In brief

  • A former director of a trustee company was under a duty to provide the company with a copy of information he had given to APRA regarding the company.
  • This obligation arose because of the duty to act in the best interests of the trustee company.
  • It was a duty to respond to a properly made request.
  • Provision of the documents would put the trustee company in a position to respond to the investigation being carried out by APRA.

The former director of a trustee company was under a duty to provide the company with a copy of information he had given to APRA regarding the company.

In Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus (No 3) [2008] FCA 1986, Mr Rickus had formerly been the chairman and a director of the Motor Trades Association of Australia Superannuation Fund Pty Ltd (the Trustee).

In that capacity, Mr Rickus provided documents relating to the Trustee to the Australian Prudential Regulation Authority (APRA) in response to a notice to produce. He gave the board of the Trustee a schedule listing those documents, but declined to provide the board with a copy of some of the documents, because he considered the documents were confidential and did not want them being made available to directors whom he considered had a conflict of interest.

The Principal Executive Officer of the Trustee considered that APRA may have reached adverse conclusions about the operations, functioning and governance of the Trustee, based at least in part on documents provided by Mr Rickus.

The court held that Mr Rickus was under a duty to provide a copy of the documents that had been given to APRA to the Trustee. This duty arose because of the following circumstances:

  • APRA was undertaking a review of the Trustee and had requested documents in that context
  • Mr Rickus was a director when he provided the documents to APRA
  • the Trustee needed to be informed as to the documents provided to APRA so it could properly respond
  • the Trustee had committed to use the documents, if produced, only for the purposes of its dealings with APRA.

The court noted that fiduciary duties are usually proscriptive rather than prescriptive, and accordingly rejected a general submission that it was part of the fiduciary duty owed by a director to make full disclosure. However, the court found a duty to produce a copy of the documents to the Trustee on these facts, at least where a request to do so was made of Mr Rickus by the Trustee, as this was in the best interests of the Trustee. His duty was to respond to a request properly made of him by the Trustee to place the board in a position where it could respond to an investigation being pursued by a statutory regulator (including responding to information provided to the regulator by Mr Rickus).

Lessons

  • It is not clear whether Rickus will be taken to establish a general principle that a director's fiduciary duty to act in the best interests of the company requires the director to respond to any reasonable request for information by the board, or whether a future court will confine Rickus to its facts.
  • The wider principle sits uneasily with the notion of purely proscriptive duties laid down by the High Court in Breen v Williams. Having said that, there is some merit in the proposition that a director should be obliged not to withhold information from a company if the company needs it in order to determine whether or not to take a proposed course of action.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.