The 19th century decision concerning the Marquess of Bute, a director and president of the Cardiff Savings Bank, does not appear much in the law reports, perhaps because under present law it appears so outlandish a decision as to be for amusement only. Although in its day, it was good law.
In the 2026 decision of Justice Michael Lee about the liability of directors of Star Casino, he opened with a dramatic description of the circumstances of the collapse of the Cardiff City Bank. Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196 (5 March 2026)
The Marquess of Bute’s case
The succession of the infant Marquess of Bute to the marquessate in 1848 made him staggeringly wealthy. As part of his inheritance, the Marquess was made President of the Cardiff Savings Bank; a position held by his late father. But despite his Lordship’s abiding interests in architecture, linguistics, philanthropy and Catholicism, the Marquess eschewed any interest in the affairs of the Cardiff Savings Bank. Remarkably, in the almost four decades leading up to the bank’s collapse, he had presided over precisely one board meeting”.
According to Justice Lee,
“while he was engaged elsewhere, an actuary had defalcated approximately £30,000 and a liquidator sought to make officers of the bank responsible, including the Marquess”.
Justice Lee continued.
“The question was whether despite having no knowledge of the irregularities (or really any of the bank’s affairs), the Marquess was liable. Mr Justice Stirling held that he was not: the Marquess was entitled to rely on others to manage the affairs of the bank and to hold otherwise would be to fix him with responsibility for their neglect or omission: Re Cardiff Savings Bank [1892] 2 Ch 100 (also known as the Marquess of Bute’s case)”.
As Justice Lee then said
“times have changed. Toleration of the languid, listless indifference of gentleman directors of the Victorian and Edwardian ages is a thing of the past. The law now expects significantly more of officers of a corporation in discharging their duties and when delegating to others”.
As to his appointment as president as an “infant”, the Marquess was in fact appointed at the age of 6 months. His family members owned Cardiff Castle and were very wealthy and he was likely appointed merely to promote the company’s image.[1] He became a renowned benefactor, industrialist, scholar, and architectural patron and was far from languid, listless or indifferent otherwise.[2] He was only one of 50 trustees of the bank[3] but its collapse was nevertheless said to have caused him great embarrassment.
In the day though, and with companies not long have been in existence, the idea of a director was that of being a ‘country gentleman’ rather than a person capable of attending to the company’s affairs. Such a director in Re Denham & Co had not attended any meetings for 4 years and in any event, he could not be expected to understand the [fraudulent] financial statements of the company.[4]
Similarly with the times having changed, the later defence of the “sleeping” director, on board for the ride, has not been accepted.
In DCT v Clark,[5] a woman with no business experience accepted her husband’s request that she become a director because “she thought she had to accept as a wife”. From time to time she signed company documents but
“I would usually have a frying pan in one hand and be signing with the other.”
Her total reliance on her husband in the management of the company was not a “good reason”, within the meaning of s588FGB(5) Corporations Act, for her non-participation in the management of the company at the relevant time.
Star Casino
This then leads into Justice Lee’s decision in Star Casino which he noted was penitentially long – hence
“Lent is an apt time for delivery”.[6]
The length reflected
“the number of defendants, the need to make a vast number of factual findings, and the convoluted way ASIC has pleaded its case”.
(The third and fourth defendants each settled the claims brought against them: ASIC v Hawkins [2025] FCA 121).
Justice Lee found that the former CEO and the former Chief Legal and Risk Officer who was also the company secretary had each breached his duty of care and diligence under section 180(1) of the Corporations Act in relation to some but not all of the breaches alleged by ASIC.
Significantly, the claims against the non-executive directors failed.
“A director of a corporation conducting a high-risk enterprise such as a casino must recognise that they are being asked to guide and monitor the management of the company operating in a singularly high-risk context. Their obligation, after all, is to perform their role at a level of diligence that a reasonable director or officer, acting in the corporation’s specific circumstances would achieve”.
Justice Lee pointed out that neither the chair of Star nor any other non-executive director gave evidence; they did not bear any onus, that “forensic choice” being vindicated by no findings being made against them.
The absence of evidence from them meant the only other guides he had as to the conduct involved was what emerged from the minutes of meetings and other contemporaneous documents including emails.
“What occurred, and what can be proven to have occurred, are not always the same thing”.
Penalties against the two directors are yet to be determined.
Comment
Directors’ duties are taken very seriously by the law, and feed many academic articles, but to what ultimate effect may be questionable. Those duties are being breached far more frequently than the law can keep up and while decisions such as that in this case might have some salutary impact, it would have little or no impact amongst the vast majority of directors.
For one thing liabilities imposed can be impeded by directors’ assets being protected by the law of trusts or family law or equity, or in other contexts simply by lack of assets generally, with guarantees often given over personal assets. People’s financial affairs aren’t always as they seem.[7] Reputation will be important for some although surveying the business scene, that might be a low-level concern.
A deeper analysis of the decision will be found in law firms’ bulletins and court judgments, and in due course academic articles.
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[1] Le Miere, Dominique — “London & New Mashonaland Exploration Co Ltd v New Mashonaland Exploration Co Ltd: Is It Authority That Directors Can Compete with Company?” (2017) 42(1) UWA Law Review 98 at fn 37
[2] See The Grand Designer: Third Marquess of Bute, R Hannah, 2012.
[3] Gower, 4th ed, p 605.
[4] (1883) 25 Ch D 752, 767.
[5] Deputy Commissioner of Taxation v Clark [2003] NSWCA 91.
[6] Lent is a significant period in the Catholic calendar, serving as a 40-day season of spiritual preparation for Easter. The Judge is perhaps suggesting that the task of reading his judgment will bring spiritual benefits.
[7] See Clout v Markwell [2001] QSC 91 at [21], Atkinson J; Ownership is sometimes but not always as it seems – presumptions for, presumptions against, and evidence – Murrays Legal.
