual obligation to grant share options — Whether implied term that the obligation to grant options was subject to shareholders’ approval — No breach of contract for failure to grant options — No damages resulting.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Stewart Anderson SC with Mr David Morgan	Holding Redlich
For the Defendant	Mr Matthew Connock SC with Mr Richard Attiwill	Freehills

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Arguments and issues....................................................................................................................... 2

Summary of conclusions................................................................................................................... 4

Did Regis breach an obligation to give Dalkeith nine months’ notice of termination?....... 5

The termination provisions in the services contract................................................................ 6
Vacating office under the constitution....................................................................................... 8

Removal under a provision of the constitution........................................................................... 9
Otherwise ceases to be a director............................................................................................... 12

No breach..................................................................................................................................... 13
Damages if there was a breach?................................................................................................ 14
Conclusion on termination........................................................................................................ 14

Did Regis breach an obligation to pay Dalkeith a $100,000 bonus?...................................... 14

Was an agreement made as alleged?....................................................................................... 15

Events preceding 7 May 2008.................................................................................................. 16
The conversation with Dr Folie................................................................................................ 18
Events after the conversation.................................................................................................... 18
Authority.................................................................................................................................. 20

Other arguments......................................................................................................................... 21
Conclusion on bonus.................................................................................................................. 22

Is Regis liable to pay Dalkeith damages for failure to issue it options?................................ 22

Was the promise to grant options subject to shareholder approval?................................. 23
The 650,000 options.................................................................................................................... 25
2007/2008 year............................................................................................................................ 26
2008/2009 year............................................................................................................................ 28
Conclusion on options............................................................................................................... 30

Conclusion......................................................................................................................................... 30

HIS HONOUR:

Introduction

1. In August 2004, David Walker became managing director of Regis Resources Ltd (the defendant), a publicly listed, start-up mining company.  From 1 July 2005 onwards, his services as managing director of Regis were supplied by his family company, Dalkeith Resources Pty Ltd (the plaintiff).  Those services were supplied under a services contract made between Regis and Dalkeith, initially for a term of two years until 30 June 2007 but then, by an amendment to the agreement, extended until 30 June 2009 (‘the services contract’).[1] 

   [1]Exhibit A, tab 47, pp 974-996 and tab 84, pp 1270-1271.

1. On 4 May 2009, shortly before the expiry of the extended term, Mr…