Australian Securities & Investments Commission v Lewski & Anor; Wooldridge & Anor; Butler & Anor; Jaques & Anor; Clarke & Anor

The Australian Securities and Investments Commission (ASIC) brought proceedings against Mr Lewski and several other respondents, including Mr Wooldridge, Mr Butler, Mr Jaques, and Mr Clarke. The dispute concerned allegations of contraventions of the *Corporations Act 2001* (Cth) by the respondents, who were directors of a company. The High Court of Australia heard the appeal from the Full Federal Court.

The central legal issues before the High Court were whether the respondents had contravened their duties as directors under sections 180(1) and 181(1) of the *Corporations Act 2001* (Cth) by failing to exercise their powers and discharge their duties with the degree of care and diligence and in good faith in the best interests of the company, respectively. Specifically, the court considered the nature of the "best interests of the company" and the standard of care and diligence required of directors in circumstances where a company is facing insolvency.

The High Court, in a joint judgment, clarified that the duty to act in the best interests of the company, as stipulated in section 181(1), requires directors to consider the interests of the company as a whole, which includes, at the relevant time, the interests of its creditors. The court held that when a company is insolvent or nearing insolvency, the paramount consideration for directors shifts to the interests of the company's creditors. Furthermore, the court affirmed that the standard of care and diligence under section 180(1) is an objective one, requiring directors to exercise the care and diligence that a reasonable person would exercise if they were a director in the circumstances of the company and occupied the particular office held by the director. The court found that the respondents had failed to meet these standards.

The High Court allowed the appeal, setting aside the orders of the Full Federal Court and remitting the matter to the Federal Court for further determination of penalties and other relief.