Director Responsibilities in Business Transactions

Litigation: 17 September 2025

Author: Aaron Stewart - Our People

Davis v Perry O’Brien Engineering Pty Ltd [2025] QCA 18

Introduction

In Davis v Perry O’Brien Engineering Pty Ltd [2025] QCA 18, the Queensland Court of Appeal examined the consequences of misleading conduct during the due diligence period of a business sale. This case highlights the critical importance for directors to ensure transparency and accuracy in all representations made during business transactions.

As Principal Lawyer at Aitken Partners, I often see how directors underestimate the legal risks associated with disclosures and warranties in corporate transactions. This case is a timely reminder of those responsibilities.

Background

The appellants, as sellers of an earthmoving and civil contracting business, entered into a share sale agreement with the respondents. The agreement included warranties regarding the accuracy of information provided up to completion and an ongoing obligation to disclose any material matters affecting the business.

After completion, the buyers discovered undisclosed liabilities and commenced proceedings for misleading and deceptive conduct under the Australian Consumer Law.

The Court’s Findings

The Queensland Court of Appeal upheld the primary judge’s decision, emphasising several key points:

• Breach of Contractual Warranties: The sellers’ failure to disclose material information constituted a breach of the share sale agreement warranties.
• Misleading and Deceptive Conduct: The sellers’ conduct during due diligence misled the buyers and caused financial loss.
• Causation and Damages: The buyers demonstrated that the misleading conduct directly caused their losses, justifying the damages awarded.

Implications for Directors

The Queensland Court of Appeal upheld the primary judge’s decision, emphasising several key points:

• Breach of Contractual Warranties: The sellers’ failure to disclose material information constituted a breach of the share sale agreement warranties.
• Misleading and Deceptive Conduct: The sellers’ conduct during due diligence misled the buyers and caused financial loss.
• Causation and Damages: The buyers demonstrated that the misleading conduct directly caused their losses, justifying the damages awarded.

How Aitken Partners Can Assist Directors

At Aitken Partners, Brisbane, we regularly advise directors on their responsibilities in business transactions. Our services include:

• Due Diligence Oversight: Ensuring all information provided is accurate, complete and compliant with contractual obligations.
• Contract Review and Negotiation: Drafting and negotiating share sale agreements to protect directors’ and companies’ interests.
• Risk Assessment and Mitigation: Identifying potential legal and commercial risks and advising on strategies to minimise exposure.
• Dispute Resolution: Representing directors and companies in disputes arising from business transactions, including claims of misleading or deceptive conduct.

Conclusion

The Davis v Perry O’Brien Engineering Pty Ltd case reinforces that directors carry significant legal responsibilities during business transactions. Accurate disclosure, adherence to warranties, and proactive risk management are essential to protect both the company and its directors.

If you are a director navigating a business sale or other complex commercial transaction, our team at Aitken Partners, Brisbane can provide practical, tailored advice to protect your interests and ensure compliance.