ILAC Hypotheticals Brad, Elena, and Jack. Free Essay

Published: 2023-03-23
ILAC Hypotheticals Brad, Elena, and Jack. Free Essay
Type of paper:  Case study
Categories:  Finance Business Software Crisis management
Pages: 4
Wordcount: 844 words
8 min read

Brad, Elena, and Jack are directors and shareholders of Digital10 Company which deals with web applications, e-commerce, and digital marketing in Queensland. Each individual has a specific duty and responsibility in the company; that is, Brad is the managing director, Elena is the head of app development, and Jack deals with the accounts and financial reports. The company lacked to pay the bill of a contract between them and Triad Advertising. The accounting software stopped functioning, and Jack used to keep the company's accounts in handwritten journals. Through this, the brand wanted to upgrade the business's graphic design software. Brad decides to take a loan for the upgrade from NDB Bank and forces Elena and Jack to accept the deal. The primary consequence of the agreement was that Brad took advantage of the scenario to benefit his iDesign Company. Moreover, in May 2019, the company started to decline, and it came to the attention that Brad concentrated so much on drugs and gambling activities.

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Brad, Elena, and Jack seek to know how the debts shall get paid and achieve business operation success.


Is there any agreement concerning decision-making between Brad, Elena, and Jack on improving the company's design software? Is there any negligence of duty among the directors? Did Brad intend to have an agreement with Elena and Jack on where to purchase the software?


ASIC v Healey (2011): Centro Group of Companies failed to report $2.7 billion on its balance sheet

Cummings and anor v Claremont Petroleum NL [1992]: directors passed dishonest resolutions benefiting themselves


A director or officer of an organization must exercise their authority and discharge their duties with the diligence that a reasonable person would in that position. The legal principle got developed in ASIC v Healey, where the court found out that actions got taken immediately when the problem occurred in the company because of the matter bases on the organization's approach of the business. In this hypothetical, the responsibility was for Brad to establish strategies that may secure the company from undesirable outcomes. It was the duty of Brad to care and find strategic ways and ideas, which was the purchasing of the design software, hence no intention for the negligence of duty in the business. Besides, the court allowed for the presumption to get rebutted if the consequences were severe, as in the following cases.

In Cummings and Anor v Claremont Petroleum NL the court allowed the presumption to get rebutted due to the consequences of reliance on the management function. In both cases, the court looked at the severe consequences of dishonesty in the resolution of the company's problem. The court believed that the result of business gambling was real and based on the management function to get invalidated.

Here, similar to Cummings and Anor v Claremont Petroleum NL, Brad took the loan to purchase the software from his company to prevent collapse. Drugs and negligence of duty get displayed and noted; hence management function factors of the company. Like the given ILAC scenario, the manager had several responsibilities but took advantage of the power to benefit his interest. Therefore, it is most likely that the courts will accept the seriousness of the consequence if Brad took advantage of the problem facing Digital10 Company.


On the balance of probabilities, the court will most likely find that there was power dishonesty in the company. It is likely that Brad would be legally bound to provide his services to the functions of a manager in the company. The expectation is to ensure fairness in decision-making between every individual directing the company.

Section two

Question one,

The Digital10 and iDesign names are not available for registration when using the ASIC Connect website. The Australian Company Number of Vacation Limited is 166 631 330. The location of Vacation Limited is in a city called North Sydney found in Australia.

Question Two,

The relevant sections that got held to have been breached by Vacation Limited were continuous disclosure of obligation, misleading and deceptive conduct, and lodgment of a defective Cleansing Notice. The sections held not to get breached the inadequate information of the junior directors. Vacation Limited engaged in misleading and deceptive conduct when they failed to announce the measure taken by DEECD to the ASX and a misleading due diligence questionnaire (DDQ), which UBS considered the writing proposed offer of shares.

Question three,

The directors that got commenced civil penalty proceedings were namely Mr. Mark Hutchinson, John Dawkins, and Manvinder Grewal. The three directors had breached section 180 of disclosure obligations and misleading conduct. ASIC alleged that each of the directors had breached their duty of the Act.

Question Four,

Mr. Hutchinson had the most responsibilities than other directors because he was the Chief Executive Officer. A director may be held responsible under section 180 for allowing their institution breach of the Act even where they had no information about the infringement.

Question Five,

The business judgment can rule defense in section 180 apply to the decision made by the director. The proceedings that the judge relied on was the availability of Mr. Hutchinson in the court to defend himself.

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ILAC Hypotheticals Brad, Elena, and Jack. Free Essay. (2023, Mar 23). Retrieved from

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