Alice had a profitable restaurant called Alice’s Diner situated on a large parcel of land in Margaret River, Western Australia. She arranged for a new company called Wonderland Pty Ltd (“Wonderland”) to be set up to purchase her restaurant business and the land. On 3rd May 2017, Wonderland was incorporated and on 1 June 2017, Wonderland bought the business and land from Alice. The company’s shareholders are Alice, her son James, her daughter Jenny and her husband Jerry. Each owns 10,000 shares. The directors are Jerry and Jenny. Jenny is also appointed Managing Director. Jerry is a non-executive director. Jerry is from South America and despite living in Australia for 30 years, he speaks little English. He also left studies after Primary School in South America. Wonderland overpaid Alice by about $200,000 above market value for the land and business. At the time of the contract, Jenny asked a real-estate agent to value the land but never read the Appraisal report. She believed her mother’s valuation. She did not hand over the Appraisal report to Jerry nor did Jerry ask her for the valuation. In July 2019, James was told that Alice used part of the overprice to buy a new car. He is worried that when the company expands, the new shareholders might try to recover the overvalue from Alice or worse still from all the family
i). Discuss whether Alice may be liable to the company for the sale.
ii). Discuss whether Jerry and/or Jenny could be liable for breach of s180 of the Corporations Act 2001 (Cth).
iii). Only in this part, assume that the company is wound up on January 2020 on the grounds of insolvency, and there has not yet been any claim against Alice, how does that change your advice given in (i)?