Company Law - Asden Developments Pty Ltd v Dinoris
Added on 2019-10-31
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Running head: COMPANY LAWCompany LawName of the StudentName of the universityAuthor Note
1COMPANY LAWA.Case IntroductionThe case of Asden Developments Pty Ltd (in liq) v Dinoris (No 3)[2016] FCA 788 dealswith the liquidator’s conduct and the breach of good faith obligations. The case discussedwhether the director has breached his statutory duties under section 180 of the Corporations Act.In this proceeding, Asden claims that the liquidator Mr Dinoris has breached his statutory dutiesand thereby has caused damage to the company. The case was whether the actions of theliquidator have caused the company to incur loss under section 1317H of the Corporations Act,2001. An important case dealing with the duties of the directors is Asden Developments Pty Ltd(in liq) v Dinoris (No 3)[2016] FCA 788. In this case the Federal Court held that the liquidatorshave acted in violation of their duties and breached the duties that they owed to the company.The court held that the directors were required to act with care and diligence and they have failedto act in a diligent manner. The Court did not award severe damages of big amounts and heldthat the facts of the case do not point at a grave breach but the case serves as a big reminder tothe liquidators to act prudently and exercise care and diligence while executing their duties.According to section 588 G of the Australian Corporations Act, it is held that there shall be noinsolvency trading. This means that when a director is aware that the company is turninginsolvent or does not have enough finances to sustain it, the director shall not indulge thecompany to trade. This is done keeping in mind the interests of the company and making surethat the company does not run into losses. The directors are expected to execute proper trainingand make the most of their qualification in gauging the accounts of the company and thereforeprotecting the company from going insolvent. The duty of the liquidator under the CorporationsAct is to make sure that he conducts timely enquiry into the matters of the company and alsoinvestigate the assets of the company to come to a sound conclusion regarding the finances of the
2COMPANY LAWcompany. In the case of Asden Developments Pty Ltd (in liq) v Dinoris (No 3)[2016] FCA 788,the Court held that there has been breach of care by the liquidator as he has not conducted properinvestigation into the assets of the company and has not stopped the company from tradingfurther. The Judge determined in the case that the contraventions made by Dinoris were notgrave enough to be counted as a breach of statutory duties. The actions of the liquidator were notas such so as to cause any damage to the company that would make him liable for criminalliabilities. In this case the judges were of the opinion that the liquidators should exercise morecaution in dealing with matters of company affairs and should act with prudence (Keay 2016).Section 181 and section 588G of the Australian Corporations Act talks about the good faithobligations of directors and how they are breached in case they fail to act in a fiduciary relation.Section 181 of the Australian Corporations Act talks about the good faith obligations of thedirectors who are working in a corporation. Under the good faith obligation it is the duty of thedirector to act in a bona fide manner and also in the best interests of the company. The director ina company has immense powers and therefore he is obligated to channel his powers for thebetterment of the company. He has to act in such a way that the company benefits from hisdecisions. The decisions of the director need to be aimed at the best interests of the employees.Section 181 of the Australian Corporations Act also says that directors in a company work forpurpose and the purpose needs to be fulfilled by the managers and the directors (Barker 2016).Therefore, all the actions taken by the director need to be in the interest of safeguarding thatpurpose and also making sure that the purposes are in the best interest of the company.B.Duty and responsibility breach
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