Jones v Invion Ltd

In the case of Jones v Invion Ltd, the appellants, who were directors of the first respondent, appealed against findings of breach of their fiduciary duties and statutory duties under the Corporations Act 2001 (Cth). The appellants, comprising the executive Chairman, the Chief Executive Officer, and the Chief Financial Officer, had amended their contracts without seeking approval from the Board, and had acted in concert to secure enhanced benefits for themselves. The trial judge found that the appellants had breached their fiduciary duties and statutory duties, and that they had acted dishonestly in doing so. The respondent corporation sought equitable compensation and statutory compensation under s 1317H of the Act.

The legal issues before the court were whether the trial judge erred in finding the appellants had acted dishonestly, whether their conduct was causative of the respondent’s loss, and whether the trial judge erred in failing to find that the Board had acquiesced to making payments to the appellants. The court also considered whether the trial judge erred in failing to find that the appellants had an honest explanation for their breaches of duties, and that they ought to be excused from liability.

The court held that the trial judge did not err in finding the appellants had acted dishonestly in amending their contracts without Board approval, and in failing to disclose this to their fellow directors. The court found that the appellants had deliberately bypassed the Board, knowing that it would not approve the changes. The court also held that the appellants’ conduct was causative of the respondent’s loss, as the Board was not aware of the changes made to the contracts, and therefore could not be bound by them. The court found that the Board did not believe that the company was bound to make payments to the appellants, but had acquiesced to doing so in any event.

The court held that the trial judge did not err in finding that the appellants’ conduct was knowingly discreditable, and that there was no honest explanation for their breaches of duties. The court found that the appellants had not sought to excuse their conduct on the basis of a misunderstanding, but had asserted an express entitlement to do what they did. The court held that the appellants’ reliance on documentary evidence alone to challenge the trial judge’s conclusions was misconceived, as the trial judge had considered and traversed the documentary evidence in the context of the appellants’ evidence.

The court dismissed the appeal with costs, and rejected the appellants’ application to adduce further evidence.