Southern Resources Limited v Residues Treatment & Trading Company Limited

Southern Resources Limited (the applicant) and Residues Treatment & Trading Company Limited (the respondent) were parties to proceedings in the High Court of Australia concerning the validity of a written resolution of directors. The dispute centred on the interpretation and legal effect of article 112 of the company's Articles of Association, which permitted directors to pass resolutions by written consent rather than by holding a formal meeting.

The primary legal issue before the court was the construction of article 112, specifically whether it could be validly used when one or more directors had a conflict of interest. The trial judge, Justice Perry, had held that the article could not be used if any director had a conflict, as such a director would be unable to vote at a meeting. This interpretation conflicted with an earlier decision by Mr Justice Napier in *Re Charles Atkins*, who had held that a written resolution was validly passed even with a director who had a manifest conflict. The Full Court had not resolved this conflict.

The applicant argued that Justice Perry's construction was incorrect. They contended that if two directors had a conflict of interest, the remaining directors constituted "all the directors" for the purposes of the article, meaning the article could still be validly used. The applicant sought to demonstrate that the Full Court's reasoning was unclear and did not definitively resolve the conflict between the two Supreme Court of South Australia decisions, suggesting the Full Court may have viewed the article as having only evidentiary importance.