The Fiduciary Nature of the Bona Fide and Proper Purposes Duties of Company Directors: Bell Group Ltd (In Liq) v Westpac Banking Corp (No 9)

Abstract

Directors’ obligations to act bona fide in the interests of the company and for proper purposes have historically been regarded as fiduciary in nature. Indeed they have been a central tenet of the fiduciary loyalty expected of directors. However, the fiduciary classification of these obligations has (perhaps inadvertently) been thrown into doubt in the last decade. In the recent decision of Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) Owen J reaffirmed the fiduciary status of these obligations, thus allowing liability to be imposed on third parties who had received property knowing of the breach of these obligations. His Honour’s judgment arguably demonstrates the fragility of the proscriptive-prescriptive dichotomy, which is now a key feature of fiduciary classification.