Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Lee v lee's air farming ltd

29/10/2021 Client: muhammad11 Deadline: 2 Day

SCHOOL OF LAW & JUSTICE

Session 2, 2018

TOPIC 2 The Australian Constitution & Corporate Law Administration of Corporate Law

_________________________________

Separate Legal Entity Doctrine

2

AIM: At the end of this topic you should understand:

•  The relationship between s 51(xx) Australian Constitution & Corporations Act 2001 (Cth)

•  Role of ASIC Chapter 1 Textbook •  The Separate Legal Entity Doctrine (& Salomon’s

Case) • Corporate Veil Chapter 4 Textbook

2

Sources of Company Law • Corporations Act 2001 (Cth) • Australian Securities and Investments Commission Act

2001 (Cth) • Case law • Other sources

•  Corporations Regulations, ASIC guidelines, accounting standards, ASX Listing Rules (for listed companies)

4

Prescribed Texts

Thomson Reuters, Corporations Legislation 2018

Thomson Reuters 2018, Corporations Legislation, Includes key section annotations Example: Section 124 p 185

3

Information Sources • www.uclaw.com.au/home/ • www.austlii.edu.au SCU Library •  http://scu.edu.au/library/index.php/21/

Corporations Act 2001 (Cth)

• Australia’s company law statute • Came into effect on 15 July 2001 •  Before 2001, Australia’s corporations law was made

up of separate State and Territory Acts

Case law

•  In a common law system, creates binding legal rules (Doctrine of precedent)

• May apply: •  in interpreting rules contained in the Corporations Act •  in imposing additional rules

• Consider - the significance of ‘the facts’ of the case to the facts of a given scenario.

4

Source: Textbook page 3

Towards a unified national scheme

• 1901-1950s Separate State acts based on English Companies Act 1862

• 1961-1963: Uniform Companies Act 1961 no mechanism for maintaining uniformity

• 1978-1991: Co-operative Scheme Companies Code 1981; introduction of NCSC and Ministerial Council; problems of inconsistencies, duplication and accountability

Towards a unified national scheme (cont.)

1989: Corporations Act • a proposed national scheme • based on section 51(xx) of the Constitution – known as corporations power

5

Australian Constitution Section 51 (xx) The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.

13

NSW v Commonwealth [1990] HCA 2 THE INCORPORATION CASE HCA majority > that part of the Corporations Act 1989 was invalid Section 51(xx) Constitution did not allow the Commonwealth to make laws on incorporation of companies HCA interpreted the phrase ‘formed within the limits of the Commonwealth’ to mean ‘already formed’ Constitutional power did not cover companies yet to be formed.

Towards a unified national scheme (cont.)

•  1 January 1991: Corporations Law Scheme •  State legislation with Cth Act as a schedule • Conferred jurisdiction on Federal Ct, authorised to

exercise jurisdiction under Cth Act •  national administration and enforcement via ASC

(now ASIC) accountable to Commonwealth Parliament (Treasury) - Application Acts still necessary

•  Re Wakim; Ex parte McNally (1999)

15

6

The Present Scheme Corporations Act 2001 (Cth)

• Further negotiation between States and Cth • States conferred authority on to the Cth (s 51(xxxvii) Constitution) • Corporations Act 2001 (Cth) 15 July 2001 • States referred power for 5 year intervals From a pure legal perspective states can recall power, however not politically feasible

16

High Court of Australia

Constitutional challenges in the HCA

New South Wales v Commonwealth (1990) Constitution did not allow Cth to make laws on incorporation of companies.

Re Wakim; Ex parte McNally (1999) Federal courts cannot hear matters in relation to state law

Bond v R (2000)

A conferral of authority by the states upon a Cth officer was inoperative pursuant to s109

R v Hughes (2000)

Cth must be able to identify a legislative head of power to support the enactment of Cth legislation

7

Corporations Law Bodies

CLERP Financial Reporting Council (FRC) & Financial Reporting Panel (FRP)

ASIC*

Commonwealth Parliament

Commonwealth Treasurer

Parliamentary Joint Committee on

Corporations and Financial Services

Takeovers Panel*

Australian Accountin

g Standards

Board*

Companies Auditors and Liquidators Disciplinary

Board*

Business Regulation

Advisory Group

* Established under ASIC Act

Source Text p 26 ©  Thomson Legal & Regulatory Ltd. All Rights Reserved.

Auditing & Assurance Standards Board (AUSAB)

Corporate Law Economic Reform Program •  Established in 1997 to develop policy in wider economic

framework • Company Law Review Act 1998 • Corporate Law Economic Reform Act 1999 •  Financial Services Reform Act 2001 • Corporations Legislation Amendment Act 2003 • Corporate Law Economic Reform Program (Audit Reform

and Corporate Disclosure) Act 2004 • Corporations Amendment Act (No. 1) 2005 • Corporations Amendment (Takeovers) Act 2007 • Corporations Legislation Amendment (Simpler Regulatory

System) Act 2007 • Corporations Amendment (Insolvency) Act 2007 • Cross-Border Insolvency Act 2008

20

Australian Securities & Investments Commission (ASIC)

•  See: http://www.asic.gov.au Textbook p 15-21 •  Part of the Commonwealth Government •  Treasurer is the responsible Minister •  Responsible for administering Corporations Act •  Responsible for forming, terminating and regulating

companies • Consists of three Commission members and a large

staff •  Strategic priorities:

•  Promoting investor and financial consumer trust and confidence •  Ensuring fair, orderly and transparent markets •  Providing efficient and accessible registration

21

8

ASIC (cont)

Objectives set out in section 1(2) of ASIC Act Functions, under section 11 : •  registration of companies • collection and dissemination of corporate information

• surveillance, investigation and enforcement • education •  law reform

Australian Securities Exchange • Usually referred to as ASX • A private, for profit organisation that provides an organised market for listed securities

•  Companies can choose to “list”, allowing their securities to be traded in that market

• Contract with ASX to comply with the Listing Rules

• ASX monitors companies, enforces the Listing Rules and co-operates with ASIC

• Continuous disclosure • Corporate governance

HALF TIME!

24

9

Effect of registration

registration

separate legal entity

limited liability

creates

facilitates

Salomon’s Case SALOMON v SALOMON (1897) HOUSE OF LORDS

Issue: Could Salomon get priority for

(residual) £1,000 secured by his debentures?

©  Thomson Legal & Regulatory Ltd. © All Rights Reserved.

Facts: Salomon’s shoe

business

Pty Ltd

sold

debentures cash

Salomon 20,001 shares family 6 shares

(as Salomon’s nominee)

Salomon’s case – facts (cont.) • Downturn/strikes in boot industry •  Salomon & Co went into liquidation • Company’s assets insufficient to pay both

•  Debenture holder (secured creditor) •  Ordinary, unsecured creditors

•  Liquidator, on behalf of unsecured creditors •  Objected to payment of secured debt •  Argued company acting as either agent (or trustee) for

Salomon •  Argued that Salomon should indemnify the company for its

debts

27

10

Salomon decisions Trial: found for liquidator (acting for unsecured creditors) •  Company conducted business as agent for Salomon. •  Business = Salomon’s business (high degree of control) •  Salomon as Principle, to indemnify his Agent (Salomon &

Co Ltd) against business liabilities Court of Appeal: found for liquidator •  Company = trustee, holding business on trust for Salomon •  Trustee entitled to indemnity from beneficiary for debts

incurred as trustee •  Salomon incurred liability to liquidator to pay trade

creditors

28

Salomon in the House of Lords •  Reversed earlier decisions •  Salomon & Co Ltd neither agent nor trustee • Debenture was valid •  Salomon succeeded in claim against Salomon & Co

Ltd as secured creditor •  Structure of company compliant with Companies

Act 1862 (UK)

29

Legal consequences of the separate legal entity principle

On incorporation: • Distinction between private and company debts • Distinction between private and company assets • A company may contract with its members (>

multiple capacities) • A company may be liable in tort to a member

30

11

Distinction between private and company assets

• Company may own assets in its own right, section 124 •  Sole director and sole member companies • Macaura v Northern Assurance Co Ltd [1925] AC 619

31

A company may contract with its members

• Company may contract with its members Lee v Lee’s Air Farming Ltd (1961) Ac 12 (Privy Council) •  Lee died in plane crash while “working for” Lee’s Air

Farming Ltd •  Insurance company argued that Mr Lee could not be

a worker and employer at the same time •  Privy Council held that Salomon allowed Mr Lee to act

in differing capacities as governing director, shareholder and employee

32

The corporate veil • COMPANY

Separate legal entity with own: • Assets •  Liabilities • Contracts

33

•  INCORPORATORS •  DIRECTORS •  MEMBERS

•  own shares but not a proprietary interest in the company’s assets

•  may also be a creditor, debtor or director of the company

V E I L

12

Lifting the Veil Existence of veil can be abused consider the position of: • unsecured creditors • tort claimants

Because of abuses, the veil is sometimes lifted to impose liability on: • controllers • directors (eg, Gilford Motors, Re Darby) • holding/parent company (eg, s 588V)

The corporate veil may be … • Lifted

• Pierced

Discussed in Atlas Maritime Co SA v Avalon Maritime Ltd [1991] 4 All ER 769

> Impact on Salomon’s case? Considered by UK Supreme Court in Prest v Petrodel Resources Ltd [2013] 2 AC 415

35

Lifting the veil (cont) Sometimes the lifting is to confer an advantage

(“reverse lifting”) eg, Smith Stone & Knight, Lee’s Air Farming)

Two methods of lifting (1) if statute has express provision (2) under general law principles

13

Statutory grounds Under Corporations Act 2001 (Cth)

•  insolvent trading (ss 588G, 588V, 596AC) • uncommercial transactions (ss 588FB-588FF) •  financial assistance (s 260D(2))

• Under other legislation (eg, taxation, occupational health and safety, environmental protection and various regulatory regimes)

37

General Law Examples

•  No relevant statutory provision, but, for some overriding policy reason, a court decides to lift the veil

•  Australian courts have been more reluctant to do this than the English and American courts

General law grounds Difficult to reconcile cases but consider general descriptive categories •  Fraud Re Darby; Ex Parte Brougham [1911] 1 KB 95 •  Evasion of an existing legal obligation Gilford Motors Co Ltd v Horne [1933] 1 Ch D 935 Commissioner for Fair Trading v TLC Consulting Services Pty Ltd [2011] QSC 233 • Agency Smith, Stone & Knight v Birmingham Corporation [1939] 4 All ER 116 Pioneer Concrete Services Ltd v Yelnah Pty Ltd (1987) 5 ACLC 467

39

14

A Simple Corporate Group

Thomson Legal & Regulatory Ltd. All Rights Reserved.

B LTD

D LTD

C LTD

A LTD

Each of these companies is a subsidiary of A LTD.

D LTD is also a subsidiary of C LTD.

60%

100% 100%

General law grounds Difficult to reconcile cases but consider general descriptive categories •  Fraud Re Darby; Ex Parte Brougham [1911] 1 KB 95 •  Evasion of an existing legal obligation Gilford Motors Co Ltd v Horne [1933] 1 Ch D 935 Commissioner for Fair Trading v TLC Consulting Services Pty Ltd [2011] QSC 233 • Agency Smith, Stone & Knight v Birmingham Corporation [1939] 4 All ER 116 Pioneer Concrete Services Ltd v Yelnah Pty Ltd (1987) 5 ACLC 467

41

General law grounds (cont.) • Company knowingly participates in breach of

director’s fiduciary duties Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1 •  Tort Briggs v James Hardie & Co Pty Ltd (1987) 16 NSWLR 549 •  Part of a group of companies DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852 (but see s 588V) •  Possibly, if interests of fairness and justice require

42

15

AIM: At the end of this topic you should understand:

•  The relationship between s 51(xx) Australian Constitution & Corporations Act 2001 (Cth)

•  Role of ASIC Chapter 1 Textbook •  The Separate Legal Entity Doctrine (& Salomon’s

Case) • Corporate Veil Chapter 4 Textbook

Next Week

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Smart Tutor
Quality Assignments
Top Grade Tutor
Assignment Hub
Pro Writer
Financial Analyst
Writer Writer Name Offer Chat
Smart Tutor

ONLINE

Smart Tutor

As per my knowledge I can assist you in writing a perfect Planning, Marketing Research, Business Pitches, Business Proposals, Business Feasibility Reports and Content within your given deadline and budget.

$42 Chat With Writer
Quality Assignments

ONLINE

Quality Assignments

Being a Ph.D. in the Business field, I have been doing academic writing for the past 7 years and have a good command over writing research papers, essay, dissertations and all kinds of academic writing and proofreading.

$21 Chat With Writer
Top Grade Tutor

ONLINE

Top Grade Tutor

I am an elite class writer with more than 6 years of experience as an academic writer. I will provide you the 100 percent original and plagiarism-free content.

$31 Chat With Writer
Assignment Hub

ONLINE

Assignment Hub

I find your project quite stimulating and related to my profession. I can surely contribute you with your project.

$22 Chat With Writer
Pro Writer

ONLINE

Pro Writer

I will be delighted to work on your project. As an experienced writer, I can provide you top quality, well researched, concise and error-free work within your provided deadline at very reasonable prices.

$47 Chat With Writer
Financial Analyst

ONLINE

Financial Analyst

I have read your project details and I can provide you QUALITY WORK within your given timeline and budget.

$35 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

The mask you live in discussion questions - Telestar international case study answers - Patient Scenario Short Paper - Please answer all the question in 10 pages. PLEASE AVOID PLAGIARISM. PLEASE DO NOT COPY PASTE FROM ANY WEBSITES, ARTICLES, CHEGG, COURSEHERO OR ANY SUCH WEBSITES. - Parker hi fi systems - The espresso lane to global markets case study solution - All about me speech examples - Naive forecast excel - Pelton wheel experiment lab report - Inorganic contaminants present in a sample of water lab report - Mitosis and meiosis lab 5 answers - Descriptive Essay - Dr ang teddy victoria secret - Katherine petrova family tree - Components of a Business Strategy - NURS6050 - Ethical Hacking - Four elements of natural selection - In one 500-word post, respond to at least one of the following questions: - Need someone good in excel and access - The gross profit must cover these types of costs: - Elimination Diet Paper - Can i use a gas bbq on total fire ban - Animal testing persuasive speech outline - Patricia van tighem documentary - Persepolis discussion questions and answers - Michael verde memory bridge - Accounts google com signoutoptions hl en&continue https www google com - Blood pressure measurement in pregnancy - Nie higher degree portal - Harvard business marketing simulation tips - PSY4500/Week 4 - Assignment: Analyze Experiments - As noted in your text global segmentation targeting - Distributed computing project ideas - For Essays Guru - - Self discipline plays an important role in leadership development because - Essay - Which of the following best describes the trial balance - Physics lab homework answers - Labor and legality ruth gomberg munoz notes - Http owl english purdue edu owl resource 544 01 - Should bottled water be banned - Debit and credit theory - Concrete fire resistance rating - Early childhood running record observation example - Uct gsb executive education - Experiment 2 effect of temperature on enzyme activity - Omron rx inverter user manual - Can sohcahtoa be used on non right triangles - Harmonics harbor scraped oak stair nose - Paper typed - Discuss the difficulties in measuring the intelligence of machines. - Operation Security Week-2 - Century national bank case study answers - Topic 2 DQ 2 Patophysiology - Hclo4 aq koh aq - Knowledge skills abilities and other characteristics ksaos - Sabre simulation tips - Serum6. - The boarded window summary - Business Intelligence - Big shoes to fill case study - Discussion - Mcmaster university enrollment dates - Irish poems for funerals - Reply 1 and 2 ,150 words each one add references and citations by 08/23/2020 at 6:00 pm08/23 2020 - Tony hsieh at zappos structure culture and radical change - Devry econ 312 week 3 quiz - Democrats discussion cjt101 - Discussion 6 - Presented below is an aging schedule for bosworth company - Pros and cons of dsm diagnosis - ASSIGNMENT - Audacity download lame mp3 - Wk 4: IOP/480 360 Leadership Evaluation Paper - 01928 area code uk - Summary - Business Policy Unit 1 Assignment - Prewriting: Finding Key Passages - Long distance mousetrap car - Researchers endeavoring to conduct an online study - Interview - Cmis 141 - 73.6 kg in stone - Tlif0002 - Robin goodfellow character analysis - 8 2 2 project 3 multimedia presentation submission - Passenger let her go lyrics meaning - When was the pedestrian written - City & guilds courses in sri lanka - Kc 360 trikuta nagar - Conflict of interest statement doc - Hsc english advanced 2015 - Wileyplus financial accounting chapter 9 answers - Netflix porter's five forces analysis 2017 - Excel - Reflection paper - Soc 110 week 5 team proposal - HA575 Assignment 8 - What are persuasive devices