Question
MMC Pty Ltd operates a designer jeans tailoring business. Brittney and Christina are the executive directors. Brittney makes the jeans while Christina looks after the
MMC Pty Ltd operates a designer jeans tailoring business. Brittney and Christina are the executive directors. Brittney makes the jeans while Christina looks after the accounts. Brittney and Christina have agreed that all company transactions involving more than $2,000 will only be made with the approval of both directors.
Brittney leased a new car in the company's name from Zipper Cars Ltd. Brittney did not tell Christina about the transaction. Brittney uses the vehicle for her own purposes and to drive to work each day. When the first account from Zipper Cars arrives, Christina refuses to pay saying that the company is not liable for the debt.
Advise Christina whether this is correct. If the company were liable to pay the debt, could the company claim the lease expenses from Britney?
Brittney bought a considerable amount of denim cloth, for which MMC didn't have to pay until 90 days after delivery. Unfortunately, a fire destroyed MMC's storage rooms also destroying the new cloth. MMC had no insurance because Christina forgot to pay the insurance premiums that year. Christina told Brittney that she wasn't sure how the company could pay all its accounts. Brittney insisted that they had to keep trading. Therefore, she bought replacement cloth also on credit. It cost $30,000. However, due to change in fashion trading fell away completely. MMC Pty Ltd cannot pay its debts. A liquidator has been appointed.
Does the liquidator have an action against Brittney and/or Christina under the Corporations Act? Explain fully.
(Under Australian Law)
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