Matthew, John, and Aaron are the sole directors and shareholders of JAM Transport Pty Ltd. They set up the company together, contributed equal capital and agreed to share equally in the management and day to day activities of the company.

Last year Matthew, who was married to John’s sister, separated from his wife. This caused tension between Matthew and John. They do not talk to each other, and all communication is done through Aaron. In the last two months Matthew has only worked at the company for a total of two weeks.

John and Aaron are concerned about the effect that Matthew’s absence is having on the activities and profitability of the company and decide to make some changes:

• John and Aaron form another company, JA Deliver Pty Ltd, in which Matthew is not involved, and divert a valuable government transport contract worth $100,000 to the new company; and,

• John and Aaron call a member’s meeting of JAM Transport Pty Ltd at which it was resolved to remove Matthew as a director.

Matthew is not happy with the changes that John and Aaron have made.

Question 1. Advise JAM Transport Pty Ltd of the legal issues in this case and if, any or all, of the directors could be in breach of their duties.

Question 2. Advise Matthew if he has a legal remedy under the Corporations Act 2001 (Cth)

Answer rating: 100% (QA)

Question 1 In this case there are several legal issues related to the actions taken by the directors of JAM Transport Pty Ltd and their potential brea... View the full answer