Wikiversity Law Reports/Grove v Flavel

Full Court of the Supreme Court of South Australia

TL;DR: director who made use of information obtained as director to take steps to protect the director's own interests, to the detriment of other creditors of the company, acted improperly.

Facts edit

  • Director and entities associated with the director were owed money by the company.
  • The company had other creditors.
  • The director foresaw insolvency for the company, and so took steps to obtain payment of debts to the director and associated entities in preference to other creditors.
  • The director was charged with and convicted of breaching the duties of a director.

Held edit

  • A director of an insolvent company (or a company at risk of insolvency) has a duty to consider the interests of creditors of the company.
    • But the existence of duty to creditors independent of the duty to the company was rejected by High Court in Spies v The Queen (2000) 201 CLR 603, 635-637 [93]-[96].
  • The director acted improperly.

Other publishers' references edit

  • (1986) 43 SASR 410
  • (1986) 11 ACLR 161
  • (1986) 4 ACLC 654