Has the "Sleeping" Director Finally Been Laid to Rest?

Abstract

The decision in AWA v Daniels was heralded as marking the end of the "sleeping" director and the beginning of a new era in corporate responsibility. It is suggested, however, that this praise was not really warranted. While at times Rogers CJ's judgment in this case echoes the more rigorous approach to directors' duties adopted in the insolvent trading cases, his Honour nevertheless reaffirmed the subjective nature of non-executive directors' duty of care. This article suggests that the majority judgment on appeal in Daniels v Anderson is more worthy of praise. Here the majority justices, Clarke and Sheller JJA, rejected Rogers CJ's approach, asserting, inter alia, that the objective test found in the law of negligence was equally applicable to both executive and non-executive directors and thereby finally laying to rest the "sleeping" director. This article suggests that the majority approach in this case involves a significant change in the common law directors' duty of care and that this change should be applauded. Ultimately it is submitted that in light of the current uncertainty underlying the interpretation of s 232(4) of the Corporations Law, the common law duty of care may have surpassed the standard of care expected under its statutory equivalent.