Question

Jack Jones has recentlyinherited an investment property from his late mother who passed away five months ago. The property is a beach front villa that is located in a very popular tourist attraction and the recent valuation of the property indicates that this house is worth $1.6 million.

Jack needed cash to build his share investment portfolio since financial investment has always been a passion of his. Jack then decided to sell the villa andin order to have the property sold guickly.Jack entered into a contract for sale of the land to a purchaser Rose Darling for the price that is much lower than the market value.

Prior to completion of the contract,Jack changed his mind about selling the property to Rose at undervalued price and in order to avoid his contractual obligations to Rose,Jack subsequently registered a business with ASIC Australlian Securities&Investments CommissioncalledJack Holdinas Pty Ltd in which Jack was the sole director and secretary of the entity.

Instead of selling and transferring the property to the purchaser Rose Darling, Jack transferred the property to his newly formed company Jack Holdings Pty Ltd for the purpose of defeating Rose's right to seek specific performance of the contract (effectively to purchase the property).

Rose Darling found out about the transaction and following her investigation on the relationship between Jack Jones and his new entity Jack Holdings PtyLtd,she has instructed her lawyer to seek court order for specific performance(meaning court directs a party to perform the obligation as agreed under the contract)against Jack Holdings Pty Ltd.

Place yourself in the position of the court and deliver your judgment/decision on whether Jack Jones and his new company Jack Holdings Pty Ltd are separate legal entities? Will Jack be obliged to sell the property to Rose Darling?

1.Jack Jones and his new company Jack Holdings Pty Ltd are separate legal entities?

2: Will Jack be obliged to sell property to Rose Darling?