Mr Anthony & Mrs Phillip operate a Solar Panel company which installs solar panels for

commercial operators in Darwin. The company is 'Solar Yes Pty Ltd'. Mr Antohny is director

of the company and Mrs Phillip is also a director and secretary of the company. Mrs Phillips

husband is the Chief Financial Officer for the company. Both Mr Anthony and Mrs Phillips

are equal shareholders in the company.

Mrs Phillips and her husband attend a meeting with Our Way Pty Ltd. Our Way Pty Ltd has

been the company's finance provider for the last 10 years. At the meeting Our Way Pty Ltd

agrees to lend Solar Yes Pty Ltd $2.5m. During the meeting Mrs Phillips suggest to Our Way

Pty Ltd that she start a new company Solar Residential Pty Ltd with Our Way Pty Ltd and

they, together, supply solar panels to residential customers. She also mentions that Mr

Anthony is not aware of the new company and would not be a director or shareholder of

the new company.

Our Way Pty Ltd prepares a loan agreement with Solar Yes Pty Ltd and Mrs Phillip and Mr

Phillip sign the loan agreement. Our Way Pty Ltd decides not to become a shareholder of

the new company Solar Residential Pty Ltd. In the past Mrs Phillip and Mr Phillip have

signed other bank documents on behalf of Solar Yes Pty Ltd. The relevant manager at Our

Way Pty Ltd makes no further enquiries with respect to the purpose of the loan.

Mrs Phillips transfers the funds to the new company (Solar Residential Pty Ltd) and uses

these funds to acquire solar panels for a new contract in the name of Solar Residential Pty

Ltd without informing Mr Anthony. Mr Phillip codes the transfer as purchases so Mr

Anthony is not aware of the transfer to the new company. Solar Residential undertake

several jobs and returns a profit of $1.5m.

Our Way Pty Ltd requests Solar Yes Pty Ltd pay the outstanding loan. Mr Anthony, discovers

the transaction and responds to Our Way Pty Ltd saying Solar Yes Pty Ltd did not take out

the loan and will not be paying any amount with respect to this loan.

REQUIRED:

1. Explain whether Our Way Pty Ltd can enforce the loan against Solar Yes Pty Ltd.

Consider whether it can rely on the assumptions in s129 of the Corporations Act. and

whether an exception to the assumption by way of s128(4) is applicable. Refer to

case law to explain your conclusion.

2. Briefly discuss whether Mrs Phillip and Mr Phillip have breached any director/officer

duties in establishing the new company and approaching clients.