EXERCISE 19 4 Queensland Rail Constructions Ltd (QRCL) purchases $2 million worth of wood for the Brisbane Sydney rail line project from Tasmanian Timber Ltd (TTL) After installing tracks are installed between Brisbane and Robina, QRCL is unhappy to observe that the wood components have warped dramatically, such that QRCL will have to lay the entire length of track again As a result, RCL refuses to pay TTL for the wood In due course, TTL sends a letter stating that QRCL owes it $2 million, plus compound interest at 8 percent per annum The letter is addressed to 'Rail Contracting Pty Ltd' QRCL is of the view that the entire lot of wood is defective, and if anything, TTL should have to pay QRCL for the massive expense that QRCL is going to incur significantly more than $2 million in relaying the damaged track Advise QRCL on the demand it has received, and the alleged quality of the wood may relate to subsequent winding up proceedings SUMMARY ORCL received a demand to pay $2 million to TTL for the wood tracks installed for the Brisbane Sydney line project However, QRCL believes the wood is defective and there was significant damage requiring them to redo the entire relaying of the wood which would cost them more than 2 million as a result QRCL wants TTL to pay for the expenses to relay the tracks MATERIAL FACT QRCL owed 2 million to TTL TTL asks for the money with 8 compound interest QRCL refuses to pay, and as a result, TTL sends a letter to the Rail Contracting Pty Ltd QRCL believes the wood was defective with significant damages, as a result, TTL should pay for all the expenses that QRCL is going to incur in relaying the damaged track ISSUE The legal issue from the statement above is to determine whether TTL is insolvent which can likely result in the winding up of the company subsequently due to the alleged quality of the wood found by QRCL RULE The initial step is to establish whether QRCL is insolvent To establish whether QRCL is insolvent, the following rules of the Corporations Act should be considered The definition of Insolvency in section 95A of the Corporation Act states that If a person is solvent and only if the person can pay all the person's debts, as when they become due and payable A person who is not solvent is insolvent Additionally, the courts should apply the cash flow test to determine if a company is solvent This test asks whether the company has any money from any source to pay its debts when they become due and payable (see Sandell v Porter (1966) 115 CLR 666) After the insolvency is determined, a receiver, liquidator, or voluntary administrator should take charge depending on the serious of the situation please help me write this in IRAC

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EXERCISE 19.4 Queensland Rail Constructions Ltd (QRCL) purchases $2 million worth of wood for the Brisbane-Sydney rail line project from Tasmanian Timber Ltd (TTL). After

EXERCISE 19.4

Queensland Rail Constructions Ltd (QRCL) purchases $2 million worth of wood for the Brisbane-Sydney rail line project from Tasmanian Timber Ltd (TTL). After installing tracks are installed between Brisbane and Robina, QRCL is unhappy to observe that the wood components have warped dramatically, such that QRCL will have to lay the entire length of track again. As a result, RCL refuses to pay TTL for the wood. In due course, TTL sends a letter stating that QRCL owes it $2 million, plus compound interest at 8 percent per annum. The letter is addressed to 'Rail Contracting Pty Ltd'.

QRCL is of the view that the entire lot of wood is defective, and if anything, TTL should have to pay QRCL for the massive expense that QRCL is going to incur significantly more than $2 million in relaying the damaged track.

Advise QRCL on the demand it has received, and the alleged quality of the wood may relate to subsequent winding-up proceedings. SUMMARY

ORCL received a demand to pay $2 million to TTL for the wood tracks installed for the Brisbane - Sydney line project. However, QRCL believes the wood is defective and there was significant damage requiring them to redo the entire relaying of the wood which would cost them more than 2 million as a result QRCL wants TTL to pay for the expenses to relay the tracks.

MATERIAL FACT

QRCL owed 2 million to TTL
TTL asks for the money with 8% compound interest
QRCL refuses to pay, and as a result, TTL sends a letter to the Rail Contracting Pty Ltd
QRCL believes the wood was defective with significant damages, as a result, TTL should pay for all the expenses that QRCL is going to incur in relaying the damaged track

ISSUE

The legal issue from the statement above is to determine whether TTL is insolvent which can likely result in the winding up of the company subsequently due to the alleged quality of the wood found by QRCL.

RULE

The initial step is to establish whether QRCL is insolvent. To establish whether QRCL is insolvent, the following rules of the Corporations Act should be considered.

The definition of Insolvency in section 95A of the Corporation Act states that

If a person is solvent and only if the person can pay all the person's debts, as when they become due and payable
A person who is not solvent is insolvent.

Additionally, the courts should apply the cash flow test to determine if a company is solvent.This test asks whether the company has any money from any source to pay its debts when they become due and payable (see Sandell v Porter(1966) 115 CLR 666).

After the insolvency is determined, a receiver, liquidator, or voluntary administrator should take charge depending on the serious of the situation

please help me write this in IRAC