Max, Hymie, Larabee and Siegfried have known each other for many years, all studying at USC together after finishing high school. The four friends have all worked together, buying run-down houses around the Sunshine Coast and renovating them to sell and make a profit. In 2017 the quartet formed a company, Kontrole Pty Ltd (Kontrole) which purchases the properties in the company name and pays all the expenses of the renovation projects and uses the profits made to provide dividends to the shareholders and purchase the next property for renovation.

Kontrole has 120 shares in total, with Hymie owning 10 shares, Larabee and Siegfried each owning 25 shares and Max owning the remaining 60 shares. Max's shareholding reflects his contribution of the majority of the capital for the new company and Hymie's portion reflects his work in setting up the company (Hymie is a self-employed solicitor). Siegfried and Larabee are officially appointed as directors of Kontrole. Hymie chooses not to become a director of the company because he is too busy in his solicitor firm. In setting up Kontrole, a clause was added in the company constitution appointing Hymie as the company solicitor, only allowing Hymie to be removed as company solicitor if he no longer holds a legal practising certificate. Hymie, Larabee, Siegfried and Max agreed on all clauses in the constitution. Siegfried and Larabee run the company's day to day business but always consult Max over decisions and if there are any disagreements, Max's decision usually prevails because he is the major shareholder. Hymie handles all the legal aspects of Kontrole, including regulatory compliance, drafting of contracts and contractor and supplier payments.

The company relies on the fact that they have exclusive access to a number of high-end suppliers and use these to create unique features in their houses. These suppliers are not used by anyone else on the Sunshine Coast. The system works well and the Kontrole houses are sought after because of their unique features. Most of Kontrole's suppliers deal with Larabee. However, "El Amador Touches" (El Amador) deal almost exclusively with Siegfried because Starker, the managing director of El Amador, has been friends with Siegfried for many years.

Kontrole has been a very successful enterprise and has generated a significant profit each year so far. However, Max and Hymie have had a falling out and Max wants to have Hymie replaced as company solicitor. Larabee and Siegfried eventually agree to the removal of Hymie as company solicitor, giving in to Max's demands. Max decides the best way to accomplish Hymie's removal is to buy Hymie's shares in Kontrole. Max, Larabee and Siegfried alter Kontrole's constitution to allow compulsory acquisition of shareholdings of 10 percent or less of the total shareholding (making sure that all the formalities of notice and proposing and accepting resolutions are complied with). Max, Larabee and Siegfried have the company shares valued by an accredited, licensed valuer at $3,000 per share. To expedite the removal of Hymie, Max suggests they compulsorily acquire Hymie's shares at $5,000 per share.

The 'Hymie affair' is brought to a close through mediation. However, Siegfried is still upset at Max's treatment of Hymie and resigns as director of Kontrole but retains his shares in the company. Kontrole's latest project involves a textured finish to the walls of the some of the rooms in a house at Kilkivan. As is customary, Siegfried contracts with El Amador to apply their specialised coatings to the required walls in the house at Kilkivan. Starker hears that Siegfried is no longer a director of Kontrole but does not believe it because he and Siegfried have been friends for so long that he is certain Siegfried would tell him if he were no longer a director of Kontrole.

Meanwhile, Larabee has found another supplier that provides finishes similar to those of El Amador, but at a significantly lower price. Consequently, Max refuses to authorise payment of El Amador after the work has been completed. Max says Siegfried does not have authority to contract with anyone on Kontrole's behalf since Siegfried is no longer a director of Kontrole.

Question 1.

Is Max an officer or director of Kontrole as defined in the Corporations Act?

Question 2.

Can Hymie enforce the company constitution to remain the Kontrole company solicitor?

Question 3.

Can Hymie prevent the compulsory acquisition of his shares in Kontrole? If so, how can Hymie do this?

Question 4.

Does Siegfried have authority to enter into a contract with El Amador to perform work on the latest venture on Kontrole's behalf?

Question 5.

Can El Amador enforce payment of the latest contract with Kontrole? If not, why not? If so, how can that best be achieved?