Candice is a company secretary at Doggy Dudds Pty Ltd (Doggy Dudds) which manufactures dog clothes. The board consists of Rhonda, the managing director, Fred, an executive director, and Daniella, the chief financial officer.

sh aDoggy Dudds' customer owns a dog, jock which developed a severe rash on his back and Krish took jock for treatment to the veterinarian who chatthe ash iscausd by thedog jumper made by oggy Duddsrish is furious and posts a video on youtube showing the ras on jocks back. The video elicits many angry comments, causing bad publicity for Doggy Dudds. An urgent board meeting is held to discuss the negative publicity for the company. Rhonda could not attend the meeting as she was on a cruise to the Whitsunday lslands which she had booked a month ago. At the meeting, Candice suggests that the company should recall all products until it can be determined that the product is safe. Danielle disagrees with Candice and argues that: "They're only dogs! Besides, we have a huge contract to supply 2000 jumpers at the annual dog show to be held at Randwick Racecourse in a week time. lf we admit that there is a problem with the product then we could lose that contract. if we lose that contract then the business could be completely ruined. We have no choice but to tell everyone that there is nothing to worry about and the product is safe for use."

Candice votes against making any media announcement that the product is safe, as that would be a lie. However Fred vokes with Daniella who is in favour ot the announcement. Daniella releases a statement reassuring the public via the press and social media that there was no problem with Doggy Dudds' clothes a day after the directors' board meeting. In that board meeting, a separate resolution is also passed that authorises Doggy Dudds to pay for Fred's whole family to holiday in France. Many dogs had developed a similar rash to jock's. All of the dogs using the Doggy Dudds jumpers sold at the Randwick Racecourse are now being given a full refund. Dog owners are also seeking compensation from Doggy Dudds for veterinary treatment for their dogs. Rhonda returns from her holiday and finds that the company is facing severe financial difficulties and is unable to service its loan with ABC bank and the bank initiates court proceedings to place Doggy Dudds into liquidation.

Advice the Doggy Dudds' directors and officers, (a) if the they have breached their general law and statutory duties; (14 marks)and(b) if there are any defnces that may be raised by the directors. (6 marks)