ASIC v PFS Business Development Group Pty Ltd [2006] VSC 192
Company law; directors’ duties; duty of care and diligence
Facts: PFS Business development Group (PFS) was a group of eleven companies that offered financial services of various types. ASIC sought declarations and other orders against the group on various grounds, one of which was a breach by the directors of their duty to ensure that the companies were properly managed. Specifically, it was established that the directors had:
failed to ensure timely payment to employees
allowed companies in the group to trade while insolvent
failed to ensure that proper books and records of company transactions were kept
not complied with taxation requirements; and
generally mismanaged the PFS group.
Issue: On these facts, had the directors of PFS breached their statutory duty of care and diligence?
Decision: The directors had breached their duty of care and diligence.
Reason: The facts showed that the directors had not exercised a reasonable degree of care and diligence in the management of the companies. According to Hargrave J (at [330]) ‘the management of the PFS Group was a complete shambles’.