DIRECTORS' LIABILITY

Evening Post, Volume XCI, Issue 97, 25 April 1916, Page 2

DIRECTORS' LIABILITY

AN AUSTRALIAN CASE.

(FIIOM OCR OWN CORRESPONDENT.) SYDNEY, 18th April. An interesting decision,' given during the week in the Equity Court, Sydney, is acclaimed as a salutary reminder to directors of companies that they have more to do than merely to collect fees. The Mount Oxides Company, formed to work copper mines in Queensland, sued Sir Albert Gould and the other three directors, also Joseph Earle Hermann, ex-company promoter and company manager, and the concern of J, Earle Hermann,. Ltd., to recover damages on account of the alleged mismanagement of the affairs of the company to the great loss of the shareholders. Hermann, who a couple of years ago set himself up in business in Sydney as a sort of "Napoleon of finance," and was going to show Australia how to do things on a magnate scale, got his affairs and those of his concern of J. Earle Hermann, Ltd,,\ in an awful tangle. There was trouble over forged bills, and' Hermann is now bankrupt and in gaol. After an i .exhaustive examination of the history of the luckless Mount Oxides Company, Mr. Justice Harvey found that the directors had sadly neglected their duty i by letting Hermann run the company and its finances while they "retiredinto obscurity" after having agreed to get sub»tantial directors' fees for themselves. Accordingly, he gave judgment that , the directors were jointly and severally liable to the company for the sum of £20,000, in addition to several lesser amounts on account 'of losses through over issues of scrip and other details, to. be ascertained after further enquiry. It seems that all "the directors (ire men of considerable means, but the judgment must nevertheless be most unwelcome to them.