Heydon v NRMA Ltd; Bateman v NRMA Ltd; Morgan v NRMA Ltd

These three appeals, heard together, concerned claims brought by shareholders of NRMA Limited (NRMA) against NRMA and its directors, as well as against the legal advisers who acted for NRMA during its demutualisation. The central dispute revolved around allegations that the demutualisation process, which involved altering NRMA's articles of association to allow for the issue of shares to members, was undertaken in a manner that constituted oppression or expropriation of shareholder rights, and that the legal advice provided was negligent.

The primary legal issues before the court were whether the alteration of NRMA's articles of association was valid, particularly in light of the principles established in *Gambotto v WCP Ltd*, and whether the directors and legal advisers owed a duty of care to the shareholders. Specifically, the court had to determine if the lawyers' duty of care extended to advising on the potential for a High Court appeal to alter the law regarding corporate expropriation, and what standard of care was expected of senior counsel in providing such advice. Furthermore, the court considered whether the prospectus issued in relation to the demutualisation was misleading or deceptive.

The court's reasoning focused on the nature of the duty owed by directors to a company and its members, and the contractual duty owed by solicitors to their clients. It was held that the alteration of the articles of association was valid and did not constitute oppression or expropriation, as it was done for the benefit of the company as a whole and was within the powers conferred by the existing articles. The court found that the legal advisers had acted with reasonable care and skill, and that their duty of care did not extend to predicting or advising on a potential change in the law by the High Court, particularly when the *Gambotto* decision was not considered to be reasonably foreseeable in its application to the NRMA demutualisation. The claims against the directors and legal advisers were therefore dismissed.