A legal battle in Queensland threatens to open up a new set of
liabilities for company directors.
Former rugby league star – and company director
– Jarrod McCracken is appealing against a $1.5 million
damages (plus interest) award.
What takes this case out of the ordinary is that the damages
were awarded to someone to whom the director (Mr McCracken) owed no
legal duties.
The Queensland Supreme Court made the award under a
little-noticed section at the back end of the Corporations Act.
Section 1324 says that a court can, on the application of ASIC
or a person affected by the conduct, grant an injunction to prevent
a person from contravening the Act. It also says that the court can
"order that person to pay damages to any other person".
Although it has been a part of company law for many years, section
1324 has rarely been used in litigation.
