SCENARIO

Super Materials Ltd (SML) is a manufacturer of synthetic materials for industry based in Unanderra which has an extensive customer base both in Australia and overseas. 75% of its business and a little over 80% of its profit come from the manufacture of SuperSteel, a synthetic metal. It is a product in high demand (indeed sales have increased by over 20% in the last year and continued growth is anticipated) from airline and motor vehicle manufacturers because whilst stronger than steel it is extremely light, heat resistant and easy to mould and manipulate. Whilst there are other products which can substitute for SuperSteel none can match its performance.

The "secret" to SuperSteel is the use of a small amount of a chemical known as B-256 in the manufacturing process. SML has a contract for 5 years from 1 January 2019 with Bargo Minerals Ltd (Bargo) under which Bargo is to supply SML with the raw mineral from which B-256 is extracted at a fixed price, with annual increases (the supply contract). Bargo's mine is the only one in Australia whose minerals contain B-256 in sufficient concentration to make extracting it economic. Whilst there are a handful of other mines in the world which can also produce B-256 their supplies are fully committed under either contract or in some cases by legislation for supply to various defence and space exploration organisations.

The supply contract provides that Bargo will supply and SML will purchase the whole of Bargo's production of the raw mineral it extracts. There is also an option in SML's favour for renewal of the supply contract for a further 5 years on the same terms other than future pricing which is to be set by reference to an agreed formula contained in the supply contract.

In February 2022 Bargo contacted SML to "discuss some issues with the contract". At the meeting between the CEO's that followed Bargo requested SML to agree to determine the supply contract from 30 June 2022 After SML rejected the request Bargo made an offer to pay SML a sum of $10,000,000.00 as a break fee if SML would agree. After SML responded by advising that it was not interested in foregoing the contract the Bargo CEO told the SML CEO that Bargo had an offer to purchase all of the B-256 it could extract at a price several times the contract price under the SML supply contract. She also indicated that a vacancy on the Bargo Board of Directors was going to arise shortly, and the SML CEO would be a perfect fit for it. She mentioned that it was an easy Directorship which would be "extremely rewarding", particularly if Bargo was able to accept the new offer for B-256.

After a Board meeting of SML on 1 March 2022 the SML CEO advised Bargo that SML had no interest in terminating the supply contract "at any price" as it believes not only will the ongoing production of SuperSteel for the life of the contract and the option be profitable but it will also position SML as a world leader in the production of synthetic metals which will afford SML even greater opportunities in the future.

On 12 March 2022 SML was served with a document titled "NOTICE OF TERMINATION" from Bargo, which purports to terminate the supply contract, effective 30 April 2022, and cites "ongoing difficulties with payments and generally" as the reason for the purported termination. All payments have in fact been made on time and apart from the February 2022 meeting no other difficulty or issue with the supply contract has previously been raised by Bargo. The supply contract itself contains no provision for early termination.

SML wants the contract to be performed in full or otherwise to obtain "billions" in damages. Without it the production of their mainstay product would have to cease, and any alternative would not have SuperSteel's unique qualities. At best SML would have to cut its operations by at least 50%, and would suffer losses including

1. the profit, including continuing growth it would otherwise have made from SuperSteel for the balance of the supply contract and the option period;
2. it would have a workforce far exceeding it's future needs at the reduced level of operations, so would have to make at least 150 employees redundant;
3. it's premises which are leased for a further 5 years would be substantially in excess of it's needs and until it was able to sub-lease the redundant part the continued rental wil be wasted;
4. it has been investing heavily in research of further synthetic metal technology, anticipating that this would provide further opportunities down the track. That research is some years from fruition, could not be afforded to continue on the reduced operations and effectively would have to be scrapped as it has no commercial value at this time; and
5. damage in losing its reputation as a world leader in the field, which SML considers to be incapable of calculation.

SML has a second issue. It has developed a new adhesive "Megaglue" for joining metals and synthetic without welding or other high intensity methods of joining the materials. While it is new to the market so profits are not yet flowing from it, SML has high hopes for it over time, and has registered Patents covering it's formula and the method by which it is produced.

A few weeks ago one of the sales reps brought an advertisement for a product "Gigaglue" to the attention of SML, which was given to the sales rep by a customer. It indicates that Gigaglue claims to have virtually identical characteristics to Megaglue. SML obtained a one litre can of Gigaglue from the customer and University of Wollongong testing indicates that it is in fact identical to Megaglue. The named manufacturer of Gigaglue is Rippoff Pty Ltd (Rippoff), and searches reveal that the sole director and shareholder of Rippoff is Henry Frump. Henry is the husband of Delta Frump, an industrial chemist who until late 2021 was employed in SML's research department and worked at times on the Megaglue project.

Delta however is another problem for SML. Her employment was terminated by the Director of Research who gave as the reason that Delta was not a "team player". Delta has now given notice that she intends to sue SML for damages in contract or alternatively in tort, claiming breaches by SML in failing to provide a safe working environment. In particular she alleges harassment including fairly high level sexual harassment (Delta was the only female in the Research Department) over an extended period of time, and that she now suffers serious mental distress at a level which prevents her undertaking future employment in her field. She also claims that as a result of her dismissal she is "unemployable" in the industry as she now has a reputation of being a "disruptive" employee. She is currently receiving counselling for her distress, although she has declined to undertake a course of medication recommended to her by her psychiatrist on the grounds that she does not want to become addicted to what she regards as "psychotic" drugs.

Delta alleges that she complained on a number of occasions to the Director of Research about these matters but he told her that if she "wanted to compete in a man's world" she needed to "harden up".

Finally a SML truck recently crashed while returning from western Sydney. It failed to negotiate a corner and ploughed through the lounge room of the home of Dave and Louise Adam (the Adams) at Figtree. The residence was rendered unsafe and the Adams initially stayed at the Northbeach at Wollongong for a month. They have now rented a home unit in North Wollongong whilst their home is rebuilt. The estimated cost of the repairs as desired by the Adams is $400,000.00. Pre accident value of the home was $1.25 million, whilst value as damaged is $1.0 million. The desired repairs will result in the residence being larger and more modern (the existing home was built in 1960 and has not had any significant renovation before now) with an estimated value on completion of $1.35 million. Louise Adam claims to have been traumatised by the accident (she was in the home at the time of the accident) suffering from flashbacks which have caused her to be unable to sleep normally. Louise also suffered a miscarriage a week after the accident which she attributes to the trauma she is suffering. She has not been able to work since the accident.

You are required to advise SML of all possible remedies that may be available to

1. SML arising from the notice it has received from Bargo (15 marks)
2. SML arising from the information it has about Rippoff Pty Ltd, and Henry and Delta Frump (10 marks)
3. Delta arising from her employment with SML (arising at common law and ignoring any issues specific to statutory employment law) (10 marks) and
4. The Adams arising from the truck accident (10 marks)

You may assume that the evidence will establish each of these wrongs to the relevant standard. Ensure that you canvass all of the remedial options available, noting any difficulty that any party may face in obtaining such remedies. To the extent that the Civil Liability Act 2002 may apply you ONLY need to consider those sections that have been extracted and published on the subject Moodle site. You should indicate any need by any party to elect between identified remedies and ultimately recommend an appropriate course to pursue. You should cite any relevant Statute or case which you regard as authority for any proposition you advance. If you believe that further information is required to answer these questions state what additional information you need and explain why it is necessary.