Week 11 Consequences and Remedies Breach of Duty.docx

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LECTURE 11 Consequences and Remedies for Breach of Duties Breach of Duty – consequences + remedies The General Law and the Statute Law provide for consequences and remedies for breach of duty: Breach of General Law Duties Breach of Statutory Duties Action available to the company Action available to ASIC (civil) Action available to DPP (criminal) Action available to other parties Defences and exceptions to breach Exoneration and relief from breach Breach of Duty – approval Approval : persons can avoid breaching their duties by making full disclosure of all relevant information to the company and obtaining through ordinary resolution the company’s: authorisation (statute law and general law ) approval before taking the action ratification (general law only – not statute law:) approval after taking the action Note: the above is based on obiter in Angas Law Services Pty Ltd v Carabelas and so is yet to be affirmed approval only is available: for general law duties (authorization and ratification) and statutory duties (authorization only) if company is solvent: Kinsela v Russell Kinsela Pty Ltd approval by company does not prevent: ASIC bringing an action for breach Statutory Derivative Action: s 239(1) approval is not effective where: directors use power as members to ratify their own breach: Cook v Deeks Conduct is oppressive to members: Hannes v MJH Pty Ltd Breach of Duty – general law and statute law actions Any of the following may bring an action for breach of duty owed to a company: Company – under general law and statute law ASIC – under statute law ( Corporations Act + ASIC Act ) DPP – under criminal provisions (statute law) Third parties (limited to creditors – insolvent trading) ASIC = Australian Securities & Investments Commission DPP = Director of Public Prosecutions (Cth) Breach of Duty – general law actions & remedies Directors owe duties to the company, that is, to the members as a whole: Greenhalgh v Arderne Cinemas Company is proper plaintiff for wrongs done to the company: Foss v Harbottle
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LECTURE 11 Consequences and Remedies for Breach of Duties At general law , only the company may bring action for remedies available to the company, including: damages: Daniels v Anderson account of profits: Regal (Hastings) Ltd v Gulliver rescission: Transvaal Lands Co v New Belgium constructive trust:
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