Is there a serious question to be tried?
59Robash puts GPNL's claims in various ways and, to some extent, its position shifted during the course of argument. The claims are largely identified in a proposed statement of claim prepared by Robash. That statement of claim alleges that Mr Palmer:
(a) negotiated with BHPB to buy QNI in his own interest instead of negotiating the sale to GPNL (para 23);
(b) failed to inform GPNL of the progress of his negotiations with MCC and consequently hindered GPNL's ability to negotiate with BHPB (para 24);
(c) entered into an agreement to acquire the shares in QNI in circumstances where he had been negotiating to acquire those shares for GPNL (para 27).
60The statement of claim alleges that, in engaging in that (and other) conduct, Mr Palmer:
(a) breached his common law duties not to obtain an unauthorised benefit from his position as a director of GPNL and not to put himself in a position of conflict (para 30-1);
(b) did not exercise his powers or discharge his duties as a director of GPNL in a way that a reasonable person in his position would in breach of s 180 of the Act (para 32);
(c) did not act in good faith in the best interests of GPNL or for a proper purpose in breach of s 181 of the Act (para 33);
(d) improperly used his position as a director of GPNL to gain advantage for himself or the Palmer companies or to cause detriment to GPNL in breach of s 182 of the Act (para 34).
61During the course of submissions, Mr Stevenson SC, who appeared for Robash, also submitted that there was a serious question to be tried that Mr Palmer improperly used information that he obtained as a director of GPNL to gain an advantage for himself or the Palmer companies or to cause detriment to GPNL in breach of s 183 of the Act. Robash provided details of the information on which it relied in supplementary written submissions. It was not, however, contended that Mr Palmer breached a duty of confidence that he owed to GPNL by using the information in formulating his own bid for the Yabulu refinery.
62In support of the allegation that Mr Palmer breached his duties at common law, Mr Stevenson SC relied on the decisions of the House of Lords in Boardman v Phipps [1967] 2 AC 46 and Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134n, among others. In the latter case, the directors of the appellant incorporated a subsidiary to lease two cinemas in connection with the appellant's business. They became directors of the subsidiary as well. Initially, it was proposed that the capital of the subsidiary be 2,000 pounds and that the directors would give guarantees in respect of the lease payments payable by the subsidiary. Shortly afterwards, an offer was made to acquire all of the shares in the appellant for 92,500 pounds with 15,000 pounds of that amount being apportioned to the subsidiary. One of the directors refused to give the guarantee. As a result, it was decided that the subsidiary would raise further capital by issuing additional shares to the directors. The sale of the shares fell through but a short time later the shareholders in both companies received another offer for their shares, which resulted in the directors making a substantial profit. The House of Lords held that the directors were liable to account for that profit to the appellant. It did not matter that the directors were acting in good faith or that the appellant itself was not in a position to take up the shares. As Lord Russell explained (at 144-5):
The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made.
63In Boardman v Phipps [1967] 2 AC 46, a solicitor acted for the trustees of a testamentary trust which owned a substantial minority interest in a private company. The solicitor, on behalf of the trust, received an offer to acquire those shares and, following further investigations, he recommended that the trust seek to acquire a controlling interest in the company. The trustees rejected that suggestion. He and one of the beneficiaries of the trust then decided to make a takeover offer for the shares themselves. In the course of negotiating to acquire the additional shares, the solicitor and beneficiary used the substantial minority interest of the trust to obtain detailed knowledge of the assets of the company and their value. The solicitor also used considerable expertise of his own. As a result of acquiring the shares, the solicitor and beneficiary made a substantial profit, as did the trust on the shares that it held. A majority of the House of Lords held that the solicitor and beneficiary were liable to account for the profit they made to the trust. It did not matter that they were acting in good faith or that the trust itself was unwilling to acquire the shares itself. However, the majority held that the solicitor and beneficiary were entitled to be given credit on a generous scale for their work and skill in acquiring the shares. In reaching that conclusion, Lord Hodson stated the relevant legal principle in these terms (at 105):
The proposition of law involved in this case is that no person standing in a fiduciary position, when a demand is made upon him by the person to whom he stands in the fiduciary relationship to account for profits acquired by him by reason of his fiduciary position and by reason of the opportunity and the knowledge, or either, resulting from it, is entitled to defeat the claim upon any ground save that he made profits with the knowledge and assent of the other person.
64Boardman v Phipps was distinguished in Queensland Mines Ltd v Hudson (1978) 18 ALR 1. In that case, Mr Hudson and Mr Korman formed Queensland Mines initially to prospect for uranium. That proposal was ultimately abandoned. However, they were also interested in applying for licences to explore for iron ore in Tasmania. Their intention was to form a new company to do so, but in the meantime they used Queensland Mines for that purpose and it paid expenses incurred in connection with the application for the licences. Two licences were applied for by Mr Hudson in his own name. It was accepted that Mr Hudson had used the good name of Queensland Mines to do so. In February 1961, after Mr Hudson had applied for the licences, Mr Korman's companies got into severe financial difficulties. Mr Korman told Mr Hudson the position on 19 February 1961 and on 23 February 1961 the licences were issued to Mr Hudson. On 8 March 1961, Mr Korman told Mr Hudson that there was no possibility of him proceedings with the licences. Mr Hudson, as was widely reported in the press at the time, formed a new company, which he announced would bear the expenses of the licences until a public company could be formed. Some time later, on 13 February 1962, the board of Queensland Mines passed a resolution in these terms:
It was agreed that in view of all the explanations and the large amount of cash that would be required to finance the project, nothing could be gained by pursuing the matter any further.
By June 1963, Mr Hudson had proved the existence of valuable deposits and had been successful in interesting an American company in the project, as a result of which he made substantial profits.
65The Privy Council concluded that Mr Hudson was not liable to account for those profits to the company. The view it took was that the company had decided, at least by February 1962, not to pursue the licences itself, and that that decision was a fully informed one:
The board of the company knew the facts, decided to renounce the company's interest, whatever it was, in the Tasmanian iron ore venture, and assented to Mr Hudson doing what he could with the licences at his own risk and for his own benefit. The position after 13 February can be put in either of two ways. It can be said that from that date the venture based on the licences was "outside the scope of the trust and outside the scope of the agency" created by the relationship of director and company - a relationship which continued to exist between Mr Hudson and Queensland Mines. Or it can be said that on that date Queensland Mines gave their fully informed consent to pursue the matter no further and to leave Mr Hudson to do what he wished or could with the licences. (at 18 ALR 9-10)
66There is a question about the precise principle for which Queensland Mines stands. Normally, in the absence of a provision in the articles permitting the board to authorise or ratify conduct which would otherwise amount to a breach of fiduciary duty, conduct of that type can only be authorised or ratified by the company in general meeting: Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134n at 150 (Lord Russell), 157 (Lord Wright); Furs Limited v Tomkies (1936) 54 CLR 583 at 592 per Rich, Dixon and Evatt JJ; Woolworths Ltd v Kelly (1991) 22 NS W LR 189 at 228 per Mahoney JA. It is sometimes suggested that Queensland Mines stands for an exception to that principle which permits authorisation or ratification by a board even in the absence of an appropriate provision in the company's constitution where the board can be regarded as representative of all shareholders - as in the case of a company which is essentially a joint venture and each member of the joint venture has a right to appoint one or more board representatives: see RP Austin and IM Ramsay, Ford's Principles of Corporations Law, LexisNexis, at [9.340]; Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 403 per Brereton J at [21]. That may explain the second ground advanced by the Privy Council for its conclusion, but it does not explain the first. That ground turned on the view that there was no breach by Mr Hudson because the company had abandoned any interest in the licences and, in doing so, had put the venture outside the scope of the fiduciary duties owed by Mr Hudson.
67Boardman v Phipps and Regal (Hastings) Ltd have been approved by the High Court on a number of occasions: see, for example, Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 393-4 per Gibbs J; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 67-8 per Gibbs CJ; at 103 per Mason J; Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544. In Hospital Products , Mason J summarised the relevant principles in these terms (at 107):
The principle, accepted by the courts below, is that the fiduciary cannot be permitted to retain a profit or benefit which he has obtained by reason of his breach of fiduciary duty. A fiduciary is liable to account for a profit or benefit if it was obtained (1) in circumstances where there was a conflict, or possible conflict of interest and duty, or (2) by reason of the fiduciary position or by reason of the fiduciary taking advantage of opportunity or knowledge which he derived in consequence of his occupation of the fiduciary position. [footnote omitted]
See also Chan v Zacharia (1984) 154 CLR 178 at 199 per Deane J.
68However, the High Court's approval of Boardman v Phipps and Regal (Hastings) Limited has not been unqualified. In Warman , for example, the question was whether the plaintiff was entitled to an account of profits in circumstances where it was clear that the fiduciary had breached his duties. In that case, Warman, which manufactured and distributed slurry pumps, had a distribution agreement with an Italian company known as Bonfiglioli. Bonfiglioli was looking to enter into a joint arrangement, preferably with Warman, for the local assembly of its products in Australia. The management of Warman indicated that it was not interested in such an arrangement. The general manager of the Queensland branch of Warman, Mr Dwyer, then wrote to Bonfiglioli indicating that he was considering leaving Warman to set up his own business "which would include and feature Bonfiglioli". Subsequently, Warman asked Mr Dwyer if he was interested in acquiring Warman's agency business. Mr Dwyer declined and instead carried on secret negotiations with Bonfiglioli to establish a joint venture with it. The joint venture was established and was profitable. Warman sought an account of those profits. The High Court held that Warman was entitled to an account of profits for the first two years. In reaching that conclusion the court said (at 559):
Although an account of profits, like other equitable remedies, is said to be discretionary, it is granted or withheld according to settled principles. It will be defeated by equitable defences such as estoppel, laches, acquiescence and delay. And, notwithstanding what was decided in Regal (Hastings) Ltd v Gulliver and Phipps v Boardman , it may be that:
"the liability to account for a personal benefit or gain obtained or received by use or by reason of fiduciary position, opportunity or knowledge will not arise in circumstances where it would be unconscientious to assert it or in which, for example, there is no possible conflict between personal interest and fiduciary duty and it is plainly in the interests of the person to whom the fiduciary duty is owed that the fiduciary obtain for himself rights or benefits." [ Chan v Zacharia (1984) 154 CLR at 204-5 per Deane J; 53 ALR at 438.]
The conduct of the plaintiff may be such as to make it inequitable to order an account. Thus a plaintiff may not stand by and permit the defendant to make profits and then claim entitlement to those profits. [ Re Jarvis (decd) [1958] 1 WLR at 820-1 citing Clegg v Edmonson (1857) 8 De G M & G 787; (44 ER 593); Aquaculture Corp (No 3) (1986) 1 NZIPR 677 at 690; see also Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 33]
And later (at 561):
In the case of a business it may well be inappropriate and inequitable to compel the errant fiduciary to account for the whole of the profit of his conduct of the business or his exploitation of the principal's goodwill over an indefinite period of time. In such a case, it may be appropriate to allow the fiduciary a proportion of the profits, depending upon the particular circumstances. That may well be the case when it appears that a significant proportion of an increase in profits has been generated by the skill, efforts, property and resources of the fiduciary, the capital which he has introduced and the risks he has taken, so long as they are not risks to which the principal's property has been exposed. Then it may be said that the relevant proportion of the increased profits is not the product or consequence of the plaintiff's property but the product of the fiduciary's skill, efforts, property and resources. This is not to say that the liability of a fiduciary to account should be governed by the doctrine of unjust enrichment, though that doctrine may well have a useful part to play; it is simply to say that the stringent rule requiring a fiduciary to account for profits can be carried to extremes and that in cases outside the realm of specific assets, the liability of the fiduciary should not be transformed into a vehicle for the unjust enrichment of the plaintiff.
69Although, as I have said, the proposed statement of claim pleads that Mr Palmer breached his duties under ss 180, 181 and 182 of the Act, as well as the duties he owed at common law, the statutory and common law claims rely on substantially the same facts and it is not suggested that they raise substantially different issues. The critical question in both cases is whether there is a serious question to be tried that Mr Palmer acquired the refinery in circumstances where he had an actual or possible conflict of interest and duty or in circumstances where he used his position as a director of GPNL, or information he acquired as a director of GPNL, for his own benefit. If he did, there is a question whether he obtained GPNL's fully informed consent to his conduct.
70In considering the question whether Mr Palmer was in a position of conflict or possible conflict, it is important to identify the conduct he engaged in as a director of GPNL and to ask whether, in engaging in that conduct, he was in a position of conflict or possible conflict. It seems clear that Mr Palmer's conduct fell into three categories. First, he was one of the persons who negotiated or reported to BHPB concerning GPNL's bid. The most obvious example is his negotiations with BHPB on 30 April 2009. However, he had one or more other meetings with BHPB, including the meeting on 29 May 2009. It is arguable from the minutes of the board meeting on 5 May 2009 that the purpose of that meeting was for Mr Palmer "to provide feedback to the vendor on the progress of discussions with MCC" as a representative of GPNL.
71In its written submissions, Robash asserted that Mr Palmer owed GPNL fiduciary duties as a negotiator as well as a director. But it is difficult to see how that assertion adds anything to the allegation that, as a director of GPNL, Mr Palmer involved himself in negotiations with BHPB and, in conducting those negotiations, he was required to comply with the fiduciary duties he owed. Robash also asserts that Mr Palmer was reappointed a director of GPNL for the express purpose of negotiating and advising on GPNL's acquisition of the Yabulu refinery. But again, that seems to me to be an overstatement. The only reasonable inference available from the evidence is that Mr Palmer was reappointed a director of GPNL because he no longer had a conflict arising from the SIA, he was a major shareholder in GPNL and it was thought that his presence on the board would assist the bid because of the significance that BHPB attached to his involvement. The negotiations continued to be handled principally by Mr Downie and Mr Henderson both directly with BHPB and through Gresham.
72The second category of conduct engaged in by Mr Palmer is that he had some discussions with MCC when he was in China in May 2009 in relation to the question whether MCC would provide funding for the acquisition. Again, it would be an overstatement to say that Mr Palmer was responsible for the negotiations with MCC. Rather, it appears that what occurred was that Mr Palmer was going to China on other business and he agreed to meet with MCC while he was there.
73Third, Mr Palmer participated in the board meeting on 5 May 2009 at which GPNL's bid for the refinery was discussed.
74In my opinion, the evidence falls short of establishing that there is a serious question that Mr Palmer was in a position of conflict or possible conflict at the time he engaged in the conduct I have referred to. The only evidence that Mr Palmer had any interest in acquiring the refinery himself prior to 29 May 2009 is the conversation he had with Mr Martino in late March 2009 in which he told Mr Martino that he might be interested in acquiring the refinery himself but that he would not stand in GPNL's way if it wanted to make a bid and that he would provide some assistance to GPNL in making that bid. There is no evidence that Mr Palmer did anything as a director of GPNL prior to 29 May 2009 that was inconsistent with or undermined GPNL's bid. Nor is there any evidence that Mr Palmer took any steps at all to acquire the refinery himself prior to 29 May 2009. Mr Palmer met separately with representatives of BHPB on 30 April 2009, shortly after he had rejoined GPNL's board. But there is no suggestion that he did anything other than promote GPNL's bid for the refinery at that meeting. Mr Palmer provided some support for GPNL's bid. In particular, he provided a letter of support, albeit in very qualified terms and he later agreed to underwrite a share issue by GPNL in the event that its bid was successful, although there is a question concerning the extent of that agreement. GPNL may have hoped that he might have agreed to do more. However, Mr Palmer was under no obligation to provide any form of financial support to GPNL in connection with its bid. Mr Palmer was in China on his own business. He made time to meet with representatives of MCC to see whether it would agree to finance the acquisition. MCC's response was negative. However, there is no suggestion that that was because of something that Mr Palmer said or did. In the proposed statement of claim, it is alleged that Mr Palmer breached his duties by not reporting back to GPNL on the results of his conversation with MCC. However, GPNL had a report from Ms Grieve, and there is no evidence to suggest that Mr Palmer could have provided any other information that would have assisted GPNL.
75The only reasonable inference that can be drawn from these facts is that Mr Palmer had decided that he would not seek to acquire the Yabulu refinery for himself unless and until GPNL's bid failed. That conclusion is consistent with what Mr Palmer said to Mr Martino in late March 2009. If that was Mr Palmer's position, I do not think that there is a serious question that he was in a position of actual or possible conflict. To be in that position, Mr Palmer would need to have sought to acquire the refinery in competition with GPNL or there must have been a reasonable possibility that he would do so. Prior to 29 May 2009, the evidence does not support either of those two contentions. As I understand Robash's submissions, it does not assert otherwise.
76Mr Palmer met with BHPB on 29 May 2009. Mr Sheahan SC, who appeared for GPNL, submitted, on the basis of Mr Wilson's email dated 1 June 2009, that it was BHPB who raised the possibility of Mr Palmer acquiring the refinery at the meeting on 29 May 2009 and Mr Palmer said nothing about it at that stage. However, given the attitude Mr Palmer had expressed previously to Mr Martino, it is at least arguable that Mr Palmer raised the question of a bid by him for the refinery at that time. Nevertheless, it is clear that by 29 May 2009, there was no real prospect that GPNL would be able to acquire the refinery. BHPB gave notice (through Gresham) on 26 May 2009 terminating discussions with GPNL. It did so in circumstances where GPNL had failed to make an offer that satisfied a condition that BHPB had been saying for some time was essential in accordance with a timetable that BHPB had said was critical - that is, an offer that contained clear evidence that GPNL would be able to fund the acquisition and, perhaps even more importantly, fund the ongoing costs of the refinery. BHPB terminated GPNL's access to the data room on 28 May 2009. GPNL made one further offer on 26 May 2009 and Gresham's response to that offer might be regarded as equivocal. However, BHPB's response on 2 June 2009 was not; and the only reasonable inference available from the evidence is that BHPB told Mr Palmer at their meeting on 29 May 2009 that BHPB was no longer interested in dealing with GPNL. In addition, there is no evidence that GPNL had any realistic chance of raising financing for the acquisition in the near future. For example, there is no evidence that GPNL was in serious discussions with any potential lender or investor, let alone one who might provide funds in a timeframe that might have been acceptable to BHPB. Although GPNL did not abandon all hope of acquiring the refinery until about 9 June 2009, there is no evidence that that hope had any realistic foundation. Having regard to those circumstances, I do not think that there is a serious question that Mr Palmer was in a position of conflict by discussing his own acquisition of the refinery with BHPB on 29 May 2009.
77Robash takes issue with the conclusions of the previous paragraph. It submits that it was not for Mr Palmer to determine whether GPNL's bid had come to an end by 29 May 2009. That was a question for GPNL; and it is clear from the evidence that GPNL had not given up on its bid until at the earliest by 9 June 2009 and not formally until the board meeting on 16 June 2009. Moreover, Robash submits that, at least until 2 June 2009, it could not be said that its bid was doomed to failure. Gresham's email dated 28 May 2009 appeared to leave the door open; and Mr Downie's email dated 2 June 2009 to Mr Palmer in which he said that "It seems to be a good sign that Jimmy is still talking" suggests that the position was not hopeless; and, in any event, if the position became hopeless that was only because, as soon as Mr Palmer indicated an interest in dealing with BHPB himself, BHPB lost all interest in dealing with GPNL.
78The first limb of Robash's submission on this point is undoubtedly correct. It was not for Mr Palmer to determine when Robash's bid came to an end. However, I do not accept the second limb of the argument. The question whether there was an actual or real possibility of a conflict is a question that must be answered objectively. As Santow J (as he then was) said in ASIC v Adler [2002] NSWSC 171; (2002) 41 ACSR 72 at [735], citing Boardman v Phipps [1967] 2 AC 46 at 124 per Lord Upjohn and Queensland Mines Ltd v Hudson (1978) 18 ALR 1:
... in order to assess whether or not there is a real sensible possibility of conflict one must adopt the position of the reasonable person looking at the relevant facts and circumstances of the particular case ...
79In this case, BHPB made its position clear on 26 May 2009. There was nothing that GPNL could do to address BHPB's concerns in anything like the timetable set by BHPB. Mr Downie recognised that fact when he commented that it was a good sign that Mr Wilson was still talking. Contrary to Robash's submissions, it is clear from the next sentence of that email that the point Mr Downie was making was that it was a good thing that BHPB was still talking to Mr Palmer . Mr Downie's decision to seek legal advice from Clayton Utz also supports the view that he recognised that GPNL's position was hopeless. The conflicts rule ceases to fulfil its function - to preclude the fiduciary from being swayed by considerations of personal interest in discharging his or her duties (see Chan v Zacharia (1984) 154 CLR 178 at 199 per Deane J) - when the transaction giving rise to the conflict has no real prospect of proceeding.
80As to the question whether Mr Palmer took advantage of knowledge or an opportunity or information he gained as a fiduciary, in my opinion, it cannot seriously be argued that Mr Palmer took advantage of an opportunity he learned of as a fiduciary. It is clear that BHPB approached Mr Palmer in late 2008, at a time when Mr Palmer was not a director of GPNL, to see whether he was interested in acquiring the refinery. BHPB met with Mr Palmer independently of GPNL to encourage that interest and gave him the document described as "Opportunity Overview". This is not a case where Mr Palmer learned of the sale or was able to deal with BHPB in relation to it because of his directorship of GPNL. In fact, the reverse is the case. The evidence clearly suggests that BHPB wanted to deal with Mr Palmer and was only prepared to deal with GPNL because Mr Palmer was its major shareholder. Robash submits that the opportunity to acquire the refinery came to Mr Palmer as a result of his meeting with BHPB on 29 May 2009 and that he attended that meeting in his capacity as a director of GPNL. I do not accept that submission. The opportunity had been available to Mr Palmer since November or December 2008. He only took that opportunity when he realised that it was one no longer available to GPNL.
81The question whether Mr Palmer used information he gained as a director of GPNL in making his bid for the refinery is not as clear. As I have said, Robash, in written submissions, provided a lengthy list of information that Mr Palmer is said to have learned as a director of GPNL which was relevant to his own bid. Broadly speaking, that information falls into the following categories:
- Information learned by GPNL as a result of due diligence. Robash placed particular significance on the fact that GPNL learned that BHPB estimated the costs of closure at $400 million and the fact that due diligence did not reveal any particular reasons not to proceed with the acquisition;
- Information concerning BHPB's attitude to the bid. Robash placed particular emphasis on the information that Mr Palmer is said to have learned at the meeting with BHPB on 30 April 2009, including the fact that there was no other bidder and that BHPB was keen to sell;
- Information concerning GPNL's internal analysis of the bid;
- Information concerning the terms of GPNL's offers;
- Information provided to MCC;
- GPNL's analysis of the proposed share purchase agreement.
82In my opinion, there are four difficulties with the allegation that Mr Palmer used information he obtained as a director of GPNL for his own bid in breach of both his common law obligations and his obligations under s 183 of the Act.
83First, much of the information obtained by Mr Palmer was obtained by him other than as a director of GPNL. At the time that Mr Palmer rejoined the board of GPNL, it appears that he no longer had a contractual right to prevent GPNL from bidding for the refinery. However, his agreement to the bid continued to be important because GPNL wanted his financial support for the bid. GPNL willingly provided Mr Palmer with information concerning the bid before he joined the board. Two employees of Mineralogy signed confidentiality undertakings in connection with the due diligence process before Mr Palmer was reappointed to the board. That could only have been because GPNL expected to share due diligence information with them. There is no reason to suppose that GPNL's attitude would have been any different if Mr Palmer had not joined the board; and it seems artificial to say that Mr Palmer received information as a director when that information would have been made available to him in any event.
84Robash submits that it could not have been intended that, even if Mr Palmer received the information in some other capacity, he was free to use it for any purpose he thought fit. That may well be the case. However, Mr Stevenson SC specifically disavowed any claim that Mr Palmer owed a duty of confidence in respect of the information he obtained. Consequently, the only question is whether Mr Palmer received information as a director and whether he used it or used it for an improper purpose.
85Robash also places considerable emphasis on the meeting on 30 April 2009 and the fact that Mr Palmer learned at that meeting that BHPB had no other bidders. Certainly one of the capacities in which Mr Palmer attended that meeting was as a director of GPNL. In my opinion, he also attended that meeting as the major shareholder of GPNL, whose support BHPB regarded as essential. In any event, there is no evidence that Mr Palmer was told that there were no other bidders and it is most unlikely that that is what happened. Rather, it was a conclusion that he drew from what he was told by BHPB. Although, as I have said, one of the capacities in which Mr Palmer attended the meeting was as a director of GPNL, it seems clear that he could have met with BHPB any time he wanted to discuss the acquisition of the Yabulu refinery, either as a shareholder of GPNL or as another person interested in making a bid. He could have learned the same information he learned at the meeting on 30 April 2009. Again, it seems artificial in those circumstances to say that the conclusions he drew concerning BHPB's position were conclusions that were only available to him as a director of GPNL.
86The second difficulty with this aspect of Robash's case is that, on 3 June 2009, Mr Downie sent Mr Palmer information that GPNL had obtained for its own bid. His only purpose in doing so could have been to provide assistance to Mr Palmer's bid. There is no suggestion that Mr Downie breached his duties to GPNL in doing so, and it is difficult to see how that suggestion could be made. By then, it was obvious that GPNL's bid would not succeed. As Mr Downie recognised, GPNL's best hope was to see Mr Palmer's bid succeed and seek to persuade Mr Palmer to give GPNL a management contract for the refinery. But if Mr Downie did not breach his duty by giving Mr Palmer the information to use for the purpose of his (Mr Palmer's) bid, it is difficult to see how Mr Palmer breached his duties in using that information, assuming he did.
87The third difficulty with this aspect of Robash's case, is that there is no evidence of what information, if any, was used by Mr Palmer in his bid. That, or course, is not fatal to Robash's application. The question is whether there is a serious question to be tried, not whether GPNL will succeed. And it is at least arguable that, having been provided, with information, Mr Palmer used some of it. But this is an issue relevant to GPNL's prospects of success, which in turn is relevant to what is in GPNL's best interests.
88The fourth difficulty with this aspect of Robash's case is that, on 16 June 2009, the board of GPNL resolved that "GPNL will no longer pursue the Yabulu Refinery opportunity".
89Rule 117 of GPNL's constitution permits the board to authorise conduct which would otherwise be a breach of duty by a director. However, it is doubtful that that provision applies in this case. It only applies where the director notifies the board of a "Material Interest" as soon as practicable after the director becomes aware of the facts which give rise to that Material Interest: r 113. "Material Interest", in relation to a director, is defined to be:
... any interest (whether direct or indirect, whether actual or potential and whether financial or not) or duty of that Director which gives rise to a real possibility that the interest or duty may conflict with the duties owed by the Director to the Company.
It is at least arguable that Mr Palmer did not give notice as soon as practicable after he became aware of the relevant facts. It is also arguable that the rule only applies to relieve the directors of breaches arising from a conflict and not from breaches by which the director makes a profit from his position as a director. In addition, it is arguable that the resolution itself was not a resolution authorising Mr Palmer to do anything. It was simply a resolution that GPNL did not intend to pursue a particular opportunity. For those reasons, r 117 can be put to one side.
90Nonetheless, the resolution of the board on 16 June 2009 is significant. There is no suggestion that that resolution passed by the board involved a breach by the directors who passed it of their duties. Nor, in my opinion, is there any basis on which it could reasonably be argued that the board was not fully informed when it took that decision. It knew the circumstances in which GPNL's own bid had failed. Mr Palmer was open about his own negotiations with BHPB. There was no suggestion that the board's support for Mr Palmer's bid was based on anything but the hope that Mr Palmer might agree to reimburse GPNL for some of its costs and agree to grant GPNL a management contract. The only purpose of the board passing the resolution it did with that knowledge was to permit Mr Palmer to pursue the opportunity itself. That was the result that was conveyed to Mr Palmer. Necessarily, that would involve Mr Palmer using whatever information he had gained over the past few months. In this respect, Mr Palmer's position seems to be indistinguishable from the position of Mr Hudson in Queensland Mines .
91Robash, however, sought to distinguish Queensland Mines on four bases.
92First, it submitted that the decision of GPNL's board was not a fully informed one because the board did not know what happened at Mr Palmer's meeting with Mr Wilson on 29 May 2009. I do not accept that submission. The only relevant thing to come out of the meeting on 29 May 2009 was that there was a discussion about the possibility of one of Mr Palmer's wholly owned companies bidding for the refinery which led to Mr Wilson's email dated 1 June. Mr Palmer forwarded that email to Mr Downie. In those circumstances, there can be no question that the board was properly informed of the relevant matters arising from the meeting on 29 May 2009 when it took its decision.
93Second, Robash submitted that the resolution of the board in Queensland Mines that the opportunity not be pursued was made before the director pursued the opportunity on his own behalf. In my opinion, there is no merit in that submission. At the time the resolution in Queensland Mines was passed, Mr Hudson had obtained the relevant licences in his own name and was actively seeking to establish a public company to whom, presumably, he would sell the licences.
94Third, Robash submitted that the principle for which Queensland Mines stands is that a resolution of the board is only effective in respect of the application of the conflicts rule. It was not effective in respect of the rule that the fiduciary could not make improper use of his position or information he obtained as a fiduciary. Again, I do not accept that submission. In Queensland Mines the Privy Council expressly found that "the opportunity to earn these royalties arose initially from the use made by Mr Hudson of his position as managing director of Queensland Mines" (18 ALR at 8).
95Fourth, Robash submits that Queensland Mines only applies where the board can be regarded as representative of all the shareholders. That cannot be said of the board in this case. I do not accept this submission. As I have said, the Privy Council gave two reasons for its advice. One of those reasons undoubtedly turned on the nature of the company and the composition of the board. But the second reason did not. It turned on the particular facts of the case and, in particular, the fact that there was no prospect of Queensland Mines pursuing the relevant venture and, in those circumstances, it was willing to turn that venture over to one of its two major shareholders who set about taking all the risks and doing all the work necessary to progress the venture. That was the position of Mr Palmer in this case. The opportunity came to both Mr Palmer and GPNL - although in GPNL's case most likely only because of Mr Palmer. Mr Palmer chose not to pursue that opportunity and gave GPNL a chance to do so. At the beginning, Mr Palmer and GPNL shared the information that they were given by BHPB. When it became obvious that GPNL could not pursue the opportunity itself because it could not raise financing, it agreed to turn that opportunity over to Mr Palmer. In the particular circumstances of this case, I think the only reasonable conclusion is that the GPNL board by its resolution on 16 June 2009, accepted that the acquisition of the refinery fell outside the obligations of Mr Palmer and GPNL as a fiduciary.
96Taking these matters into account, I do not think that there is a serious question to be tried that Mr Palmer breached his duties by using information he gained as a director of GPNL to pursue his acquisition of the Yabulu refinery.