Detailed Analysis of Business Law Case: Babybelle Pty Ltd (Schwartz)

This case study analyzes the legal dispute in the matter of Babybelle Pty Ltd, focusing on Mr. Schwartz's application to manage the company after facing disqualification by the Australian Securities and Investments Commission (ASIC). The document outlines the relevant facts, including Mr. Schwartz's involvement, the company's incorporation, and the ASIC's notice citing dishonesty offences and contravention of the Corporations Act. The major legal issues revolve around Mr. Schwartz's disqualifying conduct and his failure to provide sufficient evidence to counter the ASIC's claims. The Federal Court relied on sections 206A and 206G of the Corporations Act, along with precedents like Adams v Australian Securities and Investments Commission, to determine the outcome. The court ultimately invalidated Mr. Schwartz's application, finding him guilty on multiple charges, including contraventions of the Social Security Act and the Criminal Code Act, leading to fines and continued disqualification from managing the company. The analysis includes references to key legal sources and provides a clear understanding of the case's implications for corporate governance and director responsibilities.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University

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Table of Contents
a. The relevant facts of the case...................................................................................................1
b. The major legal issues..............................................................................................................1
c. The relevant law relied on by the judge(s) in making their decision.......................................2
d. The actual decision of the case.................................................................................................3
Reference.........................................................................................................................................4

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Schwartz: In the matter of Babybelle Pty Ltd (ACN 116 052 683) [2007] FCA 1469
(September 2007)
a. The relevant facts of the case: The fact of the case is Mr Schwartz is the plaintiff who
has sought leave for manage a proprietary company which name is Babybelle Pty Ltd. He
also wants to appoint a director for the company. The Australian Securities and
Investments Commission (“ASIC”) make a notice against him for disqualified to manage
a corporation properly1.
b. The major legal issues: the major legal issues are that Babybelle was found incorporated
by Mr. Schwartz with several dishonesty offences. This company has only one
shareholder and one director, Mr Goodman who also holds a personal share in the
company. It was also found that Until 1 March 2007 the office registered address was 22
O’Loughlin Street, Ormond then on that day it was transferred to Mr Schwartz’ home
address. As a shareholder he has the duty of administration of the company and provide
contract services relating to the importation and sale of goods including spa pools, heated
towel rails and other sports equipment. Now the issue arises about the contravened of the
sec- 206A of Corporation Act2. The Australian Securities and Investments Commission
(“ASIC”) found that he is disqualifying conduct through hypothesis for dishonesty
offences. It was then stated that he commit the offence under the sec- 206G of the
Corporations Act 2001 (Cth). 3
1 du Plessis, Jean Jacques, and Jeanne Nel De Koker, eds. Disqualification of Company Directors: A Comparative
Analysis of the Law in the UK, Australia, South Africa, the Us and Germany. Taylor & Francis, 2017.
2 Hiller, Janine S. "The benefit corporation and corporate social responsibility." Journal of Business Ethics 118.2
(2013): 287-301.
3 Coffee Jr, John C., Hillary Sale, and M. Todd Henderson. "Securities regulation: Cases and materials." (2015).

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c. The relevant law relied on by the judge(s) in making their decision:
According to the Federal Court of Australia that Mr Schwartz disqualified from
managing a corporation commits an offence under Sec- 206A (1) Corporation Act Cth)
where it was mentioned that a director can make or participate in the decision making
process which is related to the business of the corporation or the organization. Whereas,
the Sec- 206B (2) defines the period of disqualification4.
According to the Adams v Australian Securities and Investments Commission
(2003) the disqualification of any person who is the director or promoter of the company
and holds the share which is only applicable according to his interference in the decision
making process. Mr. Schwartz has provided with unsatisfactory evidences which are
unable to resolve the case5. Mr.Goodman also failed to run the business therefore the
application which was Mr. Schwartz has appealed. The application was not able to satisfy
the terms as per the Sec- 206A (1) and Sec- 206G of Corporation Act Cth). However,
Australian Securities and Investments Commission (“ASIC”) also reply through a letter
to Mr. Schwartz about for not attending the hearing of the case6.
d. The actual decision of the case: As per the case situation, the application has been
invalid and he needed to open another application for referring to the address. The
Federal court has found guilty to Mr. Schwartz under the Sec- 206A (1) and Sec- 206G of
4 Coffee Jr, John C., Hillary Sale, and M. Todd Henderson. "Securities regulation: Cases and materials." (2015).
5 du Plessis, Jean Jacques, and Jeanne Nel De Koker, eds. Disqualification of Company Directors: A Comparative
Analysis of the Law in the UK, Australia, South Africa, the Us and Germany. Taylor & Francis, 2017.
6 Hiller, Janine S. "The benefit corporation and corporate social responsibility." Journal of Business Ethics 118.2
(2013): 287-301.

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fffCorporation Act Cth). For the disqualification from the managing the company. He
also found guilty under 5 charges, namely contravention of s 1350 of the Social Security
Act 1991 (Cth), two contraventions of s 215 of the Social Security (Administration) Act
1999 (Cth) and two contraventions of s 135.2 of the Criminal Code Act 1995 (Cth). He
was fined iwth the amount of $13,578.947.
7 Hiller, Janine S. "The benefit corporation and corporate social responsibility." Journal of Business Ethics 118.2
(2013): 287-301.

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Reference
Adams v Australian Securities and Investments Commission (2003) 46 ACSR 68
Coffee Jr, John C., Hillary Sale, and M. Todd Henderson. "Securities regulation: Cases and
materials." (2015).
du Plessis, Jean Jacques, and Jeanne Nel De Koker, eds. Disqualification of Company Directors:
A Comparative Analysis of the Law in the UK, Australia, South Africa, the Us and Germany.
Taylor & Francis, 2017.
Hiller, Janine S. "The benefit corporation and corporate social responsibility." Journal of
Business Ethics 118.2 (2013): 287-301.
Schwartz: In the matter of Babybelle Pty Ltd (ACN 116 052 683) [2007] FCA 1469
(September 2007)