Breach of Director Duties in Whitehouse v. Carlton Hotel Proprietary Limited

1. Cover page
2. This statute is significant and has to be followed to the T, as it brings forth the manner in
which a company can conduct its business and operations. It also acts as guidance on
what would be deemed as legal or illegal conduct by any company. In context of the
director’s/ officer’s duties, this legislation is important.
3. Before going in on the law aspect of the case of Whitehouse v. Carlton Hotel Proprietary
Limited, there is a need to understand what actually happened in this case.
4. Not only questions were raised on allotment of shares, which is not the focus of this
discussion, but also questions were raised on the breach of fiduciary duties by Charles
Whitehouse based on the shares he issued to his sons (Barker, 2018).
5. This case was decided even before the present legislation of Corporations Act, came into
force. However, based on the theme of this discussion, the breach of director duties by
Charles Whitehouse have been discussed in context of provisions of Corporations Act.
As has been touched upon in the very start of this discussion, the Corporations Act
imposes some important obligations/ duties on the directors and officers of the
companies. One of the prominent sections under this legislation is section 181.
6. A careful analysis of this section reveals that it has two parts. The first part is focused on
the need for working in best interest and in good faith for the company. And the second
part is based on the work done by the directors to be undertaken for proper purpose. The
second part of this section is related to the present case in discussion, i.e. for Whitehouse
v. Carlton Hotel Proprietary Limited.
7. It was the duty of Charles Whitehouse to work for proper purpose and for best interest of
Carlton Hotel, where the good faith towards the hotel was fulfilled, instead of towards his