Case: Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373
Outcome: referred to
The statutory duties imposed by ss 180 , 181 and 182 of the Corporations Act reflect and, to some extent, refine the obligations of the directors at general law: Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373 at [99]. Each is a duty owed by a director to the corporation. However, directors' duties provisions are not concerned with any general obligation owed by directors to conduct the affairs of the company in accordance with the law generally or the Corporations Act . Moreover, the directors' duties provisions do not necessarily make a director liable for a breach by the company of another provision in the Corporations Act . The corollary is that it cannot be said that every breach by a company of the Corporations Act necessarily gives rise to a breach of the directors' duties provisions. 23 That last proposition or principle (that not every breach by a company of the Corporations Act necessarily gives rise to a breach of the directors' duties provisions) is self evident. It is reinforced by the fact that, under s 180(1) of the Corporations Act , the circumstances of the particular company are relevant to the content of the duty of a director to exercise reasonable care and diligence. The circumstances may include, but are not limited to, the type of company, the size and nature of the company's business, the director's position and responsibilities within the company, the particular functions the director is performing, the manner in which responsibility for the business of the company is distributed and, of course, the circumstances of the case: Maxwell at [100] and the authorities referred to. 24 The need to consider the circumstances of a particular company in defining the content of the duty of a director to exercise reasonable care and diligence is demonstrated in the case of Mr Pritchard. The circumstances of Warrenmang are outlined in paras [5] to [15] above. There was an " identity of interest between the directors and the shareholders, so that in effect the directors [were] the shareholders ": Maxwell [103]. Ordinarily that fact may make the requirement to prevent self-interested dealing much less acute: Maxwell at [103]. In the case of Warrenmang, the identity of interest between the directors and the shareholders in fact meant the requirement to prevent self-interested dealing was acute because of the following circumstances. (1) Warrenmang was registered as an unlisted public company on 1 September 2003 with Mr Pritchard holding approximately 20 million of the 20.82 issued shares; (2) although at the time of its incorporation, three directors were appointed, Mr Pritchard was at all times the person in charge of Warrenmang's day to day activities including maintenance of its financial records and was its controlling mind; (3) on 5 December 2003 and again 10 March 2004, Warrenmang sought to raise funds from the public through the sale shares in Warrenmang and in response to the IPO and the Supplementary Prospectus did in fact raise substantial funds from hundreds of subscribers; and (4) the subscription monies were received by Warrenmang and deposited into the Warrenmang Accounts to which Mr Pritchard was the sole signatory.