A group of Perth businessmen have won a three-year battle against Western Areas directors Terry Streeter and David Cooper, with the Supreme Court today awarding nearly $65 million to unrelated company Western Areas Exploration.
WAE were looking to gain a portion of the profits made by Messrs Streeter and Cooper after both were allegedly presented with a potential nickel opportunity by three geologists, including Julian Hanna, which called themselves the Australian Nickel Project Consultants in 1999.
WAE claimed that Messrs Streeter and Cooper, who were both on WAE's board at the time, pursued the nickel prospect to float Western Areas NL.
The nickel prospect was the Forrestania nickel tenements, which hosts the Flying Fox nickel mine that Western Areas operates.
WAE - which includes directors Lex Brailey and Garry Connell, and shareholders Bernard and Guy LeClezio and Justin Evans - were represented by Lavan Legal lawyer Martin Bennet, who said the plaintiffs were "profoundly happy" with today's judgment.
In a 182-page judgment, Justice Eric Heenan said Messrs Streeter and Cooper had breached their "fiduciary duties in diverting and using to their own advantage the opportunity" presented by ANPC.
Justice Heenan ruled that WAE can choose one of two options to recover its lost portion of profits.
WAE can elect to hold 11.05 million Western Areas shares or be paid out the cash equivalent of those shares based on the company's closing price on the day of judgment, less $1.75 million.
Shares in Western Areas closed down nine cents to $6.08 today, valuing the judgment at just more than $65 million.
Mr Bennet told WA Business News that WAE has 14 days to decide which option to take.
Should WAE elect to acquire the shares, Mr Streeter's company Jungle Creek Gold Mines, which was a defendant in the case, would lose nearly a third, or 10.675 million shares, of its interest in Western Areas.
Mr Cooper would need to give up 400,000 shares. He currently holds 1.1 million Western Areas shares.
Mr Bennet said today's judgment could have a far reaching impact on companies and directors.
He also expects Messrs Streeter and Cooper to appeal today's judgment.
"The plaintiffs are profoundly happy that it vindicates the lengthy legal battle that's been running since 2006," he said.
