Ireland: Directors' duties: executive and non-executive directors

In Kavanagh v Delaney & ors [2008] IESC1, the Irish Supreme Court considered the duties of executive and non-executive directors. Hardiman J. (with whom the other judges concurred) referred to the English decision Re Barings (No 5) [1999] 1 BCLC 433 and observed:

“In my view, apart from any general amplification of the words of Shanley J. [in Re La Moselle Clothing [1998] 2 ILRM 345], there is a yet unmet need to make authoritative findings after full debate, as to the respective duties of an Executive and a non-executive director and, perhaps, a non-executive director appointed (as the appellant was) for a particular and specific purpose. But this has yet to occur. I would not be prepared simply to apply the Baring’s criteria, without such argument, to all these classes of director, or to assume that their common law duties are identical. I am slightly uneasy that, in this case, there may have been an assimilation in particular of the position of a non-executive director to that of an executive one. Such an approach might derive some support from the judgment of Roderick Murphy J. in Vechicle Imports Ltd (in liquidation) (Unreported, High Court, 23rd November 2000), but it is not explicit and in any event there does not appear to have been argument on the topic of the duties of the different classes of director, mentioned above. I do not consider that this case, or that of Vehicle Imports, mandates the assimilation of the position of a non-executive director to that of an executive in terms of their common law duties. The position of a highly paid executive director of a vast Bank may be of limited use in considering the common law duties of a non-executive director … a small company”.