Question 1 Kempston Billboards Pty Ltd ('Kempston') provides advertising design and distribution services to a number of industry and business sectors. For example, it designs advertising media for outlets on buses and in freeway service stations.

In November 2021, the company decided to expand its operations. It purchased, for $1,650,000, a large new warehouse near the company's existing premises from Sonny. Amelia, a director of Kempston, is recently married to Sonny. In the board of directors' meeting, Amelia spoke strongly in favour of the purchase of the warehouse and convinced the board that the factory was of good value.

Ryan, a majority shareholder of Kempston, now seeks your advice. He tells you that the company no longer needs the new warehouse, as the planned expansion of Kempston's operations has failed to generate much new business. Furthermore, following a drop in local business property prices, the warehouse is now worth only $1,450,000. The board of directors was also unaware of Amelia's relationship with Sonny when it agreed to purchase the warehouse.

Advise the company of any action that can now be taken against Amelia as director regarding the purchase of the new warehouse including any possible sanctions that might be imposed in public enforcement proceedings by ASIC against Amelia. Would the other directors also infringe any provision of the Corporations Act 2001 (Cth)?

(Your answer should include case law and the provisions of the Corporations Act 2001 (Cth) (where relevant)).

Sample Question Peter is the owner of an exclusive dress shop called "La m. He wishes to travel overseas to buy some new fashions for his shop, so he leaves his daughter, Amanda, in charge ofthe shop. During Peter's threeweek absence, Amanda decides to hire a new sales assistant for the shop. Amanda also buys some imitation Christian Lacroix gowns, which are labelled as genuine gowns, to sell in the shop. Advise Peterwhether he is liable to pay the wages ofthe new shop assistant. Sample Answer In order to determine whether Peter is responsible for the new shop assistant's wages will depend upon resolution ofwhether Amanda is acting within her authority as an agent of Peter. There is also a secondary issue, namely that the contract of employment between Peter and Amanda is affected by Amanda being Peter's daughter. Dealing with the latter first, whilst there is a presumption that when an agreement takes place in a domestic situation, namely between father and daughter, that there is no intention to be bound, this can be rebutled. (Balfour v Balfour) The presumption will be rebutled ifthe overall circumstances have a commercial flavour Wv Brewster}. Here the agreement relates to maintaining Peter's business and this would indeed rebut the presumption. Therefore, a valid agency agreement has been created. The first issue could be Was: \"Would Amanda's ostensible authority as the Acting Manager ofthe Store include hiring employees?' This is because the facts do not indicate the level of actual authority. Ustensible authority is dependent upon a representation by Peter, who has actual authority, that Amanda has a certain level of authority, which is necessary in a manner of speaking, for the agent to perform their task, employment etc. (ANZ Elank Ltd v Ateliers} Secondly, where the actual authority is limited, then ifthe ostensible authority is greater than actual authority, the courts have shown that the Principal [Peter] will be bound bythe actions of their agent. (Freeman and Mv WPark Properties; wily HmchinsonvLayttegg Ltd}. From the facts it is clear that an acting manager should have enough authority to maintainthe daily operations of the respective business, and so trade custom will be very important. |.e. what level of authority do other acting managers in a retail clothing store have, and does it extend to hiring new staff? This is unclear from the facts presented, but it is argued here that hiring new staff is not ofthe same nature as other decisions, more strategic such as extensive renovations costing larger sums of money or entering into a partnership. It is also true that Amanda's decision is not of the same nature as say replenishing stock, which clearly would be within ostensible authority of an acting manager. It is submitted here, that if the volume of business was such as to require a new sales staff then a manager would hire new staff, and this would be within their ostensible authority. It is further submitted here that an acting manager's authority would be the equivalent, if only slightly inferior to that of a fulltime manager, and thus it would include hiring a new sales assistant. Therefore, Peter is responsible for the new sales staffs wages