Out of time?** - The specifics of the Jodee Rich amendments

Previous posts have looked at the interplay between the rights of spouses on a property settlement under the Family Law Act and the rights of creditors on the bankruptcy of a spouse.

The amendments to the Family Law Act and the Bankruptcy Act made in 2005 radically changed how the Family Court is able to treat property interests where one or both of the parties to the marriage became bankrupt.

In particular, the Family Law Act permits the court to make whatever orders it considers appropriate, including -

1. altering the interests of the bankruptcy trustee in the vested bankruptcy property of a party involved in a family law property settlement;
2. ordering a relevant bankruptcy trustee to transfer property for the benefit of either or both the parties to the marriage or a child of the marriage; and
3. taking into account the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt.

As usual, please make contact if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Blur song ‘Out of time’.

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When exactly is a director being a reasonable (man)**?

Posts over the last 2 weeks have looked at various aspects of the business judgment rule, leveraging the lessons explained in the decision of ASIC v Mariner Corporation Ltd [2015] FCA 589.

This case also explains when a director will be held to have acted reasonably as part of relying on the business judgment rule.

In particular, the court confirmed that the reasonableness of a director's belief should be assessed by reference to the:

1. importance of the business judgment to be made;
2. time available for obtaining information;
3. costs related to obtaining information;
4. director or officer’s confidence in those exploring the matter;
5. state of the company’s business at that time and the nature of competing demands on the board’s attention;
6. evidence available as to whether or not material information is reasonably available to the director.

As usual, please make contact if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the National song ‘Reasonable Man’.

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Avoid being on your own** (A safe Harbour in the Mariner, Part II)

Last week’s post summarised the leading Corporations Act case of ASIC v Mariner Corporation Ltd [2015] FCA 589. This post further considers the business judgment rule in more detail.

While the key principles in relation to the business judgment rule have remained largely constant for many years, ASIC v Mariner was the first case where the rule would have been successfully relied upon if the directors had been found to have breached their directors’ duties.

The business judgment rule, under section 180(2) of the Corporations Act 2001 (Cth) provides that a director will discharge their duties whenever a decision is made in good faith, for a proper purpose, after a director fully informs themselves that the decision is reasonable and rational.

Importantly, pursuant to section 189 of the Corporations Act, a director may rely on information provided by a co-director, if they do so in good faith, after having made an independent assessment of it

At a practical level, the ability of a director to rely on the business judgment rule will depend largely on the records kept in relation to a decision. This means comprehensive meeting and diary notes in relation to board decisions are critical.

As usual, please make contact if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Blur song ‘On your own’.

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