In June 2018, Eliza became the managing director of a newly registered company, Supergolf

Limited (Supergolf). At that time SuperGolf controlled a chain of successful golfing greens

and was in a strong financial position.

In December 2019, a liquidator was appointed to Supergolf. The Liquidator's investigation

of Supergolf's affairs disclosed a deficit of funds of over $3 million.

Supergolf's revenues had steadily increased from 2018 to 2019 resulting in substantial

trading profits.However the Liquidator has reported the following:

The purchase of a $3 million Gold Coast penthouse apartment with funds from

Supergolf which, upon resale, was only likely to realise $2 million;

The purchase of new motorised mowing machines designed to automatically cut both

greens and fairways which were purchased as a labour cost saving device, but proved

unsuitable and were replaced at a net cost of $500,000;

A dividend of $100,000 is due from Wise Investments Pty Ltd (Wise), Supergolf's

investment advisers, a company of which Eliza is the managing director and majority

shareholder. There is a guarantee by Wise in favour of Supergolf for $50,000 but, given

Wise's financial position, no more than $20,000 is likely to be recovered.Eliza did not

disclose her interest in Wise to the Supergolf board of directors, although they knew

about it.

Eliza has been charged with fraudulently misappropriating $1.5 million from Supergolf

to finance her extravagant lifestyle. She is currently on bail awaiting her trial in the

Supreme Court.

The directors of Supergolf during the period 2018 to 2019 were:

Eliza, as Managing Director and Chair;

Edward Scissors, a partner of a leading firm of chartered accountants;

Walter Pidgeon, a highly regarded doctor who sits on several public company boards;

Enid Blyton, a public relations consultant and golfing enthusiast. Enid was ill for much of

2019 and was unable to attend board meetings or take any part in the company's

management.

The day - to - day management of Supergolf was left to Eliza.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 Eliza , as

were the auditors.

Consider the following in your answer:

-Statutory duties:

os.180 (1)

os.180(2)

os.588G

os.189

-Business judgement rule

-General law duties

oDuty of care, skill and diligence

Required:

Advise the liquidator whether he should pursue any of the non-executive directors for

compensation based on an action under section 180 Corporations Act 2001 (Cth).

The question concerns three non-executive directors and whether they have contravened s180 CA.