Corporate Law

Rules:
There are several sections under the CA which are related to this case, it includes:
S 180: duty to exercise care and diligence
S 189: deal with reliance on info or advice provided by others
S 181: deal with good faith and proper purposes
S 182: not to make improper use of his or her position
S 183: not to make improper use of info

Applications
As directors, Alex and Lee owe fiduciary duties, duty of care, skill and diligence to their company, because NSW Service Stations is vulnerable to their actions and depends on them to act properly.

The duty under S181 of the CA requires all directors to exercise their powers and discharge their duties in good faith for the best interest of the company and for a proper purpose. In this case, Alex permitted the board to vote for the purchase of non-safety standard petrol pumps disregarding the recommendation by an independent expert, and exercise his power to benefit himself as a major shareholder of Techno Pty Ltd rather than the NSW Service Stations. A reasonable director in Alex’s position would consider an expert’s advice and make the decision based on best interests of the company. Therefore, he had breached S181. Regarding to S182 and S183, it was stated that the officer or employee must not improperly use their position (S182) or info (S183) obtained because of their position to gain a benefit for themselves or someone else, or to damage the company. Applying rules to the case, the act that Alex had entered into a contract with Techno Pty Ltd (where Alex is a major shareholder) had shown that Alex did not comply with S182 as there are reasonable grounds to believe that he was under a conflict bwt his duty to promote interest of NSW Service Stations and his indirect personal benefit in replacing petrol pumps. Alex might have disagreed that he did not obtain any benefit by doing so, however, according to Chew case, it was found that the section do not require the proof that the officer actually... [continues]

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