Law Report: Central Management (NSW) Pty Ltd Case - Business Law

This case study analyzes the legal issues in the Central Management (NSW) Pty Ltd case, focusing on the role of Mr. Henderson as a de facto director and his fiduciary duties. The case involves the liquidator's claims against a former director for breach of duties under the Corporations Act 2001, specifically Sections 180, 181, 182, and 183. The court considered whether Mr. Henderson acted as a director after ceasing to be officially recorded and whether payments made to another company constituted a breach of duty. The judgment referenced relevant case law, including Grimaldi v Chameleon Mining NL (No 2), to determine director status and the application of the Corporations Act. The court found that Mr. Henderson had breached his duties, highlighting the importance of directors acting in good faith and with reasonable care. The decision serves as a warning to company directors regarding their responsibilities under the Corporations Act and the potential consequences of actions that are not in the best interests of the company. The case underscores the significance of adhering to legal and fiduciary obligations to protect the company's assets and interests, as well as the importance of documented agreements.

Running Head: Central Management Pty Ltd
Central Management (NSW) Pty Ltd
Case Summary
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Central Management Pty Ltd
Table of Contents
Legal Issues................................................................................................................................2
Facts of the Case........................................................................................................................2
Statutes and Cases Referred.......................................................................................................2
Decision of the Court.................................................................................................................2
Observation................................................................................................................................3
Bibliography...............................................................................................................................4
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Central Management Pty Ltd
Legal Issues
The major legal issue that the court had to decide upon are the position of Mr. Henderson as
de facto director and fiduciary duties arising as a director of the company.
Facts of the Case
On the 12 October, Mr. Michael Smith was appointed as official liquidator of the company.
Deputy Commissioner of Taxation appointed him. The legal proceedings are against a
previous director of Central Management (NSW) Pty Ltd (Company) and another
organization of his for reimbursement of monies owed and breach of his duties. The
Company for PP Hotels Investment Pty Ltd (PPHI) made a huge amount of money. This
happened after Mr Henderson was not a director1. Mr Smith and the Company claimed that
Mr Henderson breached Section 1802, 1813, 1824 and 1835 of the Corporations Act 2001, just
as his trustee obligation owed to the Company as an executive.
Statutes and Cases Referred
The Court replied on Section 180 held that Mr Henderson’s role before 31 December 2010 in
making the Company pay liabilities of PPHI. This section necessitates he should have acted
with reasonable care and diligence. His act was in breach of Section 181 of the Act, which
necessitated that he should have acted in good faith. He also breached Section 182 and 183 of
the Act. The court referred, Grimaldi v Chameleon Mining NL (No 2)6 to decide whether an
individual was acting as a director of company.
Decision of the Court
The Court managed the case for monies owing by PPHI. It is settled law that a credit
agreement does not really need to be oral or written and could be induced from the conducg
or act of the parties. In any occasion it was far-fetched that instalments owed in regard of the
account utilized by PPHI to buy, the Central Hotel established “liabilities and misfortunes
1 Supreme Court New South Wales, (Caselaw, 2018)
<https://www.caselaw.nsw.gov.au/decision/59bf6e91e4b058596cbaa742> accessed on 3 May 2019
2 Corporations Act 2001- Sect 180, (Commonwealth Numbered Acts, 2019)
<http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s180.html> accessed on 3 May 2019
3 Corporations Act 2001- Sect 181, (Commonwealth Consolidated Acts, 2019)
<http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s181.html> accessed on 3 May 2019
4 Corporations Act 2001- Sect 182, (Commonwealth Numbered Acts, 2019)
<http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s182.html> accessed on 3 May 2019
5 Corporations Act 2001- Sect 183, (Commonwealth Consolidated Act, 2019)
<http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s183.html> accessed on 3 May 2019
6 [2012] FCAFC 6
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Central Management Pty Ltd
brought about as an outcome of the activity of the Business”. The Court held that the emaild
are another evidence that Mr. Henderson had accepted accountability to act as a director after
31 December 2010.
Observation
The decision of the court is very apt in regards to the applicability of Section 180 to 183 of
the Corporations Act. This decision of the court is a warning signal for rest of the directors
and the companies who are violating there provisions of the corporations act. The decision
will force the trustees and the directors that they should focus on the best outcome of the
company and they should not invest company’s assets to assist some other company with
whom they do not have any agreement. It will be hard to recover the money without any
agreement.
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Bibliography
Primary Source
Case
Grimaldi v Chameleon Mining NL (No 2), [2012] FCAFC 6
Secondary Sources
Websites
Supreme Court New South Wales, (Caselaw, 2018)
<https://www.caselaw.nsw.gov.au/decision/59bf6e91e4b058596cbaa742> accessed on 3 May
2019
Corporations Act 2001- Sect 180, (Commonwealth Numbered Acts, 2019)
<http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s180.html> accessed on 3 May
2019
Corporations Act 2001- Sect 181, (Commonwealth Consolidated Acts, 2019)
<http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s181.html> accessed on 3
May 2019
Corporations Act 2001- Sect 182, (Commonwealth Numbered Acts, 2019)
<http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s182.html> accessed on 3 May
2019
Corporations Act 2001- Sect 183, (Commonwealth Consolidated Act, 2019)
<http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s183.html> accessed on 3
May 2019
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