Country Living Ltd is a company registered in Australia manufacturing and selling camping equipment and accessories. It proposes to expand its business to include either the manufacture of outdoor home furniture such as gas heating units for outdoor use, BBQ cook tops, outdoor lamps and other outdoor electrical items or the manufacture of indoor replica antique clocks.
Before making any decision about the expansion, Country Living Ltd conducts a survey into the feasibility and marketability of the two projects above. The board of directors subsequently meets and decides on the matter. Judy is not interested in the topics being discussed. She lives in apartments all her life and has no appreciation for any of the outdoor or camping equipment. She also has no interest in decorating homes with antique furniture. As a result of her disinterest and during the board meeting, she plays with her latest phone and her tablet. It is only towards the end of the meeting that she provides a passionate speech on why the board should vote on the indoor replica antique clock project. The board unreservedly agrees with her as she has been “right most of the time”. Hence, the board resolves to take on the indoor replica antique clock project and expand its business, and rejects the outdoor home furniture project.
Before the board meeting, the survey results have been collated and the results indicate that there is not a lot of demand for indoor replica antique clocks.
Two months after the board meeting, Judy resigns from the board of Country Living Ltd and goes to work for Classic Trend Pty Ltd, a company that manufactures modern indoor furniture and her brother Andrew is the managing director. Judy discusses the survey outcomes with Andrew. As a result of that discussion, Classic Trend Pty Ltd decides to expand its business to include the manufacture of outdoor home furniture, including gas heating units, BBQ cook tops and fancy outdoor lamps. The expansion at Classic Trend Pty Ltd proves to be successful.
Thornton is the managing director of Country Living Ltd. He comes to you for advice on the following matters:
Question:
(a)What duties have been breached by Judy under the Corporations Act 2001 (C’th) and under the general law? Your answer should include relevant sections of theCorporations Act 2001 (C’th) and should include relevant court cases.
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