Gold Ribbon (Accountants) P/L v Sheers & Ors

[2005] QSC 198

Supreme Court of Queensland

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Interrogate

Catchwords

1. Corporations
2. › Management and administration
3. › Directors and other officers
4. › Duties of directors
5. › Duty of care and diligence
6. › Non-executive director with specialist expertise
7. › Whether failure to ensure accepted lending practice constituted breach
8. › Whether entitled to rely on co-directors and administrator
9. › Corporations Act 2001 (Cth), s 180(1), s 180(2)
1. Corporations
2. › Management and administration
3. › Directors and other officers
4. › Duties of directors
5. › Business judgment rule
6. › Whether defence available where director failed to inform himself about subject matter of judgment
7. › Corporations Act 2001 (Cth), s 180(2)
1. Corporations
2. › Management and administration
3. › Directors and other officers
4. › Duties of directors
5. › Duty to attend board meetings
6. › Duty to monitor corporate affairs
7. › Duty to familiarise with financial status and business fundamentals
1. Negligence
2. › Essentials of action for negligence
3. › Causation
4. › Material contribution to loss
5. › Concurrent tortious acts
6. › Whether fraudulent conduct of co-directors broke chain of causation
7. › Whether breach increased risk of loss

Quick Take

A non-executive director with specialist expertise relevant to the company's business has a duty to give the company the benefit of that expertise and cannot discharge that duty by disengaging from the company's affairs. Reliance on co-directors, external institutions (banks, insurers), and administrators does not relieve a director of the obligation to familiarise himself with fundamental business documentation and ensure proper procedures are in place. The business judgment rule under s 180(2) is unavailable where the director has not informed himself about the subject matter of the alleged judgment. Fraudulent conduct by co-directors does not break the chain of causation where the director's breach of duty increased the risk of the very kind of loss that eventuated.