What Is a Breach of Fiduciary Duty and Can You Sue a Director in Australia?

A breach of fiduciary duty by a director occurs when a director of an Australian company fails to act in the company’s best interests, puts their own interests first, or misuses their position for personal gain. It is one of the most serious allegations that can be made against a company director — and one of the most common grounds for commercial litigation in Australia.

If you are a shareholder, co-director, or business partner who suspects a director has been acting against the company’s interests, you may have grounds to sue. Equally, if you are a director facing allegations of breach, understanding the legal framework — and your exposure — is essential.

This article explains what fiduciary duties directors owe, what constitutes a breach, the remedies available, and the practical steps to take if you are on either side of a fiduciary duty dispute in Australia.

What Fiduciary Duties Do Directors Owe?

Under Australian law, directors owe fiduciary duties to their company — not to individual shareholders, and not to themselves. These duties exist under both the general law (equity) and statute.

Statutory Duties Under the Corporations Act

The Corporations Act 2001 (Cth) codifies the core duties that every director and officer of an Australian company must observe:

• Section 181 — Good faith: Directors must exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose.
• Section 182 — No improper use of position: Directors must not use their position to gain an advantage for themselves or someone else, or to cause detriment to the corporation.
• Section 183 — No improper use of information: Directors must not use information obtained through their position to gain a personal advantage or to cause detriment to the corporation.
• Section 184 — Criminal offences: Where a breach of sections 181, 182, or 183 is committed dishonestly or recklessly, it constitutes a criminal offence punishable by fines and up to 15 years imprisonment.

These statutory duties operate alongside — not in replacement of — the general law fiduciary duties that have developed through centuries of Australian and English case law.

General Law (Equitable) Fiduciary Duties

At general law, a director’s fiduciary duties include:

• The duty of loyalty: To act in the best interests of the company, not in the director’s own interests or the interests of a third party.
• The no-conflict rule: To avoid situations where the director’s personal interests conflict (or may conflict) with the interests of the company.
• The no-profit rule: Not to make a profit from the fiduciary position without the informed consent of the company.
• The duty not to misappropriate corporate opportunities: If a business opportunity comes to a director in their capacity as a director, they cannot take that opportunity for themselves.

In the 2026 Federal Court decision in ASIC v Bekier [2026] FCA 196, the Court reinforced that the duty under section 180(1) — the duty of care and diligence — applies to all directors and officers according to their role, the information available to them, and the nature of their responsibilities. Two senior executives of Star Entertainment were found to have breached section 180(1), while seven non-executive directors were cleared because their conduct was assessed against the specific standard applicable to their roles.

What Constitutes a Breach of Fiduciary Duty?

A director breaches their fiduciary duty when they act in a way that is inconsistent with the duties outlined above. In practice, the most common breaches we see in director disputes include:

• Self-dealing: A director causes the company to enter a transaction that benefits the director personally — such as selling company assets to a related entity at undervalue.
• Diverting corporate opportunities: A director discovers a business opportunity through their role and takes it for themselves or channels it to a competing business they control.
• Misusing company funds: Directors who treat the company’s bank account as their personal account, or make loans to themselves without proper authorisation.
• Misusing confidential information: A director uses the company’s trade secrets, client lists, or financial data for personal advantage — for example, setting up a competing business using the company’s information.
• Acting in the interests of a third party: A director who is also a director of another company, and who prioritises the other company’s interests to the detriment of the first.
• Failing to disclose conflicts: A director who fails to declare a material personal interest in a matter being considered by the board, in breach of section 191 of the Corporations Act.

It is important to understand that a breach of fiduciary duty does not require dishonest intent. A director can breach their duties through carelessness, poor judgment, or simply failing to recognise a conflict of interest.

Can You Sue a Director for Breach of Fiduciary Duty?

Yes. In Australia, several categories of plaintiff can bring an action against a director for breach of fiduciary duty:

1. The Company Itself

The company is the primary victim of a director’s breach. The company (through its remaining directors or a new board) can sue the breaching director for compensation or an account of profits.

2. Shareholders (Derivative Action)

If the company itself will not bring a claim — often because the wrongdoing director controls the board — shareholders can apply to the court for leave to bring a derivative action on behalf of the company under section 237 of the Corporations Act.

To obtain leave, the shareholder must satisfy the court that:

• It is probable the company will not bring the proceedings itself;
• The applicant is acting in good faith;
• It is in the best interests of the company that the applicant be granted leave;
• There is a serious question to be tried; and
• The applicant gave written notice to the company at least 14 days before applying.

3. Shareholders (Oppression)

Where a director’s breach amounts to conduct that is oppressive or unfairly prejudicial to shareholders, an oppression application under section 232 of the Corporations Act may be available. This is a powerful remedy that can result in share buyout orders, winding up, or injunctions.

4. Liquidators

In an insolvency context, liquidators regularly pursue directors for breaches of fiduciary duty — particularly self-dealing, unreasonable director-related transactions (section 588FDA), and insolvent trading. The liquidator steps into the company’s shoes and can recover compensation for the benefit of creditors.

5. ASIC

ASIC can bring civil penalty proceedings against directors for contraventions of sections 180–183, seeking pecuniary penalty orders and disqualification orders. ASIC’s enforcement posture has intensified — in 2025, ASIC delivered record civil penalties of $350 million and has signalled that director accountability remains a 2026 enforcement priority.

What Remedies Are Available?

The remedies for breach of fiduciary duty in Australia are both extensive and flexible:

• Equitable compensation: The director must compensate the company for the loss caused by the breach — calculated to restore the company to the position it would have been in but for the breach.
• Account of profits: The director must hand over any profit they made from the breach. This applies even if the company suffered no loss — because the principle is that a fiduciary must not profit from their position.
• Constructive trust: If the director acquired property using misappropriated corporate funds or opportunities, the court can declare a constructive trust over that property — effectively returning it to the company.
• Injunctions: The court can restrain a director from continuing the breach — for example, preventing them from operating a competing business using the company’s confidential information.
• Rescission of transactions: Transactions entered into in breach of fiduciary duty can be set aside.
• Civil penalties: Under the Corporations Act, ASIC can seek penalties of up to $1,565,000 per contravention for individuals (as at 2026).
• Disqualification: The court can disqualify a director from managing any corporation for a specified period — sometimes permanently.
• Criminal penalties: For dishonest or reckless breaches under section 184 — fines and imprisonment of up to 15 years.

Common Mistakes in Fiduciary Duty Claims

Whether you are bringing or defending a claim, these are the errors that derail cases:

1. Waiting too long. Limitation periods for equitable claims can be as short as 6 years from when the breach occurred (or was discoverable). Critical evidence — emails, financial records, witness recollections — degrades over time. We regularly see shareholders who suspected wrongdoing for years but did not act until the damage was irreversible.
2. Suing the wrong person or in the wrong capacity. Remember: fiduciary duties are owed to the company, not to individual shareholders directly. If you are a shareholder, you generally need a derivative action (s 237) or an oppression claim (s 232) — not a personal claim in your own name.
3. Relying on general suspicion without evidence. Courts require evidence of specific conduct that breaches a specific duty. Vague allegations of “bad management” are not enough. You need documents, financial records, and clear particulars.
4. Not preserving evidence early. If you suspect a director is breaching their duties, request access to company books and records under section 290 of the Corporations Act before the director can destroy or alter them. In urgent cases, apply for an Anton Piller order or a freezing order.
5. Using a generalist lawyer. Fiduciary duty claims involve the intersection of equity, corporations law, and commercial litigation. They are technically complex and strategically demanding. A generalist practitioner may not identify all available causes of action or the optimal procedural pathway.

How to Protect Yourself — Whether Suing or Being Sued

If You Are a Shareholder or Co-Director Suspecting a Breach

1. Document everything. Keep copies of board minutes, financial statements, email communications, and any evidence of unusual transactions. Store these securely outside company systems.
2. Exercise your rights to information. Under section 290 of the Corporations Act, directors have a right to inspect the company’s books. Shareholders can apply to the court under section 247A for access.
3. Get legal advice immediately. The earlier you engage a commercial litigation lawyer, the more strategic options you have — including urgent injunctive relief, freezing orders, or preservation of evidence.
4. Consider whether oppression or derivative proceedings are appropriate. The procedural pathway determines the remedies available and the costs exposure. This is a decision that requires experienced legal guidance.

If You Are a Director Facing Allegations

1. Take the allegations seriously. Do not dismiss them as “just a shareholder dispute.” Fiduciary duty claims carry personal liability, ASIC scrutiny, and potential disqualification.
2. Do not destroy or alter records. This will be discovered in litigation and will destroy your credibility. Courts draw adverse inferences from document destruction.
3. Review your directors’ and officers’ (D&O) insurance. Confirm your policy covers fiduciary duty claims and understand the notification requirements — late notification can void cover.
4. Seek independent legal advice. You cannot rely on the company’s lawyer — there is an inherent conflict. You need your own commercial litigation lawyer who understands director defence strategies.

How Boss Lawyers Can Help

Boss Lawyers regularly acts for directors, shareholders, and companies in fiduciary duty disputes across Brisbane and Queensland. With over 17 years of experience and more than 3,000 clients served, we understand both sides of these disputes — and we know how to achieve outcomes efficiently.

Whether you need to pursue a director who has acted against the company’s interests, or defend your position against allegations of breach, we provide strategic, commercially focused advice tailored to your situation.

To get strategic advice specific to your situation, call Mark Harley directly on 1300 267 711 or contact us at bosslawyers.com.au.

Frequently Asked Questions

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This article contains general information only and does not constitute legal advice. You should seek specific legal advice tailored to your circumstances. Boss Lawyers Pty Ltd ACN 143 136 645.

Written by Mark Harley, Principal Solicitor, Boss Lawyers.

If you are involved in a director dispute, Boss Lawyers can help. We have extensive experience in director dispute matters in Brisbane and Queensland, including breach of director duties, removal of directors, and oppression remedies. Contact us on 1300 267 711.

Facing a commercial dispute? Early legal advice is essential. Our commercial litigation lawyers Brisbane provide strategic advice from initial dispute assessment through to trial or negotiated resolution. Call Boss Lawyers on 1300 267 711.

Disclaimer: This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances before taking any action. For advice on your specific situation, contact Boss Lawyers on 1300 267 711.