The Supreme Court of Victoria has found in favour of Herbert Smith Freehills (“Freehills”) in a proceeding brought for the recovery of fees owed by United Petroleum Australia Pty Ltd and United Petroleum Pty Ltd (together, “United”). The court has also dismissed a separate proceeding brought by United and other related parties (together, “the United Parties”) against Freehills and Martin Hudson, the former chairman of United Petroleum Holdings Pty Ltd (“United Holdings”).
The first proceeding concerned fees invoiced by Freehills to United in respect of work performed on a proposed initial public offering, which, if successful, would have resulted in a listing of United Holdings on the Australian Stock Exchange in December 2016. United contended that, under the applicable retainer, they were entitled to a 25 percent discount on Freehills’ fees given that the proposed listing did not occur. The court has found that a subsequent retainer applied from late August 2016. The discount provisions in the 2016 retainer did not apply in circumstances where United Holdings decided not to proceed with the listing process. Accordingly, Freehills is entitled to recover all of its unpaid fees, together with interest.
The second proceeding was brought by the United Parties against Freehills, claiming that breaches of duty by Freehills, and in particular the partner working on the proposed listing, led to the listing not proceeding in 2016. An additional claim was later added against Martin Hudson, for breach of his duties as a director of United Holdings. Those breaches were said to have occurred primarily on 23 October 2016, by reason of Hudson refusing or failing to approve the release of a draft prospectus (“the Pathfinder”) to independent analysts. The release of the Pathfinder was 1 step in the agreed-upon timetable the United Parties and their advisers (including Freehills, as well as KPMG, Morgan Stanley and Credit Suisse) were attempting to follow in order for United Holdings to be listed in 2016.
Owing to circumstances outside of the control of Freehills and Hudson, by 23 October 2016 it was clear to Freehills and Hudson that the Pathfinder was not in a sufficient state to be provided to the independent analysts. Through no fault of Freehills or Hudson, the date for its provision had already been delayed several times, and there was no ability to delay it any further if United Holdings were to be listed in 2016. Accordingly, in the circumstances, the court has held that both Freehills and Hudson acted appropriately, and in accordance with their duties, at all material times.
NOTE: This summary is not intended as a substitute for the court’s reasons or to be used in any later consideration of the court’s reasons. The only authoritative pronouncement of the court’s reasons and conclusions is that contained in the published reasons for judgment.