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Directors' Duties Lawyers in Melbourne
We act for directors and officers facing an allegation that they breached their duties, and for companies, new boards and liquidators investigating and pursuing a claim against a current or former director. Every stage stays with us, from an ASIC notice or a liquidator's examination to civil penalty proceedings and, if it comes to that, a prosecution under section 184.
When the duties are being enforced
Most of what is written about directors' duties is written for boards that want to stay out of trouble. This page is for the moment the duties are enforced: a notice from ASIC, a summons to a liquidator's examination, a claim by a company under new control, or an application by a shareholder for leave to sue in the company's name. We act for the director or officer answering the allegation, and for the company, board or liquidator bringing it, but never for both sides of the same matter.
The duties are in sections 180 to 183 of the Corporations Act 2001 (Cth), and they sit alongside the general law duties of directors rather than replacing them (section 185). They bind directors and other officers, and a person involved in a contravention of sections 181 to 183 contravenes the section themselves (section 79 defines involved). What changes from one matter to the next is who is bringing the claim, what they can compel, and what they can ask the court for.
The work stays with us from start to finish: ASIC investigations and examinations under section 19 of the ASIC Act, liquidators' public examinations, civil penalty and compensation proceedings, and a prosecution for an offence under section 184 if a matter moves that far.
If you want governance advice before anything has gone wrong, that is the work of our corporate team. If the fight is between directors over control of the board, see director disputes. This page deals with the claim itself.
Notices, section 19 examinations, and the proceedings that can follow.
Public examinations, for the liquidator or for the person summoned.
For companies, new boards and liquidators seeking compensation.
Defences, relief, personal exposure, and who pays.
A shareholder suing in the company's name, with leave.
Offences under section 184, if a matter moves that far.
Who brings the claim decides how it runs
The duties are the same whoever alleges the breach. Almost everything else is not. ASIC, a liquidator, the company and a shareholder each come to a breach of duty claim with different powers to compel information, different remedies they are allowed to seek, and different points at which the claim can be resisted. For a director, a response that suits one can be the wrong move against another. For a company or liquidator, the route chosen decides what the court can be asked to order.
The Act controls who may ask for its remedies. ASIC may apply for a declaration that a civil penalty provision was contravened, a pecuniary penalty or compensation; the company may apply for compensation; and no one else may apply for those orders unless the section permits it (section 1317J). A shareholder who wants the company to sue must first obtain the court's leave to bring the claim in the company's name (sections 236 and 237).
The duty is the same. The claimant changes everything else.
An ASIC investigation
ASIC can investigate a suspected contravention (section 13 of the ASIC Act), require books to be produced (sections 30 and 33), and require you to attend an examination on oath, held in private (sections 19 and 22). If it sues, it can seek a declaration, a pecuniary penalty and compensation, and then ask the court to disqualify you from managing corporations (section 206C).
A liquidator's claim
A liquidator can apply to have a current or recent officer summoned for examination about the company's affairs, usually in public (sections 596A and 597), and can then pursue the company's claim for compensation. Where the company traded while insolvent, the claim is often paired with insolvent trading (sections 588G and 588M). See corporate insolvency.
A claim by the company
When control changes, a new board or a new owner often looks back at decisions made before they arrived. The company can seek compensation for damage caused by a contravention (section 1317H), and that damage includes profits anyone made from it, not only what the company lost (section 1317H(2)).
A derivative action
A member, a former member or an officer can sue in the company's name only with the court's leave (sections 236 and 237). Member approval of what you did does not stop the claim on its own, but the court can take it into account (section 239). See director disputes for how leave is sought.
From the first notice to the end of the claim
Before you answer anything
The first response often shapes the case. Answers at an ASIC or liquidator examination are compulsory, and the protection for answers that might incriminate you or expose you to a penalty applies only if you claim it before you answer. We prepare you, attend with you where the law allows, and secure the company records you are entitled to see (section 198F).
Test the allegation against the duty pleaded
Each duty has its own elements and its own answers. The business judgment rule can answer a care and diligence claim but not an improper purpose claim. A pecuniary penalty needs material prejudice or a serious contravention. Proceedings for these orders must start within six years. We work out which parts of the claim hold up and what the evidence will show.
Resolve it, or run it
Many claims resolve once both sides have tested the evidence. Where one does not, we defend it and, where the facts support it, ask the court to excuse a director who acted honestly (sections 1317S and 1318). If a matter moves to a prosecution under section 184, we continue to act. Throughout, we deal with the company and the insurer on who is paying for the defence.
Investigating and bringing a claim against a director
When a new board takes control, or a liquidator is appointed, one of the first questions is whether a current or former director caused the company loss. We act for companies, boards and liquidators investigating that question and bringing the claim. For liquidators we act as lawyers; we do not take liquidator appointments ourselves.
Before proceedings start, we look at whether a judgment would be worth having, which often depends on the director's assets and any insurance that responds. Insolvent trading claims have their own elements, defences and time limits, and are covered on our corporate insolvency page. A breach of duty claim often runs alongside one.
What has to be established
The claim has to fit the duty. Care and diligence is measured against a reasonable person in the company's circumstances holding the same office and responsibilities (section 180(1)). Good faith and proper purpose (section 181), and improper use of position or information (sections 182 and 183), turn on what the director did and why. Expect the business judgment rule to be raised (section 180(2)). A director's reliance on information or advice is taken to be reasonable unless the contrary is proved, if it was in good faith and followed an independent assessment, and the source was an employee the director reasonably believed was reliable and competent, a professional adviser on a matter the director reasonably believed was within that adviser's competence, or another director, officer or board committee on a matter within their authority (section 189).
Books, records and evidence
The company's financial records, which must be kept for seven years (section 286), are usually the core of the case. In a winding up, officers and former officers must deliver the company's books to the liquidator and help with the winding up, and a person generally cannot keep the books from the liquidator or claim a lien over them (sections 530A and 530B). A liquidator can also have officers, and others who can give information, examined about the company's affairs, usually in public, and the record can be used in evidence against the person examined, subject to a privilege claim made before answering (sections 596A, 596B and 597). We conduct those examinations.
Recovery and relief
The company can apply for compensation for the damage a contravention caused, including profits anyone made from it, whether or not a declaration of contravention is made (sections 1317H and 1317J). It can bring general law claims alongside (section 185). Proceedings must start within six years of the contravention (section 1317K). Expect the director to ask to be excused as having acted honestly (sections 1317S and 1318), and build the claim with that answer in mind.
What the Act allows a director to say in answer
Three answers that come up in almost every breach of duty claim.
The business judgment rule
A director who makes a business judgment in good faith and for a proper purpose, without a material personal interest, informed to the extent they reasonably believe appropriate, and rationally believing it is in the company's interests, is taken to have met the duty of care and diligence (section 180(2)). It protects decisions, including a decision not to act (section 180(3)). It does not answer a claim under sections 181 to 183.
Honest, and fairly excused
Where a director has acted honestly and, in all the circumstances, ought fairly to be excused, the court may relieve them wholly or partly from liability (sections 1317S and 1318). A director who expects a claim can apply for that relief before one is brought (sections 1317S(4) and 1318(2)).
Time and seriousness
Proceedings for a declaration, a pecuniary penalty or a compensation order must start within six years of the contravention (section 1317K). A pecuniary penalty also requires that the contravention materially prejudiced the interests of the company or its members, or its ability to pay its creditors, or was serious (section 1317G).
A plain read on the allegation
Bring the notice, the summons or the letter of demand, or, if you are considering a claim against a director, what you have found so far. Initial consultations are confidential, and we will tell you where you stand and what should happen next.
Book a consultationYour personal exposure
A breach of duty finding can reach you in several ways at once. The company can recover compensation, measured to include profits made from the contravention (section 1317H). On ASIC's application the court can order a pecuniary penalty payable to the Commonwealth (section 1317G) and disqualify you from managing corporations (section 206C). Where conduct is alleged to be dishonest or reckless, the same facts can found an offence (section 184).
If the company has failed, a liquidator may also claim for insolvent trading, which has its own defences (section 588H) and its own safe harbour (section 588GA). See corporate insolvency.
Indemnities and D&O insurance
Directors often assume the company, or its directors and officers insurance, will stand behind them. The Act limits both. A company must not indemnify a director against, among other things, a liability owed to the company, a pecuniary penalty or a compensation order (section 199A(2)). Nor may it indemnify the legal costs of, for example, proceedings the director loses on those terms, or ASIC or liquidator proceedings in which the grounds for the order are established (section 199A(3)). That last limit does not apply to the costs of responding to an ASIC or liquidator investigation before proceedings start.
A company also must not pay a premium for insurance against liability, other than for legal costs, arising from a wilful breach of duty or improper use of position or information (section 199B). Anything that goes further is void to that extent (section 199C). Read the deed and the policy before you need them, and if the insurer declines, see insurance disputes.
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Questions about breach of duty claims
Last reviewed October 2026. Statutory references are current to the Corporations Act 2001 (Cth) Compilation No. 149 and the Australian Securities and Investments Commission Act 2001 (Cth) Compilation No. 109, both dated 19 September 2026. This page is general information, not legal advice.
The first response usually shapes the claim.
If you are a director or officer in Melbourne and a notice, a summons or a claim has arrived, arrange a consultation before you respond. If you are a company, board or liquidator weighing a claim against a director, speak with us before the first letter goes out. Either way, we will give you a plain read on where you stand.
See also: Corporate Law, Director Disputes, Corporate Insolvency, Shareholder Disputes, Commercial Litigation.
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