In April 2011, Earl became the managing director of a newly registered company, Go-Carts Limited (Go-Carts). Go-Carts at that time controlled a chain of successful go-karting venues and was in a strong financial position.

In December 2011, a liquidator was appointed to Go-Carts. An investigation of the affairs of Go- Carts by the liquidator disclosed a probable shortage of funds of over $3 million.

Although there had been a steady increase in Go-Carts' sales of tickets into the go-karting venues from 2010 to 2011 (resulting in substantial trading profits), the liquidator reported the following:

(a) the purchase of a $4 million chateau in France with funds from Go-Carts which, upon resale, was only likely to realise $3 million - representing an expected net loss of $1 million;

(b) the purchase of new motorised sweepers designed to collect litter on the go-karting tracks which, despite high hopes at the time and potentially large (labour) cost savings, subsequently proved to be unsuitable and had to be replaced at a net cost of over $800,000;

(c) that $200,000 is due from Shrewd Advisers Ltd (Shrewd), Go-Carts' investment advisers, a company of which Earl is the governing director and majority shareholder. There is a guarantee by Shrewd in favour of Go-Carts for $100,000 but, given Shrewd's financial position, no more than $70,000 is likely to be recovered. Earl did not disclose his interest in Shrewd Pty Ltd to the Go-Carts Board, although they knew about it; and

(d) Earl had himself fraudulently misappropriated about $1 million to finance his extravagant lifestyle. Fraud charges against Earl are currently being heard by the county court.

The directors of Go-Carts during the period 2009-2010 were:

Earl, as Managing Director and Chair;

Elisabeth Deal, a partner of a leading firm of chartered accountants;

Enid Patton, a highly regarded doctor who sits on several public company boards;

Eleanor Arnold, a public relations consultant and go-karting enthusiast. Eleanor was ill for much of 2008 and was unable to attend board meetings or take any part in the company's management.

The day-to-day management of Go-Carts was left to Earl. The non-executive directors conceived their role to be planning and policy-making. There is no evidence of wilful neglect or default by any of the non-executive directors, who were all deceived by Earl, as were the auditors.

Advise the liquidator whether she should pursue any of the non-executive directors for compensation.