Identification and proof of the powers and duties of Mr Tully
157 In Cassimatis, Thawley J at [452] observed that in determining whether the standard required by s 180 of the Corporations Act has been met "it is desirable to identify the power or duty with precision." See also Greenwood J at [25]. At the outset the plaintiffs' pleading fails to do so. And the position had not improved by the time of closing submissions.
158 Although the inquiry at s 180 of the Corporations Act is objective, it is tied to how a reasonable person would exercise powers and discharge duties with care and diligence if a director of Tempo and in its circumstances occupying the same office as Mr Tully and with the same responsibilities. Similarly, putting to one side the debate whether the duty at s 181(1)(a) is determined objectively or subjectively, the provision requires identification of the particular circumstances of Tempo and analysis of what was in its best interests at the time.
159 I return to the precision point.
160 The Second Further Amended Statement of Claim from [5] to [19] pleads the fact of the GTA and its operative terms, the amounts receivable by Tempo as at 31 March 2017, 31 March 2018, the requests made of Tempo to transfer funds between 29 August 2019 and 16 January 2019 and the corresponding amounts paid by it, the reservations expressed by the auditor on 26 March 2019 about the recoverability of the receivable by Tempo, the amount receivable as at 31 March 2019 and the fact that at $26,402,414 it represented 69% of the total assets of Tempo, the five transfers in issue and the increase in the receivable to $32,264,843 in consequence of those payments. It is then pleaded by way of a conclusion that Mr Tully "knew or ought to have known" of those matters. The actual knowledge case fails: Mr Tully was not at the time aware of these matters, save for the audited balance of the receivable amount in each financial year. The constructive knowledge case is inextricably linked to the various contentions of failure, primarily to oversee, monitor and be informed about the management and operations of Tempo and in particular the GTA. I have set out above how what is left of that case as pleaded.
161 In closing submissions, the plaintiffs contend that "it was incumbent on the directors of Tempo to exercise a very high degree of care and diligence in relation to the company generally and the operation of the [GTA] specifically." To make good that proposition, the plaintiffs rely on the following matters.
162 As at March 2019, Tempo was a sizeable business with revenue of approximately $75 million and liabilities exceeding $42 million. Despite this it only had two directors and did not hold regular board meetings. These matters are established, but why the failure to have more directors in this corporate group and or that board meetings were not regularly held was a breach of Mr Tully's duties was not addressed in the evidence.
163 The plaintiffs submit whilst it "is not unusual" for a company to participate in a GTA, and by logical extension it was not unusual for Tempo to participate in the GTA, it "tended to rely on the [GTA] during the lean season since at least 2015." That is so. Correspondingly that was the very purpose of the GTA which was of material benefit to Tempo.
164 Mr Tully is an educated businessman with tertiary qualifications and broad experience, none of which is in issue. As the non-executive director with responsibility for reviewing, approving and signing the annual audited accounts, he was required as observed by Ormiston J in Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405 at 412-413 (a case concerning insolvent trading) to:
[I]nform himself …as to the financial affairs of the company to the extent necessary to form each year the opinion required for the directors' statements. Although that is only an annual obligation, it presupposes sufficient knowledge and understanding of the company's affairs and its financial records to permit the opinion of solvency to be formed.
165 In Healy at [116], Middleton J referenced that statement with approval and drew attention to what his Honour said at 431 relevant to the entitlement of the directors to delegate the day-to-day management of the company to others. Of particular relevance to the present case, Ormiston J stated at 431:
[D]irectors are not required to have omniscience. It is not yet assumed that directors shall apply themselves full-time to the company's business. There is still a place for part-time and advisory directors. Directors are entitled to delegate to others the preparation of books and accounts and the carrying on of the day-to-day affairs of the company. What each director is expected to do is take a diligent and intelligent interest in the information either available to him or which he might with fairness demand from the executives or other employees and agents of the company.
166 Later in these reasons I return to the delegation question more generally. Staying with Mr Tully's annual account review and approval of the financial statements, Middleton J in Healy at [124], following an extensive review of the case law and the requirement for the directors at s 295(4) of the Corporations Act to express the opinion that there are reasonable grounds for believing that a company will be able to pay its debts and that the financial statements are in accordance with the statutory provisions, observed:
In my view, the objective duty of competence requires that the directors have the ability to read and understand the financial statements, including the understanding that financial statements classify assets and liabilities as current and non-current, and what those concepts mean. This classification is relevant to the assessment of solvency and liquidity. Equally, a director should have an understanding of the need to disclose certain events post balance sheet date. It would not be possible for a director to form the opinion required by s 295(4)(d) without such an understanding. It is not suggested that a director could vote in favour of a resolution in support of the required directors' statements when he did not hold the opinions referred to at all.
167 Mr Tully read the relevant annual accounts for 2017 and 2018 before he made the required declarations. He understood the accounts. In those years there is no question that Tempo was profitable, was able to pay its debts and had substantial assets exceeding its liabilities. Nor was there any question about the financial health, profitability and asset strength of the Group. The plaintiffs' case is concerned with one class of asset being the amount receivable pursuant to the GTA. Mr Tully was satisfied that the amounts shown as receivables were accurately reflected in the audited accounts. He was satisfied as to the accuracy of the report provided by the auditor in each year. No matter was disclosed in the accounts or that report which caused him to consider that further enquiries should be made, before providing the directors declarations. He was aware that the receivables were held "at call". He was aware that Cox & Kings had provided, in effect, a guarantee of repayment. Mr Tully relied upon the expertise and independence of the auditor. He was not aware of any fact which caused him to doubt the accuracy of the audit opinion. All of the financial information as presented in those annual accounts caused him to believe, plainly on reasonable grounds, that the business of Tempo was profitable, healthy and there was no question that it would continue as a viable going concern.
168 It was not a function of Mr Tully to liaise with, provide information to or otherwise deal with the auditor. This task had been delegated to Mr Madan.
169 These are the circumstances of Tempo and the responsibilities of Mr Tully that are established on the evidence. Beyond these general matters, there is no precision in the evidence as to the particular duties and responsibilities of Mr Tully, Mr Kerkar and Mr Madan nor the division of functions and responsibilities between them. They findings do not prove the plaintiffs' case that Mr Tully failed to read and understand the audited accounts in each year before providing the director's declaration, did not have sufficient knowledge and understanding of the affairs of Tempo in order to review and approve of the annual accounts or that he failed to be sufficiently appraised of the affairs of Tempo in order to take action to address the increases in the amounts receivable under the GTA in the 2017, 2018 or 2019 financial years.
170 Another matter that the plaintiffs rely on is that Mr Tully failed to consider in detail or forensically the information contained in the weekly sales reports and the monthly management reports. Mr Tully accepted that he received weekly sales reports and less regularly the management accounts. He said that the sales reports "were very positive" in that they disclosed that Tempo was trading profitably and did not have liquidity issues. He said that the management accounts were consistent with the information contained in the sales reports. His review of each, when it occurred, did not cause him to consider whether the business of Tempo was in financial difficulty or to ask more detailed questions of Mr Madan. At the time that money was transferred to and received from other group entities to assist with working capital requirements within the Group. The plaintiffs latch onto this evidence to assert that "Multiple millions of dollars were transferred out of the company without his knowledge - right under his nose". Whilst that is literally true, it overlooks the Group structure, the purpose of the GTA, the plaintiffs' concession that it is not "unusual" for corporate entities within a global group to operate a GTA (or equivalent) and Mr Tully's evidence that the GTA had historically been of benefit to Tempo.
171 Something more should be said about the Group and the position of Mr Tully as one of the directors of a wholly owned subsidiary, despite the plaintiffs' silence on this issue. In Walker v Wimborne (1976) 137 CLR 1, Mason J at 6-7 stated that despite membership of a group of companies, that fact must not "obscure the fundamental principles that each of the companies was a separate and independent legal entity, and that it was the duty of the directors of [the subsidiary] to consult its interests and its interests alone in deciding whether payments should be made to other companies." However, that does not mean that intercompany payments may not be in the individual interests of group companies, as his Honour explained at 6:
To speak of the companies as being members of a group is something of a misnomer which may well have led his Honour into error. The word "group" is generally applied to a number of companies which are associated by common or interlocking shareholdings, allied to unified control or capacity to control. In such a case the payment of money by company A to company B to enable company B to carry on its business may have derivative benefits for company A as a shareholder in company B if that company is enabled to trade profitably or realize its assets to advantage. Even so, the transaction is one which must be viewed from the standpoint of company A and judged according to the criterion of the interests of that company.
172 Whether taking commercial decisions within a group of companies permits consideration of the interests of the group members as a whole is controversial in Australia: see the discussion by Bryson J in Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd [2001] NSWSC 448; 38 ACSR 404 at [173]-[192]. Not having the benefit of any argument on the point, this is not the occasion to embark upon a detailed analysis and I am content to adopt the analysis in Nippon Credit where Bryson J reconciled the "essential principle" that powers may only be exercised for the purpose of each company with group transactions at [190] as follows:
This essential principle does not preclude exercise of a power with a view to an advantage to be received by another company if the transaction is one for the benefit of a company entering into it. The benefit foreseen need not be direct and immediate; it may arise indirectly. The concept of benefit for a group of companies often claims consideration, but is difficult to use in a clear way because many different relationships among companies may be thought to make it appropriate to speak of them as a group.
173 In this case the evidence (indeed the plaintiffs' case) is that the GTA was not in itself an unusual transaction, Tempo had received the benefit of it over a substantial period, Tempo was entitled to rely upon the ability of Group companies to repay the receivable until 7 June 2019, there was no doubt about the recoverability of the receivable at an unidentified point in time prior to 16 April 2019, the operation of the GTA did not affect the trading performance of Tempo and that until early in 2019, Tempo and the Group were each in a healthy financial position. The plaintiffs have failed to address why in the circumstances of this case continuing participation by Tempo in the GTA was not in its interests being those of its shareholders and creditors.
174 Further, the plaintiffs ignore the division of responsibility within Tempo in that Mr Kerkar was the managing director, Mr Madan was the financial controller and CFO, the limited duties and responsibilities accepted by, and in fact undertaken by Mr Tully, the absence of evidence to the effect that the appointed managers of Tempo lacked the necessary skills and experience to run the business operations and the specific circumstances in which Mr Tully assumed the responsibility of reading, approving and signing the annual accounts. The plaintiffs make no claim that the weekly sales reports or the management accounts were inadequate or objectively misleading or contained information that would have put a reasonable director in the position of Mr Tully on inquiry.
175 The plaintiffs then focus attention on the reliance that Mr Tully placed on Mr Kerkar and Mr Madan. The plaintiffs correctly accept that directors, and particularly non-executive directors, are entitled to rely on others but contended that there are certain non-delegable duties that bound Mr Tully and required him to proceed differently. The plaintiffs identified these non-delegable duties as including:
(a) the irreducible requirement to be involved in the management of the company and to take all reasonable steps to be in a position to guide and monitor its affairs: Healy at [16];
(b) to understand and focus upon the content of financial statements and if necessary to make further enquiries: Healy at [16]-[17] and [20];
(c) that directors cannot substitute reliance upon the advice of management for their own attention and examination of an important matter that falls specifically within the responsibilities of the Board of Directors: Healy at [175]; and
(d) reliance by directors on others must be reasonable: blind delegation is never acceptable: Adler at [372]; GetSwift at [2599] and Daniels v Anderson (1995) 37 NSWLR 438.
176 Those principles are not in dispute in this case. Rather it is how they operate on the facts established by the plaintiffs. The plaintiffs did not adduce evidence as to the division of duties and responsibilities between Mr Tully and Mr Kerkar as the managing director, save for the evidence that Mr Kerkar was responsible for the overall management of the Group. There is no evidence as to when and on what terms Mr Kerkar was appointed as the managing director of Tempo in accordance with cl 79 of the Articles. There is no evidence as to the particular duties and responsibilities of Mr Kerkar within the Group from which findings may be able to be made as to whether it was unreasonable for Mr Tully to place reliance on Mr Kerkar as the managing director of Tempo and to accept that he carried far greater responsibility for the business operations.
177 The terms of appointment of Mr Madan as the CFO were not produced, no evidence addressed about the duties and responsibilities of employees who reported to Mr Madan and there is no evidence on which findings may be made as to whether it was reasonable for Mr Tully to permit Mr Madan to be responsible for the financial operations of Tempo, to report directly to Mr Kerkar or to be the point of all contact with the auditors of Tempo.
178 With Mr Kerkar as the Group CEO and managing director of Tempo, the plaintiffs have not adduced evidence establishing that Mr Tully, as the non-executive director, was required to take identified steps to be in a position to guide and to monitor the business of Tempo, as a core irreducible obligation. The plaintiffs frame that part of the case on what Middleton J said in Healy at [16], but which his Honour qualified at [20]:
Nothing I decide in this case should indicate that directors are required to have infinite knowledge or ability. Directors are entitled to delegate to others the preparation of books and accounts and the carrying on of the day-to-day affairs of the company. What each director is expected to do is to take a diligent and intelligent interest in the information available to him or her, to understand that information, and apply an inquiring mind to the responsibilities placed upon him or her. Such a responsibility arises in this proceeding in adopting and approving the financial statements. Because of their nature and importance, the directors must understand and focus upon the content of financial statements, and if necessary, make further inquiries if matters revealed in these financial statements call for such inquiries.
179 To the same effect see Cassimatis at [31], [136], [147] and [165]-[166] (Greenwood J).
180 Mr Tully did take interest in the information that was available to him: the sales reports, the management accounts, the audited annual accounts, and the annual reports of the Group. Of the latter Mr Tully said that Tempo was effectively being run as part of a group, and he understood from reading the consolidated audited group accounts for 2018 and 2019 that it was a very substantial and profitable enterprise. In accordance with my earlier findings, Mr Tully plainly had reasonable grounds for holding those views.
181 There was nothing in the sales reports or the management accounts that would have alerted a person in Mr Tully's position to any matter of concern about the recoverability of money pursuant to the GTA before April 2019. The annual accounts, as I have explained did not contain information that would have put a reasonable director in the position of Mr Tully on notice to make further inquiries as to the operation of the GTA.
182 The concept that Mr Tully was bound to take reasonable steps to guide and monitor Tempo must have as its foundation some evidence that required him to proceed in that way. That is to step beyond his limited function as a non-executive, non-remunerated director and to monitor the work of Mr Kerkar as the managing director or the work of Mr Madan as the CFO. The evidence does not address what step was required and when and because of which fact or circumstance. The plaintiffs' assertion that Mr Tully was obliged to take reasonable steps to monitor or to be able to monitor is not put as one to monitor the entire business operation. Rather, as expressed in the closing submissions:
In this case, the [GTA] demanded critical and detailed attention. It was not something that could be blindly delegated to Mr Madan or any other person. Even if Mr Tully was entitled to rely on the auditors, at least to some degree, insofar as the company's accounts are concerned, that has no bearing on his obligation to monitor the [GTA].
183 That submission does not explain where the evidence permits those findings, or findings not different in effect, to be made. If the GTA demanded critical and detailed attention, then it must follow it was required from the outset of Mr Tully's appointment as a director in November 2008. As I explain in greater detail in addressing the next issue, that cannot be reconciled with a pivotal aspect of the plaintiffs' case that Mr Tully did not breach his duties as a director before 16 April 2019.
184 No finding is open of blind delegation, connoting abdication, in face of the evidence that the GTA was not per se improper, that Mr Kerkar was ultimately responsible for the operation of the GTA throughout the Group and that within Tempo, it was Mr Madan who was tasked with the responsibility of operating the GTA. Why it was not open to Mr Tully to entrust the operation and monitoring of the GTA to his fellow managing director Mr Kerkar, is not explained in the evidence. The fact that Mr Tully was aware that Tempo participated in the GTA and that large receivables were reported in the annual accounts of Tempo as attributable to the GTA does not establish why he was obliged to monitor its operation.
185 Further, the evidence does not establish what Mr Tully was required to do by way of monitoring the GTA. As explained by Greenwood J in Cassimatis at [25]-[27] the inquiry is fact intensive, the source of the contended power or duty must be identified and the inquiry must focus on the what a reasonable person would do in the circumstances of Mr Tully having "the same 'responsibilities within the corporation' as the director whose conduct is impugned", which responsibilities exist in a combination of statutory requirements, the memorandum and articles of association, the general powers and duties of governments entrusted to the directors and the particular responsibilities of each director within the corporation. Whilst it is true that he said in his public examination that he could not express a definitive view as to who had authority to transfer funds pursuant to the GTA, he believed that each of Mr Khandelwal and Mr Madan had authority. His evidence before me was more precise. It was Mr Madan who had authority for dealings between Tempo and Cox & Kings, who reported directly to the finance director in India and there was no reporting requirement to Mr Tully. That evidence simply does not establish the source of the asserted duty of Mr Tully to monitor the GTA or the content of that obligation.
186 The plaintiffs next formulate eight propositions that they contend should be found in their favour as to what a reasonable director in the position of Mr Tully would have done in the circumstances. Expressed as abstract propositions (the hypothetical director would have behaved differently) reveals little about the content of the asserted duties anchored by evidence focused on the circumstances of Tempo at the time and the responsibilities of Mr Tully (s 180) or what was it about those circumstances which would have caused a reasonable director to consider it not in the best interests of Tempo to continue to participate in the GTA (s 181). Each proposition commences with the contention that a reasonable director in Mr Tully's position "would have" had certain knowledge or acted in a particular way.
187 The first proposition is that a reasonable director would have a proper understanding of the operation of the GTA. What is meant by "proper" in that proposition is not explained. Mr Tully did have an understanding of the GTA, that it was a common arrangement in group travel companies, was implemented to assist group members with seasonal cash flow, that advances were secured, and that the arrangement was not documented. He was also aware that the arrangement had been historically beneficial to Tempo. The plaintiffs have not established what greater understanding would have been acquired by a reasonable director of Tempo.
188 Second, have in place a process to monitor the operation of the GTA. The evidence did not address what that process might have looked like, how it would have monitored the GTA or with what effect on either of the ss 180 or 181 cases.
189 Third, would have realised that during the lean season between October 2018 and February 2019, Tempo had only received one payment of USD485,000 on 6 February 2019. As an abstract proposition that fact tells one nothing about the consequences of its realisation. And why simply focus on that time and ignore the broader pattern of receipts and payments from say the start of the 2018 year when approximately $1.5 million was received in January, $5.1 million was paid out in March, $5 million was received and 7 million was paid out in April and a further approximately $3 million was paid out in August and September. The overall effect of those transactions was to increase the receivable amount from approximately $21.5 million to approximately $31.3 million. If the reasonable director monitoring obligation was to notice the receipt of funds in February 2019, that obligation must also have included one to notice the receipts and payments in at least the 12-month period preceding it. But, in the plaintiffs' case, there was no breach by Mr Tully before April 2019: i.e. a reasonable director in the position of Mr Tully would not be in breach in the earlier period. That reasoning applies equally to the s 181 case in that the plaintiffs have failed to establish how a reasonable director would have acted differently.
190 Fourth, would have engaged with the finance team to ascertain why only one payment had been received in the period from October 2018 to February 2019. Assuming an inquiry of that type would have been made, it follows that the hypothetical director would have asked Mr Madan that question. Logically a responsive answer could only have been given at the conclusion of that period. What is known from the evidence is that despite numerous requests for payment from late 2018 through February 2019, by 27 March 2019, Mr Madan's stated that Tempo was in a "safe position", was clearing its outstanding debts and that its financial position remained "comfortable" for the next 4-5 months. If the hypothetical director had inquired of Mr Madan in late March 2019, then I find that he/she would have received advice to that effect and would most likely have been satisfied with Mr Madan's explanation. There is no basis to infer, on the s 181 case, that an inquiry by a hypothetical director would have elicited different information or that if it had, that the course of Tempo's participation in the GTA would have altered.
191 Fifth, that upon inquiry, the hypothetical director would have discovered the true extent of Cox & Kings various failures to respond to requests made by Mr Madan for the transfer of funds. That proposition can only be sustained if each of the propositions before it are made out. They are not for the reasons that I have explained. Further, this proposition is entirely speculative. It assumes that the hypothetical director, upon inquiry from the finance team (presumably Mr Madan, but exactly who is unstated) would have been told something materially at variance from what Mr Madan had informed head office in the email of 27 March 2019. And on the s 181 case, the plaintiffs have not established that if the hypothetical director had become aware of these matters, it would have acted differently. The hypothetical director does not exist in abstract and with the benefit of hindsight. He or she needs to be placed into the position of Tempo at the time and in the circumstances that I have addressed in detail. The plaintiffs do not explain how the director would have formed the view that it was inappropriate to ignore the operation of the GTA and to allow the payments to be made.
192 Sixth, that the hypothetical director would have discovered that on 15 April 2019, Cox & Kings foreshadowed a delay in remitting funds to Australia and on 1 May 2019 requested Mr Madan to "send all available funds to india [sic] urgently". That proposition only holds if the inquiry to the finance team was made after 15 April 2019. And if made in March 2019 would likely have received the satisfactory response that I have addressed in dealing with the fourth proposition. More critically, this proposition assumes that some fact would have alerted the hypothetical director to ask questions after 15 April 2019. The plaintiffs' evidence fails to identify that fact. In contrast, the Cox & Kings annual report released on 28 May 2018, disclosed as headline numbers, a total transaction value of USD2.3 billion, more than 7 million customers, net revenue of INR239,930 (lakhs) and profit before tax of INR69,138 (lakhs). On 11 April 2019, Cox & Kings provided the letter of assurance to the auditor of Tempo to the effect that it would ensure provision of sufficient funds to meet the working capital requirements of Tempo for a period of not less than 12 months from the date on which the directors approved the consolidated annual group accounts. That correspondence satisfied the concerns of the auditor, who then certified the accounts of Tempo to 31 March 2019. If the inquiry had been made later then it is likely that the correspondence between Mr Madan and Cox & Kings of 17 May 2019 would have been disclosed. That is, despite the request for an urgent transfer of funds by Tempo, it was anticipated that the funds would be returned in early June 2019 and that there were steps in place for Cox & Kings to refinance its debt obligations. It was not until 7 June 2019, that Cox & Kings publicly announced that in principle agreement had been reached with 70% of its lenders to provide for a moratorium of 180 days. By then four of the five impugned payments had been made by Tempo.
193 The same reasoning applies to the s 181 case- i.e. the plaintiffs fail to identify what fact or circumstance would have put a director on notice of the request of 15 April 2019 and in circumstances where the individual must also be taken to be aware of the letter of assurance and the solid financial position of the Group as disclosed in the 2018 annual report.
194 Seventh, the hypothetical director would then have engaged with Cox & Kings to "ascertain its financial position". The evidence did not address what that engagement would entail, how it would be undertaken or with what result and over what time frame. And the hypothetical result very much depends upon the point in time when the engagement would have occurred. On the preceding propositions, not earlier than 1 May 2019. No attempt is made by the plaintiffs to logically connect this proposition to the inquiring hypothetical director under whose watch, three of the impugned payments were by then matters of historic fact. That analysis applies equally to the ss 180 and 181 cases.
195 Eighth, the hypothetical director would have "stopped or not allowed" the five payments to be made. That proposition intrudes into the separate question of causation that I address in more detail below. To the extent relevant to what a reasonable director would have done at the time, the evidence adduced does not found the necessary findings of fact involved in this proposition. For example, what power or right would have authorised the hypothetical director to take this action? Mr Tully had no role or function in the day-to-day management of the operations of Tempo and had no function in relation to the operation of the GTA. Clauses 69 to 78 of the Articles regulates the proceedings of the directors of Tempo. Decisions are made by majority and the chair has a casting or deliberative vote. The plaintiffs do not identify any actual or apparent authority authorising Mr Tully to respond as contended: see generally Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146, particularly Dawson J at 202-205.
196 The plaintiffs do not explain how or in what circumstances the hypothetical director could act unilaterally as asserted. Nor do they explain what would have been the outcome if the hypothetical director had first raised with the other director, Mr Kerkar or his hypothetical equivalent, that Tempo should not make the payments that Cox & Kings was demanding. The obvious inference is that at the time Mr Kerkar would not have agreed: i.e. the overwhelming inference is that he would have determined that it was in the interests of the Group that funds be transferred as required by Cox & Kings, as the ultimate holding company The deadlock between the actual or hypothetical directors may have been resolved by the chair exercising a deliberative vote, but it is pure speculation that the outcome would have been one that the payments be withheld. A hypothetical director might then have resigned, consistently with the duties that the plaintiffs frame, but that would not have resulted in avoidance of the loss claimed to have been suffered by Tempo. The loss may have been the result of decisions made by persons other than Mr Tully or his hypothetical equivalent.
197 It is difficult to reconcile the s 181 case with these matters and the plaintiffs made no attempt to do so. The proposition is that the hypothetical director in the shoes of Mr Tully would not think it appropriate to completely ignore the operation of the GTA and allow the payments to be made when it had become increasingly obvious that there were serious liquidity issues within the Group. That case does not engage with how, when and in what circumstances the director would have acquired knowledge to so conclude by 16 April 2019 (but not before on the plaintiffs' case), which is a matter I address in greater detail in the next section.
198 The overall concluding submission is that Mr Tully "was asleep at the wheel in allowing the five payments to be made". Pejorative contentions of that type must have an evidential foundation, which the plaintiffs have failed to lay.
199 At this point, something more should be said about the s 181 case. To the extent that the plaintiffs' eight propositions assert breach by Mr Tully in failing to act in a particular way, it was not explained how an omission to act amounts to a failure to exercise a power or the discharge of a duty and I was not referred to any authority which addresses that question. On one view, the provision is confined to decisions that are made and action that is taken rather than a failure to act. Put another way, the provision is concerned with consciously acting contrary to the best interests of the corporation and as such is concerned with deliberate conduct. See generally, Ramsay I, Company Directors Principles of Law and Corporate Practice (2nd ed, LexisNexis, 2023) at [7.15]-[7.16] where the comprehensive review is of decided cases concerned with decisions made and actions taken. One of the cases is Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd [2016] VSC 303; 114 ACSR 1 at [87] where Sifris J observed that most cases under this provision concern positive acts or decisions. This is not to say that omissions may not amount to a contravention when incidental to a decision or an action, as that case illustrates, where there was a failure to secure an income stream when the company agent negotiated player contracts. In any event, I do not decide this issue. Rather, it is another difficulty that the plaintiffs have failed to address.