Great Southern Finance Pty Ltd (in liq) v Rhodes

The plaintiff, Great Southern Finance Pty Ltd (in liquidation), brought an action against the defendant, Rhodes, alleging a breach of directors' duties. The case was heard in the Federal Court of Australia. The plaintiff sought to hold Rhodes liable for the financial losses incurred by the company due to what it claimed were improper decisions made by Rhodes during his tenure as a director.

The court was required to determine whether the defendant's defence was sufficient in light of statutory provisions regarding the business judgment rule. Specifically, the court had to decide whether the defendant had adequately identified the decisions he was relying on for protection under sections 1317S or 1318 of the Corporations Act 2001 (Cth). The court also needed to assess whether the defendant had sufficiently outlined the circumstances he relied on in his defence.

The Federal Court held that the defendant's defence was insufficient because it did not identify the specific decisions or the circumstances relied on for protection under the statutory business judgment rule. The court ruled that such information was necessary to allow the plaintiff to respond adequately and to ensure that the statutory protections were not misused. Consequently, the court ordered that the paragraphs of the defence in question be struck out, with leave granted for the defendant to replead.