Company Law Assignment

Company Law Assignment

Subject: General Questions    / General General Questions   
Question
COMPANY LAW (SUMMER TERM 2016): ASSIGNMENT
QUESTION
Word Limit: Minimum 1,500 words – Maximum 1,700 words [excludes footnotes
and bibliography]
Question 1 [15 Marks]
Dozey, a sole trader, is the owner of a very successful business called ‘Sleepy Head’ which
specialises in selling mattresses and bed-ware. He has insured the business with Risk Ltd
against fire, theft and the like in the sum of $1,000,000.
Some five years later, Dozey decided to conduct the business via a corporate structure. He
incorporated a company called ‘Sleepy Head Pty Ltd’ which is validly registered with ASIC.
Immediately thereafter, in February 2016, Dozey enters into a sale contract with Sleepy Head
Pty Ltd which purchases the business from him. As consideration for the purchase price, the
company issued the following to Dozey: a substantial block of shares as fully paid; and
debentures for a further substantial sum secured by a mortgage over the company’s
assets.
After incorporation, Dozey caused the company to take out workers compensation insurance
policy with Compo Ltd. A series of ‘bad luck’ accidents followed. In June 2016, burglars broke into the premises of
‘Sleepy Head Pty Ltd’ and stole stock valued at $250,000. In July 2016, Dozey fell from a
ladder in the store while trying to retrieve some stock and injured his back. He has incurred
substantial medical costs. As a result of the Global Financial Crisis, business has declined
and Sleepy Head Pty Ltd is now insolvent and under the care of the liquidator.
The liquidator has rejected Dozey’s claim against Sleepy Head Pty Ltd in relation to the
enforcement of the mortgage (security). Compo Ltd, which has underwritten Sleepy Head Pty
Ltd’s worker compensation policy, has rejected Dozey’s claim for payment of his medical
bills. Risk Ltd has also refused the insurance claim of Sleepy Head Pty Ltd to recover the
value of the goods stolen.
Advise fully, with reference to legal authority, whether Dozey can:
(a) enforce the mortgage against Sleepy Head Pty Ltd; [5 marks]
(b) enforce the claim of Sleepy Head Pty Ltd against Risk Ltd to recover the value of the
goods stolen ; [5 marks] and
(c) enforce his claim against Compo Ltd for the payment of his medical bills. [5 marks] Question 2 [15 Marks]
Sally has a successful restaurant business in Ashfield, Sydney. She owns and controls the
business. She used the profits to buy herself an expensive home in Burwood, a BMW car and
an investment property in Chatsworth. Sally wishes to expand her business. Her income and
her income tax is rising. Sally comes to you advice. Sally wants to know whether she should
reconsider the type of business structure she has. Sally has $100,000 dollars to fund the
expansion of the new business but will need a further $300,000 to open the new yum-cha
restaurant in Chinatown. Sally is currently single, but wishes to marry Tom soon and would
love to have children.
Advise Sally, with reference to the facts above, what type of business structure would best
suit her needs. Your answer must offer full reasons for the advice.
Your answer must also give full details on the formalities required to implement the advice
given.
Note: This answer can be structured in the form of an essay [use of headings and subheadings highly recommend] End of Question.
Most Important: Plagiarism is a serious academic offence and can result in failure of
this course. Students are expected to submit answers based on individual effort (this is
not a group project).
Requirements for a pass/good mark:
1. A legal analysis of the question with reference to relevant principles of corporations
law (case law) and, where appropriate, relevant statutory provisions of the
Corporations Act 2001 (Cth).
2. Students are expected, as a minimum requirement, to reference the relevant
chapters in the prescribed textbook and to draw supporting information from there in
support of the answer. 3. You are generally advised not to use the internet for resource materials, especially if
you are unfamiliar with the topic (as it may be unnecessary and you run the real risk
of drawing on irrelevant information or legal information from other countries that are
irrelevant to Australian law). Your prescribed textbook, and the references given
therein to journal articles, is more than adequate to answer the question.
4. With those cautionary remarks in mind, only use internet sources that are relevant,
accurate and reliable – remember, Wikipedia is not a reliable/credible source of
academic information.
5. Students are expected to footnote case law references1 and to provide a
bibliography of books2 and journal articles3 consulted.
6. Marks will be deducted if the answer does not meet the minimum word count – a
word count, plus signature, must be on the cover sheet.
7. All answers, at the minimum, will do the following:
(a) Be proof-read to eliminate spelling and grammatical errors;
(b) Be referenced, with a bibliography;
(c) Meet the minimum word length requirement;
(d) Not simply copy/reproduce the textbook (answer must show own understanding);
and
(e) No plagiarism.
8. For problem-type questions, you may find it useful the follow the 5 step plan below:
(i)
Identify the material (relevant) facts – and NOT simply repeat the question;
(ii)
Identify the legal issue (or issues);
(iii)
Identify the relevant case law;
(iv)
Apply the legal principles and case law to the given facts;
(v)
Offer reasons for your conclusion (must be supported by legal authority) – a
simple Yes or No answer with personal views is inadequate); 1 Salomon v Salomon & Co Ltd [1897] AC 22 (hereinafter Salomon’s case) discussed in Harris, Hargovan &
Adams, Australian Corporate Law (5th ed, LexisNexis, 2016) pp 153-156.
2
Harris, Hargovan & Adams, Australian Corporate Law (5th ed, LexisNexis, 2016).
3 Farrar J, ‘Doctrinal incoherence and Complex Variables in Piercing the Corporate Veil Cases’ (2014) 29 Australian Journal of Corporate Law 23 at 27.