Company Law

Business and company Law (1705656)

Issues in case study

In this case study, the major legal issue identified is that Mr. Michael Smithas liquidator of central management Pty Ltd filed case against PP hotel investment 1 Pty ltd. Company claimed to pay off loan amount of $662,923.32.

The other major point has been highlighted in the case study is that during the session of hearing all the defendant did not appear in the court. Lastly, the most important aspect is defendant denied the existence of loan between company and PPHI.

Also, there are is no repayment needs to be done from their side (Hodges, 2015). The entire case is heard and concluded on basis of section 180-183,530 B, 588FDA, 588FE and 588FF of Corporations Act 2001, Evidence Act 1995, and Uniform Civil Procedure rule 2005.


In addition to this, the strong background fact is found that Mr. Michael has successfully proved that he is not informed about appointment of former directors and specifically Mr. Lowe. However, Mr. Henderson has been declared as de facto director of the company on record and only shareholder of the company.

Also, he investigatedagainst those employees has made payments using two company accounts. Apart from that, there is assignment signed between company and PPHI for hotel sale transaction financed by ME bank on the basis of personal guarantee by Mr. Henderson and three others (Islam et al., 2012).However, later the agreement for other business and license found illegal


During the judgment, many other case studies has been referred as Re Swan Services Pty Ltd, observation of Barrett AJA in Re, Natcomp Technology Australia Pty Ltd V Graiche2001,Grimaldi v Chameleon Mining NL 2012 in order to reach to the statutory and legal judgement.

At the same time, there are certain general laws and legal principles are applied referred from Healthy Beverages Pty Ltd and FAL Retail Pty Ltd, 2017, the statutory duty of care and diligence under s 180 of the Corporations Act and Australian Securities and Investments from Investments Commission v Maxwell2006 (Bath, 2012).

Meanwhile,these principlessignificantly exercised inrespectto define and scrutinize the roles and responsibilities of an active director and shareholder.

Mr. Henderson found to be guilty of breach of duty of care and diligence that stated that when one fails to fulfill his duties timely and not able to face the foreseeable challenges to others, arises the breach of dutiesand recognized as de facto director (Velasco, 2014).

Therefore, he is liable to pay to company as indemnifier signed in agreement. there are two people are identified as Mr. McKee and Mr. Nooran those advised, supported Mr. Henderson and planned all illegal activities majorly in money settlement and fraudulent activities.

Also, it become the actual base for the declaring such judgment. Moreover, this case study could work as important lesson for those businessman enter into any lease agreement or involve as indemnifier and director role in the company (Badriyah and SH, 2014)

They must clearly understand the legal compliances, laws and application and meaning of de facto director role.


Finally, it is revealed that Mr. Noonan paid the money from company accounts. Finally, Judgment came that the company has made the reasonable claims against PPHI and Mr. Henderson, liable to pay impugned payments benefitted to PPHI prior to 31 December 2010 and also 60% of case proceeding costs within seven days of judgment.

Company Law


Badriyah, S.M. and SH, M., 2014. The Breeding of The Contract Law Principles (The Study of The Leasing Agreement in Civil Law and Common Law System). South East Asia Journal Contemporary Business, Economics and Law. Vol6.

Bath, V., 2012. Foreign investment, the national interest and national security-foreign direct investment in Australia and China. Sydney L. Rev.34, p.5.

Hodges, C., 2015. Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement, Compliance and Ethics. Bloomsbury Publishing.

Islam, Z.M., Ahmed, S.U. and Hasan, I., 2012. Corporate social responsibility and financial performance linkage: Evidence from the banking sector of Bangladesh. Journal of Organizational Management1(1), pp.14-21.

Velasco, J., 2014. A Defense of the Corporate Law Duty of Care. J. Corp. L.40, p.647.

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