Alice Black is the Managing Director of Creative Cranes Pty Ltd, a large proprietary company that manufactures cranes and other construction equipment. In addition to Alice, there are three other directors of the company (Cliff Daniels, Ellen Farrell and Gary Hugh). Each of the directors own 20% of the shares each, with the remaining 20% issued to two other investors in the company who own 10% each (Martin Motha and Adam Freeman).

Alice has been in negotiations with Sophisticated Engineering Pty Ltd for the exclusive licence of the designs for a new crane that can be manufactured more cheaply but is of similar quality and would therefore increase Creative Cranes' profit margin, while enabling them to undercut their competitors. Even with the ongoing licence payments to Sophisticated Engineering for use of the designs, the benefit to Creative Cranes is substantial. Alice presents the proposal to the board of Creative Cranes who agree that it is an excellent opportunity and a contract is finalised and executed immediately. Alice did not disclose in the board meeting that she holds 12% of the shares in Sophisticated Engineering and, as a result of securing this agreement, will receive an additional 12% shareholding in Sophisticated Engineering. She had, however, discussed this with the board members at the annual board dinner the night before.

The transaction goes ahead and Creative Cranes begin manufacturing the new cranes, which are a huge success. The directors provide an interim report to all shareholders noting the success of the new designs and the expected increase in profits of the company. Martin and Adam are excited by the prospects of the company and look forward to receiving very strong dividend payments based on the increased profits. However, at the annual general meeting they discover that the directors have resolved not to pay dividends but to reinvest all profits into the company. At the same meeting a resolution is put to substantially increase the directors' bonuses. When Martin questions the directors in this regard at the meeting, the response is that the director bonuses are reasonable given the overall success and profitability of Creative Cranes. The resolution is passed with the four director-shareholders voting for it and the two other shareholding voting against.

A.Advise Martin and Adam whether they can personally take action against Creative Cranes under the Corporations Act 2001 (Cth) in relation to the director bonuses and the non-payment of dividends. In your answer identify what orders the court would be likely to make if such an action is successful. (16 marks)