Corporate Law Case Study: Breach of Duty in Queensland Nickel Collapse

This case study examines Clive Palmer's conduct as a director of Queensland Nickel and analyzes whether his actions constitute a breach of duty under Section 184 of the Corporations Act 2001. The case details how Palmer allegedly diverted $200 million from Queensland Nickel to fund his personal ventures, including political donations and the Titanic II project, leading to the company's collapse and significant job losses. The analysis focuses on whether Palmer acted in good faith and in the best interests of the company, as required by directors' duties. It concludes that Palmer is likely guilty of breaching these duties by using his position for personal gain and making reckless decisions that harmed the company and its stakeholders. The study recommends that the Australian Securities and Investments Commission (ASIC) take appropriate action to prevent similar occurrences in the future. The document includes relevant references to support the analysis. Desklib provides access to this and other solved assignments for students.

Corporate
Law
Assignment

Introduction
Corporations Act 2001 acts as a guide to the corporate
industry of Australia.
Section 184 of Corporations Act 2001 deals with faith,
use of position and use of information as a criminal
offence.
Section 184 (1) deals with good faith- Under this
reckless decisions by the director or any other officer is
considered as criminal offense.

Continued…
Section 184 (2) deals with the use
of position- under this section, the
director or any other employee or
officer of an organization is held
guilty if he or she intentionally
directly or indirectly used his
position for personal advantage or
in someone else’s favour.

Continued…
Section 184 (3) deals with use
of information- under this
section if a person uses
information for personal
advantage or to favour
someone else then that
person is held responsible, as
guilty for a criminal offense.

Discussion
The duties and responsibilities of the directors in Australia are
guided by statutory laws as well as laws made by judges of
the country.
The main aim behind framing these laws is to ensure that
good governance is practiced in corporate industries.
This also makes sure that all the activities of the organization
are in favour of the organization.

Case Analysis
The case revolves
around Clive Palmer who
took $200 million from
Queensland Nickel in
order to invest that
amount on his other
flagship business.
From that amount he
donated nearly $21.5
million to Palmer United
Party.
$189 million was
reflected in the loans
section of FTI Consulting,
one of the flagships of
Palmer.

Contd…
$5.9 million was
spent over the
plans of Titanic
II.
In 2014
Queensland
Nickel accounted
for nearly 27 per
cent of the
political
donations of the
country.
Allegations have
been made
against Mr.
palmer that he
has used the
money in order
to build his
Empire.

Contd…
Mr. Palmer reacted to these
allegations by saying that it is his
money and he can do anything with
his money.
This raised further controversies
against him.

Analysis
On the basis of Section
184 of the Corporations
Act 2001 it can be
clearly inferred that
Clive Palmer is guilty
under the breach of his
duty to act in good faith
and in the interest of
the company.

Continued…
Under Section 184 (1) Clive Palmer is guilty
for being reckless and taking irrational
decisions.
Because of this Queensland Nickel collapsed
and nearly 800 employees of the company
became unemployed.

Continued…
Under Section 184 (2) Clive Palmer is guilty of using
his position for his personal advantage.
Without considering the fact as to what negative can
happen to Queensland Nickel he used his position as
the director and used the organization as a piggy
bank.

Continued…
According to the duty to
act in good faith, the
directors are expected
to think of the benefit of
every stakeholder
before taking any
decision.
Clive Palmer clearly
failed in this.
Mr. Palmer also denied
to take any
responsibility of the
employees of
Queensland Nickel
which is against the
duty of a director.