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Wikiversity Law Reports/Grove v Flavel

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This is a Wikiversity Law Report.
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

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  • 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

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  • 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

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