Daniels v Anderson (1995) 37 NSWLR 438

You are here:
< Back


  • In 1986 and 1987, Deloitte Haskins & Sells (Deloitte) were AWA Ltd’s (AWA) auditors.
  • The directors were experienced businessmen who had served or were serving on the boards of prominent and successful companies as chairmen or directors.
  • One of AWA’s major activities was manufacturing, importing and exporting electronic and electrical products. AWA imported large quantities of components from Japan and other countries.
  • To hedge against foreign currency fluctuations, in 1985 AWA began purchasing foreign currency against contracts in place or anticipated contracts for imported goods.
  • In December 1985, Andrew Koval was appointed foreign exchange manager of AWA. He appeared very successful. AWA seemed to be making huge profits on foreign exchange dealings.
  • AWA claimed that by early July 1987 Koval had lost $49.8 million as a result of Deloitte’s repeated failure to report huge deficiencies in AWA’s records and internal controls.
  • In October 1988, AWA brought proceedings against Deloitte to recover damages for breach of contract and negligence.
  • Deloitte alleged that AWA’s loss was caused or materially contributed to by its own fault and in addition cross-claimed to recover indemnity or contribution collectively and severally against four of the directors: John Hooke, the chairman and chief executive officer, Sir Peter Finley, the deputy chairman, David Anderson and Alexander Campbell.
  • Deloitte was held responsible but appealed.

Summary of AWA Financial Dealings

  • By September 1986, the value of open foreign exchange contracts exceeded $700 million.
  • As at 31 December 1986, AWA had no record of loans of $38.8 million, which Koval had taken out to fund foreign exchange losses.
  • On 9 March 1987, Deloitte confirmed that the results of AWA for the six months ended on 31 December 1986 showed an operating profit of $16.068 million when AWA had sustained a substantial operating loss.
  • An appropriate system for conducting foreign exchange dealing was only implemented in July 1987.
  • AWA’s board did not learn that AWA had lost $49.8 million from foreign exchange operations until July 1987.


  • Were the AWA directors responsible for AWA’s loss?


  • Hooke was found liable for negligence while the other directors were not.
  • The Court of Appeal held that the director’s duty of care is not merely subjective, limited by the director’s knowledge and experience or ignorance or inaction.
  • The Court also held that special qualifications of the director will be relevant in determining the scope of his or her duty of care.
  • Section 181 of the Corporations Act 2001 (Cth) (the Act) requires that in order for directors must exercise their powers and discharge their duties in good faith, in the best interests of the company and for a proper purpose.
  • Section 184 of the Act also stipulates that if a director can face criminal charges if it they violate Section 181 with recklessness or dishonesty.

-- Download Daniels v Anderson (1995) 37 NSWLR 438 as PDF --

FavoriteLoadingSave this case