Advocating For You - Member update: The Star Case

In March 2026, the Federal Court delivered judgment in ASIC’s civil penalty proceedings concerning alleged breaches of the statutory duty of care and diligence (s 180(1) of the Corporations Act 2001 (Cth)) by former senior executives and non‑executive directors of The Star Entertainment Group Ltd.

The Court found that two former senior executives, the former Managing Director and CEO and the Chief Legal and Risk Officer and Company Secretary breached their duties, while ASIC’s case against the non-executive directors was dismissed.

This summary outlines key points that company secretaries and governance professionals need to be aware of after the Court’s ruling.

Reinforcement of settled principles

Director and officer duties under s 180(1)

The Court was explicit that the case did not turn on any novelty in legal principle. The judge observed that the content of s 180(1) of the Corporations Act 2001 (Cth) is well settled, however its application will be contextual. Directors and officers are required to exercise care and diligence by reference to the corporation’s specific circumstances, the office held, the responsibilities assumed, and the information available at the relevant time.¹

Information volume and complexity

The Court reaffirmed long-standing authority that directors must take reasonable steps to place themselves in a position to guide and monitor management and cannot excuse inattention by pointing to the volume or complexity of board materials. Information overload is not an excusable defence. Boards are expected to control the information they receive and ensure it is fit for purpose.²

Reliance as a defence

The judgment also reinforces the principles on directors ability to rely on management and other officers, but only where there is no reason to doubt the adequacy, honesty or competence of that advice.³ Where facts arise that would alert a reasonable director or officer that something may be amiss, there is a positive duty to inquire further. The judge observed that directors cannot substitute reliance upon the advice of management for their own attention and examination of an important matter that falls specifically with the board’s responsibilities.⁴

Form and substance of information provided to boards

The Court discussed the problem of voluminous board packs, describing them as increasingly ‘oppressive’ and emphasised that the discipline of synthesis and prioritisation is a governance obligation, not merely a presentational preference. The Court’s observations underscore that both directors and those preparing board materials share responsibility for ensuring that critical risks are clearly surfaced.

Use of AI in board processes

The Court also addressed the growing use of artificial intelligence in board processes. It acknowledged that AI tools may assist directors and company secretaries in navigating large volumes of material, but warned:

“It scarcely requires emphasis to observe that the use of AI-generated summaries as a substitute for the careful reading and interrogation of board materials would warrant caution, not least because inadequately deployed or misdirected AI may increase risk and legal exposure rather than mitigate it. That said, there is considerable potential for AI, if appropriately utilised, to assist directors in the discharge of their duties”.⁵

The judge referred to the critical role of Chairman and company secretaries in preserving role boundaries with management and promoting proper director engagement.⁶ While technology may play a role in reading and examining material, analysing and understanding information provided by management is a core function of a board.⁷

Severability of formal titles and capacities

The Court addressed the matter of formal titles and capacities by applying and affirming the High Court’s decision in Shafron.⁸ It confirmed that the statutory duty imposed on officers to exercise their powers and perform duties with care and diligence applies to all responsibilities an officer holds within a corporation, irrespective of how or why these responsibilities were acquired.⁹ The division of dual roles, such as company secretary and general counsel, is immaterial when determining an officer’s obligation under s 180(1).

Reasonable person test applied to dual capacities

In Shafron’s Case, the High Court had clarified that paragraph (b) of s 180(1) necessitates an assessment of what a “reasonable person” in the same position as the officer would have done, further noting that this position must be described with reference both to the office held and the attendant responsibilities.¹⁰ In the Star Case, the Court rejected attempts to categorise responsibilities solely based on formal titles or designated capacities. For individuals classified as officers, s 180(1) encompasses all the roles and responsibilities they carry within the organisation, whether defined as company secretarial, legal, risk-related, or otherwise. The statutory examination centres on the actions that a reasonable person, possessing the combined functions, responsibilities, and expertise of the officer, would have taken.

For company secretaries - particularly those who concurrently serve in legal or risk capacities - the judgment underscores several practical considerations. Company secretaries are recognised as officers and are directly accountable to the board. In this instance, the Judge specifically noted the dual function of the Company Secretary, who also served as General Counsel:

“What is required to be done to comply with the duty will vary according to the fact that the officer has had legal training and possesses legal experience or skills which supported their appointment to their position. Such an officer may reasonably be expected to apply their legal knowledge, training and skills to identify risks that other officers of the company may not necessarily have appreciated, particularly those who lack legal experience or expertise, and to recognise that other officers within the company may be relying on them to be aware of legal risks, and to guard against the realisation of those risks”.¹¹

An officer with legal training may be reasonably expected to identify and escalate legal, regulatory and reputational risks that others may not appreciate.

The evidentiary role of minutes

The judgement also highlights the importance of minutes. The judge observed that:

“What occurred, and what can be proven to have occurred, are not always the same thing. This is often the case where, like here, meetings and calls allegedly took place for which there was no record, and the oral evidence of conversations was sometimes contradictory. Purported discussions of key matters during Board meetings were not recorded in the minutes. Some aspects of what occurred remain obscure.

But the result of all this is that the absence of evidence from officers other than the CEO and the chief lawyer has meant the only other guides I have as to the actions of directors is what emerges from the minutes of meetings and other contemporaneous documents including emails”.¹²

The Judge also observed that the minutes did not paint:

“a portrait of directors actively pressing management with difficult questions as to whether the business was being conducted ethically, lawfully, and to the highest available standard. The contemporaneous minutes disclose little by way of sustained scrutiny or insistence upon explanation in circumstances where risks were obvious”.¹³

While it is always a matter for judgement in each case, it may be “appropriate that minutes record significant issues or questions raised with management by directors and the responses received or action promised.”¹⁴ The reason being that in the absence of any other evidence the minutes may be the only available evidence of what occurred and it is open to a Court to draw its own conclusions.