Facts of the case - Scenario 1:

In 2018 by Mungo Maple and his friends Bill Birch, Cameron Conifer and Edith Evergreen registered Tassie Views Co Ltd. Its purpose was to seek a tender to construct a cable car system and associated track work on and around Mount Wellington in Hobart. It undertook a successful fundraising campaign and raised over $2 million dollars by selling shares. Unknown to the other three directors, Mungo asked his mother's business Trish Confer Financial Services Pty Ltd to promote Tassie Views Co Ltd to her clients.

The company adopted a constitution in late 2018 and the directors agreed to meet monthly to oversee all management duties. An agreement was put in place to pay Mungo a salary of $100 000 per year and the other three directors a sitting fee for attending monthly board meetings. Only Mungo had any real understanding of what might be involved in tendering for and constructing a cable car.

Tassie ViewsCo Ltd operated for 12 months with Mungo and Bill both regularly attending board meetings. Cameron attended two over the 12-month period and Edith only 1. Both Cameron and Edith are employed full time for other businesses so give their role as directors of Tassie ViewsCo Ltd very little priority.Over this 12-month period Tassie ViewsCo Ltd sourced equipment as appropriate to commence constructing prototype cable cars. Mungo, with the help of a local engineering firm, produced two cable cars.

Bill, who is an accountant attended every meeting and was responsible for keeping the accounts for the business. He was aware that Mungo had very little numeric literacy and over the first 12 months Bill had come to realise that none of the other three directors read the reports he prepared. This annoyed Bill so he decided to 'change some figures'in the accounts. He presented these changed figures at the board meeting in March 2019. Again no one bothered to read the accounts. No auditor was appointed. The shareholders did not question this decision.

In April 2019 Bill, who had full access to the bank accounts for the company, began taking money and using it to fund his lifestyle.

In May 2020, William, a wealthy cable car enthusiast, approached Mungo. William offered Mungo $200 000 for the two cable cars that Tassie ViewsCo Ltd had produced. Mungo accepted this offer. He provided $150 000 of it to Bill for banking in the company's account and he kept $50 000 'because it was his hard work that led to the creation of the cable cars.'

By the end of July 2020, it became evident that Tassie ViewsCo Ltd was insolvent.Cameron and Edith called a meeting and the company was placed into liquidation.

Mungo Mapleseeks your advice as to whetherthe directors breached their duties as directors of Tassie ViewsCo Ltd? Consider all of them individually and consider if they have any defences to any action that the liquidator may take against them.

Facts of the case - Scenario 2:

In 2014, Rachel Jones and Emily Lee created Cutting Edges, a partnership producing a range of high-end knives for the catering trade and shears for the hairdressing and seamstress trade. In 2019, it became a company: Cutting EdgesPty Ltd.

At the moment, Emily is the Chair of the Board. The other shareholders are:

-Rachel

-Elise Jones and Antonia Jones (Rachel's daughters)

-James Lee and Sean Lee (Emily's sons)

-Rory McNeil and Anna Lim (long-time employees of the business, not family members).

Rachel has had some health issues. She now works part-time, focusing on designing new knives/shears, leaving the day-to-day operations and decision-making to Emily.

For a long time, Antonia has felt powerless and resentful about Emily's sons following whatever their mother wants, in relation to company matters. Elise doesn't get actively involved. James maintains absolute loyalty to Emily when it comes to company decisions, and Sean takes no active interest in the company.

At a general meeting last week, members voted on Emily's proposal to not pay dividends out of recent profits, but to reinvest them. This is the second year in a row that Emily has done this with the members' approval.

In another resolution, the company decided to restructure its shares. There are to be additional shares that will only be available to Emily, James, Sean, Rory, and Anna. Elise and Antonia are seen as threats to the company because they often disagree with Emily and her family.

Rory and Anna are unlikely to take up the additional shares, and James and Sean are currently speaking to their financial advisers about whether they can afford to invest more money into the company.

AdviseAntonia on her legal position as a member. Does Antonia as a shareholder have to vote in line with the business's best interest?

Instructions:

For EACHscenario, there are two (2)tasks.

Task 1:You must give a background briefing. For this you will use the PIRAC method discussed in Week 1. Your background briefing should be reasonably detailed, outlining the law that you believe applies (cases and legislation). For cases, you must indicate the key findings/authority and why you are either applying or distinguishing the case. For legislation, you must indicate specific sections you are relying on and why you believe they apply. If there are cases that assist in interpreting these specific sections they should be identified, including the key findings.

Remember, you will need to apply what you have learned from the lectures, required readings and extra resources to the legal issue or issues at hand. Details as to legal referencing are provided in Module 1 with the link to the UTAS Library Law Guide. A quick reference guide has also been provided.

Task 2: You must write a separate letter of advice TOyour clients. Your advice is to be prepared in a structure that is appropriate to use when giving clients advice about their legal questions/dilemmas and the possible legal and practical solutions to those issues or dilemmas. A template for the client letter is available on MyLo under Assessment although use of the template is not compulsory.