This case considers the competing positions of Sattler as a director of Links Golf Tasmania and the landowner of property on which he established a golf course in direct competition with a golf course operated by Links Golf Tasmania.  It demonstrates that directors wearing multiple hats need to be careful to identify and manage possible conflicts.  It also shows that a board needs to act promptly, where it suspects impropriety by a director.

The plaintiff, Links Golf Tasmania Pty Ltd (LGT) established and operated a golf course called “Barnbougle Dunes” on land leased from the first defendant, Sattler.  Sattler was one of LGT’s directors until 2009 and LGT’s CEO until 2010. 

The case arose from allegations made by LGT’s minority shareholders (on behalf of LGT) that Sattler had breached various fiduciary duties and his duties under section 181, 182 and 183 of the Corporations Act 2001 (Cth) (Act) by:

  • establishing a second golf course called “Lost Farm” on a portion of Sattler’s land adjacent to Barnbougle Dunes;
  • obtaining a government loan and a loan from a fellow LGT investor in Sattler’s own name to increase his shareholding in LGT to a majority stakeholding without LGT’s fully informed consent;
  • obtaining a second government loan in Sattler’s own name to finance the establishment of Lost Farm;
  • using LGT’s employees in the Lost Farm business;
  • contracting with LGT while Sattler was CEO to set an accommodation commission payable to LGT for referral to accommodation operated by Sattler; and
  • unilaterally relocating a “wellness centre” originally planned for Barnbougle Dunes to the advantage of the Lost Farm business.

Sattler’s establishment of Lost Farm

The Court held that establishing Lost Farm on Sattler’s land adjacent to Barnbougle Dunes was not a breach of his fiduciary duties as a director of LGT.  The issue turned on the fact that Sattler had dual positions as both a landowner and director.  It was recognised that Sattler, as a landowner, had a discretion as to whether to construct Lost Farm on his land, and as to the participation of LGT in Lost Farm’s development.  Sattler was not under a positive duty to acquire the benefits available from the development of Lost Farm for LGT.  The choice to establish Lost Farm was therefore outside the scope of his fiduciary duties.

The Court further held that the opportunity to develop Sattler’s adjacent land into a golf course did not result from his fiduciary position at LGT.  While it was accepted that the opportunity resulted from Barnbougle Dunes’ success, the Court found that the opportunity would have been available regardless of Sattler’s connection with LGT.

Sattler was also found not to have breached the conflict rule in operating Lost Farm, The Court affirmed the principle that a non-executive director of a company conducting a competing business would not necessarily create a conflict of interest and noted that it is only in relation to a decision which involves the exercise of powers or functions in the service of the relevant company that the director can be held to account as fiduciary.  In any case, as Lost Farm became operational well after Sattler had ceased as CEO and director of LGT, the Court found that Sattler was no longer bound by any duties as a director.

Sattler’s loans

In considering the two loans which Sattler used to increase his stake in LGT, the Court was satisfied that Sattler had obtained both loans as an individual investor, not in his position as a fiduciary and that accordingly, there had been no breach of his fiduciary or statutory duties.  Further, the Court viewed Sattler’s investment as a risk free injection of funds into LGT and opined that it would be unjust to deny Sattler his shareholding.

In relation to the government loan which Sattler used for the development of Lost Farm, the Court was doubtful that Sattler had breached his duties by using non-confidential financial information available to him as LGT’s director in his application for the loan.  Apart from issues of causation, the Court identified difficulties in establishing an account of profits where the claim related to only one aspect of a complex transaction, funding only part of Lost Farm.  In any case, the Court believed Sattler had acted honestly and was therefore willing to exercise its discretion under section 1318 of the Act to relieve Sattler of liability in relation to the loan.

The relocation of the “wellness centre”

The Court found that there was a breach of duty in respect of Sattler’s relocation of the wellness centre to Lost Farm and his pursuit of government funding for its establishment.  LGT’s intention to seek government funding for the centre was well-established in its board minutes.  Despite the absence of deceit, given Sattler’s knowledge of LGT’s interest in the funding and the centre, the Court found that his conduct involved a degree of imprudence which could not be excused by section 1318 of the Act. 

The accommodation commission

Sattler (through Sattler Nominees Pty Ltd) separately operated accommodation facilities situated on Barnbougle Dunes. While the accommodation business was independent of LGT, LGT provided a booking service and certain other services. While he was still CEO of LGT, Sattler set the accommodation commission rate payable to LGT for such services by executive action without the authority of the LGT board. The Court held that Sattler (or Sattler Nominees) contracting with LGT gave rise to a clear conflict of interest in the setting of the rates and that Sattler should have put the matter before the LGT board and absented himself from its deliberations.  However, the Court found that LGT (whose board was fully aware of the arrangement) had stood by too long for Sattler to be held to account (although it noted that it may have been more sympathetic to LGT had Sattler still been a director or CEO of LGT). The Court also noted that had it decided otherwise, it would again have been willing to exercise its discretion under sections 1318 and s 1317S of the Act to relieve Sattler of liability based on its assessment that Sattler had acted honestly in relation to the setting of what he genuinely believed was a fair and appropriate rate.

The use of LGT’s employees

The Court found that Sattler’s use of certain LGT employees for the Lost Farm business constituted a breach of his fiduciary and statutory duties, holding that a director was not entitled, without proper compensation, to make use of a company’s employees on his or her own behalf and benefit without the board’s consent. 


As a result, the Court only granted orders for an account of profits in relation to the operation of the wellness centre and Sattler’s use of LGT’s employees in breach of his duty.

See case.