Cases 2 Topic 13 Directors and Officers

''Directors duties to the company and creditors are to ensure that the company's affairs are being managed properly and the assets are not being exploited for the directors interest and in a way that may prejudiced the interest of creditors''

• Boardman v Phipps [1967]

• Wikeworth v Edward Baron Development Co. Ltd

• Howard Smith Ltd v Ampol Petroleum Ltd

• Re Tomlin Patent Horse Shoe Co. Ltd

''Acting in good faith for the best interest of the company''

• Regal (Hastings) Ltd v Gulliver

• Grove v Flavel

• Winkworth v Edward Baron Development Co. Ltd

• Boardman v Phipps [1967]

Directors duties to the company and creditor:

1. Ensure that the company's affair being managed properly

2. Ensure the assets are not being exploited for directors interest ;

3. Any act that may prejudiced the interest of creditors.

• Boardman v Phipps [1967]

• Totex - Adon Pty Ltd v Marco

• Regal (Hastings) Ltd v Gulliver

• Winkworth v Edward Baron Development Co. Ltd

As trust has no power to purchase more shares, B and T decided to acquire shares themselves. B represented the trust (attended AGM and obtain information on share). B & T purchased shares and obtained controls. They reorganised the company and all is done in good faith and with object of enhancing the trust holdings.

• Winkworth v Edward Baron Development Co. Ltd

• Regal (Hastings) Ltd v Gulliver

• Totex - Adon Pty Ltd v Marco

• Boardman v Phipps [1967]

Held: D acted honestly but he breach the fiduciary duty as he was a solicitor. His action arose conflict of interest as he obtained a personal profit while in fiduciary duty.

• Winkworth v Edward Baron Development Co. Ltd

• Boardman v Phipps [1967]

• Grove v Flavel

• Regal (Hastings) Ltd v Gulliver

No conflict of interest between directors and the company.

• Boardman v Phipps [1967]

• Winkworth v Edward Baron Development Co. Ltd

• Regal (Hastings) Ltd v Gulliver

• Totex - Adon Pty Ltd v Marco

The trust was a minority shareholder in a private company which was not effectively managed. B acted as solicitor to the trust and he purchased necessary shares to gain control over the company with T. He reorganized the company and B done this with good faith. However conflict arise when B gain profit from shares.

• Winkworth v Edward Baron Development Co. Ltd

• Grove v Flavel

• Totex - Adon Pty Ltd v Marco

• Boardman v Phipps [1967]

Held: D acted honestly however he is a solicitor and the personal gain of profit while in fiduciary duty arose the conflict of interest. D could only escaped his duty by informed consent from principle.

• Regal (Hastings) Ltd v Gulliver

• Boardman v Phipps [1967]

• Winkworth v Edward Baron Development Co. Ltd

• Totex - Adon Pty Ltd v Marco

Held : Knowledge held by D must account to the trust for any profits made out of it. Persons may however, be entitled to payment at liberal scale for their work and skills

• Totex - Adon Pty Ltd v Marco

• Grove v Flavel

• Boardman v Phipps [1967]

• Real (Hastings) Ltd v Gulliver

Circumstances where director's personal interests in conflict with the company

• Totex - Adon Pty Ltd v Marco

• Grove v Flavel

• Regal (Hastings) Ltd v Gulliver

• Boardman v Phipps