Analysis of The Case "Asden Develpoments Pty Ltd (in Liq) V Dinos"

Introduction

In every corporation, there are some individual bodies who act on behalf of the company and they are known as officers of the company. But such officers need not be a director or employee of the company every time. From every officer of the corporation it is expected that they shall perform their duties under the provided umbrella of law. Many of times, such officers commit acts which are outside of the boundaries of expectation of law provided under Corporations Act, 2001 (Cth). Although these acts can be done without any mala fide intentions, but still proceedings can be initiate against such deeds of an officer of Corporation. It is not necessary that such deeds of an officer lead an adverse impact to corporation, yet these officers shall responsible to breach their duties provided under section 180,181, and 182 of Corporations Act, 2001. This report address one of the lead case of Australia titled “Asden Develpoments Pty Ltd(in liq) v Dinos (No. 3) [2016] FCA 788”, and brief the facts, proceedings and decision given by the court in regard to this case.

Asden Develpoments Pty Ltd(in liq) v Dinos

The presented case brought an argument in between Asden Developments Pty Ltd, corporation which was under the process of liquidation (herein after referred as “Asden”) and Mr. Dinoris, it is one of the liquidators. In this case, question of argument was an act of Mr. Dinoris along with his co-appointee Mr. Combis (herein after jointly referred as “Mr. Dinoris”), which has come into light when company has changed it is present liquidator and appointed another person on this designation, named Mr. Clout. The lead issue of the case was the fact that there were some funds of the corporation which has transferred from corporation’s account but to whom they have been paid was not traceable. Mr. Dinoris, being liquidator of the company did not ask about such funds to sole director of the company who was Ms. Nichols. In addition to this, there was also a boat registered in the name of the asden, who has sold but Mr. Dinoris did not supervise such sale and he also had no idea about the disposal of sale value of boat (Maddocks, 2016). As per the requirement of Section 180 and 181 of Corporations Act, 2001, it is expected from an officer, that these persons shall charge their duties in the best effective manner and in well faith of the corporation (Maisto, 2009). But in the cited case, Mr. Dinoris resulted failed to do so, thus Asden commenced a case against Mr. Dinoris.

Facts

Mr. Dinoris has appointed as liquidator of the company on22 December 2010. Before a week ago his appointment some funds worth $236,500 has transferred from Asden’s bank account. Later on, these funds declared as missing funds as nobody could track that to where the same have transferred. Here, being the officer cum liquidator of asden it was the duty and statutory liability of Mr. Dinoris that he must ask to Ms. Nichols, that to which account such missing funds have transferred, as apart from being director and sole shareholder of corporation, she was also the signatory of account from where those funds have debited, but Mr. Dinoris did not ask any questions to Ms. Nichols.

Asden put one more allegation on Mr. Dinoris, as there was a sale of boat to a third party, but Mr. Dinoris did not properly take care of this sale. Inclusive this, he also had no information about distribution of amount, which asden has received in consideration of a aforementioned sale. Although Mr. Dinoris has appointed a sale agent to look after to this sale, yet it was his duty to at least maintain a record of said transaction.

Duties Breached

We observed a total of 120 participants from Texas State University. Students where observed in their everyday classroom lecture. Observers were instructed to only observe students seated beginning from their right to left, in front right to left and lastly, directly in front. The observation tactic was used to determine which students to observe first.

Measures

Observers were observing participants to see whether cellphone use distracts students from taking notes in class. The independent variable is cellphone use, which was defined as being actively engaged and looking at your phone for longer then 5 seconds or more during the 5-minute interval. There were two variables, cellphone use and non-cellphone use. Participants who looked or touched their phone for more than 5 seconds were categorized under cellphone use. The participants that were categorized under non-cellphone use were the ones that did not touch or look at his or her cellphone for at least 5 seconds or more.

The dependent variable is attention, which was defined as taking notes by visibly typing or writing down information given in the lecture. There were two levels: taking notes and not taking notes. Those participants that were actively writing or typing notes were categorized under taking notes and those who were included in the not taking notes category were the participants who didn’t write or type notes.

Procedure

The type of study used was a naturalistic observation. The observers sat in their normal seats and let the surrounding seats fill in randomly. Under the possible circumstance of empty seats, the observer was instructed to begin observations closest to them from right to left, then in front right to left and the final participant option would be directly in front About 10-15 minutes into class the observer would observe a maximum of 2 students for 5 minutes each. During the 5 minutes, the observer recorded if the participant looked or touched their phone for more than 5 seconds or if they were paying attention by actively typing or writing down notes.

Results

For the results, a Chi Square test of independence was used to determine the relation between cellphone use and the impact on attention. The variables tested showed a relation that was statically significant, X2(1, N = 120) = 21. 89, p =. 001 (see Figure 1). Participants who were categorized as non-cellphone users were more likely to paying attention by taking notes than those who were cellphone users that did not take notes. Sections 180 of Corporations Act 2001 define that an officer of the corporation must perform his/her duties with required amount of responsibility and attentiveness. Roles of an officer can vary according to position, but the essential requirement of his post is his/her best judgment (Legalvision, 2015). Section 181 of Corporation Act, 2001 communicates the requested form of intention of officers of corporation. This section ascertain that an officer of a corporation must always work in it is excellent belief. This section made responsible corporation’s directors and officers to play their role in the corporation for a convenient purpose. This section confirms the aspect that is needs to be follow by an officer of a corporation while taking any decision or conducting any business action (Lo, 2015)All the officers and director of the corporation must follow their duties for the favor of corporation, for it is finest interest and for a meaningful cause (Federal Register of Legislation, 2018). Section 182 of Corporations Act, 2001 also defines the duties and obligation of director, employee and an officer of the corporation. This section demands that aforesaid persons must not improperly use their designation in the corporation and must not take unfair advantage of their position (Austlii, 2018). In the case in case Fodare Pty Ltd v Shearn (2011) NSWSC 479, it was held that a director as well as every officer of the corporation must follow their duties provided under section 180 alike a responsible person.

While performing their duties, such officers must be aware of with every possible result of their deeds and actions. Reason why duties have breached? In the assigned case, being the liquidator, it was expected from Mr. Dinoris under section 180 of Corporations Act, 2001 that he shall look after to every financial transaction of the asden. Whereas, in asden some valuable funds were missed, and Mr. Dinoris does not keep any records of the same. He also did not ask any question to Ms. Nichols about clearance of such funds. It is assuming on the part of Mr. Dinoris that even on asking about those funds to Ms. Nichols, she must not been able to answer, but this cannot be an appropriate ground to take plea. So here, Mr. Dinoris become failed to perform his duties as required from him according to Corporations Act, 2001. As Mr. Dinoris was designated an officer asden, he must deliver his services in a proper way and must have questioned to Ms. Nichols, regardless the fact the reply of the same was available with her or not. In addition to, Mr. Dinoris has also not suitably reviewed the sale transaction of boat, which was asden’s property. As Mr. Dinoris was working as a liquidator of asden, according to Section 180 of Corporations Act, 2001, it was his charge to review and control every transaction of asden like an answerable officer (Mills Oakley, 2016). It was held in the case Macks V Viscariello, (2017) SASCFC 172 It is assuming that if an individual is acting alike an officer of a corporation, he/she must be aware with his/her role in the organization, and also must follow delegated responsibilities with due care.

Decision Of The Court

In the considered case, asden has applied to court to initiate a proceeding against Mr. Dinoris, as he did not perform his duties in an appropriate and responsible manner in the course of his job. Court, while making judgment, stated that Mr. Dinoris has breached his duties under section 180 of Corporations Act, 2001. Although, it was held that due to the negligence of Mr. Dinoris towards his obligation, asden has not suffered from any loss. So no penalties shall levy upon Mr. Dinoris. It was also held by the court that even if Mr. Dinoris would ask some questions to Ms. Nichols, she would not be able to clarify anything related to missing funds. Further, in the matter of sale transaction of boat, Court has stated that Mr. Dinoris has appointed a sale agent to handle this transaction; he was no more obliged to administer afore mentioned deal (Jade, 2018)

Impact of the decision of the case on the operation of Australian companies

This case does not involve director of a corporation. This case enlightens the fact that an officer, whether director or liquidator of a company is equally liable for the purpose of section 180 of Corporations Act, 2001. Before this case, it was a misconception among corporations and their other officers that only directors of corporations will hold liable to perform their duties according to section 180, 181 and 182 of Corporation Act, 2001. But now, they have a proper understanding about the scope and impacts of said sections. Admitting the fact that court had not levied any penalty upon Mr. Dinoris, this fact cannot be ignored that if due to his negligence, if any loss could have accrued to asden, court must have given decision in his against. Corporations and their officers in Australia now these days become more aware about their duties and responsibilities. They are playing their role in more attentive way. When any matters come to highlight, court’s decision plays a very impressive role as it bring an effect that what can happen when a person not meet out with the requirements asked by law. This case brought the same effect to officers of corporations in the said country. Now, they have a well-versed interpretation of Corporations Act, 2001 and duties described in this act. They understand what exactly law expects from them.

Conclusion

In the reviewed case, an officer of a corporation did not behave with required level of responsibilities. Being the officer of a corporation, it was expected that he shall perform his duties in an accurate manner. Mr. Dinoris did not ask any questions to Ms. Nichols about missing funds in the asden. In addition to this, he neither has supervised sale transaction of boat nor did he have any account of the distribution of sale value; whereas it was the duty of Mr. Dinoris to do so. As per Sections 180 to 182 of Corporation Act, 2001, there are some basic duties of every officer of the corporation, which such officers should deliver to corporation. Further, court has declared Mr. Dinoris liable to breach his duties as per the requirement of law but did not levy any penalties as there was no monetary loss happened to asden due to the negligence of Mr. Dinoris. Although, no penalties have levied to Mr. Dinoris, he must follow all his responsibilities carefully in order to avoid proceedings.