subject- business and corporations law

Problem Question:

In 2021 Fiona received a large inheritance from a distant Aunt which included land and several properties. Fiona recently finished an advanced course in business and property development and feels ready to start to grow her portfolio. Fiona went to see her solicitor in January 2022 and he advised her that she needed to sell one of her properties as soon as possible as the solicitor said he had knowledge that the property was in an area where the property market would crash in only a month or two. The solicitor offered to buy the property himself from Fiona as he knew how to improve the property and stop its value from decreasing. Fiona, keen to increase her cash resources, agreed to the sale and the solicitors brother finalised the contract for sale. The property was sold for much less than Fiona thought it was worth but provided her with further cash for other investments. After Fiona had received the funds, she decided to move forward with her dream of opening a bakery. However, Fiona decided the gruelling work and early morning starts would be difficult, so she decided to look for options to build and then lease out a bakery. Fiona met with the owner of Easy Constructions (Easy), Vibha, to negotiate construction in March 2022. During negotiations and before the contract was finalised and signed, Fiona informed Easy that she intended to lease the premises to Sweet Tooth who had offered rent of 10% above market value to lease the premises due to their immediate need for a new location by 1 June. Sweet Tooth have agreed to a lease commencement date of 1 June for 2 years. The contract with Easy contains the following clauses: 1. construction of the commercial kitchen and bakery shop front will be completed by 30 May 2022. 2. a daily liquidated damages rate of $10,000 will apply to each day beyond 30 May 2022. 3. all payments shall be made within the agreed time period without any deduction or set-off for any reason whatsoever. 4. this agreement shall be governed by the law of Queensland Construction of the kitchen was progressing well when a global steel shortage delayed materials coming into Australia and delayed construction of the kitchen. Easy informed Fiona that their completion date would be seriously delayed and a finish date of 14 June was now expected. Fiona advised Sweet Tooth of the delay and Sweet Tooth proceeded to validly terminate the lease of the bakery with Fiona. Fiona tries her best to find another tenant immediately but despite paying for extensive advertising, she only manages to secure a tenant who is willing to pay $500 less per month than Sweet Tooth had originally agreed to. The lease is for 2 years. Fiona secures the lease with the new tenants. Fiona wants to be around to make sure construction finishes by the new date so she cancels her non-refundable flights to Bali, booked for 5 June. The construction is completed on 14 June and the new tenants commence their lease on the same day. Fiona found the whole situation stressful and felt that Easy could have easily finished construction on time. Fiona does not want to pay her final invoice from Easy as she is disappointed by the delay and wants to make sure that she can get every dollar she can out of Easy. Fiona phoned Easy and told them she refused to pay for the completed work despite payment being due over a month ago. Fiona is also upset as similar properties to the house she sold to her solicitor are being sold for much more than she received, and she is worried that the solicitor took advantage of her.

1.Fiona seeks your advice on the following: Can Fiona withhold payment of the final invoice from Easy and claim damages for emotional distress and suffering around Easys delay? Are there any risks for Fiona in her proposed action?

2. What damages can Fiona seek to recover from Easy and why. What damages is she unlikely to be able to claim and why?

3.What is the most commercially sensible course of action you would recommend for Fiona in her dealings with Easy with reference to the likely legal outcomes?

4.Identify any legal issues in the transaction in relation to the sale of Fionas house to her solicitor. Explain and identify any remedies.