Frederick is one of 5 directors of High Country Industries Pty Ltd (High Country). High Country was formed as the vehicle through which the American designed gortex products, developed by Livingston Industries Ltd (Livingston), would be manufactured and sold in the Australian market. Frederick was assigned the task of negotiating the agreement with Livingston. Because High Country had no assets of any real value, Livingston was not prepared to enter into the agreement with High Country alone. Instead it insisted that it would only enter into such an arrangement with High Country and High Country's five directors as equal parties to the agreement.

This proposal was agreed to by High Country's board of directors and a contract to that effect was entered into soon thereafter. In the two years that gortex products have been selling in Australia, substantial profits have been made by High Country and its five directors.

A month ago, the shareholders in High Country became aware for the first time of the details of what had transpired in relation to the contract entered into with Livingston. One of those shareholders is Malcolm who, at all relevant times up to that point of time, held a substantial number of shares as bare trustee for James.

Last week James telephoned Malcolm and instructed him to hold the shares on trust for Felicity.

In relation to the above facts, Felicity seeks your advice as to the following:

(a)whether she has any interest in any shares in High Country; (15 marks)

(b)whether Frederick and the other 4 directors of High Country are in breach of any obligations owed to High Country; (20 marks)

(c)whether Frederick and the other 4 directors of High Country are in breach of any obligations owed to Malcolm; (15 marks)

(d)whether Frederick and the other 4 directors of High Country are in breach of any obligations owed to the beneficiary of shares of which Malcolm is the bare trustee. (10 marks)

Note:In answering this question exclude from consideration any obligations imposed upon directors by statute.

Question 2: (40 Marks)

In 2006, Ronald and Melanie purchased, as joint tenants, a Torrens title house in Vaucluse, as their family home. They contributed equally to the purchase price of $10 million. Upon registration of the purchase, the Land Titles Office issued them a Certificate of Title that was kept in a locked safe at the Vaucluse property.

In February 2020, Melanie executed a valid will in which she appointed her father, Viktor, as executor, and left her entire estate to her 18 year old son, Benson. On 3 November 2020, Melanie contracted the Covid 19 virus. On 5 November 2020, in order to sever the joint tenancy in relation to the Vaucluse property, Melanie executed an instrument pursuant s 97 of the Real Property Act 1900 (NSW) which was witnessed by Ronald and indicated that he understood that the joint tenancy was to be severed. On 10 November she handed the s 97 instrument to Benson and urged him to lodge it with the Land Titles Office for registration as soon he possibly could.

On 11 November, 2020, Melanie was killed in a car accident while she was on her way to receive medical treatment in relation to symptoms she was suffering as a result the Covid 19 virus.

In relation to the above facts:

(a)Benson, who has not lodged the s 97 instrument for registration, seeks youradvice as to whether he can now get it registered. (20 marks)

(b)Would your advice in (a) be different if, instead of executing the s 97 instrument on 5 November 2020: (i) Melanie executed a memorandum of transfer of her interest in the Vaucluse property by way of a gift to Benson; (ii) she gave him a key to the safe at the Vaucluse house so that he could collect the certificate of title; and (iii) Benson, not having yet collected the certificate of title from the safe, now wants to do so and then lodge it together with the transfer for registration at the Land Titles Office? (20 marks)

Note: In answering this question assume that the electronic conveyancing legislation was never enacted in New South Wales.