HUB Utilities Ltd (HUB) is a construction management company that is listed on the ASX. HUB has 3 directors; Mr Short, Mrs Lee and Dr Wittless (who holds a PhD in “construction management policy”).

At a directors’ meeting in March 2020, a proposal to purchase a small construction management company is discussed. The proposal is accompanied by a report detailing the financial status of a company called Tricky Business Pty Ltd.

Only 2 of 3 directors attend this meeting. Mr Short does not attend the meeting (he has actually not attended any of the past 5 Board meetings) During the meeting, Dr Wittless glances over the financial report for Tricky 

Business Pty Ltd and comments that it “looks all good”. Mrs Lee does not read the financial report for Tricky Business Pty Ltd, considering the opinion of Dr Wittless to be entirely reliable. Together, Mrs Lee and Dr Wittless 

approve the proposal for HUB to purchase Tricky Business Pty Ltd.

Not long after the purchase, it becomes apparent that Tricky Business Pty Ltd is financially poor and that purchasing the company has very bad consequences for HUB. Mr Short is angry when he finds out about the deal but Mrs Lee and Dr Wittless tell him that "he has no right to be upset since he has not been active in decision-making for a very long time".

Have Mr Short, Mrs Lee and Dr Wittless breached their directors duties?

Make sure you use I.R.A.C. to structure your answer and make reference to the relevant sections from the Corporations Act 2001 (Cth) and case law.

Answer rating: 100% (QA)

The duties of a director include duty of care Based on the duty of care directors have the duty ... View the full answer