Stonemagic Pty. Ltd. has one director, Andrew Stone who is also a shareholder and a second shareholder, Elizabeth Stone. Elizabeth is Andrew's wife. Both shareholders are employed by the company and insurance policies are taken out with Nova Insurance Company for all employees. The company imports and cuts stone for sculptors. On 8th September, 2023 Andrew is working in the warehouse when a huge block of marble becomes loose and falls, crushing his leg. Andrew is hospitalised for several months. An insurance claim is lodged for Andrew's injuries and for loss of business income while he is unable to work in the business. The claim is refused by the insurance company. The insurance company says that Andrew is not an employee but a director and therefore is not covered by the insurance policy. Required: Advise Andrew and Elizabeth if they can challenge the insurance company's decision? Justify your answer based on the relevant legal precedents critically applied to the facts.

1. How is this scenario supported by In 1997, the dispute between the Patrick StevedoreGroup and the Maritime Workers Union of Australia (MUA) highlighted the doctrine of separate legal entity?

2. Employee Rights in Insolvent Companies

Employee rights in insolvent companies have been a subject of debate since the late 1990s.

The Federal Government approved a national employee entitlement support scheme in February 2000 to guarantee employees a proportion of their entitlements lost due to an employer's insolvency.

3. The Fair Entitlements Guarantee Bill

The Corporations Law Amendment (Employee Entitlements) Act 2000 increased protection for employee entitlements by extending the duty of directors to prevent insolvent trading and introducing a new offence against avoiding payment of employee entitlements.

Non-government parties in the Senate attempted to make companies liable for debts of "related bodies corporate" but were rejected.

4. Conspiration Actions

The MUA action against various parties associated with the Group and Peter Reith for conspiracy to injure the employees was discontinued as part of the negotiated settlement.

The CASAC Report in 2000 recommended against any changes to the existing principles of tort liability for corporate groups.

5. CASAC Report on Australian Corporate Law and Groups

The CASAC Report recommends a single, uniform "control" test replacing the current "holding", "subsidiary" and "related" company tests.

The report opposes the introduction of a power for the court to order a company to contribute to the debts of related companies.

The report also suggests that liquidators of group companies should be allowed to pool the unsecured assets and liabilities of two or more companies in liquidation with the prior approval of all the unsecured creditors.

Pooling arrangements were introduced into the Corporations Act by the Corporations Amendment (Insolvency) Act 2007 for liquidations.

6. Creditors with contracts with unassetted companies in a group are not allowed to access group assets.

Directors' duty issues arise when a liquidator seeks compensation from a subsidiary's directors claiming they acted in the group's best interests.

Tort claims may have strong policy reasons for lifting the corporate veil.

7. Insurance claim or insurance policy?

How does these discussions, amendments, Act solve this scenario?