Hypothetical Assignment

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ACC220 Law of Business Associations Semester 2, 2017
Assessment Task 2 – Written Hypothetical Assignment
DUE DATE: 5pm, Monday Week 10
TOTAL MARKS: 35 marks (35% of overall assessment)
WORD LIMIT: 1750 words
SUBMISSION: Electronically in Black Board under the Assessment tab.
Ensure that you include a cover page with your name, the name of your tutor
and day and time of your tutorial.
There are two (2) questions. You must submit answers to BOTH questions
(including sub-questions). Submissions should be in a single document.
QUESTION 1
Alana and David are the directors of Chocolate Cleaning Products Pty Ltd (“CCP”), a
small company that manufactures biodegradable and environmentally friendly
cleaning products that smell like chocolate. The shareholdings of CCP are as
follows:
• 40%: Alana;
• 40%: David;
• 15%: Sol (an investor and mentor who has significant experience in the
cleaning products industry);
• 5%: Max.
Max was engaged by Alana and David when they set up the company in order to
draft the constitution and advise on the initial business structure. In exchange, he
received a 5% shareholding in CCP. When drafting the constitution, Max included a
clause in the constitution appointing himself as the company’s solicitor and that he
cannot be replaced except for negligence.
Relations between Max and Alana and David have been strained of late because
Alana and David are taking Sol’s advice in regards to proposed expansion activities.
Max thinks that Sol’s recommendations are generally shady, but Alana and David
are unswayed. Eventually Sol recommends that they fire Max as company solicitor
and engage someone with more experience.
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In addition, David and Alana call a general meeting and pass a special resolution to
alter CCP’s constitution, inserting a new clause giving the board the right to
expropriate the shareholdings of members owning less than 10% of the total shares
issued.
Q1: Advise Max as to whether he is able to:
a) enforce the clause in the constitution making him the company solicitor,
and what type of remedy he would need to seek if he could; and
b) prevent the inclusion of the clause allowing the directors to expropriate
his shares, even though the other shareholders have passed a special
resolution.
QUESTION 2
Aussie Boats Ltd (“AB”) is a listed public company that has been supplying custombuilt boats to the Australian market for the past 25 years. Its customer base has
been gradually decreasing due to increasing competition for larger luxury yachts with
hi-tech fit-outs made by other companies such as Millionaires on Water Ltd (“MWB”).
AB had been planning expansion activities into international markets for a number of
years but has held off due to lack of funds. They have had some initial discussions
with boat consultancy firm La La Loopsy Pty Ltd, but again, have not had the funds
to engage them for a full report and recommendations.
The board of AB is made up of Clancy (who is the managing director/CEO), Jack
(the Chief Financial Officer) and three non-executive directors, Henry, Banjo and
Matilda (the chairperson). At a board meeting held in July 2017 the directors
expressed their concerns about the difficult financial future facing AB, as well as their
deteriorating market share. In addition, Clancy and Jack had received notice that
MWB had been buying up stock in AB and now owned 35% with a planned takeover
bid imminent.
On the 15th of July, the board resolved to issue $1.5million of shares as follows:
• $500,000 of shares to La La Loopsy Pty Ltd, in return for the provision of a
report on opportunities for AB to supply boats internationally;
• $1 million of shares to the public to be issued for the purpose of raising
additional capital for expansion purposes.
The minutes of the meeting reflected as the reasons for this decision that:
1. It is in the best interests of AB that it immediately engages in previously
planned expansionary activities so as to improve market share;
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2. That such expansion should be informed by high-quality consultancy and
market research.
The new issue of shares was completed in September. After the new issue, MWB’s
stake in AB was reduced to 18%.
Banjo, one of the non-executive directors of AB, disagreed with the resolution and
issue of shares, believing that it would be better to enter into discussions with MWB
around the terms of the take-over. He believes that Clancy and Jack are acting
purely out of concern for their own positions as MWB is known to terminate the
positions of executive directors after completing a take-over (whilst generally
retaining non-executive directors).
Q2: Advise Banjo as to whether the directors have breached their equitable
and/or statutory duties to AB (including any remedies or penalties that might
be applicable).
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ASSIGNMENT GUIDELINES & INSTRUCTIONS
The following guidelines are based on a review of common errors made in assignments.
Students are asked to read these guidelines carefully as they will be taken into account in
marking your papers.
ASSESSMENT CRITERIA
As noted in the course outline, the assessment criteria for this assessment task are:
1. Demonstration of knowledge of the law, as evidenced by accurate statement of
relevant legal principles;
2. Demonstration of understanding of the law, as evidenced by cogent and
coherent application of legal principles to the fact situation as stated;
3. Demonstration of requisite academic communication skills, as evidenced by
logical structure of arguments, appropriateness of conclusions, accuracy of
citations (legal referencing) and academic referencing and use of accurate and
appropriate expression.
CONTENT AND ANALYSIS
The focus of the assignment is on clear, accurate and concise application of the law to the
fact scenario. You should make direct reference to the relevant sections of the legislation
(the Corporations Act 2001 (Cth)), as well as the relevant case law (such as that discussed
in the lectures and textbook). Make sure you clearly and directly answer the question that is
asked. Whilst there may be a range of issues that arise on the facts, focus on the key issues
required to respond to the question.
In terms of addressing the assessment criteria:
• In order to demonstrate knowledge of the law for this assignment, you need to state
the relevant legal principles accurately and reference them appropriately by citing
case law and legislation;
• In order to demonstrate understanding of the law, you need to apply the relevant
legal principles to the facts of the case study in order to reach a conclusion;
• You need to adopt a logical structure (it is recommended you use headings), avoid
spelling and grammatical errors (see further under ‘Structure and Style’ below) and
present your arguments in a coherent and convincing manner.
Note that the use of footnotes is the required method of referencing for legal writing (you can
use the ‘Insert > Footnote’ function in Word).
The following guidelines stem from the criteria stated above:
• It is not enough to discuss the facts in a general way without reference to legal
principle/s.
• It is not enough to state relevant legal principles without explicitly applying those
principles to the facts.
• Statements of legal requirements/ principles must be accurate. Use of your own words is
encouraged but must convey the substance (meaning of) the legal principle/s.
• Merely reproducing the facts given in the problem will not attract marks. This problem
commonly occurs in written introductions, where it would appear that the writer is not
sure where to start.
• Answers to each question should include an introduction, analysis which outlines and
applies the relevant law to the facts and a conclusion which responds directly to the
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question (but DO NOT simply use ‘introduction’, ‘analysis’ and ‘conclusion’ as your
headings).
• The introduction to each question should contain brief statements of:
• The legal terms given to the relevant parties on the facts
• The nature of the action to be taken by the party advised
• The party who must prove the action (burden of proof)
• The relevant standard of proof
• The elements of the action requiring proof.
• The analysis should include
• Statements of the relevant law including the elements requiring proof (from the
legislation) and interpretation of those elements (from legislation and case
authorities as appropriate)
• An application of the legal requirements (elements) and their interpretation to the
facts in question – after correctly identifying the relevant legal issues, this is the
most important aspect of your answer
• A consideration of legal remedies available to the injured party should the action
be proven.
• The conclusion should contain:
• A summary of previous discussion and conclusion as to the likelihood of proof of
the action. No new material should be included in this part of an answer.
• Accurate and full reference to cases and legislation must be used (see further below).
STRUCTURE AND STYLE
The following guidelines reflect the requirements of formal academic writing generally and
those more specifically relevant to law.
• Executive summaries or absracts should NOT be included.
• Headings may be used (and are recommended).
• Headings should reflect the legal issues raised by the problem
• Do NOT use headings such as IRAC (issue, rule, application…)
• Do NOT use headings ‘introduction’, ‘analysis’, ‘conclusion’
• Avoid abbreviations- eg use ‘has not’ instead of ‘hasn’t’.
• Avoid informal language- eg use ‘Therefore..’ instead of ‘So..’ or ‘Well..’.
• Avoid use of emotive language- eg use ‘I argue.., “I would argue..’, ‘I assert.., or ‘I
contend..’ instead of ‘I believe..’, ‘I feel..’ or even ‘I think..’.
• Be mindful that legal analysis is about logical argument based on principles as applied to
the facts and not about personal responses- emotional or value-laden.
• Avoid use of ‘slang’ (or poor grammar generally)- eg use ‘should have’ instead of ‘should
of’.
• An opinion may be stated but must be based upon an application of legal principle to the
facts.
• Ensure you proof read your submission, checking for accurate spelling and grammar
(and make use of the spelling and grammar checks available in your word processing
software).
• Full sentences, containing a subject, verb and object must be used.
• When beginning a sentence with a reference to a section of legislation use ‘Section..”
• When referring to a section of legislation mid-sentence use ‘s.…’.
• When referring to a court’s finding or judgement use, for example, ‘It was held in that
case that..’ or ‘The court held that..’(Note third person and past tense used).
• When first referred to in a sentence cite legislation in full, and the full name of cases plus
the year of reporting. For example;
• It was found in Smith v Jones (1986) 5 CLR 98 that..
• Section 67 of the Town Planning Act 1987 (Cth) requires that…
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• Subsequent references may be summarised or truncated to, for example;
• In Smith’s Case…
• The Town Planning Act…; or
• The Act…
• Care should be taken in the use of quotations and reproduction of sections of legislation.
• Generally a quotation should only be used when the author being quoted conveys
her own very specific idea that you are referencing, or when the author conveys an
idea in a manner that is convincing and that you cannot adequately paraphrase.
• Reproduction of provisions of legislation should be limited to very brief sections or
parts of sections
REFERENCING
• Although for your non-law courses you may be using the Harvard style of referencing, or
that appropriate to another discipline, in law the most accepted style is footnoting.
• The law reference guide is the Australian Guide to Legal Citation (AGLC) (3rd ed) and is
posted with your assignment (a copy is also available at:
http://www.law.unimelb.edu.au/mulr/aglc). There is a great deal of detail in this guide.
For our purposes, please note the following and refer to further instruction in the lectures:
• Use footnotes by using the ‘insert’ icon in Word and scrolling down to footnote or
endnote. Footnotes will appear at the bottom of the page you are working on.
• Your footnote should contain references to cases and legislation.
• Accurate, complete references to cases and legislation must be given (and may be
found in your text).
• References to legislation must contain the relevant section to which you are referring.
• References to either legislation or cases must NOT contain spelling errors.
• Case names and legislation should be presented in italics or underlined.
FORMATTING
• An assignment cover page should be attached to your work.
• The name of your tutor and the day and time of your tutorial MUST appear on the
assignment cover page.
• Appropriate margins should be provided on each page of your work.
• A copy of your paper should be retained for your reference.
• Use Times New Roman 12 font and 1.5 line spacing.
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Marking Rubric