2(b) Michael recently migrated from the United States of Orangutan. Whilst he cannot speak much English, he is an awesome chef. So, he has started working as a chef at the Hilton Hotel in Melbourne, but is unsure about which Superannuation fund he should join. He speaks to a financial advisor at THATBank who advises Michael to join the HelpMe Super Fund, a super fund operated and controlled by a subsidiary company of THATBank, because they also offer income insurance, and if he ever needs a home loan, he will be offered a "great deal" from THATBank, IF he is a member of HELPMe Super Fund. The premiums will cost approximately $100 per week and the premium payments can be made by using the funds from his superannuation account. Michael thinks this method of payment is illegal, and that the advisor is "tricky". (5 marks)

Advise Michael.

3(b) Mr. Chan is a financial adviser with First National Bank Ltd. Tom had $500,000 to invest. Tom hired Mr. Chan to advise on some appropriate investments. Mr. Chan advised Tom to put $250,000 into Vic Properties Ltd (VPL) and $250,000 into Oil Explorers Ltd (OEL). Tom paid Mr. Chan $2,500 for his advice. Tom invested $250,000 in VPL immediately. However, he only invested in OEL after making some enquires from an oil expert. (10 marks)

If Mr Chan had made the proper enquires he would have found that:

• Because of the downturn in the property market VPL is expecting to make a large loss. Y's $250,000 investment is now worth only $100,000.
• OEL is being sued for $100 million. It has since gone into liquidation (bankruptcy) and Y has lost its $250,000.

Advise Tom.

Part B

Please answer all questions in this part. Each section is worth 5 marks (4 x 5 = 20 marks). For the following questions, please note down the letter (for example: a, b, c, or d) of your response which is most correct and EXPLAIN your answer. Be careful that more than one of the multiple-choice answer options may be correct.

Question One

Fennessey, a lawyer, was recently charged with money laundering offences. Details of the charges were reported in the local newspaper. Fennessey claims he is the victim of a "frame up" by the Federal Police and intends to plead not guilty to the charges. Soon after the report Fennessey went to the races and collected $9,000 in winning bets. The following day he visited the ZNA Bank and deposited his winnings in cash. The bank manager is considering reporting the transaction. She contacted Fennessey's partner to alert him to the bank's concerns about Fennessey and to the possibility of an investigation into his professional dealings. Ultimately the charges against Fennessey are dropped.

Advise Fennessey.

(a) The bank has breached its duty of confidentiality.

(b) The bank has not breached its duty of confidentiality.

(c) The bank manager would have been liable for misleading and deceptive conduct if it had remained silent about Fennessey.

(d) None of these answers are correct.

Question Two

The Cutting Edge Pty Ltd is a company which owns several hairdressing salons. Joanne Snip was the company's bookkeeper. The company's two directors, Madge and Trim are authorised signatories on the bank accounts of the company. Over several months Joanne signed Madge's name, without her knowledge, on company contracts. The contracts include one contract to purchase an expensive computer system. That was installed in Joanne's house. Arthur at the ZNA Bank had suspicions about Joanne's honesty, but because the company's financial records were hopelessly inadequate and because he had been having an affair with Joanne, Arthur did not make any investigations. Madge eventually discovered Joanne's fraudulent actions. The company sues the bank.

Advise ZNA Bank.

(a) The company's claim against the ZNA Bank will fail because Joanne has acted unconscionably.

(b) The company's claim against the ZNA Bank will fail because the presumptions in s 129 Corporations Act 2000 (Cth) do not apply.

(c) Due to Arthur's actions, ZNA Bank has breached the Code of Banking Practice.

(d) All of these answers are correct.

Question Three

Betty owns and operates a childminding business. Her business has prospered for some years, earning approximately $1,000,000 in annual profits, and she made plans to expand, including building a new centre in Hawthorn estimated to cost $2,000,000 on completion. She borrowed $1,000,000 from Second National to pay for the centre. Her business deteriorated when Covid-19 restrictions came into effect in 2020-2021, and all construction work came to a halt. Betty approached her bank, Second National, asking the bank to suspend loan repayments until after the Covd-19 restrictions were lifted. They refused to do so unless the loan plus interest must be repaid within 5 years. If not, then Second National would take ownership and control of the business completely.

Advise Betty.

(a) Second National's request above will breach the Code of Banking Practice.

(b) Second National's request above would be unconscionable.

(c) Second National's request above complies with the Code of Banking Practice and is not unconscionable.

(d) None of these answers are correct