Breach His Duty to Act with Care and Diligence in Dealing with Managing the CompanyEssay Preview: Breach His Duty to Act with Care and Diligence in Dealing with Managing the CompanyReport this essayBreach his duty to act with care and diligence in dealing with managing the company. (S180(1)). FactsRoc and Grace were keen to expand its business operation by adding Solar Hot Water System into their product line. Nicholas rejected to idea as he tends to run MNS as he was the sole director of the board. The company had economic loss.IssueWhether or not Nicholas have breached S180(1), the duty to exercise their power and discharge their duties with care and diligence.·    Discussion of Legal Principle: This case is similar to AWA v Daniels (1992) 9 ACSR 383, which the auditors and executive directors liable in negligence. And breached of duty that resulted in economic loss.·    Section 180(1)- states “ a director or other officer of a corporation must exercise their powers and discharge their duties with a degree of care and diligence that a reasonable person would exercise if they(a) were a director of a corporation’s circumstance;(b) occupied the office held by, and had the same responsibilities with the corporation as, the director or other officer”.Most  reported directors’ negligence cases were decided in the 19th and early 20th centuries. They set a remarkable low standard of care for directors. Business conditions and expectations have changed since then. And each company and each managerial position is different and no universally consistent benchmark can be set to measure and assess the conduct to company directors. However, the actual requirement of that standard will depend on what sort of role that person was performing in the company.
Relevant Case: AWA v Daniels 1992 9 ACSR 383. P529-530Decision: The liquidator found the auditors and executive directors liable for negligence. His Honour found that the directors of AWA had failed to put in place an effective internal system to enable them to monitor the proper conduct of the audit, which had contributed to the failure to report the irregularities. But Most  reported directors’ negligence cases were decided in the 19th and early 20th centuries. They set a remarkable low standard of care for directors. Business conditions and expectations have changed since then. Application·    According to the fact in this case, the liquidator more likely to win the case based on result of the precedent in AWA’s case. And liquidator can ask to penalised Nicholas for beaching 180(1) by injunction. A common law damages can be claimed by the company against a director where there has been a breach of duty to act with care, skill and diligence.
* [***] The liquidator did not provide the name of the auditors at the time. The directors of AWA were duly appointed in 1997 and were subsequently held liable.
In an argument to justify his position in this case, Sir George said the director had “a duty” to act with care and the directors were liable for the breach. He also claimed that the directors may not recover for breach during the pendency of a liquidation proceedings for a material breach of the trust.
The judgment by the IBA did not state whether the directors of AWA had done anything wrong with the auditors during and after the liquidation phase of the liquidation. The IBA decision is made by the IBA (see, for example, O’Donnell v Egan 1989 4 ACRA 573; Bowers v Catt 1997 5 ACSC 17. The judgment by the IBA did not add to that of the other respondents, who were also in a similar position.
In a further twist of that IBA decision, the IBA found the directors of AWA to have breached a duty to ensure proper conduct of their audit process and to “provide the audit information with no risk” and “to ensure compliance with the standards of the Trust”.
A report by one member of the Board said in its opinion that the failure of the directors to disclose to the audit companies audited could be described as part of a wider breach of trust between the trustees and the directors of the trusts. The complaint of the Chair of the Trust alleges that one of the directors of AWA misreported accounting performance of this audit and gave the company false information. Mr Justice Levenson was also an expert on this issue.
The other respondents also contested the ruling of the IBA, finding in the case of the trustees of the Trust to have breached one of the two duty provisions. In particular, they said the IBA recognised that AWA had not been required to provide an auditing committee. However, the IBA found that in the course of reviewing the audit statements of the directors of AWA to assess how that committee was performing in respect to each level of the trust the directors, as well as their members, were not “working diligently to meet the objectives of the project.”
*** [***] It looks as though the majority judgment from the IBA is that the directors may not recover for breach of duty before and after the liquidation phase of the liquidation.
The judgment by P547 found that the directors of each corporation breached the duty to ensure that audit companies were sufficiently audited. The judgment by the IBA did not specify where the directors of the Trust had breached that duty, which the IBA had considered by a pre-determined point of judgment. Instead it was said that an independent audit team that examined the case found there were “no systemic violations” by the directors of Australian Australian Companies and that they should be held accountable for conduct that was “clearly contrary to the spirit and purpose of Australian Australian Corporations Corporations Act 2009”. An action was then brought against the directors of AWA for alleged breaches of Australia Corporations Act 2011 by those of individual directors but that order was overturned by the Supreme Court of Australia in 1999 after the case involved the directors. In this case, there was a further breach of the Australian Corporations Corporations Act 2011 in which the directors were barred or denied access to their financial accounts.
A new case is pending in the Supreme Court as to the extent that its appeal is “proportionate to the nature and extent of the misconduct and failure to protect the independence of the director of Australian Australian Companies Corporations Corporations Act 2011”.