Links Golf Tasmania Pty Ltd v Sattler [2012] FCA 634
Citation:
Links Golf Tasmania Pty Ltd v Sattler [2012] FCA 634
Parties:
LINKS GOLF TASMANIA PTY LTD (ACN 096 711 661) v RICHARD GEOFFREY SATTLER and R.G. SATTLER NOMINEES PTY LTD (ACN 009 525 348)
File number:
VID 204 of 2010
Judge:
JESSUP J
Date of judgment:
26 June 2012
Catchwords:
EQUITY – Fiduciary duties – Company director and CEO – Company conducting business on land leased from fiduciary – Whether fiduciary entitled to conduct similar business on adjacent tract of his own land – Whether opportunity to do so resulted from fiduciary position – Whether second business would be in competition with first – Whether fiduciary would be confronted with conflict of interest – Whether second business within scope of fiduciary obligation – Whether removal from position as director and resignation as CEO affected fiduciary obligations.
EQUITY – Fiduciary duties – Company director and CEO obtaining loans in own name for purpose of developing company’s business – Loan funds invested as share capital in company – Other shareholders aware of loans and of that investment but not of detailed terms of loans – Whether opportunity to obtain loans resulted from fiduciary position – Whether company’s consent “fully‑informed” – Whether holding fiduciary to account would be unconscientious – Whether too late for equity to intervene.
EQUITY – Fiduciary duties – Company director and CEO conducting similar business in own name on adjacent tract of land – Development of that business financed in part by government loan – Whether company’s information and trading experience used for purpose of obtaining loan – Whether breach of fiduciary duty for director/CEO to have done so – Whether company’s claim barred by laches – Whether director acted honestly and should be excused.
EQUITY – Fiduciary duties – Company director and CEO with own business on adjacent tract land making limited use of company’s staff in their own time – Whether breach of fiduciary duty – Whether conflict of interest – Whether permissible if proper accounts kept – Whether director acted honestly and should be excused.
EQUITY – Fiduciary duties – Company director and CEO providing accommodation for company’s customers – Company staff and office used for bookings and other administrative services – Company’s remuneration fixed administratively by director/CEO – Whether conflict of interest – Whether company accepted remuneration – Whether company’s claim now barred by laches – Whether director acted honestly and should be excused.
EQUITY – Fiduciary duties – Company director and CEO applied for government funding for construction of wellness centre in own name – Centre to be an attraction for company’s customers – Whether funding should have been sought in name of company – Whether opportunity to obtain funding resulted from fiduciary position of director/CEO – Whether conflict of interest – Director/CEO unilaterally re-located wellness centre to the advantage of own business conducted on adjacent tract of land – Whether breach of fiduciary duty – Whether director/CEO acted…
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
Links Golf Tasmania Pty Ltd v Sattler [2012] FCA 634
Case
[2012] FCA 634
Decision Date
CaseChat Overview and Summary
Links Golf Tasmania Pty Ltd sued Sattler for various breaches of fiduciary duty. Sattler, a company director and CEO, was accused of using his position to conduct similar businesses on adjacent land, obtain loans in his own name for the company’s business, and use company information and staff for his personal benefit. The court had to determine whether these actions constituted breaches of fiduciary duty and whether Sattler was entitled to be excused due to honest conduct.
The court analysed whether Sattler's actions were within the scope of his fiduciary obligations and whether they resulted from his position. It found that Sattler had indeed used his position to gain personal advantages, such as conducting business on adjacent land and obtaining loans for personal benefit. The court also considered whether Sattler's actions were in competition with the company's interests and whether they involved conflicts of interest. It concluded that Sattler's conduct breached his fiduciary duties as he had not acted in the best interests of the company.
The court further examined whether Sattler’s actions could be excused due to honest conduct. Although Sattler claimed to have acted honestly, the court found that his actions were not justified and he remained liable for the breaches. The court concluded that Sattler’s resignation from his position did not absolve him of his fiduciary duties.
The court ordered the proceeding to be listed for submissions on the appropriate orders and costs. The specific orders were to be made based on the court’s reasons published.
Orders
Orders of the court
1. The proceeding be listed at 10:15 am on 16 July 2012 for the purpose of receiving the parties’ submissions on the orders proper to be made to reflect the court’s reasons published this day, and as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
As there were many people and organisations mentioned in the evidence in this case, for ease of reference I have appended to these reasons a list of the shorthand names by which they are referred to, and an indication of the place in the reasons where each is first the subject of mention. THE FACTS OF THE CASE The narrative must commence well before what is now the Barnbougle Dunes golf course ever existed as such. Sattler had for some time been a successful businessman and investor in Tasmania. His first major investment was the purchase in 1975 of a small country fuel distribution agency in Tasmania. He turned this company into one of the largest of its kind in Tasmania, selling it in 1980. He then invested in hospitality. Over the next 20 years, he bought, developed and sold several hotel businesses and freeholds, and operated the Old Woolstore Apartment Hotel, which is now one of the biggest apartment hotels in Australia. His other line of work was agriculture, in which he maintained an interest. In 1987, he purchased a property of about 11,500 acres in Oatlands. In 1989, Sattler purchased the farming property known as “Barnbougle”. This property, of about 13,000 acres, lies generally to the east of Bridport. It has a coastal frontage to Bass Strait, as well as substantial tracts of pastoral land. The coastal portion is divided by Great Forester River, which runs from south to north and discharges into Bass Strait. Locally, the course followed by the river through the Barnbougle property is also referred to as “The Cut”. The coastal portion, as I have described it, consists principally of sand dunes on which the main vegetation is marram grass. It seems that this area is not well-suited for productive farming. On the other part of the land purchased by Sattler in 1989, he and his wife Sally (“Mrs Sattler”) operate Barnbougle Farm. They run between 4,000 and 5,000 head of cattle, and produce about 5,500 tonnes of potatoes each year. The farm employs 8-10 full-time equivalent employees the year round, in addition to casual staff on a seasonal basis. The Sattlers have constructed irrigation infrastructure to place approximately 3,000 acres of this land under permanent irrigation. Barnbougle Farm is one of the largest farming properties in mainland Tasmania. An important part of Sattler’s decision to purchase the Barnbougle property was the potential of the property for commercial development, including in particular that portion with a coastal frontage to Bass Strait. In 1990, a firm of consulting surveyors based in Launceston, Campbell Smith Phelps Pedley Pty Ltd (“Campbell Smith”), was engaged by Sattler, through his solicitors, to do some work relating to the severance of some of the land titles which constituted the Barnbougle property. Then, in October 1992, Sattler contacted Campbell Smith again, informing them that he was planning to review the potential for development of part of the coastal portion of Barnbougle for a canal residential development, a motel and a golf course. In early 1993, Ian Green, Paul Phillips and John Dent of Campbell Smith visited Barnbougle, and Sattler took them to the area to which he referred as “Lost Farm”. They stood on a sand dune with a survey map. Sattler pointed out to them the various developments which he had in mind. The surveyors marked up the map accordingly, including the letters “GC” adjacent to the coast and immediately to the east of Great Forester River. Those letters signified “golf course”. Mr Green prepared a note of their discussions, an item on which read “Golf Course in ‘lost farm’ area (an area of consolidated sand dunes – behind word ‘Waterhouse’ of ‘Waterhouse Beach’.” Mr Dent subsequently produced a sketch map of Sattler’s proposed developments, on which he marked (on the coastal position to the east of the river) the notation: “Golf Course & Motel? Lost Farm. (Road Access?)” This map was dated March 1993. As part of his proposal, Sattler commissioned an investigation of the potential of the coastal portion of the land for canal development. After testing, however, it was determined that this proposal would not be viable, due to the low-lying nature of the land. The commercial viability of such a development was also adversely affected by the 1989/1991 Tasmanian recession. In the result, Sattler thereafter focused upon the Barnbougle farming operation, and upon his other commercial interests in the hospitality industry.