Hakea Holdings Pty Ltd v McGrath (No 2) [2022] FCA 995

Federal Court of Australia Hakea Holdings Pty Ltd v McGrath (No 2) [2022] FCA 995 File number: NSD 278 of 2019

Judgment of: YATES J

Date of judgment: 26 August 2022

Catchwords: CORPORATIONS — directors' duties – duty under s 180(1) of the Corporations Act 2001 (Cth) – where the director of the company was also the sole director and shareholder of a building company engaged by the first-mentioned company to carry out construction of an aged care facility – whether the director breached his duty under s 180(1) by failing to inform the first-mentioned company that the building company was in severe financial distress and unable to complete the building work in a timely fashion – whether the alleged breach also involved the director breaching his duty to avoid conflicts of interest and conflicts of duty – where director deliberately failed to disclose facts to keep the building contract on foot INSURANCE — Directors and Officers liability insurance – "claims made" policy – whether claim required to be made against the director or officer within the period of insurance – whether notification to the underwriters of the claim sufficient – whether a claim was, in fact, made on the insured director within the period of insurance – where demand made on the director by email notification – whether email notification received by the director within the period of insurance INSURANCE — Directors and Officers liability insurance – exclusion clause – loss involving director or officer gaining personal profit or advantage – whether director gained a personal advantage within the meaning of the exclusion – where alleged personal advantage involved conduct of the director calculated to keep on foot a building contract – where the counterparty to the building contract was a building company which the director controlled – where the building company derived revenue from the building contract which supplemented funds to which the director had access for his personal use INSURANCE — Directors and Officers liability insurance – exclusion clause – loss arising from circumstance known by director or officer prior to the period of insurance – whether knowledge of facts constituting the circumstance sufficient to trigger the exclusion – whether the exclusion also required the director or officer to know that the circumstance exposed him or her to a legal liability, actual or potential, to a third party EVIDENCE — Evidence Act 1995 (Cth) – hearsay rule – whether previous representations made in affidavits filed in other proceedings admissible as admissions – whether previous representations admissible as an exception to the hearsay rule on the basis that they are representations of the maker's state of mind at the time the representations were made