QUESTION ONE

For many years Ali has been the chief chemist with the Pop-a-Pill Drug Company Ltd. Clause 33 of his employment contract states that in the event of Ali leaving his employment, he will not work in competition with the Pop-a-Pill Drug Company Ltd for one year. Ali registered an Australian company [Gee Chemicals Pty Ltd] and when he resigned from Pop-a-Pill he immediately became the managing director of Gee Chemicals.

Please consider the following two issues:

(i) Pop-a-Pill claims Ali is in breach of contract. Ali says that Gee Chemicals is in competition with Pop-a-Pill Drug, but that he personally is not.

(ii) Later, Gee Chemicals Pty Ltd is found to be selling drugs in breach of the law. Ali claims that he is only an employee and that it is the company that has broken the law, not he.

With reference to relevant cases and sections of the Corporations Act 2001 discuss each scenario separately.