1.2 The two companies.......................................................................................... 4
1.2.1 Kia Ora....................................................................................................... 4
1.2.2 Western United......................................................................................... 6
1.3 The scheme alleged by Kia Ora...................................................................... 7 1.4 The first moves towards the takeover............................................................ 8 1.5 Nelson Wheeler Perth...................................................................................... 12 1.6 The retaining of Nelson Wheeler Perth......................................................... 13 1.7 The preparation of the report required by the listing rules............................ 13 1.8 Consideration of the Nelson Wheeler report by the directors of Kia Ora. 16 1.9 The decision to proceed.................................................................................. 16 1.10 The advice to the shareholders about the proposal.................................... 18 1.11 The extra-ordinary general meeting............................................................ 22 1.12 The Horwath and Horwath report................................................................ 24 1.13 The takeover is completed............................................................................ 27 1.14 Proceeds of sale of shares by directors and senior management............. 28 1.15 The relevance of the stock market crash..................................................... 29
1.16 The trial judge’s findings on the issue of independence........................... 31
1.16.1 Mawson Pacific...................................................................................... 33 1.16.2 Wattle Gully............................................................................................ 36 1.16.3 Cullimore Investments Pty Ltd............................................................. 36 1.16.4 Back-to-back loans................................................................................ 37 1.16.5 The Kia Ora share registry.................................................................... 38
1.17 Sales of shares by Parry Corporation and Autocure Ltd........................... 39
1.17.1 The Parry transaction............................................................................. 40
1.17.2 The Autocure transaction...................................................................... 41
1.18 Duty of care.................................................................................................... 42 1.19 Were fiduciary obligations owed by Nelson Wheeler to Kia Ora?.......... 44 1.20 Contract........................................................................................................... 45 1.21 Liability of the directors................................................................................ 47
1.22 Capital gains tax............................................................................................. 48
2. DUTY OF CARE IN TORT............................................................................. 49
2.1 The submission by Nelson Wheeler.............................................................. 49
2.2 Consideration of the submission.................................................................... 56
3. DUTY OF CARE IN CONTRACT................................................................. 73 4. BREACH OF DUTY......................................................................................... 75 5. CAUSATION IN TORT................................................................................... 79
5.1 Facts relevant to causation.............................................................................. 79 5.2 The judge’s reasoning...................................................................................... 88 5.3 Relevant principles.......................................................................................... 89
5.4 Application of principles................................................................................ 94
6.1 Issues.................................................................................................................. 102 6.2 Principles........................................................................................................... 103 6.3 The share issue - relevance in determining the price paid.......................... 107 6.4 The value to be attributed to the shares issued by Kia Ora......................... 117 6.5 Damages for loss of use of money and of the value attributable to the share consideration provided by Kia Ora to Western United................................................................. 124 6.6 Other issues relevant to damages................................................................... 132 6.7 Statutory interest.............................................................................................. 133 6.8 Capital Gains Tax............................................................................................. 140
6.9 Conclusion on damages................................................................................... 142
7.1 Availability of the plea of contributory negligence..................................... 146 7.2 The duty to be independent............................................................................ 147 7.3 The test for contributory negligence............................................................. 149 7.4 Was Kia Ora guilty of fault and did it suffer damage as a result of that fault? 150 7.5 Is the conduct that constitutes fault to be attributed to Kia Ora?............... 152
7.6 Apportionment of damages............................................................................. 166
8. THE APPEALS BY SOMES AND LEE-STEERE.................................... 167
8.1 Somes’ Appeal.................................................................................................. 167 8.2 Breach of statutory duties............................................................................... 179 8.3 Appeal by Lee-Steere...................................................................................... 182
9.1 Introduction...................................................................................................... 184 9.2 Adequacy of the pleading................................................................................ 184 9.3 The approach of the trial judge....................................................................... 189 9.4 When do fiduciary obligations arise?............................................................ 190
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Duke Group Ltd v Pilmer [1999] SASC 97
Case
[1999] SASC 97
Decision Date
CaseChat Overview and Summary
In this case, The Duke Group Limited (In Liquidation) (Kia Ora) sued Nelson Wheeler Perth (NWP) and other defendants for their roles in a takeover of Western United Limited. The trial judge found that NWP breached their duty of care, fiduciary duty, and statutory duties, leading to significant financial loss for Kia Ora. On appeal, the Full Court of the Supreme Court of South Australia examined various legal issues, including the existence of a duty of care, the nature of the relationship between NWP and Kia Ora, the extent of damages, and the applicability of contributory negligence. The Court found that NWP was liable for breach of duty of care in tort and contract, and for breach of fiduciary duty. However, it concluded that there was no national partnership involving NWP and other defendants, and thus they were not liable for Kia Ora’s losses. The Court also found that the directors of Kia Ora were liable for breach of fiduciary and statutory duties, and that Kia Ora's damages should be reduced by 35% due to contributory negligence. The Court ordered NWP to pay Kia Ora damages and interest amounting to $117,073,842.91 in tort and contract, while the directors were liable for the full amount of damages and interest for breach of fiduciary duty. The Court also addressed issues relating to costs and contribution among defendants, inviting further submissions on these matters.