NRMA Limited & 1 Ors v Ian Francis Yates [1999] NSWSC 859

NRMA Limited & 1 Ors v Ian Francis Yates [1999] NSWSC 859

The impugned statement that the plaintiffs 'lost $50 million in one transaction' was both misleading and deceptive within s42 of the Fair Trading Act 1987 (NSW) and constituted a breach of the director's fiduciary duties. Neither the 'capital decline' nor the 'aggregate' approach provided a justifiable accounting or factual basis for the statement as made. The statement, if repeated, would thereby breach both statutory and fiduciary obligations. The campaign was sufficiently connected to the corporation's trade or commerce under the statutory definitions, and the director's duties included not making incomplete or misleading statements.

Parties
First Plaintiff: NRMA Limited; Second Plaintiff: NRMA Insurance Limited; Defendant: Ian Francis Yates
Jurisdiction
Australia
Judgment Date
20 August 1999
Procedural Posture
Final Injunction Equity / Final Hearing (after Interim Interlocutory Relief)
Outcome
Permanent injunction granted in favour of plaintiffs; costs awarded against defendant.
Legal Topics
Injunctions, Misleading or Deceptive Conduct, Directors' Fiduciary Duties, Corporate Governance, Trade or Commerce
Equity Trade Practices Corporations Injunctions Misleading or Deceptive Conduct Directors' Fiduciary Duties Corporate Governance Trade or Commerce

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Parties

NRMA Limited

First Plaintiff

NRMA Insurance Limited

Second Plaintiff

Ian Francis Yates

Defendant

Procedural Posture

Final Injunction Equity / Final Hearing (after Interim Interlocutory Relief)

Legal Issues

  1. 1 Whether a statement by a director in an advertisement that the company "lost $50 million in one transaction" was misleading or deceptive or likely to mislead or deceive under s42 of the Fair Trading Act 1987 (NSW)
  2. 2 Whether the director breached his fiduciary duty to act honestly and in the best interests of the company by publishing the statement
  3. 3 Whether the conduct was "in trade or commerce" for the purposes of s42

Ratio Decidendi

The impugned statement that the plaintiffs 'lost $50 million in one transaction' was both misleading and deceptive within s42 of the Fair Trading Act 1987 (NSW) and constituted a breach of the director's fiduciary duties. Neither the 'capital decline' nor the 'aggregate' approach provided a justifiable accounting or factual basis for the statement as made. The statement, if repeated, would thereby breach both statutory and fiduciary obligations. The campaign was sufficiently connected to the corporation's trade or commerce under the statutory definitions, and the director's duties included not making incomplete or misleading statements.

Court Disposition

Permanent injunction granted in favour of plaintiffs; costs awarded against defendant.

Orders

  • The defendant is restrained from publishing or authorising publication of any statement to the effect that the plaintiffs have lost $50 million in one transaction (specifically relating to shares in Washington H Soul Pattinson & Company Limited and Brickworks Limited), or any statements to the like effect.
  • The defendant is to pay the plaintiffs' costs of the proceedings including all reserved costs.