Scenario 2: Murphy Jones and his wife Lorreta Jones were the two directors of BEST Equipments...

Scenario 2:

Murphy Jones and his wife Lorreta Jones were the two directors of BEST Equipments Pty Ltd. Murphy managed all the affairs of the company and Loretta was just a housewife and had no business experience and knowledge, due to her busy schedule she had most willingly left the management of the business to her husband.

BEST Equipments Pty Ltd had been facing liquidity problems and Murphy was well aware of this fact and yet continued to operate the business, took additional financial loans and made purchases on credit. Lorreta would often sign the business documents as and when requested by her husband.

BEST Equipments Pty Ltd was unable to pay the loan instalments on due dates and some of the cheques issued by the business were not cleared due to shortage of funds. The business could not withstand the financial pressures for long and received court orders to wind up and the court appointed an official liquidator for settling the liabilities and payments to creditors.

Lorreta in her defence said that she signed the documents as she had always been doing so, as and when requested, and the documents were never explained to her and neither did she feel the need for it as she totally trusted her husband’s business skills.

You are now required to read the above case scenario and answer the following questions:

Define insolvency as mentioned in s95A of the Corporations Act?
As per s588G of the Corporations Act, which statutory duty of the director has been breached by Murphy and Lorreta? What fact mentioned in the related case indicates application of liability of s588G.
For the purposes of deciding the liability of Lorreta, was it a “good reason” for her not to take part in the management, is it a sufficient defence available for breach.

HINT: Response must be based on Director’s duty to prevent insolvent trading, and defences available for breach of the same (s588G and s588H). Facts mentioned in Deputy Commissioner of Taxation v Clark

Expert Solution

as per the above sections director is not liable for debts if it is incurred during illness or some other good reason

As Loretta jone is not ill and she is director of the company being director of the company she has a duty to be excercise care and skills so she is not excercised care so she is liable for debts it incurred as she signed the various documents of the company

ekkarill92 answered 1 year ago

The patient, Jermaine Jones, was brought to the emergency department by his wife Denise 30 minutes...

The patient, Jermaine Jones, was brought to the emergency department by his wife Denise 30 minutes ago. She reported that he had been drinking a few beers and took one of her prescription tablets, alprazolam, for anxiety. When she got back an hour later he was having trouble talking clearly and responding to her questions. His wife says that she has been getting increasingly worried about his mental condition over the last few days. Mr. Jones is a 34-year-old African...

Greg Jones, 52 year old male, presents to the doctor’s office today with his wife after...

Greg Jones, 52 year old male, presents to the doctor’s office today with his wife after mowing the lawn in 100 degree weather this morning. He started to feel dizzy and had just started his new medication for his high blood pressure. When you enter the room you notice he is sunburned, has various freckles and moles scattered over his arms and face. His wife states don’t forget to show the nurse that mole on your back! It did not...

Scenario: Mrs. Fox, a 40-year-old wife and mother of 2, was involved in a massive motor...

Scenario: Mrs. Fox, a 40-year-old wife and mother of 2, was involved in a massive motor vehicle accident (MVA) on the Sawmill Parkway in which her car struck the center divider and flipped twice. A Good Samaritan immediately dialed 911. First responders found the patient unconscious with severe injuries but were able to safely transport her to St. John’s Riverside Hospital. Upon arrival at the emergency department, Mrs. Fox was immediately triaged and the following impairments were found: blunt force...

Case study: Married with two young children, John and his wife rented a two-bedroom apartment in...

Case study: Married with two young children, John and his wife rented a two-bedroom apartment in a safe neighborhood with good schools. John liked his job as a delivery driver for a large foodservice distributor, where he had worked for more than four years. His goal was to become a supervisor in the next year. John’s wife was a stay-at-home mom. John had always been healthy. Although he had health insurance through his job, he rarely needed to use it....

4-Karl, his wife, and five year old son were completing a three year assignment in Brazil...

4-Karl, his wife, and five year old son were completing a three year assignment in Brazil and were scheduled to return to Germany in a month. Karl would return to work at the home office in Hamburg. Question: What should Karl and his family do to lessen the shock of returning to their home culture?

QUESTION 2 (15 Marks) [CLO 3] Case Scenario: Two best friends, Ben and Arthur, who grew...

QUESTION 2 [CLO 3] Case Scenario: Two best friends, Ben and Arthur, who grew up together in the same neighbourhood, are the same age and they graduated from high school together. At age 19, both friends started working at different companies but earning similar salaries. Ben started investing $2,000 at the beginning of each year from his salary for retirement, at a rate of 12%, while Arthur decided to "enjoy life" with his salary. After 8 years (age 27) the...

Your client, Barney Green, and his wife, Edith, attended a two-day conference in Maui related to...

Your client, Barney Green, and his wife, Edith, attended a two-day conference in Maui related to Barry's work in architecture as a sole proprietor. The Greens went to Hawaii several days early so they could adjust to the jet lag and be ready for the conference. The $8,000 cost of the trip included the following expenses: First-class airfare $2,500 Hotel (four days) $2,000 Conference fee $1,000 per person Meals $1,500. What expenses (if any) can Barney deduct for his business?

Jones spends all his income on two goods: X and Y. The price of good X...

Jones spends all his income on two goods: X and Y. The price of good X is PX = 15. The quantity of good X consumed is X = 20. The price of good Y is PY = 25 and the quantity of good Y consumed is Y = 30. A) Based on Jones's consumption choices, what is his income? B) If the prices next year will be PX = 9 and PY = 45, and Jones's income will be...

2. Lakned Jones is fifty years old. He is working with you, his financial planner, to...

2. Lakned Jones is fifty years old. He is working with you, his financial planner, to calculate his long-term care insurance need. Please use the following assumptions to calculate Lakned’s net LTC need: · Current Annual Cost of LTC: $73,000 · Age at which Lakned will need LTC Services: seventy · LTC Inflation Rate: 4.50 percent · Number of Years Benefits will be Needed: sixBefore-Tax Rate of Return: 7 percent · Marginal Tax Bracket: 24 percent · Annual Increase in...

Case study: Mark, age 38, and his wife, Cathy, and age 34, have two children: Sam...

Case study: Mark, age 38, and his wife, Cathy, and age 34, have two children: Sam age 5 and Alex is 3. They decided that Cathy would stay home with the boys until they reach age 6 and were ready to attend first grade. Kathy's educational background is in early childhood education, so she feels comfortable staying home with the children. Mark is self-employed as an accountant, so he has a small office and two assistants. In addition, Gretchen, Cathy's...

Question