Directors must delegate with care - throwing one's hands up in the air and saying "oops conflict" is not good enough

Article Abstract:

The Western Australia Supreme Court ruling in Permanent Building Society v. Wheeler included the holding that claiming conflict of interest did not eliminate a director's obligation to exercise care and skill to protect the building society. The Court found that not voting on an issue because of a conflict may have been appropriate, but if the director in question had material information regarding the issue before the board, the information should have been shared with the board. The Court ruled against the director, but no award was made because causation had not been shown.

Fiduciary duties, Delegation of authority

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Can directors rely on others?

Article Abstract:

The Full Court of the Western Australia Supreme Court affirmed the lower court opinion in Dempster v. Mallina Holdings in finding that the executive director of a company could avoid liability by claiming to have relied on statements by another executive. The court found that the director did not have a duty to investigate the representations of the other person. The project that was misrepresented was in the planning stages, and there was little for the executive director to investigate.

Joint ventures

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Good intentions are not enough if directors or officers breach their duties to act in good faith and fail to avoid a conflict of duty and interest

Article Abstract:

Two Full Supreme Court cases illustrate that corporate officers must abide by good faith duties and avoid conflicts of interest, as exemplified under Australia's Corporations Law section 232. R v. Cook involved violations of fiduciary duties under section 232(6). R v. Lloyd entailed violations of the Securities Industry (WA) Code. While in both cases the officers believed their actions were for the best interests of their companies, the Full Supreme Court found this was no excuse.

Commercial law, Conflict of interests (Agency), Good faith (Law), Conflicts of interest

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