The State of South Australia and South Australian Asset Management Corporation v Timothy Marcus Clark No. SCGRG 94/456 Judgment No. 5499 Number of Pages 58 Corporations (1996) 66 Sasr 199

The case concerned a claim by the State Bank of South Australia and the State of South Australia against Timothy Marcus Clark, the managing director and chief executive officer of the bank, for damages arising from the purchase of the whole of the issued share capital of Oceanic Capital Corporation Ltd for an effective purchase price of $59 million. The fair value of the shares at the time of purchase was in fact $17.2 - $21 million. No proper valuation was obtained before the bank was committed to the purchase. Furthermore, Clark did not disclose to the board of directors the fact that another company, to which Oceanic was indebted in the sum of $27 million, which debt was discharged by direct payment to the other company on settlement of the sale, was a wholly owned subsidiary of an investment and finance company itself in straitened financial circumstances, in which he held a substantial shareholding and of which he was a director. Clark raised by way of defence s29 of the State Bank of South Australia Act, which provides that no liability attaches to a director for an act or omission "done or made, in good faith, and in carrying out, or purporting to carry out, the duties of his office". The court held that the section was of application, but that Clark failed to discharge the onus of proof that he acted in "good faith". The court also held that Clark was guilty of negligence in failing to ensure that a proper independent valuation of the shares was made and, notwithstanding s11 of the Act, was also in breach of the fiduciary duties which he owed as managing director and chief executive officer. Damages were assessed at $81 million. Judgment was entered in favour of the plaintiffs against Clark in the sum of $81,225,826.25, inclusive of interest.