ChatGPT incorrectly approached the director-focused issue as a matter of employment law
The NSW Supreme Court has ordered the directors of Canberra engineering and consulting firm Lanmar to sell the company after two of the directors used ChatGPT to try and kick their fellow director out, reported The Australian.
Defendants Martin Drebber and Peter O’Connor took to the AI chatbot for advice on how to force Drew Landes out of the company because of a supposed imbalance in the amount of work the directors were doing. ChatGPT generated a resolution framework that included a performance management plan treating him as an employee.
Drebber and O’Connor presented the plan to Landes during a meeting at which they claimed the majority had no confidence in him. Landes responded with a written statement in which he stated that he was a director and not staff; however, Drebber and O’Connor maintained their course.
Justice Ashley Black criticised the pair’s decision to rely on ChatGPT’s framing of the matter.
“ChatGPT did not prove to be a prudent choice of adviser so far as matters of Australian corporate law were concerned”, the judge wrote in his decision, a snippet of which was published by The Australian. “[Drebber and O’Connor] had plainly directed questions to ChatGPT, which it had answered, which wrongly approached the question as one of employment law, rather than by reference to principles of oppression in Australian corporate law. Their research did not extend to taking legal advice”.
The judge determined that Drebber and O’Connor oppressed Landes by cutting him out of key management decisions and refusing to pay him dividends in violation of the directors’ policy. Moreover, in a May 2025 meeting the pair kept outvoting Landes on resolutions to defer dividend and bonus payments, assess director responsibilities and implement incentives.
Black said the resolutions that were supported were designed to cut Landes’ remuneration – a conclusion rejected by Drebber and O’Connor. The judge also surmised that O’Connor may have used ChatGPT to draft one of the resolutions due to the document’s generic phrasing, which included the statement “he or she” in a failure to acknowledge that all of Lanmar’s directors were men.
Black issued the order for receivers to be appointed for an en bloc sale of Lanmar’s shares after he rejected valuations of the company from both sides in the case. He did not order a wind-up since Lanmar remained viable and profitable.
Lanmar was launched in 2020 as a provider of engineering and consulting services mainly to the Commonwealth. Drebber, O’Connor and Landes each held a third of the interest in the company, which employed about 40.
Landes had offered to have Drebber and O’Connor buy out his share in the company for $8.1m based on the 2025 financial year’s earnings multiplied by six. However, the other directors shot it down.
