NRMA Limited & 1 Ors v Ian Francis Yates

INTRODUCTION 1 The Plaintiffs commenced these proceedings by seeking interim injunctive relief by Summons dated 17 August 1999; the present proceedings are now final. That relief was to restrain the defendant Ian Yates, who since December 1977 has been a director of each of the Plaintiffs, from stating, of the NRMA Limited and NRMA Insurance Ltd, "$50 million lost in one transaction" or to similar effect. I shall refer for convenience to that statement therefore as "the impugned statement". The Plaintiffs' action was prompted by the Defendant's recent television and radio advertisements that used that impugned statement to exemplify what he termed "great waste and mismanagement" of "the NRMA Board". That in turn was used to justify change to that Board in the current directorial elections conducted by postal ballot, by substituting a group of candidates from the Motorists' Action Group ("MAG"). The full text of the relevant advertisement is conveniently contained in para 19 of the affidavit of Mr Richards of 17 August 1999 which I quote below: "I was elected to the NRMA Board to protect your interests and since '97 I have seen great waste and mismanagement - $50 million lost in one transaction. That's why I believe it is time to change to the Board. If you don't I expect insurance premiums will increase, vital road service will suffer, jobs will be lost. A well managed mutual will deliver you greater benefits. Vote for all MAG (Motorists' Action Group) candidates. MAG, the team you can trust."

2 It is clear then that this advertisement is to campaign for a change in the Board and election of the "MAG" group of directors, who share with Mr Yates a common view of the future commercial direction of the NRMA group. This case is not about the right of Mr Yates to pursue such a campaign. Rather it is whether in doing so, he has made a statement which was materially misleading and, if so, whether the Court can and should restrain further publication of that impugned statement on a permanent basis. 3 Significantly, Mr Yates in making the television broadcast described himself in the words that flashed upon the screen briefly at the commencement as "a director of the NRMA". In the advertisement, he describes himself as "elected to the NRMA Board to protect your interests". There can be no doubt that he made the impugned statement not merely as a private individual or member, but professedly as a director. 4 The gravamen of the Plaintiffs' case is twofold:

(a) the Defendant has in trade or commerce engaged in conduct which is misleading or deceptive or likely to mislead or deceive in breach of s42 of the Fair Trading Act 1987 (NSW) ("the Act"); and

(b) the Defendant has breached his fiduciary duty as a director of the Plaintiffs to act honestly and in the best interests of the Plaintiffs. 5 Inherent in the relief sought is the proposition that further repetition of the impugned statement would result in breach of either the Act or the Defendant's fiduciary duty as a director, or both. 6 By consent but without admissions an interlocutory injunction was granted for a very short time pending this hearing. That hearing, by agreement of the parties and with the co-operation of their legal advisers, became a final hearing dealt with in a day. This met the Defendant's concern for urgency, in that grant or refusal of an interlocutory injunction might in a practical sense have determined the substance of the matter in issue; Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533; Silktone Pty Limited v Devreal Capital Pty Ltd (1990) 21 NSWLR 317. That was because the Defendant's advertisements would, according to the Defendant, become rapidly less effective in influencing the outcome of the election of NRMA directors, as more NRMA members cast their postal votes. By promptly hearing the matter on a final basis, it has not been necessary to resolve that question. 7 The issue before me is whether a permanent injunction should be granted in the same or similar terms to the interlocutory injunction.

RELEVANT CIRCUMSTANCES 8 The NRMA Group through both the parent company and a wholly-owned subsidiary NRMA Investments have for many years held a substantial parcel of shares built up in two companies, Washington Soul Pattinson & Co Limited and Brickworks Ltd. It amounts to 7.5 per cent of Soul Pattinson's issued capital and 8.4 per cent of Brickworks' issued capital. Those companies in turn had cross shareholdings in each other. The original holdings were accumulated over a period commencing in 1984. In the case of Soul Pattinson this was between 1984 and 1995 and in the case of Brickworks between 1984 and 1989. 9 The table below sets out what both parties agree to be the values as recorded in the audited accounts firstly as at 30 June 1996, then as at 30 June 1997 before adjustment in circumstances I later describe and finally as at 30 June 1997 after adjustment as recommended by the NRMA's internal investment analysts. Those values can properly be called "carrying values". This is in the accounting sense of "the amount at which an asset is recorded in the accounting records at a particular date"; CCH Macquarie Dictionary of Accounting" (Sydney, CCH 1991). I set out that table (PX12) below. "1 Values as recorded in audited accounts as at 30 June 1996 NRMA Investments NRMA Limited Total Value of BKW 39,092,675.19 1,542,067.72 40,634,742.91 Value of SOL 66,362,584.51 2,723,982.34 69,086,566.85 105,455,259.7 4,266,050.06 109,721,309.76

2 Values as recorded in general ledgers as at 30 June 1997 (before adjustment)

NRMA Investments NRMA Limited Total Value of BKW 50,644,799.52 2,001,526.08 52,646,325.6 Value of SOL 81,131,658.23 3,397,748.39 84,529,406.62 131,776,457.75 5,399,274.47 137,175,732.22

3 Value in audited accounts as at 30 June 1997 (ie after adjustment recommended in memorandum from David Dixon to Charles Wall dated 11 July 1997)

NRMA Investments NRMA Limited Total Value of BKW 36,909,942.62 1,458,712.71 38,368,655.33 Value of SOL 59,751,181.04 2,502,345.98 62,253,527.02 96,661,123.66 3,961,058.69 100,622,182.35"

10 These shares were valued in the accounts and general ledgers in the first instance simply at their quoted price multiplied by the number of shares held, not at their lower historic cost of approximately $49 million for the two holdings. But for the accounts for the year ended 30 June 1997 an adjustment downwards was made. The circumstances of that adjustment are set out in an internal memorandum dated 11 July 1997; see Annexure C to Dr Wall's affidavit of 16 August 1999. 11 Essentially, the reason given for the adjustment was that the quoted price of the shares in the two companies was considered by NRMA's investment analysts "given the extremely poor liquidity of both stocks and the size of our holdings" as rendering it unlikely that these values would be able to be realised in the event of a sale. However, the write down in value in the accounts was of the order of $37 million not $50 million. Accordingly, that write down, even if it were characterisable as a "transaction" which it clearly is not, could by itself not justify the impugned statement. However, the Defendant does not rely on that write down alone. Rather, he relies for one basis of justification on that write down ($37 million) aggregated with the later realised loss of approximately $14 million, as totalling $51 million in the following year. I will call that approach the "aggregate approach" and will deal with it in 39 below. His other basis is to equate "loss" with the capital decline ($71 million approximately) he says occurred in the 18 months between the decision to sell and the actual sale: I will call that the "capital decline" approach and deal with it in 12 below.

The capital decline approach. 12 On 20 February 1997 the decision was made to attempt to sell the shares in the two companies. If at that time one simply multiplied the number of shares by their quoted price and ignored the earlier adjustment for 30 June 1997, this would produce a figure of $155.83 million; (PX1 page 2). In fact, for reasons anticipated by those who had made the earlier adjustment and elaborated in 14 below, the sale did not occur till 15 months later, on 14 May 1998. The sale price then realised was $84,555,279, some $71 million less than the earlier quoted price of $155.83 million. This therefore reflected a decline over 15 months of more than $50 million from that quoted price. This the Defendant contends, independently of the aggregate approach, justifies the impugned statement. 13 But there is a fundamental difficulty in the way of such a conclusion. First, "capital decline" is hardly an apt description of a loss derived from a "transaction" which implies a realised loss by way of sale. But even if it could be said that the later sale on 14 May 1998 itself constituted that "transaction", it is fallacious to say that this crystallised a loss calculated by deducting sale proceeds from the quoted value 15 months earlier, being the date of the decision to sell (20 February 1997). This is because the carrying value of the shares at 20 February 1997 was not their quoted value or price. That carrying value was the adjusted value as at 30 June 1997, namely $100,622,182.35. Hence any deduction of the sale proceeds must therefore be made from that adjusted value as it was the value in the accounts. This yields a loss of $36,157,075, not $50 million. Indeed were profit or loss to be determined by reference to historic cost rather than carrying value, there would in fact have been a profit of just under $14 million (Wall affidavit, para 31). Thus the capital decline sense of loss could not be sustained by reference either to the NRMA's accounts or historic cost.

The sale steps 14 Paragraph 23 of the affidavit of Dr Wall describes the difficulties in effecting the sale of the shares which I set out below as well as the subsequent history leading to their eventual sale: "23 Principally as a result of: (a) the illiquid market for the shares; (b) the high price of the shares in 1997; (c) the size of NRMA and NRMA Investments' shareholding in Soul Pattinson and Brickworks compared to the total shareholdings of Soul Pattinson and Brickworks; (d) the need for confidentiality given that any action by NIMPL to publicise the decision to sell could have caused a fall in the share price of both stocks (given the size of the parcels for sale); and (e) the desire to sell the shares in Soul Pattinson and Brickworks at the same time (due to the extensive cross-shareholdings they hold in each other), the implementation of the decision to sell the shares was a difficult task. 24 As a result of the difficulties JB Were had in effecting the sale of the shareholdings, Macquarie Equities Limited were approached in or about September 1997 and were asked to attempt to identify a buyer. However, their efforts also failed to bring about a sale. Sale of shares in May 1998 25 Between December 1997 and April 1998, the share price of both Soul Pattinson and Brickworks fell significantly. 26 In about April 1998, a decision was then made taken jointly by myself, Ms Doyle and Mr Dixon to ask NIMPL's equities dealer, Mr Ben Ong, to explore other options for selling the shares, even if they would be less confidential. 27 In late April or early May 1998, I recall that Mr Ong said to me words to the following effect: 'I've asked ABN AMRO to work on it. They are doing a due diligence on the companies.' 28 On 14 May 1998, I was informed that ABN AMRO had found buyers for the Soul Pattinson shares at $26.50 a share. I cannot recall whether I was informed of this directly by Mr Ong, or by either Ms Doyle or Mr Dixon after they had spoken to Mr Ong. After discussing the matter, Ms Doyle, Mr Dixon and I decided to accept the deal for the sale of the Soul Pattinson shares. 29 Within an hour after the sale of the Soul Pattinson shares, I was informed that ABN AMRO had also found buyers for the Brickworks shares at a price of $35.00 per share. Again, I cannot recall whether I was informed of this directly by Mr Ong, or by either Ms Doyle or Mr Dixon after they had spoken to Mr Ong. After discussing the matter with Ms Doyle and Mr Dixon, it was decided to accept the deal for the sale of the Brickworks shares. 30 The sale of the shares was completed on 14 May 1998. The Soul Pattinson shares were sold at a price of $26.50 per share for a total consideration of $45,777,929. The Brickworks shares were sold at a price of $35 per share for a total consideration of $38,773,350."

15 The end result was a realised sale price totalling $84,555,279.

What transaction - Onus. 16 The relationship between the events concerning these two companies culminating in the sale of the share parcels and the impugned statement subsequently made on television, is not apparent from the bare wording of that statement. The reference to "transaction" is totally at large. The Defendant contends that it is for the Plaintiffs to establish that they have never made losses of $50 million in any one transaction of whatever kind. Yet Mr Yates readily acknowledged in evidence that he intended the statement to refer to the very transaction to which I have referred. That indeed is reinforced by a letter dated 12 February 1999 written by Mr Yate's then solicitor Brian Camilleri to the then Chief Executive Officer of the NRMA Insurance Limited. Unmistakeably, reference is made to the events concerning the shares in the two companies concerned. 17 The Defendant contends that whatever may have been in the mind of Mr Yates, what is relevant is the understanding of those to whom the television broadcast is directed. Since they can be assumed to be primarily potential voters in the forthcoming NRMA directors' election to be declared on 6 October 1999 after the ballot closes, though no doubt others will hear the broadcast, it is their understanding that is primarily relevant. They, it is then contended, would not turn their mind to those share transactions. 18 However that proposition ignores reality. First, there has been considerable newspaper publicity contemporaneously with the current proceedings identifying the share transaction. If the advertisements were allowed to be repeated, such publicity could be expected to connect them to this share transaction. Looking at the matter prospectively, as one must in considering whether to restrain repetition of the impugned statement, there can be little doubt that many of those who would hear future broadcasts would readily appreciate that it is this share transaction to which reference was made. That as Mr Yates concedes, was his intended meaning, though conveyed in totally uninformative fashion. It would be disingenuous therefore to suppose that the many future viewers with an interest in the NRMA's affairs will be under any misapprehension that the advertisement relates to other than the Soul Pattinson/Brickworks transaction. 19 There is a further answer to this argument. Mr Yates has made the broadcast as a director of NRMA. He is under an obligation of a fiduciary character not to provide information which he knows is wrong or misleading and under a positive duty that if he does provide information of an advocatory kind, that it be not so incomplete as to be likely to mislead. In Fraser & Anor v NRMA Holdings Ltd (1994-5) 127 ALR 543 at 554 the Full Federal Court said, in the context of directors' communication to a shareholders' meeting, but no less applicable to an individual director speaking as such: "A duty to make disclosure of relevant information arises as part of the fiduciary duties of the directors to the company and its members in relation to proposals to be considered in general meeting and under s1022 of the Law in respect of the contents of a prospectus. The fiduciary duty is a duty to provide such material information as will fully and fairly inform members of what is to be considered at the meeting and for which their proxy may be sought. The information is to be such as will enable members to judge for themselves whether to attend the meeting and vote for or against the proposal or whether to leave the matter to be determined by the majority attending and voting at the meeting …" 20 And at 466, the Full Federal Court identify the overlap between s52 and the directors' fiduciary duty: "Although s52 gives rise to no duty to provide information, when information is in fact given in purported discharge of the fiduciary duty, s52 requires that the information given is not misleading or deceptive or likely to mislead or deceive. Additionally, the section requires that the conduct of the directors in withholding certain information is not itself conduct which is misleading or deceptive or likely to mislead or deceive. It is in the area of the proper discharge of the fiduciary duty to provide relevant information that there is an overlap between discharge of the duty and the operation of s52: a failure properly to discharge the duty may itself constitute a contravention of s52 as well as a contravention of s995 of the Law." 21 Without at this point deciding whether that information was in fact wrong or misleading, assume that it were. He as a director would then be propagating information about a $50 million loss when he knows of no transaction other than this one to which the loss relates but yet he fails to identify it. Assuming it to be misleading, if this transaction were the one in mind, that precludes him from purveying it. Mr Yates can hardly expect the NRMA to establish there was no other transaction to which it could relate, when Mr Yates well knows that the allegation of loss was intended to fit this transaction, and this one alone. It is not for the Plaintiffs in effect to have to say when they stopped beating their grandmothers when the Defendant knows of no beating other than this one - and that this one was not a beating at all, if one assumes the statement to be misleading. 22 To refer to a "transaction" without specifying which one, is in this context of a communication by someone professedly acting as a director and directed principally at NRMA members, itself misleading. This misleading character derives from the suggestion that there could be any other transaction than these two share sales, when the speaker has no others in mind and is a director with the fiduciary duty I have described. In effect he says: "if the cap fits, wear it", but I won't tell you the critical dimensions of the cap. It is of course well settled that one can be misleading by silence in the s52 context; see for example Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 95 per Lockhart J: "At common law, silence can give rise to an actionable misrepresentation where there is a duty upon the representor to reveal a matter if it exists, and where the other party is therefore entitled to infer that matter does not exist from the silence of the representor … The circumstances in which silence may constitute misleading conduct under the Act were referred to in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477. That case established that silence may be relied on in order to show a breach of s52 when the circumstances give rise to an obligation to disclose relevant facts … The duty to disclose is not confined to cases where there are particular relationships, such as trustee and beneficiary or solicitor and client, principal and agent and guardian and ward. There is no useful purpose in seeking to analyse the circumstances in which the duty to disclose will arise as this must depend on the facts of each case."

23 The same reasoning must apply to s42 of the Act assuming it otherwise were capable of applying. I therefore would conclude that in the circumstances, the Defendant's failure to disclose which transaction he meant would itself be misleading on the assumption I have made. It is therefore certainly not for the Plaintiffs to have to demonstrate no other transaction would fit the imputation of a $50 million loss from one transaction.

In Trade or Commerce? 24 I turn now to the next question; whether the impugned statement is capable of being misleading or deceptive, within the statutory ambit of s42 of the Act. That depends on whether the impugned statement is made in trade or commerce as those terms are defined in that Act. Section 42 is in these terms: " 42 Misleading or deceptive conduct (TPA s52) (1) A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in this Part shall be taken as limiting by implication the generality of subsection (1)"

25 The terms "trade or commerce" are themselves defined in s4 of that Act and I quote below the relevant definitions. " trade or commerce includes any business or professional activity."

26 The Defendant's contention is that the word "business" necessarily connotes "trade, commercial transactions or engagement" (Fasold v Roberts 145 ALR 548 at 588). Then, it is argued that because it is not possible to find any trade, commercial transactions or engagement in the activities of Mr Yates, he could not be caught by s42 even were the statement misleading or deceptive. 27 The meaning of similar language in s52 of the Trade Practices Act 1974 (Cth) has been settled by the High Court in Concrete Constructions (N.S.W.) Pty Ltd v Nelson (1990) 169 CLR 594 in the majority judgment at 603: "What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character."

28 Earlier, the majority made clear that they are referring to the "central conception" of trade and commerce, not the "immense field of activities" in which corporations may engage in the course of, or for the purpose of carrying on some overall trading or commercial business. 29 The question then is whether Mr Yate's activities come within that central conception of trade or commerce. Importantly, we are not here concerned with whether Mr Yates carries out the conduct in question in connection with his own business. As was said by Hedigan J in Meadow Gem Pty Ltd v ANZ Executors & Trustees Co Ltd (1994) ATPR (Digest) 46-130 and approved by Sackville J in Fasold (supra) at 593 that is not necessary: "the conduct in question does not have to be conduct in connection with one's own business, and that it would be sufficient if the conduct engaged in was for the purpose of promoting the business of some other person or corporation."

30 The earlier quoted ratio from Concrete Constructions (supra) itself extends the conduct capable of being caught to include promotive conduct. 31 However, that first person's promotive conduct must be sufficiently connected to the trade or commerce of the second person or corporation whose business is thereby promoted if it is to constitute trade or commerce in that central sense. The centrality of Mr Yates' connection with the NRMA and its business is derived both from his speaking as a director and his purpose in so doing. His purpose is clearly to promote a campaign for the election of like-minded directors of the NRMA in order to avoid the consequences flowing from "great waste and mismanagement" identified in the advertisement; that is to say, to influence the future trade and commerce of the NRMA via change to its corporate governance. 32 The conclusion that his impugned statement is in trade or commerce of the NRMA's is strongly reinforced by the fact that he makes the relevant statement professedly as a director in connection with NRMA's future corporate governance and strategic direction. That he does so as an individual director can make no difference more especially as describes his role as one "elected to the NRMA board to protect your interests". That equates him in trade or commerce to the directors collectively of a corporation sending a memorandum to shareholders in relation to a proposed acquisition to be considered by shareholders at a general meeting of the corporation, itself held to be conduct in trade or commerce; Orison Pty Ltd v Strategic Minerals Corporation NL (1987) 77 ALR 141.. 33 The intention of Mr Yates, by a campaign of paid advertising, itself a commercial activity, is thus to promote the interests as he sees them of the NRMA group of companies and in particular their business. 34 That the statement made by Mr Yates as a director is related to the candidature of directors in a contested election and thus also relates to the corporate governance of the NRMA, itself may suffice without more to bring the statement within the central conception of trade or commerce, though I do not need to determine that. However, were anyone not connected with the corporation to make a statement about a loss said to have been incurred by a trading corporation that may or may not be enough of itself to place the impugned statement in trade or commerce; again I do not have to decide that.

Conclusion 35 I am satisfied that Mr Yates' advertising campaign is capable of coming within s42, as being in trade or commerce as there defined.

Director's fiduciary duty breached? 36 Were I wrong in that conclusion, the Plaintiffs' case is also put on the basis that the Mr Yates has breached his fiduciary duty avowedly acting as a director of the Plaintiffs to act honestly and in the best interests of the Plaintiffs. If that contention were made out, there is no necessity to demonstrate that the relevant activity occurs in trade and commerce. 37 It was not put in cross-examination to Mr Yates that he had failed to act honestly, nor in terms which identified all of the elements establishing dishonesty such as those of deliberate intent to mislead. Nor was it put that he had in the past failed to act as he saw it in the best interests of the Plaintiffs. However, the problem for the future lies in whether such an advertisement could be propagated if it were now finally determined by this Court that it was misleading and deceptive. Whatever may be said about the past about honest belief, once such a judgment were made that the impugned statement was misleading, it could not be other than a breach of a director's fiduciary duty of honesty to continue to propagate such a statement. It is to that question I now turn.

Misleading or deceptive? 38 The Defendant acknowledged that if the transactions be those to which I have earlier referred, then the statement that the NRMA "lost $50 million in one transaction" could only be justified on one of two bases. The first capital decline approach is that the circumstances demonstrate a capital decline in the book value of the relevant shares of at least $50 million. That could not be justified, for the reasons already stated in paras 12 and 13 above.

The aggregate approach 39 The second basis, the aggregate approach, is set out in para 3.4 of the Defendant's written submissions which I quote below: "3.4 It may be inferred from material which is available to the Court, but which would not be available to a viewer of the advertisement, that the loss being referred to by Mr Yates was the "capital decline" suffered between the time the plaintiffs resolved to sell the shares and the time of sale. This is a concept which the plaintiffs themselves seem to embrace in the report prepared for the board meeting on 20 February 1997 (see: Wall, CW1, p 41.3). If the actual capital decline is calculated from the report of 13 February 1999, it amounts to $71.3 million. This seems to have been readily understood to be a loss by the journalist of the Sydney Morning Herald article on 18 August 1999: "How the NRMA blew $71 million" (Yates, p.43). Even if it is approached on the book profits and losses, the write-down in June 1997 was from $47.50 to $35.00 for Soul Pattinson and from $48.00 to $35.00 for Brickworks: Wall, p 14. Therefore, on the 1,788,509 Soul Pattinson shares there was a book loss of $22.4 million and on the 1,102,310 Brickwork shares there was a book loss of $14.3 million as at year end 30 June 1997 as a result of the write-down. When these book losses for the year ended 30 June 1997 are added to the book losses of $13.9 million for the year ended 30 June 1998, the book losses recorded on the shares from the time the plaintiffs resolved to sell on 20 February 1997 to the time they sold on 14 May 1998, were $50.6 million. What is it about the statement "fifty million lost on one transaction" which prevents it from bearing this meaning? More correctly, how have the plaintiffs proven that the statement was misleading or deceptive when the criteria for calculating the loss were not specified by Mr Yates in his statement and the loss he gives can be supported on a reasonable basis?"

40 The aggregate approach, ingenious as it is, can be summed up this way. As between 30 June 1996 and 30 June 1997, as a result of the adjustment down in carrying values, there was an unrealised book loss of $36.7 million. To that is to be added the transaction of sale which occurred in the next financial year on 14 May 1998. That yielded what the Defendant describes as a further loss of $13.9 million for the year ended 30 June 1998. When these two losses, so called, are aggregated ($36.7 million from year one, unrealised and $13.9 million from year two, realised) they produce an aggregate loss as at the time the shares were sold on 14 May 1998 of $50.6 million. It will be seen that only the latter involved a transaction, itself sufficient to preclude that justification. 41 Moreover such reasoning involves the fallacy of adding an unrealised book loss from a previous year to a realised book loss in a subsequent year. This is to confuse realised and unrealised losses, and this when the term "transaction" clearly enough refers to realised losses only. Even were unrealised losses capable of being taken into account as part of an overall transaction culminating in sale, there is no basis for aggregating an unrealised loss from a previous year of income to a realised loss of a later year of income. Conventional accounting strikes a profit year by year, in the case of capital profits; likewise for capital losses. That aggregate approach therefore could not be justified on any rational system of accounting. 42 Those who view television advertisements are not trained accountants. But, even if they had such sophistication, they would be misled, for by no rational system of accounting did these transactions generate a loss of $50 million. To the lay viewer, a loss realised is what the quoted words connote - realised by an actual transaction. To a layman, the transaction of sale compared to historic cost could also be what he or she might have in mind. But that, as is clear, would have yielded not a loss but a profit and in any event that appears not how the Plaintiffs' recorded the relevant transaction in their books, in calculating profit or loss. The intermediate adjustments in carrying value over the period that the shares have been held going back to 1984 can be viewed as a creature of the fluctuating stock market price with the 1997 adjustment to reflect the practical difficulty later experienced of disposing of so large a parcel. All such adjustments in carrying value were unrealised and thus not to be described as a "transaction". One only has to ask what would happen if directors were to announce a profit based upon the converse circumstances. That is, aggregating an unrealised profit in carrying values from an earlier year of income to a realised profit of a later year, and then calling the result a "profit" from a "transaction". That would be just as misleading.

Overall Conclusion 43 Accordingly, I conclude that the statement, if repeated, would be both misleading and deceptive in terms of s42 of the Fair Trading Act and a breach of Mr Yate's fiduciary duties.

Remaining Issues - Delay, s232A of the Corporations Law and balance of convenience. 44 It remains briefly to consider the question of delay. Also the question of whether the directors of the NRMA who voted to commence these proceedings were interested such as to render their participation in the directors' meeting void under s232A of the Corporations Law. 45 The issue of delay has no substance. The board when apprised of the first of the television advertisements made on 11 August 1999 met on 13 August, a Friday and the relevant summons was filed on 17 August 1999 four days later. 46 While Mr Yates was quoted in the Sydney Morning Herald of 10 November 1998 that provision of certain documents "will help me understand better my concerns as to how a $50 million loss on the shares was made", that was hardly a basis for injunctive proceedings, quite apart from their preclusion by the exemption for printed matter in s60 of the Act. 47 As to the directors who voted for the resolution to commence this action being interested, within s232A of the Corporations Law, that turns upon whether they would be precluded from voting because they themselves were standing for election in the upcoming elections in the case of three of them leaving no quorum. The short answer to that proposition is that if, as I have determined, they were simply ensuring that members were not deceived or misled, by material in support of the so-called MAG directors, they could hardly be said to advancing their own cause in the forthcoming election. To suppose otherwise is to assume that the MAG directors would have a vested interest in misleading and deceptive material being propagated. That is not a view of the MAG directors that has been advanced by any party in this Court. 48 Finally, it is clear that any balance of convenience issues clearly favour the Plaintiffs. There is nothing to stop the Defendant continuing his campaign, but not in a way to mislead or deceive or so as to contravene his duties as a director. If he has to scrap and pay for new television advertisements, that is the result of his own conduct.

ORDERS 49 By way of final relief, and on the basis that the Plaintiffs no longer give any undertaking as to damages, the Defendant is restrained by himself, his servants or agents from publishing or authorising the publication of any statement to the effect that the Plaintiffs or either of them have lost $50 million in one transaction, namely the sale of their respective shareholding interests held directly or indirectly in Washington H Soul Pattinson & Company Limited and Brickworks Limited, or any statements to the like effect. 50 I further order that the Defendant is to pay the Plaintiffs' costs of these proceedings including all reserved costs.

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