Hart Security Australia Pty Ltd v Boucousis

1. [1]

   BATHURST CJ: I have had the benefit of reading Meagher JA’s reasons in draft. I agree with the orders that he proposes and with his reasons.

2. [2]

   BEAZLEY P: I have had the advantage of reading in draft Meagher JA’s reasons in this matter. I agree with his Honour’s reasons and proposed orders.

3. [3]

   MEAGHER JA:

Outline

1. [4]

   At all relevant times HSA was a wholly owned subsidiary of Christian Thomas Group Pty Ltd (CTG). After allowing for beneficial interests, the shares in HSA were indirectly held and controlled as to 62.5% by Hart Security Holdings Pty Ltd (Hart Cyprus), a company registered in Cyprus, and as to 37.5% by Boucousis Nominees Pty Limited (Boucousis Nominees), as trustee of the Christian Boucousis Family Trust. As a result of an agreement made in December 2008 those indirectly held beneficial interests in HSA were equalised.

2. [5]

   In the proceedings at first instance, HSA alleged that in breach of his fiduciary and statutory duties (specifically those in ss 181(1), 182(1) and 183(1) of the Corporations Act 2001 (Cth)), Mr Boucousis sought to gain benefits for himself by pursuing an arrangement under which the NTA contract would be obtained by HSA, but as a wholly owned (or substantially wholly owned) subsidiary of ATMAAC International Pty Ltd (ATMAAC) (a military acronym for “achieve the mission at all costs”), in circumstances where Mr Boucousis was to become a director of that company, initially hold a 19% shareholding interest in the ATMAAC group, and be employed by a company in that group.

3. [6]

   Whilst neither ATMAAC nor HSA obtained the NTA contract, HSA’s case at trial was that the pursuit of that arrangement, and in particular the introduction in early February 2009 of a proposal whereby ATMAAC would be issued shares in HSA, was a causal factor in HSA’s loss of the opportunity to enter into a contract with NTA.

4. [7]

   HSA claimed compensation from Mr Boucousis for the loss of that opportunity by reason of his breaches of fiduciary and statutory duty, and from HWL for knowingly assisting his alleged breaches of fiduciary duty (which for this purpose were said to have been dishonest as well as fraudulent), and for being knowingly concerned in the alleged statutory contraventions. The primary judge (Darke J) dismissed each of those claims: Hart Security Australia Pty Ltd v Boucousis & Ors [2014] NSWSC 1654.

5. [8]

   By its notice of appeal HSA challenges the primary judge’s conclusions that there was no breach of fiduciary duty (ground 1) or of ss 181, 182 or 183 of the Corporations Act (ground 2); and maintains that he also erred in not holding that HWL was liable for knowing assistance or participation in any such breaches (grounds 6, 7, 8 and 9). The primary judge did not address questions related to accessorial liability because of his conclusions as to the absence of breach. HSA also contends that the primary judge erred in holding that HSA did not lose the opportunity to enter into the NTA contract by reason of any breach of duty of Mr Boucousis (grounds 3, 4 and 5); and in calculating the damages to which it would have been entitled (ground 10). By their substantially identical notices of contention, HWL and Mr Boucousis support the primary judge’s conclusions concerning breach of fiduciary and statutory duties (grounds 1 and 2) and causation (ground 3).

6. [9]

   The factual context in which these issues arise is complex and summarised in some detail by the primary judge: Judgment [13]-[116]. Those facts as recited and found by his Honour are, with minor exceptions, not controversial. As he records at Judgment [12], they are drawn from contemporaneous written communications and, to a much lesser extent, notes of meetings or conversations.

7. [10]

   Before returning to the issues raised by the appeal, I propose first to introduce the relevant parties and participants. I will then summarise, although not in as much detail as the primary judge, the circumstances which resulted in the making of HSA’s claim.

The parties and participants

1. [11]

   Mr Boucousis was the only person formally appointed as a director of HSA. The company’s general manager and company secretary was Ms Stone. HSA engaged the law firm HWL to assist in its pursuit of the opportunity to secure the NTA contract. The partners of that firm engaged in providing advice from time to time included Mr Hummel and Mr Burke.

2. [12]

   The directors of Hart Cyprus included Lord Westbury and Mr Madden, the chief financial officer of the Hart Group. Mr Heycock was Chief Operations Officer. The 1000 issued shares in HSA were held by CTG and the 2500 issued shares in CTG were held by CTG Hart Holdings Ltd (CTG Holdings). Before December 2008 the legal interests in shares in CTG Holdings were held as to 49.9% by Hart Cyprus and as to 50.1% by Boucousis Nominees. Boucousis Nominees held some of those shares beneficially for Hart Cyprus with the result that the beneficial interest was held as to 62.5% by Hart Cyprus and 37.5% by Boucousis Nominees: Judgment [5]. The directors of CTG and CTG Holdings were Lord Westbury, Mr Madden and Mr Boucousis. Accordingly had Mr Boucousis as the sole director of HSA wished to obtain the informed consent of CTG to his acting in any position of conflict of interest and duty it would have been necessary to make disclosure to Lord Westbury and Mr Madden.

3. [13]

   ATMAAC’s business included providing labour in the security services sector. It was a subsidiary of AMC Security Services Pty Ltd in which Investec Bank (Australia) Limited (Investec) held an interest. The Chief Executive Officer of ATMAAC was Mr Kelly. Mr Landis of the firm of solicitors Middletons, acted for ATMAAC in its negotiations concerning the NTA contract.

4. [14]

   NTA was the holding company of the companies operating the Darwin and Alice Springs airports. It was in turn a wholly owned subsidiary of Airport Development Group Pty Ltd (ADG). The major shareholders in ADG were superannuation funds. The Chief Executive Officer of ADG and NTA was Mr Kew. Mr Ainslie was the Operations Director of NTA. Ms Pollard was the in-house legal counsel for both companies. The solicitors advising ADG and NTA were Cridlands MB Lawyers.

Factual background

1. [15]

   In March 2008 HSA and NTA signed a non-binding letter of intent directed to the finalisation of a commercial agreement between them for the provision by HSA of security services at the Darwin and Alice Springs airports: Judgment [16]. Negotiations for that contract continued throughout 2008. During those negotiations NTA raised questions as to the financial substance and backing of HSA: Judgment [20]-[21]. As the negotiations proceeded Hart Cyprus became impatient with the delays in finalising the contract. During the same period Mr Boucousis remained confident that a contract could be secured. On 29 October 2008, Mr Heycock advised Mr Boucousis that the Hart Cyprus board was “not confident in the delivery of this contract and as Hart has invested significantly in Australia a return is expected”: Judgment [27].

2. [16]

   In early December 2008 there were meetings in Cyprus between Lord Westbury, Mr Madden and Mr Boucousis. There was discussion as to the possibility of Mr Boucousis finding someone to acquire Hart Cyprus’ interest in HSA. The primary judge accepted that in this context Mr Boucousis mentioned a meeting with ATMAAC, a company that Investec had recently “bought into”, and that Investec might be interested in making an investment in HSA: Judgment [34]. His Honour also found that before these meetings in Cyprus, Mr Boucousis had discussed with Mr Kelly the possibility of ATMAAC providing HSA with security services for the NTA contract and that Mr Boucousis may have informed Mr Kelly that he, Mr Boucousis, was proposing to offer to acquire Hart Cyprus’s interest in HSA: Judgment [32]-[33].

3. [17]

   On 3 December 2008 in the course of those discussions, Mr Boucousis sent Mr Kelly of ATMAAC the following email: Judgment [35]:

4. [18]

   The consultancy agreement was an agreement between HSA and NTA and its operating subsidiaries for the provision of consultancy services in relation to the security operations at their airports: Judgment [31]. The resignation letter was Mr Boucousis’ letter of resignation dated 30 October 2008 addressed to Hart Cyprus: Judgment [28]-[29]. By that letter Mr Boucousis tendered his resignation as managing director of HSA effective on 1 March 2009 because of “ongoing and recent correspondence indicating dissatisfaction with the performance of the Australian business”.

5. [19]

   The primary judge considered that to this point “Mr Boucousis was proceeding on the basis that he would continue to pursue the [NTA] opportunity on behalf of HSA, and at the same time, would seek an investor to acquire the interests” of Hart Cyprus: Judgment [141].

6. [20]

   On 4 December 2008 two documents were executed by Lord Westbury and Messrs Madden and Boucousis. The first, headed “Agreement”, was between CTG Holdings, Hart Cyprus, Mr Boucousis and Boucousis Nominees. It provided that “effective from the date of this agreement”, Mr Boucousis would increase his shareholding in CTG to 50% and relinquish his 37.5% beneficial shareholding in CTG Holdings. Effective as at the same date Hart Cyprus agreed to convert the “intercompany balances” (presumably loans from companies in the Hart group to CTG or HSA) into share capital. (HSA’s balance sheet as at January 2009 disclosed a loan from Hart Cyprus to HSA of $783,107 and loans from HSA to CTG of $144,260 and to CTG Holdings of $17,657. An adjusted version of that balance sheet did not include those with company balances or suggest that the intercompany debt had been converted into share capital.)

7. [21]

   The Agreement also provided that should the NTA contract be secured “by any of the Hart group companies”, Mr Boucousis would rescind his resignation and sign a two year contract of employment with HSA. In the event that contract was not secured, it was agreed that Hart Cyprus would review its investment strategy with respect to CTG and HSA to minimise any potential financial loss as a consequence of the non-award of that contract. It was also agreed that Mr Boucousis would be granted an option exercisable on or before 1 March 2009 to acquire from CTG Holdings its remaining 50% shareholding in CTG: Judgment [38].

8. [22]

   The second document was that option headed “Agreement (Option)”. It provided for the acquisition by Mr Boucousis of up to 50% of the remaining shareholding in CTG for US$30,000 per 1% (equivalent to US$1.5 million for 50%). That option was exercisable on or before 1 March 2009 and the consideration payable on or before 15 March 2009. The agreement also provided for the payment by Mr Boucousis of interest on the intercompany balances as at 30 September 2008 from that date until receipt of monies upon the exercise of the option: Judgment [39].

9. [23]

   The first agreement also provided that with the exception of an advance of US$50,000, no further funding would be made available by Hart Cyprus to CTG or HSA unless the terms of that funding were agreed between Hart Cyprus and Mr Boucousis. In that event the funding was to be provided in proportion to their respective (indirect) shareholdings in CTG. It was also acknowledged by that agreement that Mr Boucousis would “approach financial investors in order to secure such additional working and investment capital as necessary, which may lead to the pro-rated dilution of both [Hart Cyprus] and [him] with respect to their respective share-holdings in CTG”: Judgment [38].

10. [24]

    In the weeks that followed, Mr Boucousis had discussions with Investec in relation to its acquiring an interest in HSA. On 19 December 2008 he provided Mr Madden with copies of spreadsheets prepared by Investec for the purpose of valuing HSA. On 24 December 2008 Mr Boucousis advised Lord Westbury and Messrs Sundberg and Madden of the outcome of his discussions with Investec. That email concluded with a recommendation that Hart Cyprus take an “offer of $1.2 million USD”: Judgment [42].

11. [25]

    Discussions continued concerning the price at which Hart Cyprus might sell its 50% interest in CTG. In an email dated 7 January 2009 Mr Madden stated that it was “incumbent” upon Mr Boucousis to help his “backers arrive at the amount under the option” and suggested a cash payment to Hart Cyprus of US$1.2m with it retaining a 10% interest. Mr Boucousis responded with a suggested sale of the 50% interest for US$1.5m payable over 24 months, described as an “earn out” with an upfront payment. Mr Madden advised on 8 January 2009 that Hart Cyprus was not interested in an “earn out”.

12. [26]

    On 23 January 2009 Mr Boucousis received an email from Mr Ainslie of NTA, which enclosed an internal email from Ms Pollard and a copy of a draft of the NTA contract (described as a “Management of Security Services and Consultancy Agreement”). Those emails referred to the need on the part of NTA to understand HSA’s relationship with ATMAAC “given [that relationship] is instrumental at this stage in executing a successful contractual arrangement and for us to assess risk to NT Airports”: Judgment [47]-[48]. Mr Boucousis’ evidence was that to this point in time he had told Mr Ainslie that he was in discussion with ATMAAC about its being a sub-contractor or potentially acquiring a 50% stake in HSA: Judgment [144].

13. [27]

    When forwarding these emails to Hart Cyprus with the draft NTA contract, Mr Boucousis intentionally altered them so as to delete the parts referring to NTA’s inquiry about the relationship between HSA and ATMAAC: Judgment [49]-[50]. A short time later, on 5 February, Mr Boucousis emailed Mr Madden referring to the fact that the NTA contract had been reviewed by ATMAAC’s lawyers and noting that NTA was requiring “full transparency… including any offers/interaction with ATMAAC”: Judgment [146].

14. [28]

    The draft contract named the service provider as HSA and was to be for a term of three years from 1 April 2009. It included a requirement for a bank guarantee for an unspecified amount (cl 21), as well as guarantees of the performance of the contract to be given by Mr Boucousis and Hart Cyprus (cl 20). On 23 January 2009 Mr Boucousis advised Mr Madden that the bank guarantee was to be for $5 million and that the contract was “slated” to be signed on 20 February 2009: Judgment [52]-[53]. In his email of 26 January 2009 Mr Boucousis, referring to the $5 million performance guarantee, noted that the “scuttlebutt is given Hart has no track record, this would provide ‘comfort’ to the NTAPL team”: Judgment [53].

15. [29]

    Mr Ainslie explained NTA’s position in relation to the requirement for the bank guarantee in an email dated 28 January 2009: Judgment [54]. The guarantee was necessary to give NTA comfort that HSA could perform and carry out its obligations under the agreement. That email also advised that the contract was to be presented to the NTA board on 19 February 2009, and that the board paper for that meeting had to be submitted on or before 9 February 2009.

16. [30]

    Hart Cyprus objected to the requirement for the bank guarantee. Mr Madden’s email to Mr Boucousis received on 30 January 2009 concluded: Judgment [58]

17. [31]

    At this point, the end of January 2009, Mr Boucousis sought advice from Mr Burke and Mr Hummel of HWL concerning his duty as a director, in circumstances where he maintained that there would be issues as to HSA’s solvency if it could not secure the NTA contract. That request was referred to Mr Webeck. Mr Hummel’s email to Mr Webeck of 30 January 2009 recorded HWL’s instructions:

18. [32]

    Following that conference with Mr Burke of HWL on 30 January, Mr Boucousis sent an email to Mr Madden, which included the following: Judgment [60]

19. [33]

    The reference to no current “legal instrument in place assuring solvency” was to any letter of support from Hart Cyprus to CTG and HSA. At this time there appears to have been a difference between Mr Boucousis and Hart Cyprus as to whether earlier letters of support provided on 8 September 2008 and 20 November 2008 had expired: Judgment [45].

20. [34]

    Mr Madden replied on 31 January 2009 asking Mr Boucousis to request Investec to provide a letter formally outlining its position with respect to the NTA contract: Judgment [62]. In response, on 4 February 2009 Mr Boucousis sent an email to Mr Madden which attached an offer from ATMAAC for the purchase of CTG Holding’s 50% shareholding in CTG for A$500,000 noting that it would enter into “separate discussions” with Boucousis Nominees in relation to its 50% shareholding in CTG: Judgment [67]. The assumptions on which that offer was based included the satisfactory execution of the NTA contract, and a three year employment contract with Mr Boucousis.

21. [35]

    On 5 February 2009 Ms Pollard of NTA sent an email to Mr Boucousis concerning the bank guarantee. She indicated that NTA required an unconditional and irrevocable bank guarantee in an amount of $1 million and that Mr Boucousis and Hart Cyprus execute the contract as guarantors: Judgment [70].

22. [36]

    On the same day Mr Madden sent two emails to Mr Boucousis. In one he advised that the ATMAAC offer was “fundamentally different from what we were led to believe from our telecoms” and that as such Hart Cyprus had “no interest” in that offer. He also referred to several matters as making it impossible for Hart Cyprus to “negotiate” the contract in this manner: Judgment [68]. In his response to those matters, Mr Boucousis indicated in relation to the guarantee that the intent was it be for $1 million “ratcheted down over 5 years”: Judgment [68]-[69].

23. [37]

    In his second email of 5 February Mr Madden proposed a possible compromise in relation to the requirement for the bank guarantee. He indicated Hart Cyprus was prepared to move forward with a guarantee capped at $1 million valid for a period of 12 months from commencement of services on the basis that HSA receive an advance payment of two months estimated billings, repayable in 12 equal monthly instalments, by way of deduction from monthly invoices submitted to the client: Judgment [71]. (The value of this proposal fell to be assessed in circumstances where the expected annual billings from the contract were nearly $12 million, so that the advance payment proposed was about $2 million, twice the amount of the guarantee.)

24. [38]

    Having communicated that proposal to NTA, Mr Boucousis responded on 6 February 2009 advising that NTA did not agree with the proposal for any advance payment. Its “final” position was stated to be a $1 million bank guarantee ratcheted down over 5 years. He also advised that “Investec has agreed to meet the terms stipulated above, providing full bank guarantees and guarantor over the contract”: Judgment [72]

25. [39]

    Mr Madden made Hart Cyprus’ position clear by his response on the same day: Judgment [74]

26. [40]

    On or before 10 February 2009 Mr Boucousis was provided with a copy of the board paper prepared by the management of NTA. That paper contained a recommendation that the board approve a contract with HSA to commence on 1 April 2009 for a term of five years; and that authority be delegated to Mr Kew to execute that contract on behalf of NTA and its operating subsidiaries. That paper included the following under the heading “Risk Mitigation”: Judgment [77]

27. [41]

    He sent a copy of that board paper to Mr Madden on 10 February 2009 and reported: Judgment [76]

28. [42]

    Mr Madden responded with Hart Cyprus’ position on 11 February 2009: Judgment [78]

29. [43]

    At that time NTA was proceeding on the basis that ATMAAC was proposing to acquire the Hart Cyprus interest in the CTG group, which included HSA. That understanding was reflected in Ms Pollard’s email to Mr Boucousis of 12 February 2009: Judgment [82]

30. [44]

    On the previous day, 11 February 2009, Mr Boucousis had again conferred with Mr Burke and Mr Hummel of HWL. Mr Burke’s notes indicate that there was discussion about the possibility of Mr Boucousis, as sole director of HSA, issuing shares in HSA, and appointing an additional director. HWL was asked to advise if that was possible and whether Mr Boucousis had a “positive duty” to disclose such a course to an indirect shareholder (meaning Hart Cyprus): Judgment [80]. (It is from this point that HSA alleges that Mr Boucousis promoted his personal interests by pursuing a gain in circumstances in which there was a conflict of his interest and duty.)

31. [45]

    On the evening of 13 February 2009 (a Friday) Mr Boucousis sent an email to Ms Pollard and Mr Ainslie of NTA: Judgment [85].

32. [46]

    Discussions proceeded between Mr Boucousis, ATMAAC and Investec. An email from Investec to Mr Boucousis sent on about 14 February 2009 included the following, extracted in part at Judgment [83].

33. [47]

    The primary judge found that by 16 February 2009 the following proposal had been formulated as between HSA, Mr Boucousis and the ATMAAC group: Judgment [87]. ATMAAC Aviation Pty Ltd (ATMAAC Aviation) was to be incorporated as a wholly owned subsidiary of ATMAAC, which in turn was a wholly owned subsidiary of AMC Security Services Pty Ltd. The directors of those three companies were to be Mr Kelly and Mr Boucousis. ATMAAC Aviation was to be issued a majority shareholding in HSA by a subscription agreement. HSA would enter into the NTA contract. Mr Boucousis would be issued shares in AMC Security Services, initially 18% and increasing to 25%. He was also to be a director of that company and to be employed within the ATMAAC group. Investec, the existing financier to that group, was to provide or arrange the bank guarantee required under the NTA contract.

34. [48]

    Thereafter, as the primary judge found at [88], “strenuous efforts were made by Mr Boucousis, and others, to advance this proposal”. Middletons prepared a draft share subscription agreement, which in a later iteration provided for ATMAAC Aviation to subscribe for 99,000 shares in HSA and procure its financier to deliver the bank guarantee to NTA. On 18 February 2009 a further draft of the contract was provided by NTA to Middletons. It named HSA as service provider, was for a term of five years and continued to require a bank guarantee of $1 million, as well as a personal guarantee from Mr Boucousis.

35. [49]

    ATMAAC Aviation was incorporated on 16 February 2009 (a Monday). On the same day Ms Pollard communicated by email with Mr Landis of Middletons concerning the proposed acquisition of HSA by ATMAAC:

36. [50]

    In the evening of 16 February, Mr Hummel sent an email to Mr Boucousis which sought to clarify HWL’s role. That email is referred to at Judgment [90] and included:

37. [51]

    Middletons prepared a draft share subscription agreement on 17 February 2009: Judgment [91]. On 18 February 2009 Ms Pollard, in an email to Middletons, identified as a matter about which NTA would require some comfort that Hart Security Australia Pty Ltd “has authority to enter the contract and how the share issue to ATMAAC etc will work”: Judgment [92]. The draft contract provided on 18 February included provision for a bank guarantee of $1 million. However, as the primary judge found at Judgment [93] Mr Boucousis understood and “informed Mr Kelly that NTA would be happy to further negotiate the bank guarantee after their board meeting, and that a $500,000 guarantee for a six month period may be possible”. The primary judge found that Mr Boucousis did not pass this information on to the Hart Group: Judgment [164].

38. [52]

    Early in the evening of 18 February, Mr Boucousis received a draft letter of advice from Mr Hummel. The primary judge summarised that advice at Judgment [99]:

39. [53]

    A short time later, Cridlands MB, acting for NTA, emailed Mr Landis, Mr Hummel and Mr Boucousis in the following terms: Judgment [96]

40. [54]

    By this time the proposed structure of the ATMAAC group provided that ATMAAC Aviation would hold 99% of the shares in HSA and that via AMC Security Services Mr Boucousis would hold an 18.9% interest in ATMAAC Aviation. This was all in accordance with the agreement struck by 14 February 2009.

41. [55]

    Later in the evening of 18 February 2009 Mr Boucousis received and responded to an email from Mr Madden which inquired as to developments concerning the NTA board meeting and any “feedback from Investec/Atmaac”. Mr Boucousis responded as follows: Judgment [100]

42. [56]

    In the early hours of 19 February (a Thursday) Mr Boucousis received Mr Madden’s reply in which he posed three questions, which are summarised as follows by the primary judge: Judgment [101]:

43. [57]

    Early in the afternoon of 19 February Mr Boucousis replied to Mr Madden’s questions as follows: Judgment [102]

44. [58]

    At its meeting which commenced at 8.30am on 19 February, the NTA board did not accept the recommendation made by its management that the contract with HSA be approved. Instead the board resolved to consider the question by circular resolution once six matters had been attended to. Those matters included "Preferred contracting entity had been resolved by ADG (Atmac/Hart)". Further discussions followed between NTA, ATMAAC and HSA.

45. [59]

    In the early afternoon of 19 February Mr Boucousis advised Mr Kelly by email that the contract had not been awarded at that stage because of uncertainty with the “company structure and ownership moving forward”.

46. [60]

    Later, in the evening, Mr Madden responded to Mr Boucousis’ earlier email. Referring to NTA’s requirement for the guarantee he stated “we had assumed that we would receive a direct response” from NTA and that with no alternative proposal or suggestion offered Hart was effectively prevented “from entering into any dialogue, discussion or negotiation”. He concluded:

47. [61]

    By the end of 20 February 2009, NTA’s management decided to recommend to the board that the contract be entered into directly with ATMAAC: Judgment [109]. On 23 February 2009, Mr Ainslie of NTA wrote to Mr Boucousis:

48. [62]

    Later on the same day Ms Pollard proposed to Mr Boucousis that she make a small amendment to that letter. The amended letter was never sent or substituted for the earlier letter. Ms Pollard explained the reasons for the proposed amendment in an email to Mr Boucousis. Mr Kew agreed in evidence that her explanation reflected his general understanding of the position at the time. That explanation was as follows: Judgment [111]-[112]

49. [63]

    The possibility that NTA might award the contract to ATMAAC, rather than HSA, led to discussion as to whether HSA might assign to ATMAAC certain information and intellectual property rights relating to the performance of the proposed contract. A deed of assignment was drafted and an assignment fee of $125,000 (originally $100,000) was agreed: Judgment [106], [108]. However that transaction did not proceed because on 25 February 2009 Ms Stone as company secretary of HSA declined to sign the deed. On the following day Mr Boucousis resigned as a director of HSA: Judgment [114], [115]. NTA did not proceed to enter into a security services contract with HSA or ATMAAC.

Breaches of fiduciary duties (ground 1)

1. [64]

   The judge described HSA’s “primary case” as being that Mr Boucousis “pursued a strategy from about December 2008 aimed at benefiting ATMAAC and himself at the expense of HSA” and that by doing so he acted dishonestly: Judgment [131]. As his Honour observed at Judgment [132] the same conduct was also relied on as constituting a breach of each of the statutory provisions. In its written submissions to the primary judge concerning the statutory duties, HSA contended that Mr Boucousis “clearly acted deliberately for an improper purpose and not in good faith and in the best interests of HSA”.

2. [65]

   HSA’s alternative case was that from 11 February 2009 Mr Boucousis pursued the ATMAAC proposal in circumstances where there was a conflict or a substantial possibility of a conflict between his personal interest in that proposal and his duty as a director of HSA to consider whether entry into that transaction was in the best interests of the company: Judgment [169]-[170].

3. [66]

   His Honour rejected HSA’s primary case because he was not persuaded that during the period from December 2008 to 19 February 2009 Mr Boucousis “was pursuing a strategy aimed at benefiting ATMAAC and himself”: Judgment [167]-[168]. He also rejected HSA’s alternative case, concluding that although Mr Boucousis pursued the ATMAAC proposal there was no actual or real possibility of a conflict between his personal interest and his duties to HSA: Judgment [177]. On the basis of these conclusions the primary judge dismissed the allegations of breaches of fiduciary duty and contraventions of s 181(1), 182(1) and 183(1): Judgment [179]-[181].

4. [67]

   The primary judge rejected HSA’s claim against HWL because there was no breach of fiduciary duty amounting to a “dishonest and fraudulent design” to found any accessorial liability within the second limb of Barnes v Addy (1874) LR 9 Ch App 244. The claims of involvement in contraventions of ss 181(1), 182(1) and 183(1) also failed because of his Honour’s conclusion that there was no contravention of those subsections: Judgment [195].

5. [68]

   In the argument on appeal, HSA’s principal challenge was to the judge’s rejection of its alternative case, which does not depend on any allegation of fraud or dishonesty on the part of Mr Boucousis. HSA did not however abandon its challenge to the dismissal of its primary case. That challenge focussed on the findings of the primary judge directed to Mr Boucousis’ motivation and subjective purpose. It was said those findings were not relevant to its establishing the alleged breach of fiduciary duty, or to the characterisation of that breach as dishonest.

6. [69]

   The following is an example of the way that argument was put. Reference was made to the primary judge’s conclusion at Judgment [148] that he was not persuaded that Mr Boucousis’ concealment by the alteration of emails (see [27] above) of the extent of ATMAAC’s early involvement with NTA, “should be regarded as evidence of a consciousness of guilt, or as part of a plan to divert the NTA opportunity away from HSA”. It was submitted that it was not necessary for the primary judge to consider Mr Boucousis’ state of mind in these respects because it was “not relevant in order to make out his breach of duty” or “that [the] breach of duty [was] dishonest”. HSA emphasised that dishonesty was to be judged by the standards of the ordinary decent person, and that it was not necessary that the person appreciate that the conduct was dishonest by those standards (for which see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [173]; and Peters v The Queen (1998) 192 CLR 493).

7. [70]

   However as is emphasised by Toohey and Gaudron JJ in Peters at [18], the characterisation of an act or conduct as dishonest by reference to the standards of ordinary, honest persons necessarily requires that the act or conduct and “knowledge, belief or intent” first be identified. And where allegations of dishonesty and fraud are made, so as to found an equitable claim of knowing assistance, the conduct and any relevant state of mind must be pleaded and particularised (see Farah at [170]).

8. [71]

   Accordingly HSA’s argument, as directed to its primary case, makes it necessary to consider how that case was pleaded, it not being suggested that the conduct of this part of its case departed from that pleading (cf Banque Commerciale S.A. En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-287). Before doing so, it is convenient to consider the provisions of the Corporations Act pleaded by HSA against Mr Boucousis.

9. [72]

   Subsections 181(1), 182(1) and 183(1) provide:

10. [73]

    The primary judge referred at Judgment [180] to the decision of Black J In the matter of Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [420] and to the different views expressed concerning the content of the obligation imposed by s 181(1)(a). Those differences are as to whether the obligation to act in good faith in the best interests of the company is only contravened if it is established that the director knew that the relevant conduct was not in the company’s best interests, or whether it is sufficient to establish that viewed objectively the conduct did not answer that description.

11. [74]

    This question was addressed in the Explanatory Memorandum to the Corporate Law Economic Reform Program Bill which as enacted introduced s 181 in its current form. At page 11 of that Memorandum, in the “Summary of the key amendments proposed by the Bill”, it was said that the existing duty to act honestly (a reference to s 232(2) of the Corporations Law) had been reformulated “to capture the fiduciary principles that a director or other officer of a corporation must exercise their powers and discharge their duties in good faith in what they believe to be in the best interests of the corporation and for a proper purpose”. That subject was further addressed in Pt 6 of the Memorandum. It is sufficient here to refer to paras 6.2 and 6.7 which appear under the heading “Good faith”:

12. [75]

    Under the general law a director is required to act in what they honestly believe to be the best interests of the company; and the substantial purpose for which they discharge their duties must be a proper one, this not being determined by what the director thinks: see Ford, Austin and Ramsay’s Principles of Corporations Law (16th ed 2015, Lexis Nexis Butterworths) at [8.065].

13. [76]

    The following allegations of breach and dishonesty were made against Mr Boucousis:

14. [77]

    The earlier conduct pleaded in paras 17 to 24 included engaging in negotiations with ATMAAC with the intention that it should enter into the NTA contract instead of HSA or with the intention that ATMAAC would otherwise have the commercial benefit of that contract (para 17); in an effort to gain a benefit for himself and to gain an advantage for ATMAAC to the detriment of HSA, discussing with ATMAAC a number of scenarios including its acquisition of Hart Cyprus’s interest in HSA, ATMAAC’s subscription for shares in HSA, the employment of Mr Boucousis by ATMAAC, the issue of shares in ATMAAC to Mr Boucousis or a company with which he was associated, and the assignment of HSA’s assets to ATMAAC (para 20); and, in furtherance of the arrangements with ATMAAC to gain a benefit for himself and to gain an advantage for ATMAAC to the detriment of HSA, becoming a director of ATMAAC (para 24).

15. [78]

    Thus it was alleged that conduct of Mr Boucousis from December 2008 was undertaken with the intention or purpose of seeking a benefit for himself and an advantage for ATMAAC, to the detriment of HSA. That conduct included the conduct described above. Contrary to HSA’s submissions to this Court, addressing its primary case required that the judge make findings as to Mr Boucousis’ state of mind and purpose in pursuing various scenarios that emerged from early December 2008.

16. [79]

    The primary judge made several findings as to Mr Boucousis’ motivation or purpose in pursuing the opportunity to contract with NTA. They included: that in providing information about the NTA contract to Mr Kelly in early December 2008, Mr Boucousis was not attempting to divert the NTA contract away from HSA, but pursuing that opportunity on behalf of HSA, and at the same time seeking an investor to acquire the interests of the Hart Group: Judgment [141]; that Mr Boucousis’ conduct in intentionally altering the emails from NTA was not part of any plan to divert the NTA contract away from HSA: Judgment [148]; that before 11 February 2009 Mr Boucousis’ discussions with ATMAAC and its lawyers in relation to the NTA contract were not undertaken with the intention that ATMAAC should enter into the NTA contract instead of HSA, but were concerned with what might occur as part of a transaction in which ATMAAC acquired the Hart Group’s interests: Judgment [155]; that Mr Boucousis saw the ATMAAC proposal as agreed by 14 February 2009 (see [46] above) as the best and only option for HSA to secure the NTA contract: Judgment [160]; that it was not demonstrated that in pursuing the new ATMAAC proposal Mr Boucousis was motivated by a desire to gain an advantage for himself: Judgment [167]; and, by way of conclusion, that between December 2008 and 19 February 2009 Mr Boucousis was genuinely attempting to secure the NTA contract for HSA: Judgment [168].

17. [80]

    Each of those findings was directed to HSA’s pleaded case. None is challenged on appeal. On the basis of those findings the primary judge was not persuaded that Mr Boucousis was “pursuing a strategy aimed at benefiting ATMAAC and himself at the expense of HSA”: Judgment [167]-[168]. For that reason he rejected that primary case.

18. [81]

    In its written submissions HSA identifies five reasons why the primary judge erred in not finding Mr Boucousis’ conduct involved a breach of his fiduciary and statutory duties. The first and second of those reasons address HSA’s primary case. The remaining three are directed to its appeal from the rejection of its alternative case which is considered below.

19. [82]

    The first reason (which was pursued in oral argument) is that his Honour’s findings that Mr Boucousis was not “motivated by” a desire to gain an advantage for himself, and that his actions were not “aimed at” achieving some impermissible end, were unnecessary in circumstances where intentional wrongdoing is not a necessary element of a claim for breach of fiduciary duty.

20. [83]

    As I have already observed, this criticism of the primary judge’s findings as to Mr Boucousis’ subjective purpose or intention in pursuing the NTA contract is unwarranted. Those findings address allegations that he consciously pursued a strategy with the intended objective of benefiting ATMAAC and himself. It was on the basis of those allegations that it was said Mr Boucousis’ conduct was “dishonest and fraudulent”.

21. [84]

    HSA also submitted that it was not necessary that it prove subjective wrongdoing in order to make out a contravention of s 182(1) because impropriety is measured by the standard of conduct of reasonable persons, and may be established notwithstanding that the director believes their conduct to have been in the company’s interest. Reference was made to R v Byrnes (1995) 183 CLR 501 at 514-515 (Brennan, Deane, Toohey and Gaudron JJ).

22. [85]

    These submissions concerning the construction of s 182(1) may be accepted, but do not address all of its elements. To make out a contravention of s 182(1) it is also necessary to establish that in engaging in the relevant conduct, the director’s purpose was to gain a relevant advantage or cause detriment: see Chew v The Queen (1992) 173 CLR 626 at 632-633 (Mason CJ, Brennan, Gaudron and McHugh JJ). Thus the pleading of Mr Boucousis’ subjective purpose, as being to gain an advantage for himself and ATMAAC, was necessary to make out the alleged contraventions of ss 182(1) and 183(1). Unsurprisingly HSA’s written submissions to the primary judge accepted that this was so, contending that Mr Boucousis had used his position and information of the company “with a view to gaining an advantage for himself and ATMAAC”.

23. [86]

    It is also the position that it was not necessary for HSA to prove intentional wrongdoing on the part of Mr Boucousis to establish a breach of fiduciary duty. In Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 and Boardman v Phipps [1967] 2 AC 46 each of the fiduciaries was liable to account for a benefit obtained by reason of their fiduciary position, notwithstanding that they had acted bona fide and in the best interests of the party to whom the fiduciary obligation was owed: see also Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557-558 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ).

24. [87]

    However the position is different in respect of the equitable accessorial liability claim. For HSA to make out that claim against HWL, as well as its claims against Mr Boucousis of breaches of ss 182(1) and 183(1), it was necessary it establish that he acted deliberately and with the purpose of preferring his personal interest, with the result that judged by the standards of ordinary, decent people, his doing so was dishonest, and involved impropriety. The primary judge did not misunderstand HSA’s primary case as including these allegations.

25. [88]

    The second reason (not developed in oral argument) why it is said that his Honour erred is that he misapprehended HSA’s primary case as to Mr Boucousis’ purpose or motivation as including as a necessary element that he acted intending to cause detriment or harm to HSA.

26. [89]

    That was submitted to be apparent in the primary judge’s conclusion at Judgment [168] that he was not persuaded that Mr Boucousis was pursuing a strategy aimed at benefiting ATMAAC and himself “at the expense of HSA”. I do not agree. In my view that holding is reasonably understood as a paraphrase of HSA’s pleaded case that in seeking benefits for ATMAAC and himself Mr Boucousis acted “to the detriment of” HSA; these last words describing the consequences of his action rather than any intended objective of it. This reading of his Honour’s conclusions is consistent with his earlier findings at Judgment [167] and [168] which deal only with Mr Boucousis’ alleged motivation in seeking a gain or advantage for himself or ATMAAC, in each case as distinct from HSA.

27. [90]

    The primary judge, in his treatment of the alleged contraventions of ss 182(1) and 183(1), continued to recognise the distinction between a purpose to gain an advantage, and one to cause detriment. He formulated the relevant question at Judgment [181], holding:

28. [91]

    Although that holding in its terms also addresses a claim of contravention of ss 182(1)(b) and 183(1)(b) (which was pleaded, but not made in argument before the primary judge), it does not justify the conclusion that his Honour misapprehended HSA’s primary case of breach of fiduciary duty as including that Mr Boucousis acted with or for a purpose which included causing detriment to HSA.

29. [92]

    It follows that the primary judge did not err in rejecting HSA’s primary case.

30. [93]

    The primary judge summarised HSA’s alternative case at Judgment [169] as being whether “Mr Boucousis, admittedly acting genuinely and in the perceived best interests of the company”, nonetheless breached his duties to HSA by being in a position where those duties conflicted with his personal interest.

31. [94]

    A fiduciary cannot be in a position where their duty in that capacity conflicts with their personal interest, or where there is a real risk of that being so. There is no such conflict where the personal interest is sufficiently remote from the subject matter of the duty, or insubstantial in the sense that it is “too feeble an inducement to be determining motive”: per Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 104 citing Learned Hand J in Phelan v Middle States Oil Corporation (1955) 220 F 2d 593 at 602-603. Where there is the “possibility of conflict” it must be a real and sensible one. Whether that is so is to be determined from the standpoint of a reasonable person looking at the relevant facts and circumstances: see Boardman v Phipps at 124 (Lord Upjohn); Queensland Mines Ltd v Hudson (1978) 52 ALJR 399 at 400 (Lord Scarman delivering the judgment of the Privy Council); Re HIH Insurance Ltd; ASIC v Adler [2002] NSWSC 171; (2002) 168 FLR 253 at [735] (Santow J); and Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37; (2016) 333 ALR 524 at [109] (Payne JA, Gleeson and Leeming JJA agreeing).

32. [95]

    In Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 165; [2001] HCA 31 at [78] McHugh, Gummow, Hayne and Callinan JJ described the fiduciary as:

33. [96]

    This formulation of that aspect of the fiduciary’s obligation adopts the language of Mason J in Hospital Products at 103. In the discussion which follows Mason J makes clear that it is the fact of the making or “pursuit” of personal gain, in circumstances where there is an actual or substantial possibility of conflict, that constitutes the breach of the fiduciary’s obligation, irrespective of what the fiduciary’s actual motives may be for doing so.

34. [97]

    The objective of the rule in imposing such a strict duty is “to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage” (Warman at 557-558); see also per Deane J in Chan v Zacharia (1984) 154 CLR 178 at 198-199. Regal (Hastings) v Gulliver and Boardman v Phipps are examples of cases in which the fiduciary was in default and held liable, although not driven by self-interest or personal gain.

35. [98]

    In Warman the Court accepted (at 559) that where a loss is suffered by reason of the fiduciary making or pursuing a gain in circumstances where there is a conflict, the plaintiff may elect to have a compensatory remedy, such as equitable compensation. HSA claimed that by reason of Mr Boucousis’ pursuit of personal gain whilst in a position of conflict, it lost the opportunity to enter into the NTA contract and derive benefits under it. In doing so it relied on the principles stated in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332.

36. [99]

    Here the fiduciary obligation was owed by Mr Boucousis as a director and to the company, and not to HSA’s existing shareholder or Hart Cyprus, as the holder of a 50% indirect interest in HSA. No case was made that in circumstances where one of the (indirect) shareholders in the company was relying on a director for information and advice, and to negotiate the possible sale of its shareholding interest, a fiduciary duty was owed by the director to that shareholder: cf Brunninghausen v Glavanics (1999) 46 NSWLR 538.

37. [100]

    The primary judge concluded at Judgment [177] that “in the particular circumstances… Mr Boucousis, in pursuing the ATMAAC proposal, was not relevantly in a position of conflict. That is, there was neither an actual conflict, nor a real or substantial possibility of a conflict, between his personal interests and his duties to HSA.”

38. [101]

    His Honour reasoned to that conclusion as follows. Mr Boucousis considered the NTA contract to be a suitable and worthwhile opportunity for HSA to pursue. However by 11 February 2009, the company lacked the practical ability to enter into that contract on the terms stipulated by NTA, and the possibility of the Hart Cyprus’ interest being bought out by ATMAAC had stalled (Judgment [171]); also Mr Boucousis considered the ATMAAC proposal which had emerged by 14 February as the “best” and “only realistic means of securing the NTA contract for HSA” (Judgment [172]). Although it entailed “significant personal benefits to Mr Boucousis, including a shareholding and an employment contract”, the possibility of conflict between his interest in pursuing those benefits and his “obligation to pursue the [NTA] contract” was only “theoretical” because his personal interest did not provide “any real inducement to not faithfully discharge that duty” (Judgment [173]-[174]). Furthermore the personal benefits to accrue to Mr Boucousis were not to come from HSA so that there was no real possibility of conflict between his personal interest in receiving those benefits and the discharge of his duty to obtain the best terms for HSA (Judgment [175]).

39. [102]

    In its written submissions HSA relies on the third, fourth and fifth of the reasons earlier referred to (see [81] above) in support of its contention that the primary judge erred in rejecting its alternative case.

40. [103]

    The third of those reasons (also pursued in oral argument) is that his Honour’s analysis does not examine Mr Boucousis’ position prospectively and at the time he was required to consider whether the NTA opportunity was one that HSA should pursue by implementation of the ATMAAC proposal. Instead the primary judge addressed the question of actual or potential conflict in the light of Mr Boucousis’ view that the ATMAAC share issue proposal was the “best and only option” of securing the NTA contract.

41. [104]

    HSA submits that in doing so his Honour took into account Mr Boucousis’ assessment of a matter which the company was also entitled to have made by a director who was not in a position of conflict of personal interest and duty. The question whether there was an actual or potential conflict was not to be answered by reference to whether the party by whom the obligation of loyalty was owed was acting honestly and reasonably (Warman at 558). Furthermore the fact that Mr Boucousis may in good faith have believed that the pursuit of an opportunity, which also promised him significant personal benefits, would be in the best interests of the company, did not deny the existence of any conflict or provide a defence or excuse to his pursuit of personal gain without the informed consent of the company: see Boardman v Phipps at 104 (Lord Cohen), 105, 112 (Lord Hodson).

42. [105]

    The fourth of those reasons is that the fact that the personal benefits were not coming from HSA, and could not have been received by HSA, was irrelevant to whether there was or may be a conflict. HSA submitted that the fact a stranger to the fiduciary relationship was to provide the benefit did not have the consequence that there could be no benefit, and no conflict.

43. [106]

    The fifth reason relied on is the primary judge’s rejection of HWL’s application made under Uniform Civil Procedure Rules 2005, r 29.10 for summary dismissal of HSA’s case. In doing so the primary judge held at Judgment [199] that the evidence in HSA’s case was reasonably capable of supporting a conclusion that there was a breach of fiduciary duty in the terms alleged by its primary case. HSA submitted that if it was possible to reach that conclusion for the purposes of that application, the same reasoning should have led to the acceptance of its alternative case, which did not require findings of dishonesty or fraud.

44. [107]

    Why that follows is not explained or obvious. His Honour’s reasoning was directed to HSA’s primary case, and at the close of its evidence, as distinct from its alternative case which depended on whether there was a breach of the conflicts rule and involved no allegations of dishonesty or fraud. This argument does not advance HSA’s position in relation to its challenge to the rejection of that alternative case.

45. [108]

    In working out whether there is an actual or potential conflict, as Hayne and Crennan JJ emphasised in Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 at [61], “[m]uch closer attention must be given to the duties, interests and alleged manner of conflict than is given by simply observing that directors owe fiduciary duties. It is necessary to identify the duties or interests which are said to conflict or present a real possibility of conflict”. The need to undertake that task directed attention to the interests of the company to which, Mr Boucousis as a director of HSA, was required to have regard.

46. [109]

    The question whether there was any conflict of interest and duty was to be determined without reference to Mr Boucousis’ view that the pursuit of the ATMAAC proposal (and the issue of shares to it) was in the best interests of the company. Whether that was so was an assessment he had to make in the discharge of his duty as a director of HSA, and in the absence of informed consent, he had to do so free of considerations of personal interest. In approaching this question otherwise the primary judge erred.

47. [110]

    That makes it necessary to consider afresh the question whether in early February 2009 Mr Boucousis was in a position of conflict. By that time, the indirect shareholding in HSA was held as to 50% by him (via Boucousis Nominees) and 50% by Hart Cyprus. Hart Cyprus had rejected ATMAAC’s proposal to purchase its 50% shareholding in CTG for $500,000. That offer was made on the basis that HSA would enter into the NTA contract without any change to its shareholding. At the same time NTA had indicated that it was only prepared to enter into a services contract with HSA if a bank guarantee was provided in the sum of $1 million. Hart Cyprus did not agree to the provision of such a guarantee and had advised Mr Boucousis that it did not agree to HSA entering into a contract containing that requirement.

48. [111]

    In his email of 30 January 2009, Mr Boucousis told Mr Madden that without the contract HSA would be “unable to remain solvent beyond April”. In his later communication of 10 February, he said that not executing the contract was not an option, as it would force the company “into an insolvent position”. In making that statement, Mr Boucousis recognised that the question for him was whether it was in the interests of the company that HSA pursue the execution of the NTA contract, and if so on what basis.

49. [112]

    It is instructive to consider the position as it presented to Mr Boucousis in mid-February. NTA was not prepared to contract with HSA in the absence of a bank guarantee. Hart Cyprus’ stated position was that it would not provide that guarantee. In the absence of its doing so HSA, in its current shareholding structure, was unable to pursue the NTA contract. If HSA did not secure that contract it was thought unlikely to remain solvent beyond April. In the scenario where the NTA contract was not secured, the indirect shareholding interests of Hart Cyprus and Mr Boucousis would have been of little or no value, and Mr Boucousis would have ceased to be employed by HSA on 1 March 2009 (that being the effect of his earlier notice of resignation).

50. [113]

    The implementation of the ATMAAC proposal required as a first step the exercise by Mr Boucousis of the power under cl 85 of HSA’s constitution to issue shares. The question for Mr Boucousis was whether HSA should proceed with that issue, notwithstanding that the outcome would be a complete change in the company’s ownership; and in circumstances where there was only one shareholder and the shares in that shareholder were held beneficially by two parties, one of whom was Mr Boucousis, and the other Hart Cyprus. To that point in time HSA had looked only to Hart Cyprus for its funding, and there had been no suggestion of any significant share issue to a third party for the purpose of enabling the completion of the NTA contract.

51. [114]

    Although a director’s duty with respect to the exercise of their powers and duties is often described as being to act in the interests of the company or the company as a whole (see Howard at [58] (Hayne and Crennan JJ)), it is recognised that this is a very general expression directed to negativing purposes foreign to the company’s affairs, so as to exclude cases where directors act sectionally or partially or in self-interest: see Gambotto v WCP Ltd (1995) 182 CLR 432 at 443 (Mason CJ, Brennan, Deane and Dawson JJ); Howard Smith Ltd v Ampol Petroleum Limited [1974] AC 821 at 835; and Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 at 289-290 (Mason, Deane and Dawson JJ).

52. [115]

    It is also accepted that in cases where the exercise of the power may require the resolution of competing interests within the compendious expression “company as a whole”, this criterion is more difficult, if not impossible, to apply, as might be the case if a proposed allotment of shares benefits the interests of one group of shareholders and adversely affects the interests of others: Mills v Mills (1938) 60 CLR 150 at 164 (Latham CJ); Kirwan v Cresvale Far East Ltd (In liq) [2002] NSWCA 395; 44 ACSR 21 at [124]-[127] (Giles JA).

53. [116]

    Giles JA observed in Kirwan v Cresvale at [127]:

54. [117]

    Nevertheless as the majority said in Pilmer (at [18]), it “may be readily accepted that directors and other officers of a company must act in the interests of the company as a whole and that this will usually require those persons to have close regard to how their actions will affect shareholders.”

55. [118]

    Looking first to Mr Boucousis’ personal interests, the primary judge accepted that the ATMAAC proposal entailed significant personal benefits to him, including a shareholding interest in the ATMAAC group and ongoing employment in that group: Judgment [173].

56. [119]

    That first step in his Honour’s analysis is challenged by grounds 1 and 2 of the respondents’ notices of contention. It is convenient to consider those grounds at this point. It is submitted that whilst Investec’s email of 14 February 2009 demonstrated that Mr Boucousis’ personal circumstances would be affected by the proposed transaction, it did not show that he would be “benefited”. It is argued that to establish benefit it was necessary for HSA to show that his circumstances under the new arrangement with ATMAAC “would be superior to his current circumstances within the Hart Cyprus group”. It is also submitted that the evidence did not establish that there was any significant difference between Mr Boucousis’ existing employment benefits with Hart Cyprus and those proposed by ATMAAC or permit any similar assessment in relation to the value of his existing shareholding in CTG as compared to his proposed shareholding in ATMAAC.

57. [120]

    These arguments do not address the reality of the potential outcomes for Mr Boucousis’ personal interests depending on the decision he made. Those outcomes were not employment with ATMAAC and a shareholding in ATMAAC or continuing employment with HSA and a continuing shareholding in CTG, which had some value. Mr Boucousis believed that if he did not pursue the ATMAAC proposal his indirect shareholding in HSA was likely to be worthless and that his employment with HSA would terminate. If that proposal was successfully pursued he was assured of employment and a shareholding of some value in ATMAAC. At the same time the other indirect shareholder in HSA would have had the value of its shareholding interest diluted to nil, and have received nothing in return. That being the position, the primary judge did not err in describing the ATMAAC proposal as entailing “significant personal benefits” for Mr Boucousis. Grounds 1 and 2 of the notices of contention should be rejected.

58. [121]

    In addressing whether to pursue the NTA contract by issuing shares to ATMAAC, Mr Boucousis had to focus on the interests of the company and whether they justified that share issue. He also had to have “close regard” to how that proposal would affect HSA’s shareholder. When doing so, he was required by s 180(1) of the Corporations Act to exercise his powers and discharge his duties with a reasonable degree of care and diligence. The matters that he might reasonably have to consider included whether the company’s existing shareholder (and thereby Hart Cyprus) should be made aware of the proposed share issue so as to be given the opportunity, in that context, to provide funds or other financial support to enable the company to pursue the NTA contract; or the opportunity to propose some other means of enabling that to occur which would not result in a change of control of the company and the dilution of the value of CTG’s shareholding to nil, without any consideration or other benefit passing to CTG.

59. [122]

    However it would not have been in Mr Boucousis’ personal interests to explore that opportunity with the existing shareholder because of the risk that once the shareholder (and necessarily also Hart Cyprus) had knowledge of what was proposed, steps might be taken to prevent or frustrate the issue of shares in the pursuit of the ATMAAC proposal. This scenario exposes the nature of the significant conflict between Mr Boucousis’ personal interests and his duty to consider whether the interests of the company were best advanced by the pursuit of the ATMAAC proposal as distinct from some other proposal supported by the existing shareholder.

60. [123]

    It follows in my view that Mr Boucousis was in breach of his fiduciary duty in pursuing the ATMAAC proposal in a position of conflict of interest and duty and without the informed consent of HSA’s shareholder, CTG. It was not suggested that HSA’s constitution authorised him to proceed in the face of that conflict. For this reason ground 1 of appeal should be upheld.

Breaches of statutory duties (ground 2)

1. [124]

   His Honour’s dismissal of HSA’s primary case also justified his rejection of HSA’s claims for contraventions of ss 182(1) and 183(1). That was so because HSA had not established that Mr Boucousis’ subjective purpose was to gain an advantage for himself and ATMAAC: Judgment [181]. HSA did not rely on its alternative case as establishing contraventions of either of these subsections. It follows from the dismissal of the appeal in relation to HSA’s primary case that its appeal against the rejection of the claims for contraventions of ss 182(1) and 183(1) should also be dismissed.

2. [125]

   One issue remains for consideration in relation to ground 2. That is whether in the circumstances there was a breach of s 181(1). The primary judge found at Judgement [169] that in pursuing the ATMAAC proposal Mr Boucousis was acting “genuinely and in the perceived best interests of the company”. That finding is not challenged and has the consequence that there was no breach of s 181(1)(a). His Honour also found that Mr Boucousis believed that the ATMAAC proposal was the “best and only option to secure the NTA contract”, that this was not an unreasonable view to hold in the circumstances and that Mr Boucousis did not pursue the ATMAAC proposal for the purpose of benefiting himself: Judgment [172], [167]. None of those findings is challenged, with the result that the primary judge is not shown to have erred in holding that there was no breach of s 181(1)(b).

3. [126]

   Ground 2 of appeal should be dismissed.

Accessorial liability case against HWL (grounds 6, 7, 8 and 9)

1. [127]

   It also follows that the primary judge did not err in dismissing the accessorial liability claims against HWL. Although Mr Boucousis breached his fiduciary duty, on the findings of the primary judge, his doing so did not involve any dishonest and fraudulent design. Accordingly there could be no claim of knowing assistance.

2. [128]

   For the reasons given above, the primary judge also did not err in holding that there were no contraventions of the relevant statutory provisions. Accordingly there was no involvement of HWL in any such contraventions. Grounds 6, 7, 8, and 9 of appeal should be dismissed.

Causation (grounds 3, 4 and 5)

1. [129]

   The proposal which Mr Boucousis pursued in breach of his fiduciary duty included, as an essential element, that ATMAAC subscribe for and be issued shares in HSA. HSA’s pleaded case was that by reason of the pursuit of that proposal it lost the opportunity to enter into a contract with NTA: amended statement of claim, para 30. The primary judge concluded that HSA had not established it had lost that opportunity as a result of Mr Boucousis’ conduct: Judgement [192]. The opportunity was to enter into a contract with NTA that included a requirement for a bank guarantee of $1 million: Judgment [187] and HSA would not have been prepared to agree to that requirement: Judgment [191].

2. [130]

   Before this Court, HSA sometimes described its case as to causation as being that it had lost the valuable opportunity or chance to “negotiate a successful contract” with NTA. However that formulation was not treated as raising any different or new issue. HSA’s case remained that but for Mr Boucousis’ conduct it would have continued to negotiate with a view to entering into an agreement with NTA, and that by not doing so it lost a valuable opportunity.

3. [131]

   Where a claim is made for damages for loss of a valuable opportunity the initial question is whether the breach of contract, negligence or breach of statutory duty caused the loss of an opportunity answering that description. That question is decided on the balance of probabilities.

4. [132]

   In Sellars the position in relation to such cases was stated by the plurality (Mason CJ, Dawson, Toohey and Gaudron JJ) at 355:

5. [133]

   Where the issue of causation of loss or damage turns on what the plaintiff would have done had the conduct complained of not occurred, the plurality also observed (at 353) that “there is no particular reason for departing from proof on the balance of probabilities notwithstanding that the question is hypothetical”.

6. [134]

   However, once it is established on the balance of probabilities that such a valuable opportunity has been lost, its value is to be ascertained by reference to the “degree of probabilities or possibilities” and “it is no answer to that way of viewing an applicant’s case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable” (at 355).

7. [135]

   In Sellars the company, Adelaide Petroleum, claimed that by reason of the misleading or deceptive conduct of its director Mr Sellars and Petroleum Poseidon it lost a valuable commercial opportunity. That opportunity was described by the plurality as being “the loss of the opportunity or chance of securing commercial benefits which entry into the Pagini agreement and completion of it would have brought” (at 348); and by Brennan J as the opportunity “to enter into a contract with Pagini and to obtain the financial benefits which completion of the contract would have produced” (at 357). The trial judge (French J as his Honour then was) had held (as summarised at 346-347) that on the balance of probabilities the Pagini agreement would have been entered into. His Honour also held that there was “more than a speculative possibility” that agreement would have been completed, thereby yielding benefits to Adelaide Petroleum.

8. [136]

   The plurality concluded (355-356) that Adelaide Petroleum had established on the balance of probabilities that the contravening conduct caused the “loss of a commercial opportunity which had some value”. It did so by proving that but for that conduct it would have entered into the Pagini contract in circumstances where there was a significant chance that it would be completed (at 356). The value of that lost opportunity then depended on an assessment of the prospects of that agreement being completed, and of the value of the benefits that would have been enjoyed in that event.

9. [137]

   Brennan J’s conclusion (at 368) was to the same effect. The requirement of proof on the balance of probabilities applied to the establishing of any hypothesis as to past events on which the plaintiff’s damages claim was based. Thus where the loss is alleged to be a lost opportunity to acquire a benefit (as in the present case), Brennan J said (at 368):

10. [138]

    In his earlier analysis, Brennan J had distinguished between the different kinds of loss which might be claimed where it is alleged that an opportunity to acquire a financial benefit has been lost and damage “is the gist of the cause of action” (at 359). The loss claimed may be the benefit which would have been received had the opportunity been taken, in which case the plaintiff must prove as part of the chain of causation that they could and would have taken the opportunity and that the benefit would then have been yielded (at 362). Alternatively, the loss claimed may be the loss of a right to obtain a benefit, such as a cause of action which is lost because it becomes statute barred (at 362). Or it may be the loss of an opportunity which “is itself something of value” (at 363). In such a case, as appears above, the causal relationship between the loss of that opportunity and the actionable conduct must be proved on the balance of probabilities, and that remains so where it is necessary “to advert to hypotheses [as to past events] when determining the issue of causation” (at 367).

11. [139]

    In Sellars Adelaide Petroleum’s case was that but for the misleading conduct it would have entered into the Pagini contract and thereby acquired a “substantial prospect” of a financial return (per Brennan J at 364). That hypothesis had to be (and was by reason of the trial judge’s findings) established on the balance of probabilities, notwithstanding that it involved questions as to what Adelaide Petroleum and Pagini would have done, assuming the relevant past hypothetical events.

12. [140]

    The principles formulated in Sellars were applied by this Court (Clarke and Sheller JJA, Powell JA agreeing) in Daniels v Anderson (1995) 37 NSWLR 438. The respondent AWA claimed damages against the appellants, its auditors, alleging that by reason of their negligence it lost the opportunity to take steps to avoid financial losses due to unauthorised foreign exchange dealings of its employee, Mr Koval. Referring to the reasoning of the plurality in Sellars, Clarke and Sheller JJA observed (at 529):

13. [141]

    Applying the same analysis in the present case, it was not sufficient for HSA to establish to the required standard that but for Mr Boucousis’ breach of fiduciary duty it would have continued to negotiate with NTA. It also had to demonstrate that in doing so it would have acquired a valuable opportunity; being one which as described in Sellars “had some value (not being a negligible value)” (at 355) or which involved a “substantial, and not merely speculative” prospect of producing a benefit (at 364). That benefit was what followed from entry into the services agreement.

14. [142]

    In Castel Electronics Pty Ltd v Toshiba Singapore Pty Ltd (2011) 192 FCR 445; [2011] FCAFC 55, Castel claimed that by reason of Toshiba’s misleading or deceptive conduct it lost the valuable opportunity to enter into a distribution agreement with Harman, another manufacturer of electrical products. The trial judge found that by the time of the conduct complained of there was no substantial prospect of any distribution agreement with Harman. In rejecting the appeal, the Full Court (Keane CJ, Lander and Besanko JJ) observed at [166]:

15. [143]

    The subject of the proof of causation of loss of a valuable opportunity was more recently considered by the High Court in Badenach v Calvert [2016] HCA 18; 90 ALJR 610. Mr Calvert, the sole beneficiary under a will, claimed damages from the deceased testator’s solicitors, arguing that had the testator received advice which was not negligent he may have taken steps during his lifetime to transfer real property to Mr Calvert, so as to avoid the risk that this property would have been available to a claim under the Testator’s Family Maintenance Act 1912 (Tas). That risk came to pass when the testator’s daughter successfully claimed provision under that Act, with the result that the estate available to Mr Calvert was significantly depleted.

16. [144]

    The plurality (French CJ, Kiefel and Keane JJ) allowed the solicitor’s appeal, including for reason that Mr Calvert had not proved causation of any loss. The loss claimed included “the chance that the client may have undertaken the inter vivos transactions” (at [37]). Their Honours’ summarised what must be proved to make good a claim for the loss of a valuable opportunity:

17. [145]

    Gordon J also allowed the appeal, including because Mr Calvert had not established that the solicitor’s negligence caused any loss. Her Honour concluded:

18. [146]

    In relation to the English Court of Appeal’s decision in Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, it is sufficient to observe that in a case like the present, where the question whether the plaintiff would have received a valuable opportunity (so as to establish that it had lost such an opportunity) depends on consideration of what a third party might have done, the judgments of the majority (Stuart-Smith LJ at 1611, 1614 and Hobhouse LJ agreeing at 1618) may be understood as suggesting that it is sufficient for the plaintiff to establish by reference to the degree of probabilities or possibilities that a substantial chance of a beneficial outcome has been lost.

19. [147]

    There are two further decisions of this Court to which reference also should be made. They are Heenan v Di Sisto [2008] NSWCA 25; 13 BPR 25,213 and Thompson v Schacht [2014] NSWCA 247; 53 Fam LR 133. Each was decided before Badenach.

20. [148]

    Heenan involved a claim for damages against the appellant solicitor. When acting for the respondent vendors of two adjoining properties to a developer (Skyworld), the appellant failed to make completion of the contracts interdependent. The contracts did not proceed and the properties were eventually resold by the respondents, but for lesser amounts. The issues on appeal included whether the solicitor’s negligence had caused the loss of a valuable opportunity which may have resulted in both contracts being completed, and as to the basis on which those damages were to be ascertained. The trial judge assessed damages on the balance of probabilities rather than by reference to the degree of probabilities or possibilities. He nevertheless found that it was more probable than not that Skyworld, had it been asked, would have agreed to the contracts being made interdependent, and thereafter completed each of them (Di Sisto v Skyworld Developments Pty Ltd [2006] NSWSC 1182; 13 BPR 24,627).

21. [149]

    In addressing the solicitor’s appeal on the issue of causation, and the respondents’ cross appeal on the assessment of damages, this Court (Giles JA, Mason P and Mathews AJA agreeing) summarised the relevant principles as follows:

22. [150]

    This last formulation of what the respondents must prove does not include that they had lost a valuable opportunity, or recognise that it might have been necessary in addressing that question to consider on the balance of probabilities what Skyworld may have done in the relevant past hypothetical events. However his Honour’s earlier reference to the “initial question of causation”, and his observations in [31], make clear that where causation is in issue a plaintiff must prove by reference to that standard the loss of a chance of some value. In the present case, unlike in Heenan, that question was very much in issue.

23. [151]

    Schacht also involved a claim against solicitors. It was alleged that the appellants were negligent in failing to secure a binding financial agreement for the respondent, being one which was valid under the provisions of Pt VIIIA of the Family Law Act 1975 (Cth). The trial judge upheld that claim. Although the issues on appeal were confined to the question of assessment of damages, Basten JA (with whose reasons Leeming JA agreed) cited with approval Giles JA’s statement of the relevant principles in Heenan. There was no occasion for their Honours otherwise to consider what was said in relation to proving causation of some loss, and no reference was made to the decision of the Full Court in Castel Electronics.

The primary judge’s reasoning

1. [152]

   The primary judge referred to the description of the relevant principles in relation to causation and equitable compensation in the judgment of Spigelman CJ (Priestley and Meagher JJA agreeing) in O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272-278. The primary judge correctly proceeded on the basis that a claim for equitable compensation for breach of a fiduciary obligation requires a causal link between the breach and the loss (O'Halloran at 272-274). He addressed whether but for the alleged breach HSA would have had a valuable opportunity to enter into the NTA contract. He concluded (Judgment [186], [192]) that HSA had not established that it had lost such an opportunity.

2. [153]

   That conclusion was based on two critical findings as to the respective positions of the parties in relation to the requirement for a bank guarantee. The second, which concerned the position of Hart Cyprus, is not challenged on appeal. The first, as to NTA’s position, is challenged. HSA accepts that those findings inform the answer to the question whether HSA lost a valuable opportunity.

3. [154]

   His Honour’s first finding (at Judgment [187]) was that it was an essential requirement of NTA (in the sense of being one that it would not waive or concede) that an unconditional and irrevocable bank guarantee of $1 million be provided. His Honour found:

4. [155]

   As to the negotiating position of Hart Cyprus, the primary judge found at Judgment [191]:

5. [156]

   In so finding, he rejected HSA’s case as to what it would have done if the opportunity to further negotiate was afforded. That case was that Hart Cyprus would have provided a bank guarantee “to a value and on terms acceptable to NTA” (amended statement of claim, para 14). Lord Westbury’s evidence in support of that case (that Hart Cyprus would have agreed to provide a guarantee for $1 million) was also rejected: Judgment [188], [191].

6. [157]

   His Honour’s conclusion that HSA had not established that it was prepared to support the giving of a bank guarantee “other than on the terms it suggested on 5 February 2009” is significant. Those terms as proposed (see [37] above) involved a guarantee of $1 million valid for a period of 12 months but only on the basis that HSA receive an advance payment equivalent to two months’ estimated billings, repayable in 12 equal monthly instalments which were to be deducted from HSA’s monthly invoices. As the expected annual billings were about $12 million, that advance payment would have been around $2 million, so that acceptance of those terms would have involved NTA fully funding the required bank guarantee for the first six months, and partly funding it thereafter.

7. [158]

   In addition to challenging the finding referred to above, HSA contends that the primary judge erred in adopting an approach to the causation issue that required “the wronged beneficiary to prove that it would have reached consensus with NTA and concluded a deal”. It is said that the correct approach was “to determine, on the balance of probabilities, whether the conduct of Mr Boucousis impacted on the negotiations with NTA in the sense that it contributed to a reduction of HSA’s chances (ie. was a cause but not necessarily the cause) of securing the opportunity available”. If the answer to that question was in the affirmative it is said that damages were then to be assessed by determining the value of the lost chance of the contract being awarded

8. [159]

   It is convenient first to deal with HSA’s challenge to the finding at Judgment [187] concerning NTA’s position. HSA submits that this finding should be rejected for three reasons.

9. [160]

   First it is said that the primary judge’s statement that there was nothing in the “documentary evidence” which suggested that NTA might have been prepared to relax its bank guarantee requirement was not correct. It is submitted that Mr Kelly’s report by email to Mr Landis on 18 February 2009 (see [51] above) answered that description. In that email Mr Kelly stated that he had been informed by Mr Boucousis that NTA was “happy to further negotiate the guarantee after the Board Meeting tomorrow” and had indicated the possibility of a “six month time frame and a reduction to $500k”.

10. [161]

    The primary judge refers to that email at Judgment [93] and returns to it at Judgment [164]. There his Honour noted that Mr Boucousis was not cross-examined about what was reported to Mr Kelly and that Mr Kew gave no evidence that NTA might have been willing to negotiate about the bank guarantee requirement in any particular circumstances. He also noted that Mr Kelly said in cross-examination that “things would have been different” in relation to the assessment of risk if the proposed service provider was a local company rather one “that was based in Cyprus”. In the light of this evidence his Honour considered that “any willingness on the part of NTA to negotiate in relation to the bank guarantee was linked to a change in the ownership of HSA”. That conclusion explains and justifies his Honour’s later finding at Judgment [187] as to the documentary evidence not suggesting NTA was prepared to relax its bank guarantee requirement with respect to HSA whilst in the ownership of Hart Cyprus.

11. [162]

    The second reason is that between 23 January and 5 February 2009, NTA’s negotiating position moved from requiring a guarantee of $5 million to requiring one of only $1 million. It is submitted that the likelihood was that there would have been further movement on the part of NTA. However in fact its position did not change after that date. That position was as recorded in the board paper prepared by NTA’s management before 10 February 2009 (see [40] above). Mr Kew’s evidence was that the bank guarantee referred to in that board paper ($1 million unconditional and irrevocable) was “essential”. The primary judge accepted his evidence and is not shown to have erred in doing so: Judgment [187].

12. [163]

    The third and related reason is that it was not (but should have been) suggested to Mr Kew in the course of his cross-examination by the respondents that NTA was not prepared to negotiate about the amount of the guarantee. In answer to this submission, it is pointed out that Mr Kew did give evidence to that effect (being the evidence referred to above) and that there was no purpose in the respondents cross-examining Mr Kew further on that subject. I agree.

13. [164]

    HSA’s remaining argument focuses on whether the primary judge correctly applied the principles in relation to proof of causation with respect to the loss of a valuable opportunity.

14. [165]

    It may be accepted that HSA’s case was not that by reason of Mr Boucousis’ breach of duty it had lost the benefit of the NTA agreement. If it had made such a case it would have been required to prove on the balance of probabilities that but for that breach it could and would have entered into that contract (Sellars per Brennan J at 362). HSA’s case was that the loss it suffered was of the valuable opportunity to “negotiate a successful contract”. That opportunity was to be considered in early February 2009 and after negotiations between HSA and NTA had been proceeding for some time.

15. [166]

    By that time NTA was insisting on a bank guarantee of $1 million and Hart Cyprus and HSA were not prepared to agree to that requirement. In accordance with the principles discussed above HSA had to establish to the required standard that the opportunity to continue to negotiate with NTA, in the absence of the pursuit by HSA of the ATMAAC proposal, had real value because the prospect of a successful outcome was substantial rather than speculative; and that it was lost by Mr Boucousis’ conduct.

16. [167]

    HSA sought to do so by showing that if it had that opportunity it would have taken it and eventually agreed to provide the $1 million bank guarantee sought by NTA. In that respect its evidentiary case was similar to that of Adelaide Petroleum. The opportunity which it sought to establish it had lost was of the substantial prospect of financial gain flowing from the conclusion of the NTA contract (see Sellars at 365, 368 per Brennan J).

17. [168]

    The primary judge rejected that case. He was not satisfied on the balance of probabilities that Hart Cyprus “may have been prepared to support” the $1 million bank guarantee required by NTA: Judgment [191]. In so concluding, his Honour was responding to the way in which HSA’s case was put. He was not, as HSA contends, approaching the causation issue on the basis that HSA had to prove that it would have entered into an agreement with NTA.

18. [169]

    The primary judge’s finding as to what Hart Cyprus (and therefore HSA) would have done meant that HSA could not establish that it had lost an opportunity to enter into a contract with NTA if that contract included a requirement for a $1 million guarantee. It remained necessary to consider whether the opportunity for further negotiation included a real prospect that NTA might not insist on that requirement. The primary judge did so, concluding that he was not satisfied that NTA “might have been prepared to relax its bank guarantee requirement”: Judgment [187].

19. [170]

    It followed that HSA had not established on the balance of probabilities that the opportunity for further negotiation included any real or substantial prospect of agreement between HSA and NTA. It also followed that HSA had not proved that it had “lost” a valuable opportunity to negotiate a contract with NTA by reason of Mr Boucousis’ conduct. His Honour’s finding to that effect at Judgment [192] did not involve any error.

20. [171]

    HSA’s submission that the primary judge should have considered whether Mr Boucousis’ conduct contributed to a reduction in its chances of securing the NTA contract must also be rejected. It proposes that on the issue of causation it would have been sufficient for HSA to establish that there had been some reduction in its chances of a favourable outcome to the negotiations. The principles discussed above show that what HSA was required to prove was that it had a valuable opportunity, being one which offered the real as distinct from a speculative prospect of an agreement with NTA, and that this opportunity was lost to HSA because but for Mr Boucousis’ conduct it could and would have been pursued.

21. [172]

    For these reasons grounds 3, 4 and 5 should be dismissed. This conclusion makes it unnecessary to consider ground 3 of the respondents’ notices of contention.

Damages (ground 10)

1. [173]

   This ground does not arise and it is not possible for this Court to address it. Nevertheless I will mention it briefly. The primary judge assessed the lost opportunity to enter into the NTA contract as having a net present value of $2 million as at 1 April 2009: Judgment [217]. HSA submits that the primary judge erred in proposing that it would then have been entitled to judgment in that amount. It contends that if it was entitled to judgment, it should have been for an amount representing that net present value plus interest from April 2009 to the date of judgment. In response to this argument HWL concedes that although the primary judge did not address the question whether interest should be allowed until the date of judgment, there is “no basis to resist” such an order. Mr Boucousis does not separately address this ground.

2. [174]

   More significantly HWL points out that the primary judge’s assessment of the value of the lost opportunity proceeded on assumptions made based on HSA’s case as conducted and rejected. For example at Judgment [213] he assessed, consistently with that case, that there was only a “low to moderate risk” that any further negotiations would not have resulted in agreement. Before this Court HSA accepted that if its challenge to the primary judge’s conclusion as to causation of loss was successful it would be necessary for the assessment of damages to be remitted for determination by reference to the degree of probabilities and possibilities consistent with such an outcome.

Conclusion

1. [175]

   The appeal should be dismissed and HSA ordered to pay the costs of each respondent.