Pilmer & Ors v Duke Group Ltd (In liq)

The High Court of Australia considered an appeal from the Full Court of the Supreme Court of South Australia in *Pilmer & Ors v Duke Group Ltd (In liq)*. The dispute concerned claims for misleading and deceptive conduct and breach of fiduciary duty brought by the liquidator of Duke Group Ltd against former directors of the company. The liquidator alleged that the directors had acted in breach of their duties by approving financial statements that misrepresented the company's financial position, leading to losses for the company.

The central legal issues before the High Court were whether the directors had breached their fiduciary duties to the company, and whether their conduct constituted misleading or deceptive conduct in contravention of the *Trade Practices Act 1974* (Cth). Specifically, the court had to determine the nature and scope of the directors' duties in approving financial statements, and the causal link between any breaches and the losses suffered by the company. The court also considered the application of the *Trade Practices Act* to the conduct of directors in relation to financial reporting.

The High Court, in a joint judgment delivered by Kirby and Hayne JJ, found that the directors had not breached their fiduciary duties. Their Honours held that the directors had acted honestly and reasonably in approving the financial statements, relying on the advice of competent professionals. The court emphasised that directors are not expected to be experts in accounting and are entitled to rely on the expertise of others, provided they exercise due diligence in selecting and consulting those professionals. Furthermore, the court determined that there was no misleading or deceptive conduct under the *Trade Practices Act* because the financial statements, while ultimately proving inaccurate, did not contain representations that were false or misleading at the time they were made, given the information available to the directors and their reliance on expert advice.

The High Court allowed the appeal, setting aside the orders of the Full Court of the Supreme Court of South Australia. The liquidator's claims were dismissed.