Question 7

Jim Black, an accountant by profession, is a director of Grey Ltd. He is also is a director of three other companies and has many community obligations. Jim cannot always attend directors' meetings of Grey Ltd due to his other commitments, although he always strives to do his best.

Jim is forced to miss a directors' meeting of Grey Ltd, due to a timing clash with the board meeting of one of his other companies. At the Grey Ltd meeting the other directors decide to borrow the funds necessary to purchase a 50% interest in a new hotel development. Shortly after payment has been made to the hotel developer a terrorist attack occurs and tourism virtually ceases. Grey Ltd cannot withstand the loss of revenue and fails to pay interest on its loan. A liquidator is appointed to the company.

Jim blames the other directors for the hotel contract. The other directors blame Jim for missing the meeting as they relied upon his accounting skills.

Advise Jim and the other directors of Grey Ltd whether they have breached any directors' duties under the Corporations Act or case law.