Law

Green V Bestobell Industries Pty Ltd. 1982

WAR 1 Supreme Court of Western Australia. 

The Case

Green was a director of Bestobell Industries. Bestobell Industries were contracted to a construction project in Western Australia. Green obtained information on how much Bestobell were submitting for the tender. Green submitted a tender for a key part of the project under another business name, without the knowledge of other business directors. It was the lowest, as a result Clara (Green’s Company) obtained the contract and received profits from the work which was completed by the company. 

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Fiduciary Duty 

A fiduciary duty is a relationship of confidence or trust between two or more parties that have a duty to put another’s interests before their own, such as Green and Bestobell. It is said that Green was in breach of fiduciary duty to Bestobell as he knew how Bestobell constructed their  tenders and using this method he ensured that Clara’s tender was significantly lower than Bestobell’s to ensure that he was successful. 

The Corporations Act 2001

What elements of the case is associated with the Act?

  • 181: Good faith – civil obligations
  • 182: Use of position – civil obligations
  • 183: Use of information – civil obligations
  • 184: Good faith, use of position and use of information – criminal offences

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Lifting the Veil of Incorporation

The veil of incorporation refers to the concept (legal assumption) that the directors are completely separate and distinct from the company, so that its shareholders, directors and managers are exempt from liability of the corporations actions. It lifted the corporate veil as the company had helped to assist in directors breach of fiduciary duties. 

Conclusion

Green was therefore liable to account for the profits derived from acquiring the tender.

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