Nov 6, 2017 in Justice Category

Law Assignment

A)               Case summary

Melanie and Carol operate a joint salon business. Melanie performs the beauty therapy, while Carol is responsible for providing and packaging of the beauty products for sale. Polly, a friend of both Melanie and Carol, agreed to lend them $10000 to get the business started. The proceeds from the business are to be equally shared among Melanie and Carol. Claire purchased a beauty lotion from the business and complains that the beauty lotion has caused her facial burns making her incapable of working for a couple of weeks. Tests conducted reveal that the lotion has chemicals likely to burn the human skin. Unfortunately, while Carol was packing the lotion, she allowed some quantity of corrosive industrial cleanser to mix with the lotion. Claire is seeking for a $ 150000 compensation on loses she endeavored due to pain, treatment and loss of wages. Consequently, Carol has no money prompting Claire to make the claim against Polly and Melanie. Melanie and Polly claim that the act of negligence was the sole burden bestowed within the hands of carol (Partnership (Limited Liability) Act 1988).

Issue analysis

            Seeking for the quest of justice on whether Claire has an action termed negligence against Melanie or Polly and is, therefore, justifiable to seek compensation for harm caused from the purchase of the lotion.

Governing act: the Law of Civil Liability chapter one and the Corporations Act of the Queensland Government.

            This Act is the amendment of the personal injuries act, which has provisions to claim for compensation for damages incurred in case of negligence. Harm is defined as any form of economic loss, any form of bodily defragmentation or any threat to health. One has a right to sue for compensation of any form of harm regardless of the claim in tort, contractual or otherwise. However, the claim is not liable to situations whose compensation regimes are defined. For instance, the act does not give a guarantee to claims relating to tobacco use. The Act is also exempted for instances where one purports to claim for damages on extreme grounds of targeted direct beneficiary. Section 7 of the act also gives notification on the clear compensation for contributory negligence (Hayton 1995).

            The Act has an obligatory test on whether one has breached a duty by failing to take the right precaution that would otherwise have reversed the situation of harm. The tier test for an act of negligence includes:

a)      Person had prior knowledge that the risk is foreseeable. This implies that the person ought to have known the risk behind the procurement of the act that led to the alleged harm.

b)      The risk should not be insignificant whatsoever.

c)      In case of such circumstances, a more reasonable person should have taken the precaution to act in place of the negligent party.

            Argumentatively, there is an element of partnership in the company made up of Melanie and Carol. The inclusiveness of Polly into this company solely lies in the fact of contribution into the upgrading of the company. This implies that she is not part and parcel of this business. Therefore, there is not any legal redress that befalls her once the company is dragged into any form of injustice. However, there is an element of participatory partnership accruing from the fact that Polly has a right of partnership into the company. She does not have any case of negligence in this regard because she does not even participate in the running of the business. However, point “c” above would have made her responsible for the alleged claim since it provides that another reasonable person can act, in a move to curb negligence. The operations within the business do not run across her hemisphere (Partnership (Limited Liability) Act 1988).

            Partnership has mutual rights and obligations as an agency of the law. These obligations are in terms of contribution into the profitability of the company. Since Carol and Melanie run a business, they have the right not to tame any form of contributory negligence. The above provisions of breach of the contract do not exempt Melanie from the claim of negligence since she has an obligation to act on behalf of the accomplice as the reasonable partner. It is a must that she is aware of the effects of spillover of the corrosive industrial cleanser. Since she is bound to the business as a whole active member, her actions are to protect consumer rights as she deals with lotions that require direct contact with the skin. Consequently, packaging and sell of adhesives and other detergents requires substances for instant application in case of corrosion or scorch effects; however, there has been non whatsoever. Regrettably, Melanie is aware of the extent of the effects of the corrosive agent. This implies that she has prior foresight into the risk.


            From the assessment of the stipulations of the Partnership Act, the Personal Injuries Act, and the statutory legislation of the breach of duty, Claire has an action against Melanie. However, she does not have any action against Polly since the latter does not participate in the business affair directly. This implies that she is not responsible for any company mishaps. On the other hand, Melanie is answerable to charges of negligence since she is aware of the entire operations. She also has a duty to protect her consumers from any form of harm. On the other hand, Carol is also responsible for negligence. She contravened the corporations act by not acting in good faith. She must have been aware of the spillover and the consequences of the cleanser on the lotion. Consequently, she should not have sold the lotion since it has a spillover. She made her actions in bad faith since she is negligent. Above all, the damages caused by the spillover to the customer must be compensated for by Carol and Melanie as corporate members in the lotion business. However, Polly has no case to answer since she is only a lender into the company. She does not help in the running of the business directly.

A)               Case summary

            Brodie PTY is the trustee of the family trust, Brodie, which is a retail store for liquors and is located at the building, which belongs to Brodie PTY LTD. However, lately, the sole director for Brodie PTY ordered wines and spirits for business from Winits PTY worth $15000. The purchase was done despite the store had a burden of a serious debt; thus, did not have sufficient cash reserves, in order to cover the existing loans. In signing the contract, Larry made clear indications that he was acting and signing the papers within competences of a trustee of the Brodie family trust. The business of the family trust has failed due to negative developments such as a decrease of consumer demand and inability to meet the cost of the debts. The $15000 owed to Winitis PTY has not been settled. Consequently, other debts and mortgages are still pending liabilities to the family. This issue pertaining to the family trustee liabilities is a pure act of maturity trust. The Winits PTY has right of acclaim to the credit it is owed, while the Brodie PTY is in an insolvent state.

            From simple definition, trust is the discretion that a person is bound to run a business or take care of property on terms agreed upon a binding agreement where he or she may be a beneficiary. The trustee works according to the lease term while implementing all the agreed terms and conditions. A fiduciary duty is an ethical mandate to own assets on behalf of another person. There are different types of fiduciary duties where some are secure while others are insecure. The binding legacy between the trustees is the compassionate grounds existing between the parties in agreement. However, the fiduciary is supposed to be loyal to duty.

Case study and governing legislations

            The trustee acts in law on behalf of the beneficiary. The bankruptcy act correctly stipulates cases related to insolvency of a trustee company. In the case of insolvency, the trustee has a hand in divisible property, which includes motor vehicles, land and houses. However, in some situations, there are personal assets termed the indivisible properties, which may include household items like gas cookers and fridges, which cannot be taken away from the bankrupt. The creditors of the trust may lose the right to subrogation in case of any acts outside the powers of the trust deed. The corporations act stipulates that a person who is the director of a corporation or acts as a trustee at times of insolvency is liable to discharge of part or whole of the liability. However, the trustee has the mandate of evaluation of assets of the beneficiary.

            According to the insolvency act, the creditor has a right to sue for payment of goods supplied to a trustee company. Consequently, the creditor can file a proceeding against an individual to be declared bankrupt if the individual has a debt amounting to $A 5000, although this figure is prone to changes depending on the regulation by the government. The petitioning creditor must show that the debtor is indeed at the verge of bankruptcy. The creditor can apply for a notice from the official receiver and present this to the debtor, where the amount owed is payable. However, in some cases, presentation of balance sheets and cash flow tests could exempt the administrators from the creditor liabilities. This implies that if the insolvency were foreseen, then the creditors are doomed.

            The general argument is that the director of the trust company made goods willingly and with prior knowledge of the financial status of the family trust company. Based on the Relationships Register Act (2010), the Winitis PTY accomplished its mandate by supply of goods worth $15000. The company is at the verge of insolvency. The law act shows that in a corporation of Trustee Company, the director at the time of liability is liable for discharge of part or whole of the liability. Consequently, the foreseen burden bestowed within the company could be a cause for forfeiting the burden. However, the trustee company is still on its feet. It is only affected by lack of customers. This implies that the debts it owes the creditors cannot be written off as shown in the exemption, in cases of insolvency. The practical aspect underlying this case is that Winits PTY could file a case against the sole director of the trustee company for recovery of cash on the goods supplied because the director is liable to whole or part of the trustee liabilities, under the corporations act. Moreover, the director of the company still owes fiduciary duties to the corporation within and without times of insolvency. This means that the Winits PTY has a right of claim to the director.


            Recovery of creditor’s assets from a corporation is the mandate of the creditor. The creditor might decide on whether to file for bankruptcy notice, or sue for direct recovery of cash for goods and services rendered. The trustee company is only exempted from liabilities if the insolvency is foreseen through limited capital. However, in the case of supply of wine and spirits to the family trustee, the Brodie PTY had prior knowledge of the possible payments. The director still owes a fiduciary duty to the company even though it is at the verge of collapse. The fact that the director made a request for the goods, he is liable for payment of the same. This implies that the best person to follow up in recovery of cash for the wine and spirits is the director of Brodie PTY.

c) Case summary

In April 2010, Jones and Watson got the authority from the committee for the USQ Netball Club, which is the unincorporated association, for signing of contract for lease of  Netball court premises for the term of 5 years. The facilities were situated in the West street (Toowoomba) and owed by the local sports center. It is noteworthy to mention that the club used the facilities after the lease expired. The lease terms were stipulated in the form, as follows: USQ Netball Club, with Karen Wright as the President and Jane Waddel as the Treasurer. However, in July, the current secretary of the USQ Netball Club notified the leaser of terminating the lease contract. Both Karen and Jane were not acting as the member of the committee, by then. In fact, they are not members at all having completed their course of studies at the USQ.

Argument: how can the leaser enforce the original lease?

The land and tenancy act defines a lease agreement as an agreement that binds the owner of the property and the person with the intention to use the premises for a period of time at an agreed fee. The agreement lasts as long as the contract is not terminated. Termination of the lease agreement is protected in the act, where the owner of the property has a right to notify the tenant prior to effecting the termination. Such agreements are also liable for termination by the tenant, where they make written agreements, and then the owner has jurisdiction of viewing the condition of the property and verifies whether it is in conditions stipulated in the agreement. If this is so, the lease agreement is terminated. However, for instances of termination where the tenant has no intention of termination, the owner of the property should give twenty one days notice prior to cancellation of the lease agreement. The landlord might provide substantial reasons for termination of the contract. For instance, in cases of need for void ownership due to sell of the property, the landlord gives the tenant a 28 days’ notice. In cases where there is no substantial reason, the notice period might extend to 90 days. This is the common practice in the Southern part of Australia.

Legislation act: The Property Laws Act 1974

The conveyance from one person to the other should:

1)      Be done so for property which should be conveyed to the other person or jointly through means conducive for conveyance.

2)      Be in a manner that the conveyance is by the trustee of the beneficiary, the wife or husband of the beneficiary in cases of third party leases.

3)      Exclude any person for whom the conveyance is precluded from holding such transaction. This implies that the transaction is vulnerable for setting aside or consequent cancellation.

            The ensuing argument is that joint lease conveyances should be terminated on joint terms. The parties participating in the lease should also participate in the forfeiture of the agreement. This means that the secretary has acted under the corporations act so as to withhold the lease and terminate the contract. However, if the termination is not according to the Property and Laws Act, which means that the termination does not fall into the mandate of prior notification, the leaser has a right to sue for reinstatement of the lease.

            Further, since this leasing company is an incorporated company, it has no roles that bend it to the corporations act. This implies that the manner of conduct of services within the lease of the property lies in the hands of the owners. The fact that the agreement was made by several members as witnesses, the members might be the source of solace to the encampment reacquisition of the lease. Therefore, the leaser should sue the unincorporated association for reinstatement of the lease. However, on circumstances of the period of lease, the existing contract should still be valid. This implies that if the lease stipulated some time, then the time should not have expired; otherwise, the lease is void.

D) Case summary

            Adrian is the managing director for Landforce Pty, and he organizes a loan of $250000 from Whichbank Ltd acting on behalf of his company. Since Adrian has been a long standing officer for the firm, during his service he has dealt with many transactions in this bank. According to the company’s constitution, any borrowing in excess of $100,000 is subject to the prior approval by the board of directors. However, Adrian in this case has not applied for any approval by the management board and organizes that the cash is directed into an account where he is the only person with access.

            During negotiations for the loan arrangement, one of the officials asks Adrian why he has to direct the money into an individual account rather than the usual company’s account. Adrian argues that this transaction is a new arrangement that is sanctioned by the company. However, one week later, both Adrian and money have vanished. The company refuses to repay the loan to the bank (Leahy v Attorney General NSW 1959).

Issue analysis

The question at hand is if Whichbank can recover the granted loan now from the company.


            From the definition of a company, every member of the company has fiduciary obligations within the company. In the formation of a company, every member acts on behalf of the company. A company is defined as the natural entity that owns property, can be sued and can sue. Formation of a company is based on trust and good faith of the employees and the employer. All the human resource entities in the company work for the profitability of the company. Any intention of fraud is prohibited on grounds of the good faith bestowed to the partners forming up the business. The case states that Adrian sought for a loan on behalf of the company, of which he is an active member. The bank acted on grounds of good faith having prior knowledge of the engagements of Adrian to give the company the loan. Petitions for successful loans are accomplished through granting of the same from information filled in forms. The forms provide for account numbers of the prospective beneficiary (Partnership (Limited Liability) Act, 1988).

            Indeed, the bank should have been the least agent of suspicion on the intentions of Adrian to disappear with the money after receiving the loan. This implies that, in case of recovery of the money, the bank has the right jurisdiction to sue the company. This is because the bank had a reason to believe that Adrian was acting as a trustee to the company. Individuals appointed by companies as directors should comply with the corporations act. However, persons appointed to the government boards which are not essentially companies do not have the necessity of complying with the act. Under the act, directors are supposed to act, as follows:

1)      Act in good faith and with proper intentions.

2)      Behold the virtue of care and diligence.

3)      Avoid misappropriation of information.

4)      Disclose specified interests.

5)      Avoid improper use of office or shun abuse of office.

            The ensuing issue in this case is that Adrian has violated the Corporation’s Act 2001; section 182 where he is the champion of improper use of office. He uses the position he holds and trust that the bank has in his jurisdictions, as a company director for self interest. He disappears with the money belonging to the company, and thus, he also violates the corporations act 2001 section 181, where he acts in bad faith. He soils his intentions in applying for the money to his account instead of seeking disbursement through the company account. In this case, the sole loss of the loan is to the company that should find and sue Adrian for contravening with the corporations act (Birtchnell v Equity Trustees, Executors and Agency Co Ltd, 1929).

            On the other hand, the bank should sue the company for recovery of the loan since it has all the documentary transactions that were carried out by the director of the company on its behalf. The bank is not responsible whatsoever, in the mishaps that befall a beneficiary institution. In the event of qualified applicants, lending institutions have the mandate of making payments, which should be secured. The bank has the mandate of ensuring proper security on loans lends to persons and the corporate. In the event that the bank did not hold any valuables like title deeds or any other forms of security, recovery of the same might be disarray.


            The company has an action against its immediate former director, who is Adrian. He needs to answer to charges of violation of the corporation’s act, where he abused office as the director by soliciting for a loan for the benefit of his selfish interests. On the other hand, the bank has options of suing the company to recover the disbursed amount. However, the bank should be well armed with both the documentary evidence revealing the transactions made and security that the company provided for the loan. Adrian is also liable for state action where he is a suspect in breach of the fiduciary laws of corporations. Consequently, he is liable to penalties stipulated in the act over the breach of statutory duties. This amounts to $ 200000, together with disqualification from office (Partnership (Limited Liability) Act, 1988).

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