Streeter v Western Areas Exploration Pty Ltd (No 2) (2011)

Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 

Case Facts:

• Streeter and Cooper owned shares in Western Areas Exploration (WAE), a gold prospect-finding company. 

• WAE has no capacity to invest in its business activities and to make its own asset; therefore, Streeter financed the company and became the largest shareholder, and cooper became the company secretary.

• Brailey was a chairman in WAE, and at the same time a stockbroker, who was offered to start a nickel prospecting company which he then proposed to Streeter.

• Streeter suggested using WAE their enlisting company but the offeror of the nickel business did not adhere to the suggestion. Instead, they suggested that the gold prospecting activities be taken up by another company, which Streeter agreed upon. 

• Western Areas NL (WANL) was established and WAE acquired an IPO from WANL for the sale of its asset. Streeter also sold his minority share to WANL without giving notice to WAE.

• WANL, with the financial support of Streeter, had discovered a large deposit of nickel which increased the shares of the company, and no positive results came about the rights in gold prospect of WAE. 

• WAE, with the aid of Brailey, accused Streeter and Cooper of breach of their duty.

Case Issue:

• Did Streeter and Cooper made use of their positions in WAE to invest in WANL?

• Did they breach their fiduciary duty that they owe to WAE? 

• Was it necessary WAE to recover the profit because of the profit Street and Cooper made from WANL?

Case Decision:

It was decided that there was no breach made by Streeter and Cooper as it was not a breach of their fiduciary duty to be part of two companies which are in the same industry.

Case Significance

The case signifies the necessity to gauge the business opportunity which had been entered by the officers or directors in order to know if their fiduciary duty to the entity has been breached.