Aqua Construction Ltd is a construction company with five directors. Phil Jackson is the managing director and only executive director of the company. The non-executive directors are Damian Westford the chairperson, Violet Bloom, Kyle Wran and Stephanie Jones. The company does not have a constitution.

Kyle Wran is an engineer, Stephanie Jones is an architect, Violet Bloom is an accountant and Damian Westford is a retired chief executive of a large corporation.

Phil Jackson provides the monthly reports to the board and they indicate that Aqua Construction Ltd is performing well. At a board meeting a proposal from Phil Jackson to construct an office building for the company management to occupy, is approved. It is agreed that the funding will be obtained from EastPac Ltd. Stephanie is absent from this meeting attending a reunion of architects who have graduated from the university she attended.

Three months after the funds were borrowed from EastPac Ltd Phil Jackson provides a report to the board showing the company has serious financial problems and is insolvent. Aqua Construction Ltd is immediately put into winding up.

REQUIRED:

Using the relevant provisions of the Corporations Act 2001 (Cth) and any relevant cases discuss the facts above framing your answer on the responsibility of each director for the insolvency of Aqua Construction Ltd and whether the directors have any defences. You are required to use the 4-step process in answering this question.