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Lewis Barrett, David Winston Simmons, Robert David Eavestaff Bakewell, Molly Veronica Byrne, William Fseld Nankivell, Robert Phillip Searcy, Anthony Gilbert Summers, Timothy Marcus Clark and FAI General Insurance...

Lewis Barrett, David Winston Simmons, Robert David Eavestaff Bakewell, Molly Veronica Byrne, William Fseld Nankivell, Robert Phillip Searcy, Anthony Gilbert Summers, Timothy Marcus Clark and FAI General Insurance...

Case [1994] SASC 4882 8 December 1994

Breach of Contract

Unconscionable Conduct

Corporate Law & Governance

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COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA BOLLEN(1), MILLHOUSE(2) and DUGGAN(3) JJ

CWDS
Practice - Appeal against refusal to strike out Statement of Claim on the ground that it disclosed no reasonable cause of action - appeal dismissed.

Corporations - Action against directors of State Bank alleging various breaches of duty in connection with acquisition of the total shareholding in another corporation - consideration of 529 of the State Bank of SouthAustralia Act, 1983 which exempts directors of bank from liability for acts or omissions done or made in good faith and in carrying out the duties of office - discussion as to meaning of "good faith". Held that onus is on appellants (defendants) to prove that they were entitled to the protection of s29. Australian Growth Resources Corporation Pty Ltd (Receivers and Managers Appointed) v Van Reesema and Ors (1988) 13 ACLR 261; Hid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 116 ALR 460; Webster v Lampard
(1993) 177 CLR 598 and Vines v Djordjevitch (1955) 91 CLR 512 referred to.

HRNG ADELAIDE, 14 November 1994 #DATE 8:12:1994

Counsel for appellants: Mr M Abbott QC with Mr N Iles
(except as listed below)

Solicitors for appellants: Piper Alderman
(except as listed below)

Counsel for appellant Clark: Mr J Goldberg

Solicitors for appellant Clark: Goldberg and Co

Counsel for appellant FAI: Mr M Maurice QC with
Mr G Muecke and Mr P Bracher

Solicitors for appellant FAI: David De L. Winter

Counsel for respondents: Mr T Gray QC with Mr T Stanley
and Ms M Perry

Solicitors for respondents: Crown Solicitor (SA)

ORDER
Appeals dismissed.

JUDGE1 BOLLEN J In my opinion it is reasonably arguable that the protection given by s29(1) of the State Bank of South Australia Act 1983 does not extend to cases of gross negligence or to cases where there was no real attempt by a director to fulfil the duty of care and diligence imposed on him by his position. For example, the protection given by the section may not extend to a director who acts without dishonesty but as a mere rubber stamp.

2. I think it possible for a director to act without bad faith yet not "in good faith".

3. The question whether protection can be extended is no doubt one of law. The application or not of the possible protection will depend on the facts. I think the whole issue should go to trial. Had it been possible to say as a matter of law that s29(1) must give protection against the consequences even of gross negligence or mere rubber stamping then, of course, no trial would have been necessary. But for the reasons given by Duggan J, with which I respectfully agree, it is not possible so to say.

4. I add that I agree with the reasoning of Duggan J on "onus of proof" in relation to the immunity given by s29(1). The onus is, in my…

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.

Continue reading Lewis Barrett, David Winston Simmons, Robert David Eavestaff...

Details

AGLC: Lewis Barrett, David Winston Simmons, Robert David Eavestaff Bakewell, Molly Veronica Byrne, William Fseld Nankivell, Robert Phillip Searcy, Anthony Gilbert Summers, Timothy Marcus Clark and FAI General Insurance... [1994] SASC 4882
Case: [1994] SASC 4882
Decision Date: 8 December 1994

CaseChat Overview and Summary

In this case, the respondents filed a lawsuit against several appellants, including former directors and the insurer of the directors of the State Bank of South Australia, alleging various breaches of duty in connection with the acquisition of another corporation's shares. The primary legal issue the court had to address was whether the appellants were entitled to the protection of Section 29(1) of the State Bank of South Australia Act 1983, which exempts directors from liability for acts or omissions done in good faith and in carrying out their duties. The court also had to determine the meaning of "good faith" in this context and the burden of proof regarding the immunity provided by Section 29(1).

The Full Court of the Supreme Court of South Australia held that the concept of "good faith" in Section 29(1) requires more than mere honesty; it also entails the exercise of caution and diligence expected of an honest person of ordinary prudence. The court found that the onus was on the appellants to prove that they were entitled to the protection of Section 29(1), not on the respondents to disprove it. This conclusion was based on the reasoning that the section provides a defence to directors, and thus, the burden of proof lies on the party seeking to rely on the special or additional facts of the defence.

The court ultimately dismissed the appeals, holding that it was reasonably arguable that the protection given by Section 29(1) does not extend to cases of gross negligence or where there was no real attempt by a director to fulfil the duty of care and diligence imposed on them. Consequently, the issue of whether the appellants acted in good faith and fulfilled their duties was left to be determined at trial.

ORDER: Appeals dismissed.

Orders