iProsperFromYou Ltd (iPFYL) was a large public company that specialised in property investment. At its peak in 2020, the company owned 15 hotels in Sydney and Melbourne, and had part or full ownership in over 3000 residential properties, including 30 "high value" properties (i.e. >$20M market value). Harriet He was the company's Chief Financial Officer (CFO) who co-founded iPFYL in 2019 with Chief Executive Officer, Michael Dim. There were 3 other non-executive directors, who together with Harriet and Michael made up the Board of iPFYL. The company had many shareholderswho resided in Australia - including both Harriet and Michael - however its majority shareholder (70%) resided overseas.

Since its founding, iPFYL had been viewed by many as a resoundingly successful venture. Hence there was great astonishment in the financial community when the company went into voluntary administration during December 2021 and was shortly thereafter liquidated. There was further astonishment too when Harriet He and Michael Dim were allowed to depart Australia on a flight on New Year's Day 2022.

Sourcewell Pty Ltd was appointed liquidator and made the following discoveries:

iPFYL had been insolvent since at least October 2021

Michael had spent $1.1M to purchase a unit in Hornsby (Sydney) during August 2021.

Harriet had purchased 2 Ferraris using $400K of company savings and a further $500K sourced from a bank loan (in the company's name) negotiated in June 2021. Only 1 of the 2 cars remains in the company's possession (the whereabouts of the 2^nd vehicle is unknown)

The company solicitor (J. Lemming) had transferred $1.5M from the company's savings into Michael Dim's personal savings account at Westpac in June 2021. J. Lemming also transferred a further $200K into his own account at the same time.

Most employees of iPFYL had not been paid since August 2021

The 3 non-executive directors were not aware of any of the above facts (as evidenced in the Board meeting minutes).

Question 1(25 marks) ANSWER BOTH a). and b).

a). Discuss the breaches of directors duties that have been committed in the above story (focus on the conduct of Michael Dim, Harriet He, J. Lemming and the 3 non-executive directors)

Make sure you use I.R.A.C. structure and that you refer to the relevant case law and sections from the Corporations Act 2001 (Cth) (20 marks)

b).Could Michael Dim escape liability for breaches of his directors duties by claiming that he was not fully appointed ? Explain your answer (5 marks).