Law Notes Business Associations 1 Notes
A 243 page bible of cases and materials summaries. Includes all extra cases discussed in 2011 (e.g. ASIC v Adler) and super summaries intended for quick reference in an open book exam. Structure of cases and materials summaries is as follows:
Class 1 - Introduction to 'The Corporation' and incorporating under Australian Law
Class 2 - Separate Legal Personality
Class 3 - Implications of Limited Liability
Class 4 - The Corporate Constitution and Decision Making by the Board of Directors
Clas...
The following is a more accessible plain text extract of the PDF sample above, taken from our Business Associations 1 Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Blake Dawson Waldron, Litigation Update – Judgments in James Hardie appeals handed down today The article outlines the main findings in the James Hardie appeals: Non-Executive Directors
General Counsel
The ex-CFO, Morley, unsuccessfully appealed against the finding that he failed to advise the board to he limited nature of the reviews of cash flow analysis. The former CEO, McDonald, did not appeal his $350,000 penalty and 15 year disqualification order James Hardie Industries NV The appeal against the finding by the trial judge that it engaged in misleading conduct and statements likely to affect market behaviour and failure in disclosures was unsuccessful. |
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There are a number of cases where courts have ignored the separate personality of the company under the force of some conflicting principle or policy – such cases are those where it is said the otherwise “opaque and impassable veil” has been pierced. The primary categories of case are those relating to
Fraud
Improper Conduct
Agency
Limited recognition accorded to the unity of the enterprise of a group of companies under common ownership
But these are not exclusive (can be more than one) or exhaustive – indeed Gower suggests that these should not be called categories because that assumes they are principle/predictable when in fact “they reveal no consistent principle beyond a refusal by the legislature and the judiciary to apply the logic of the principle laid down in Salomon’s Case where it is too flagrantly opposed to justice, convenience or the interests of the Revenue” The authors suggest to question this
Many statutory provisions contain directions to pierce the veil of incorporation
s 588 G – when debts are incurred by the company when it is insolvent or its solvency is impaired by incurring the debt
s 588V-X – Where the company is a subsidiary of another company, that holding company may also be liable in relation to those debts where it knew/ought to have known of the state of its financial affairs
Personal liability of directors for debts incurred by the corporate trustee where the trustee isn’t entitled to be fully indemnified by the beneficiaries of the trust – usually because the trustee has waived such indemnity rights
Also, since many groups of companies are a ‘financial unit’ the Act requires preparation of consolidated accounts
Gilford Motor Co Ltd v Horne [1933] 1 Ch 935 Facts: The plaintiff company sold/serviced motor cars. Horne was its managing director and under his service contract was bound not to entice customers away from the plaintiff. After terminating his contract he opened a business under his own name selling parts and servicing cars. His solicitor wrote to the plaintiff seeking a copy of his service contract – a few days after which a company was incorporated under the name J M Horne & Co Ltd which took over Horne’s business (J M H was his wife’s name Proceedings: The plaintiff sought an injunction restraining Horne, through J M Horne, from attempting to entice away his customer’s. Horne admitted to soliciting clients of the plaintiffs in breach of the agreement prior to the incorporation of the company. But he argued, inter alia, that it might not be enforced against the company. Lord Hanworth MR: His honour cited and accepted the findings of Farwell J in the court below that the “defendant company was the channel through which the defendant Horne was carrying on his business” (despite the fact that his ex-colleague and wife were directors of the company).
Injunction granted against Horne and J M Horne & Co Ltd |
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Jones v Lipman [1962] 1 WLR 832 Facts: Lipman contracted to sell land to the Joneses, but before completion sold and transferred it to a company, of which he and his clerk were sole shareholders, at a significantly reduced price. The Joneses sought specific performance of the contract against both Lipman and the company. Russel J commented that two things arose from the evidence
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Buy the full version of these notes or essay plans and more in our Business Associations 1 Notes.
A 243 page bible of cases and materials summaries. Includes all extra cases discussed in 2011 (e.g. ASIC v Adler) and super summaries intended for quick reference in an open book exam. Structure of cases and materials summaries is as follows:
Class 1 - Introduction to 'The Corporation' and incorporating under Australian Law
Class 2 - Separate Legal Personality
Class 3 - Implications of Limited Liability
Class 4 - The Corporate Constitution and Decision Making by the Board of Directors
Clas...
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