directors

Question 1

de jure D

Answer 1

s 250

Question 2

de facto D

Answer 2

Re Paycheck
Someone who is part of the governing structure of co. & has assumed the status & functions of D so as to make him liable as DJ

Question 3

Re Richborough Furniture

Answer 3

Test for DF

Was D the sole person directing the co’s affairs or acting on an equal footing with other true Ds?

Question 4

Esltworth Ethanol

Answer 4

“equality of footing” is insufficient but it’s a good factor

Question 5

tjolle

Answer 5

did co hold out the individual as D & did he use the title? if yes, DF

Question 6

Mumtaz

Answer 6

since most small companies don’t have a corp. gov. structure, the court will look at the nature of the particular co., how its affairs are run & the indi’s conduct in that regard & whether that amounts to assuming office of D

Question 7

Shadow D

Answer 7

s 251

individuals influential in the running of co but who do not take up a formal position on board

Question 8

s 251 (2)

Answer 8

acting on professional advice warrants exemption from the provision

Question 9

Re Kaytech

Answer 9

SD test

Real influence in the corp. gov. of co.

Question 10

Deverell

Answer 10

influence exerted need not be over all co’s affairs. directions & instructions may blend into advice & guidance

Question 11

Vivendi

Answer 11

a controlling sh can be at risk of being SD if they act vis-a-vis DJ

Question 12

Ultraframe

Answer 12

creditor is entitled to protect his own interests as creditor w/o necessarily being SD

Question 13

Becker, Ultraframe, Re Hydrodam

Answer 13

one-off instruction/involvement insufficient. must have pattern of conduct (SD)

Question 14

s 170(5)

Answer 14

general DD applies to SDs ‘to the extent that they are capable of so applying’

Question 15

application of DD to SD confirmed by what case

Answer 15

Ultraframe

Question 16

Madoff Securities

Answer 16

Ds may not be bamboozled, dominated or manipulated by delegatee

Question 17

Fulham Football Club

Answer 17

D is not in breach of 173 if he exercised discretion in a way that restricts their future conduct. cf. fettering their discretion

Question 18

Exception to s 173

Answer 18

Where contract conferred significant commercial benefits on co (Fulham FC)

Question 19

Fulham FC

Answer 19

No breach of 173 if D exercises discretion in a way that restricts their future conduct. cf. fettering their discretion.

Question 20

Exception to s 173

Answer 20

Where contract conferred significant commercial benefits on co (Fulham)

Question 21

Relevant time for exercising discretion

Answer 21

Time of nego, not time of performance (Fulham)

Question 22

Re Barings, Re Westminster Prop Management

Answer 22

Reasonable skilll & caer in delegating is subject to a duty to maintain a residual duty of supervision

Question 23

Scottish Cooperative

Answer 23

Delegatee may not blindly follow D instructions, may take into account but makes final judgment on her own

Question 24

Re D’Jan

Answer 24

s 174. 2 limb test.

Question 25

Re Brian D’Pierson

Answer 25

D cannot take passive role in co
Standard = objective minimum
“reasonably diligent person .. with that standard capable of being raised, not lowered in light of D’s particular attributes”
Personal attributes cannot lower s 174(2)(a) standard

Question 26

2 examples of s 173

Answer 26

1) contracting with outsiders as to how they will exercise discretion conferred by AA
2) delegation

Question 27

Dorchester Finance

Answer 27

no recourse for avoidance of undertaking in D’s role

eg, D cannot pay little attention to co. operations

Question 28

D has duty to take positive action & stay informed

Answer 28

Re Barings (no. 5), Lexi Holdings, ASIC v Healey

Question 29

Lexi Holdings

Answer 29

Sisters failed to exercise active oversight of co’s affairs & bro. stole money from company
Liable
Held, has duty to take positive action & stay informed

Question 30

ASIC v Healey

Answer 30

D failed to disclose huge short-term liabilities in annual report
Held, Ds are expected to at least acquire rudimentary understanding of business

Question 31

Wrt s 174, courts may seek evidence of best/normal practice in the business

Answer 31

Abbey Forwarding

Question 32

s 1157

Answer 32

court relief wrt. negligence, default, breach of duty/trust

Question 33

s 1157 requirement

Answer 33

honest & reasonableness

Question 34

Cases where relief not granted

Answer 34

Neptune, Re Duckwari

Question 35

Cases where relief granted

Answer 35

Re Welfab Engineers, Re D’Jan