Al Bundy had a profitable shoe store Als Shoes. He arranged for a new company called Shoemart Pty Ltd (Shoemart) to be set up to purchase his business and the building which it occupied.

On 3^rd May 2021, Shoemart was incorporated and its constitution is a combination of all the replaceable rules and the following provisions:

"Clause 1 - The sole object of the company is to carry on the manufacture and sale of shoes.

Clause 2 - Peggy Bundy shall remain as a Managing Director for so long as she desires.

Clause 3 - Al Bundy shall be employed as a Shoe Consultant until 2025 at a salary of $40,000 per annum.

The company issued 10 shares each to Peggy and Bud (Als sister and brother) and 80 shares to Kelly (Als daughter). Peggy and Bud were appointed as directors with Peggy as Managing Director.

On 5^th May2021, Shoemart entered into a contract with Al to purchase the shoe business and the building for $500,000. The business and building were independently valued in February 2021 for $350,000.

ii) Kelly wondered why the business and the building were bought at such an overvalue. When she confronted Bud and Peggy, they said that they were not informed of the inflated price and that they had followed Als instructions as they had trusted him. They went on to say that it was too late now and that she should not begrudge her father the overpayment. On Shoemarts behalf, Kelly, as sole director, plans to take action against Al. Advise Al on Shoemarts chances of success. (5 marks)