1. Milan Pty Ltd is a small gold miner. on its board is Kylie Rouge, a geologist and expert in gold. She knows she is not an expert in running companies but she assumes the other directors and outside adviser will tell her what she needs to know. As she is often in remote locations, she rarely attends board meetings. The year end financial statement contain an enormous error not identified by the directors and auditors. Is Kylie in breach of the law duty of care and diligence?
2. Milan Pty Ltd is a small gold miner. Thoms, Tahn and Mei are board members. Thoms is also a farmer and owns land that is adjacent one of Milan Pty Ltd is interested in buying the land and mine it for gold. What Milan Pty Ltd does not know there is no possibility that Thoms's land contains any of the golden mineral. Thoms has known this all along. Milan decides to buy the property of Thoms, well above its market value. Eugene is a shareholder of Milan pty ltd. He is furious to learn about the sale and asks you whether any of the directors have misused their position or information?
3. Jetspa Pty Ltd., which ran a spa retreat in a remote country house,was incorporated four years ago by Jade and Sean who were the only two directors and shareholders, holding 2000 shares each. Two years ago, Jade's new partner Sheena became a shareholder, holding 1000 shares.

The spa retreat offers a range of beauty and skincare treatments as well as the usual spa facilities and accommodation.

Jade was not appointed managing director but in practice, she ran the business from the start and made suggestions and recommendations to the board when she and Sean had meetings, though these meetings happened on Zoom now. In the last year, Sheena, who attracts a lot of business to the spa retreat due to her past reputation as 'beautician to the stars', has taken on a bigger strategic role, and at her insistence, the board has made a major purchase of hydrotherapy equipment that had to be plumbed into a special room. 50% of the purchase price was paid at the time of delivery, the balance to be paid in six months time.

Six months ago the company started heading for financial trouble caused by COVIS-19's impact on bookings for the spa retreat, since most guests typically come from overseas or interstate. The hydrotherapy company is pressing for the other half of the price of the equipment. Sean's partner Mark is an accounting student and based on what Sean has told him (as the books and records are not complete), he thinks the company could be insolvent as its liabilities appear to exceed its assets.Sean mentions this advice to Jade at the next meeting.

At this time, Sheena persuades Jade to sign a contract on behalf of Jetspa Pty Ltd with Skindeep Pty Ltd, a company which runs a business of providing in-home skincare advice to wealthy clients. Skindeep Pty Ltd. is wholly owned by Sheena's parents, and they are also the two directors. Sheena also forges Sean's signature on the contract, before going to her parents' house to get their signatures on behalf of Skindeep.

The contract provides that Jetspa Pty Ltd will provide all retreat guests at departure time with an information pack and special discounts for Skindeep's services, and in return for this information,any director of X Pty Ltd. is entitled to two free skincare sessions a month.

Sean only hears about this contract by accident two months ago, when he runs into Sheena's parents at the retreat. When Sean looks totally shocked, Sheena's mum says 'but you signed it Sean! What's the problem, come and get your in-home skincare sessions and relax'.

Sean immediately insists on a board meeting with Jade and requests that Jade terminate the contract. Jade admits that he wasn't in favour of it but that he always does what Sheena tells him and says 'my hands are tied'. Sean accuses Jade of making decisions behind his back and insists on seeing a copy of the contract. Jade refuses, saying"what's the point, I signed it and that's what matters as I'm the MD. Those sessions are doing wonders for my complexion, don't you think?."

The hydrotherapy company has now served Jetspa Pty Ltd. witha statutory demand for the debt owed to it. Other creditors are also writing to Jade seeking payment of outstanding invoices, and the company has not lodged tax returns with the ATO or paid its employees for the last three months.

Identified the isssue and the legal cases.