10.3 What the case study showed

In both cases, the trustee considered that the proposed merger was desirable, and had independent advice to that effect. I have no reason to doubt those views were correct. But in both cases, the proposed merger did not proceed because of a dispute about the board composition of the merged entity.

It is not apparent why those disagreements caused negotiations to collapse. In the case of Energy Super, both parties agreed that it was appropriate to have a skills-based board; the dispute was over who would nominate the directors. In the case of CSF, both parties agreed to an equal representation board and an independent chair; the dispute was over who the first chair should be (or, perhaps, which fund should merge into which). These were differences of detail, not substance. It is troubling that such differences of detail should have prevented the mergers proceeding where they were otherwise in the best interests of members. If, as some of the communications may be read as suggesting, there was some difference in principle, what exactly was the principle?

This conduct of Energy Super and CSF suggests that the trustees may have lost sight of their fundamental obligation to act in the best interests of members. In doing so, their conduct fell below community standards and expectations.