Dr Nair v Arturus Capital Limited

Background 4 For the purpose of the hearing of the separate questions the following facts were not contested:

(a) Dr Nair commenced employment with Life Therapeutics Limited in May 1998;

(b) On 27 October 2003 he was appointed Chief Executive Officer and Managing Director;

(c) In December 2004 Dr Nair and the Company entered into a deed entitled Executive Employment Deed which formalised his employment as CEO and Managing Director. It relevantly contained the following provisions: CONTINUATION OF APPOINTMENT

(a) LT confirms the continued employment of the Executive under the title specified in Item 3 and the Executive accepts the continuation of that employment on the terms and conditions set out in this Deed.

(b) The parties acknowledge that this Deed supersedes and takes precedence over any prior agreement or document entered into between the parties relating to any of the matters contained in this Deed

(a) The term of the Executive's employment with LT shall be the term specified in Item 4 unless it is terminated earlier in accordance with clause 14.

(b) This Deed may be renewed in writing by mutual agreement of the parties. The Executive and the Company shall commence discussion on renewal one (1) year prior to the expiration of the initial term specified in Item 4. This Deed will automatically terminate unless renewed by the agreement of the parties in writing, prior to the expiration of the initial term. Following expiration of this Deed, upon the parties' failure to renew, this Deed shall expire and have no further effect (except in relation to any pre-existing rights and entitlements, or obligations and liabilities, of either party).

The Schedule to the Agreement relevantly provided: ITEM 3 JOB DESCRIPTION

Job Title - Chief Executive Officer and Managing Director Reports to - Board

Date of commencement of employment - 23 December 2004 Date of termination - 22 November 2007 (unless terminated sooner in accordance with this Agreement)

US$400,000.00 p.a. gross plus statutory superannuation

Annual Leave - 4 weeks/year Notice of termination - 4 weeks Mobile Phone during employment - yes Laptop computer during employment - yes Motor Vehicle Allowance - US$13,333 p.a.

(d) In January 2005 Dr Nair moved to the United States of America to continue his work with the Company. It appears that one of the significant tasks Dr Nair was performing there was responsibility for negotiations with a Swiss company called Kedrion with a view to some sort of a merger with or acquisition by that company.

(e) From early 2007 there were discussions between Dr Nair and the company in relation to a further agreement bearing in mind that the Executive Employment Deed provided for an expiry date of 22 November 2007. These discussions culminated in the signing of a new agreement entitled Workplace Agreement dated 23 July 2007. It was that Workplace Agreement which provided the termination entitlement which Dr Nair now claims.

(f) The Workplace Agreement relevantly provided: RECITAL

LFE agrees to employ and the Executive accepts such employment, on the terms below.

"Job Description" means the Executive's job specification as set out in the document titled "Job Description" attached to and forming part of this agreement. …

() LFE agrees to employ, and the Executive accepts employment with LFE in the position set out at Item 3 at the location specified in Item 4 on the terms and conditions contained in this agreement.

5. WAGES AND OTHER ENTITLEMENTS (b) LFE will pay the Executive the amount set out at Item 6 per annum, by way of fortnightly installments (sic). The Executive and LFE may agree from time to time that the Basic Salary will be satisfied by way of a combination of salary payments and other entitlements.

() The Executive will be entitled to annual leave in accordance with the provisions of the Workplace Relations Act 1996 (Cth) and any other applicable legislation.

() The Executive will be entitled to long service leave in accordance with the provisions of the Workplace Relations Act 1996 (Cth) and any other applicable legislation. () Subject to the provisions of the Workplace Relations Act 1996 (Cth) the Executive may also be granted paid leave by LFE in respect of: () sick leave;

( ) maternity, paternity, parental and adoption leave. (d) Subject to any applicable statutory provisions, the Executive shall not be entitled to any leave loading.

(e) The Executive must take annual leave at a period or periods agreed between LFE and Executive and in the absence of agreement or statutory requirements to the contrary, when directed by LFE on a least 1 Month's notice.

(f) Subject to any statutory provision, LFE may require the Executive to take significant accrued leave. 7. NOMINAL EXPIRY DATE

This agreement shall nominally expire on the 3 rd anniversary of the date of the signing of this agreement . [It is agreed, although for different reasons, that this should be expiry after 2 years.]

(b) This agreement may be terminated by the approval of the parties in accordance with the provisions of Workplace Relations Act 1996 (Cth) at any time.

… 11.5 Entire agreement This agreement supersedes all previous agreements in respect of the Executive's employment by LFE or any Group Company and embodies the entire agreement between the parties.

SCHEDULE TO WORKPLACE AGREEMENT LIFE THERAPEUTICS LIMITED

Job Title: Managing Director Reports to: Board Item 4 Location

Item 6 Annual wage US$450,000.00 p.a. gross plus statutory superannuation

… Item 8 Special Benefits Annual Leave - 4 weeks/year Sick Leave - 5 days/year Notice of termination - 4 weeks Mobile Phone during employment - yes Laptop computer during employment - yes Motor Vehicle allowance - US$13,333.00 p.a, Other special benefits: … (a) Travel expenses - See 9.6 US Relocation Assignment - Special Terms and Conditions (b) Accommodation expenses - See 9.6 US Relocation Assignment - Special Terms and Conditions

Item 9 Special Conditions … 9.4 Termination for a reason other than a breach If either party wishes to terminate this agreement for any reason other than a reason specified in clauses 8(b)(i) or (ii) (for instance in the event of a dispute in respect of any aspect of the operation or management of LFE and the parties are unable to resolve their differences despite good faith discussions and negotiations between them) then: (a) either party may give written notice to the other terminating this agreement on 1 Month's notice; (b) notwithstanding anything else in this agreement, in consideration of the termination, LFE shall pay to the Executive a sum equal to the higher of: (i) the balance of the salary (but not any other entitlement) otherwise payable to the Executive by LFE under this agreement in respect of the unexpired portion, of the notional term of this agreement; or (ii) 2 years' salary (but not any other entitlement) otherwise payable to the Executive by LFE under this agreement, together with any statutory leave or other entitlements which accrued up to the date of the Executive's notice of termination. The payment by LFE of the amount calculated under this special condition shall be accepted by the Executive in full and final settlement of all and any claim by the Executive to LFE under the terms of this agreement. 9.5 Role and Responsibilities

LFE acknowledges that: (a) this agreement has been entered into in order to procure the services of the Executive which are critical to the successful transition of the Life Sera business to the merged business with Kedrion and/or the facilitate (sic) the smooth sale of this or any other part of LFE's business operations to a purchaser (" Special Duties "); (b) the Executive has a unique set of skills which LFE requires to perform the Special Duties; and (c) for the above reasons LFE covenants to not change, vary or otherwise alter this agreement without the written agreement of the Executive.

9.6 US Relocation Assignment - Special Terms and Conditions The additional following terms and conditions (including Appendices A, B and C) shall only apply during and in respect of the period of the Executive's assignment to the United States ("US") for the term as specified below. In this part 9.6, a reference to "Home Country" is a reference to Australia and a reference to "Host Country is a reference to the US. Position Executive - Level 3 Role Managing Director Summary of Responsibilities See Appendix A Assignment Start Date 10 th January 2005 Original Term of assignment 3 years Extended Assignment Completion Date 31 st December 2010 Salary The Executive shall receive a base salary of US$450,000.00 gross per annum. The Executive's base salary will be paid bi-weekly in accordance with the company's US payroll policy and subject to appropriate federal, state and local tax withholdings. (italics added - all anomalies in sub-clause numbering in the original) 5 It can be seen that under the Workplace Agreement of 23 July 2007 Dr Nair was apparently only employed as Managing Director whereas before he had been employed as Chief Executive Officer and Managing Director. However, it is apparent from subsequent documents (and it does not appear to be disputed by the Company) that Dr Nair was also appointed as Chief Executive Officer under the Workplace Agreement. It was from that position he resigned in November 2007.

The first issue - is members' approval required? 6 The termination entitlement is to be found in special condition 9.4(b) and it is not disputed that it is a termination payment within the meaning of Division 2 of Part 2D of the Corporations Act 2001. 7 Section 200F Corporations Act provides for circumstances where members' approval is not required. It is s 200F(2) which is relevant to the present case and that sub-section provides: (2) Subsection 200B(1) does not apply to a benefit given in connection with a person's retirement from an office or position in relation to a company if: (a) the benefit is: (i) a genuine payment by way of damages for breach of contract; or (ii) given to the person under an agreement made between the company and the person before the person became the holder of the office or position as the consideration, or part of the consideration, for the person agreeing to hold the office or position; and (b) the value of the benefit, when added to the value of all other benefits (if any) already given in connection with the person's retirement from offices or positions in the company and related bodies corporate, does not exceed the amount worked out under whichever of subsections (3) and (4) is applicable. 8 Sub-sections (3) and (4) provide means of working out the amounts referred in sub-s (2)(b). In that regard, sub-s (5) provides: (5) For the purposes of this section, if a person has held a managerial or executive office in relation to a company: (a) throughout a period; or (b) throughout a number of periods; the relevant period for that person is that period or the period consisting of those periods.

The words "relevant period" are used in sub-ss (3) and (4). I shall return later to the suggested relevance of sub-s (5). 9 The issue which arises by virtue of the wording of s 200F(2)(a)(ii) arises because Dr Nair was already the Chief Executive Officer and the Managing Director of the Company at the time he entered into the Workplace Agreement on 23 June 2007. The Company submits that he was the holder of the office within the meaning of that sub-paragraph when he executed the Workplace Agreement with the result that that Agreement was not made between him and the Company "before" he became the Managing Director in accordance with that Agreement. 10 The Company says that Dr Nair raises no other office or position which might be considered for the purposes of s 200F other than his position as CEO and MD. It says further that it was resignation from those offices and specifically the office of CEO which he alleges gives rise to the termination entitlement. 11 Dr Nair says that the Workplace Agreement was a new arrangement between him and the Company and he became the Managing Director under that Agreement upon its execution with the result that the Agreement was made before he became the Managing Director. He submits, therefore, that the exemption in the sub-paragraph applies because the termination entitlement was part of the consideration for him agreeing to become the Managing Director under that Agreement. Dr Nair submits further that the termination entitlement was the consideration for him agreeing to enter into the new 3-year (or 2-year) contract and remaining in the United States pursuant to it despite his desire to return to Australia. 12 Some guidance can be obtained from the decision of Einstein J in Randall v Aristocrat Leisure Ltd [2004] NSWSC 411. Einstein J was considering the earlier equivalent of the present provision, then numbered s 200F(a)(iii) but in identical terms. Einstein J said: [515] The "agreement" for the purposes of section 200F(a)(iii) may be an agreement that varies or replaces an existing agreement.

[516] The proper meaning of the expression "office" used in the sub-section is the aggregation of responsibilities and duties to be performed by the office holder. The word derives from the Latin phrase "officium" meaning "duty". It is not be understood as simply a reference to a person's title.

[517] There are various authorities and academic texts that support the proposition that where an employee is required to work in a new location that is outside the terms of the previous employment or where the duties of an employee have substantially changed, a new contract of employment is entered into and is not simply a variation of an old contract. 13 Those remarks came in the context of a case where Mr Randall had been CEO of Aristocrat Leisure Ltd but changes occurred to that contract at a particular point and he was relocated to the United States to assume the role of CEO in that country. In those circumstances Einstein J held that his previous contract was terminated or varied and he assumed a new office pursuant to a new or varied contract (see at [512]). 14 In the present case the Company says that there is no relevant analogy because Dr Nair had relocated to the United States in 2005 and the Workplace Agreement of June 2007 was negotiated and entered into simply because the arrangement under the Executive Employment Deed was due to come to an end in November 2007. 15 If s 200F(2)(a)(ii) operates in respect of a varied agreement (as Einstein J says it does) it must follow that it is no bar to the operation of the sub-paragraph that the person given the benefit held the designated office before the agreement was made. In such circumstances it would only be necessary to point to some different incidents of the office in respect of which the termination benefit provides consideration. 16 In my opinion, there are sufficient indications that the office that Dr Nair occupied pursuant to the Workplace Agreement was not identical with the office he had held under the Executive Employment Deed. 17 The Workplace Agreement contained 2 significant matters relating to the incidents of Dr Nair's office that were not contained within the Executive Employment Deed. These are to be found in the special conditions that constituted Item 9 of the Schedule to the Workplace Agreement and in particular Items 9.5 and 9.6 (set out in para 4(f) above). Item 9.6 then went on to detail many other provisions concerning the US relocation assignment. 18 The Company says that because Dr Nair moved to the USA in January 2005 that cannot have been part of the consideration for the new agreement and the termination benefit. Even if that is correct and even assuming that the conditions he was working under prior to the commencement of the Workplace Agreement were identical to what is contained in Item 9.6, the responsibilities called Special Duties identified in Item 9.5 impose upon him responsibilities that he did not have under the Executive Employment Deed notwithstanding that he had been negotiating in relation to the Kedrion deal prior to the execution of the Workplace Agreement. 19 The termination entitlement was given to Dr Nair in consideration for, or as part of the consideration for, Dr Nair agreeing to enter into a new contract for 2 years that required him to remain in the United States. He was not required to do this beyond the expiry of the Executive Employment Deed in November 2007. The fact that Item 4 in the Schedule to the Workplace Agreement provides for the location of this job as Sydney, Australia is not determinative because it is clear from Item 9.6 of the Schedule that part of his responsibility was the assignment to the United States that had already taken place but was extended under that Item to 31 December 2010. 20 For reasons similar to those discussed in Dome Resources NL v Silver [2008] NSWCA 322 at [54]-[67], the consideration provided by Dr Nair was not illusory simply because of his entitlement to terminate under Item 9.4 of the Schedule to the Workplace Agreement. When the specific role and responsibilities in cl 9.5 of the Schedule are regarded together with the extended assignment completion date in cl 9.6 they are a sufficient indication that real consideration was provided by Dr Nair. The fact that matters with Kedrion came close to being finalised shortly after signing the Workplace Agreement, a matter that enabled Dr Nair to tender his resignation, does not remove the value of the consideration in the first instance. 21 Furthermore, as clause 11.5 of the Workplace Agreement makes clear, that Agreement brought to an end and superseded all previous arrangements. Although Dr Nair might have been the CEO and MD of the Company prior to the Workplace Agreement, the office he occupied after 23 June 2007 he occupied by reason of the execution of that Agreement and not otherwise. 22 In this regard it is important to note that the Workplace Agreement was not simply a renewal of the Executive Employment Deed as contemplated by cl 3(b) of that Deed. Not only was Dr Nair's obligations under the Workplace Agreement different, so were other aspects of his entitlements as is demonstrated by the 3rd paragraph under Leave Entitlements and some of the Special Benefits in Item 8 of the Workplace Agreement. All of these matters make clear that the Workplace Agreement was an entirely new arrangement between the Company and Dr Nair and it was pursuant to all of those terms including cls 9.5 and 9.6 in the Schedule to the Workplace Agreement that Dr Nair held a new position of CEO and Managing Director. 23 In the ordinary course of events he would have ceased to occupy the office of CEO and MD under the Executive Employment Deed on 22 November 2007 had the Workplace Agreement not been entered into. Had that Workplace Agreement come into effect immediately after 22 November 2007 and had Dr Nair resigned after that time there could be no doubt that the provisions of s 200F(2)(a)(ii) would have been satisfied. It cannot make any material difference that the Workplace Agreement operated to bring to an end a prior agreement earlier than the expected expiry date. Dr Nair became the holder of a new office as from 23 June 2007 albeit a similar one but with some different obligations and different entitlements from that which he occupied prior to that time. 24 Dr Nair submits also that there is a further indication from the terms of s 200E(5) that "the office" referred to in s 200F(2)(a)(ii) is a reference to the particular office held under a particular agreement. This is because, when the section provides for the working out of the relevant amount it is necessary to take into account various individual periods when a person has held an office and to total those. Dr Nair says in his case that the relevant period for the purposes of sub-s (5) includes the whole time that he has been the CEO and Managing Director. The total of those periods is the "office" referred to in that sub-s whereas, by way of contrast, the "office" in s 200F(2)(a)(ii) is a reference only to the office he held pursuant to the Workplace Agreement. 25 This argument seems to proceed on the assumption that because a person was capable of holding an office throughout a number of periods that must mean that a reference to "the office" is s 200F(2)(a)(ii) is a reference to a separate office in each of those periods. Because of the view I have formed about the new incidents of the Workplace Agreement, as detailed above, it is not necessary to consider this particular argument further.

26 In my opinion, the termination entitlement was exempt from the requirements of s 200B by reason of being a benefit that fell within s 200F(2)(a)(ii).

Issue 2 - was there approval by the members? 27 It is next necessary to consider whether, if contrary to the view I have expressed in relation to Issue 1 (on the assumption, therefore, that the termination entitlement was not exempt) the termination benefit was approved by the Members within the procedure laid down in s 200E. That section relevantly provides: (1) If section 200B or 200C requires member approval for giving a person a benefit, it must be approved by a resolution passed at a general meeting of: (a) the company; …

(2) Details of the benefit must be set out in, or accompany, the notice of the meeting at which the resolution is to be considered. The details must include: (a) if the proposed benefit is a payment: (i) the amount of the payment; or (ii) if that amount cannot be ascertained at the time of the disclosure - the manner in which that amount is to be calculated and any matter, event or circumstance that will, or is likely to, affect the calculation of that amount; and (b) otherwise: (i) the money value of the proposed prescribed benefit; or (ii) if that value cannot be ascertained at the time of the disclosure - the manner in which that value is to be calculated and any matter, event or circumstance that will, or is likely to, affect the calculation of that value. These requirements are in addition to, and not in derogation of, any other law that requires disclosure to be made with respect to giving or receiving a benefit. 28 The undisputed facts concerning the meeting where member approval is alleged to have been given are as follows. The Notice of the Annual General Meeting scheduled for 28 November 2007 was circulated to shareholders together with the Annual Report for 2007. The business set out in the Notice of the Annual General Meeting made no specific reference to approval of a termination entitlement. It contained as Item 2 of the business to be transacted "Approval of Remuneration Report" and said under that heading:

To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That the remuneration report of the Company for the financial year ended 30 June 2007 is adopted." 29 Attached to that Notice was an explanatory statement and that statement dealt in part with the approval of the remuneration report. What was said in explanation made no specific reference to the termination entitlement discussed in that Report. What it did say, however, was this: The vote on this resolution will be advisory only and will not bind the Directors or the Company, by virtue of section 250R(3) of the Act.

The Board recommends that Shareholders vote in favour of the advisory resolution to approve the Company's remuneration report. 30 The remuneration report was contained in the annual report of the Company and commenced on page 17 of that report. Under sub-heading "Director Employment Contracts" the following appeared: The CEO Dr Nair is employed under contract. The current employment contract was revised by the Board of Directors to commence on 23 June 2007 and terminates on 22 June 2009, after a two-year term. Under the terms of the contract: Dr Nair is entitled to resign from his position and terminate this contract by giving (1) month's written notice to the Company. On resignation any options will be forfeited. Dr Nair is entitled to resign from his position and terminate this contract by providing (7) days written notice no later than 90 days after the date of sale or transfer of the Company. Where the CEO elects to terminate this contract due to takeover Dr Nair is entitled to the higher of: a) The balance of the salary payable in respect of the unexpired portion of this contract; or b) 2 years' salary (based on the fixed component then being paid under this contract) together with any statutory entitlements accrued up to the date of termination. For reasons of illness or bankruptcy, the Company may terminate this agreement by providing one (1) months' (sic) written notice or provide payment in lieu of the notice period (based on the fixed component of Dr Nair s remuneration) The Company may terminate the contract at any time without notice if serious misconduct has occurred Where termination with cause occurs the CEO is only entitled to that portion of remuneration which is fixed, and only up to the date of termination. On termination with cause any unvested options will immediately be forfeited. If either party wishes to terminate this contract for any reason, then either party may give written notice to the other terminating the agreement on (1) month's written notice. Where the CEO elects to terminate the contract Dr Nair is entitled to the higher of: a) The balance of the salary payable in respect of the unexpired portion of this contract; or b) 2 years' salary (based on the fixed component then being paid under this contract)

together with any statutory entitlements accrued up to the date of termination.

31 A further statement under the sub-heading "Retirement Benefits" said this: Retirement benefits are delivered under the Life Therapeutics employee superannuation fund. Other retirement benefits may be provided directly by the Company if approved by shareholders

32 Nothing was said in the report about Dr Nair's impending retirement. 33 Dr Nair had advised the Board that he would be stepping down as CEO at the time of the Annual General Meeting. This was noted in the Minutes of the meeting of the Board of Directors on 28 August 2007. 34 The Annual General Meeting was held on 28 November 2007. In the meantime, on 10 October 2007, the Company caused an announcement to be released to the Australian Stock Exchange stating that Dr Nair, (who was described as the CEO and Managing Director) had decided to step down from his role as CEO effective from the Annual General Meeting to take place in Sydney on 28 November 2007. 35 At the Annual General Meeting Dr Nair presented the Chief Executive Officer's report. He deposes in his affidavit to recalling a question from the floor to him asking him why he was stepping down. He explained that he had finished the Kedrion deal, that the Company's business was being wound up and that there was no need for a CEO at his level. At some stage at the meeting (it was not identified when) the remuneration report was voted upon by shareholders with those in favour being 18,483,742 and those against being 5,738,943. These included proxy votes. 36 Dr Nair submits that that course of events satisfies the requirements of s 200E(1) because the approval of the remuneration report approved the termination entitlement that was referred to in it and detailed in the annual report. 37 Dr Nair says that the relevant date to determine the lawfulness of the termination entitlement is the date at which the alleged entitlement accrued, and so much can be accepted: Dome Resources NL v Silver at [30]. Dr Nair submits, therefore, that at that date the members had received notice of the proposed benefit that was payable including its amount in accordance with s 200E(2), they knew he was resigning because the matter was discussed at the meeting (quite apart from the notice to the ASX) and in those circumstances the remuneration report resolution was passed. Dr Nair submits that that is a proper compliance with s 200E(1). 38 In my opinion, these submissions should not be accepted. What s 200E(1) contemplates is that there will be a resolution at a general meeting which approves the giving of a benefit to the person concerned. The section requires the approval of the benefit ("it must be approved"). 39 What was approved at the meeting was the remuneration report which contained far more information than simply the termination entitlement that might ultimately be paid to Dr Nair but did not refer to his resignation. In my opinion, the mere approval of the remuneration report cannot have amounted to an approval of the termination benefit in some sort of ambulatory way so that the approval of that report would constitute compliance with s 200E(1) to cover the situation prospectively for whenever Dr Nair chose to retire. The focus of s 200E(1) is on the giving of the retirement benefit and its approval cannot be achieved by including the details of that benefit in the remuneration report that forms part of a director's report that is provided before an annual general meeting. 40 It is of some significance also that the approval of the remuneration report is not, as the explanatory statement attached to the notice of the annual general meeting makes clear, a vote that binds the directors or the company. The resolution that s 200E(1) requires is one that binds the company. It is a qualitatively different resolution from the resolution that s 250R(3) envisages. The knowledge by the members that a resolution was advisory only might influence their approach to the resolution and the care that they might be expected to give to the remuneration report that they were being asked to vote upon in a way that did not bind the Company. 41 Moreover, there is nothing to indicate that the members were aware prior to the annual general meeting itself of Dr Nair's resignation and intention to resign, nor does the evidence establish when, relative to the passing of the resolution approving the remuneration report that Dr Nair's resignation was identified or discussed. This is particularly significant where there are proxy votes. It seems to me to be inconsistent with the intention of the process set out in s 200E that the members had no notice of Dr Nair's resignation and the payment of the termination benefit prior to the meeting itself. Sub-section (2) emphasises the need for notice about the resolution that was being voted upon and the information that had to be made available to enable the members to make an informed decision. I do not consider that notification to the ASX is a substitute for the full knowledge that must be conveyed in accordance with s 200E(2) including the fact that Dr Nair had resigned or announced his intention to do so. 42 As Walton J made clear in Fox v GIO Australia Ltd [2002] NSWIRComm 318 at [57]: … what is required to authorise such a payment is [the members'] informed consent. 43 Mr Goot of Senior Counsel for the Company draws attention to the alteration of the wording of the Corporations Act from the previous provisions in s 237(19) when compared with s 200E(1) of the present Act. Under s 237(19) exempt benefit is a prescribed benefit given in connection with the retirement of a person from a prescribed office in relation to a company and is given under an agreement "where particulars of the terms of the agreement have been disclosed to the members of the company and approved by the company in general meeting" (emphasis added). That was an identical provision to what was contained in s 233(7)(c) Companies Code. Under the earlier law it was the terms of the agreement that had to be approved by the members of the company whereas under s 200E(1) it is the giving of the benefit that must be approved by resolution of the members. That points to the fact that it is not sufficient to approve either an agreement or information such as the remuneration report in the present case by resolution to satisfy the provisions of s 200E(1). 44 Furthermore, in relation to s 233(7)(iii) of the Code Wilcox J in Claremont Petroleum NL v Cummings (1992) 9 ACSR 1 at 53 said this: In any event, the disclosure made in the annual reports does not nearly satisfy the requirements of s 233(7)(c). For a payment to qualify as an "exempt benefit" under that paragraph, and so fall outside the prohibition of s 233(1), "particulars of the terms" of the agreement must have been disclosed to, and approved by, the members in general meeting. The notes to the accounts contain no particulars of the terms of the agreements between Claremont and the consultants. Nor, as it seems to me, can it be said that a resolution which merely approves a set of accounts constitutes an approval of an agreement referred to in them. The evident purpose of s 233(7)(c) is to ameliorate the harshness of s 233(1) by providing a way in which directors may receive benefits connected with their retirement, but to condition this amelioration upon the shareholders making an informed, deliberate decision that the benefits are acceptable . For this objective to be satisfied, there needs to be a resolution specifically directed to the particular agreement . (emphasis added)

45 This decision was upheld on appeal to the Full Court of the Federal Court although that particular determination of his Honour did not appear to form part of the consideration on the appeal - see (1992) 9 ACSR 503. The same can be said, analogously, to the requirement under s 200E for approval of the retirement benefit. 46 In my opinion, the requirements of s 200E were not complied with if (contrary to what I have found) the termination entitlement required member approval.

Conclusion 47 Accordingly, I answer the questions asked as follows:

(c) It is not necessary to decide this question; 48 The Defendant must pay the Plaintiff's costs of the hearing of the separate questions.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.