GENERAL INSTRUCTIONS
2. Assignment is worth 30%. Question 1 is 15%. Question 2 is 15%.
3. Submitting in a group indicates that all group members agree that each member should receive the same mark for the assignment.
4. Read the “Guide to submitting assignment” in Blackboard.
5. The maximum word limit is 2000 words (approx. 1000 words for Q1, 1000 words for Q2).
6. The number of students in each group is to be 4-5 students. This is a group assignment so all students are expected to work in groups. Special consideration may be given to students who have special reasons to work alone, rather than in a group, however there needs to be very sound reasons and supporting documentation must be provided. Applications must be received at least two weeks before the due date.
7. Marking Criteria are:
• Clear identification of legal issues relevant to the question
• Full discussion and explanation as required by the question
• Description of legal sources (legislation and/or case law)
• Logical structure
• Use of English language with care and accuracy
QUESTION 1
OPTION 1 – Court Observation Report
Your task is to write a Court Observation Report of 1000 words, from observing a civil court hearing in any of the following courts:
a) Supreme Court of Victoria
b) Federal Court
The case you observe should be related to subject areas covered by this course. For example, insolvency, bankruptcy, or other commercial matters.
It is also OK if the subject matter is not covered by this course, but you must demonstrate a link to this course. You must also gain a sufficient understanding of the subject matter, in order to write your report.
FEDERAL COURT INFORMATION
• Each week at the Federal Court’s Registrars conduct Corporations and Bankruptcy Lists with multiple matters in each List.
• The Federal Court’s Corporations Lists mainly consists of applications to wind up companies in insolvency.
• The Federal Court’s Bankruptcy List mainly consists of creditor’s petitions seeking the sequestration of a debtor’s estate.
• The Corporations Lists are conducted each Tuesday and Friday at 9.30am and the Bankruptcy Lists each Tuesday and Thursday at 9.30am.
• The Federal Court’s Daily List is published daily on the Federal Court’s website.
• If you have any other queries please telephone the Federal Court.
SUPREME COURT INFORMATION
• The Supreme Court’s Applications hearings (related to the Corporations Act) are heard in Court Room 5, each Friday at 10 am.
• The Supreme Court’s Daily List is published daily on the Supreme Court’s website.
• If you have any other queries please telephone the Supreme Court.
COURT ETIQUETTE
• The courts are security controlled buildings, which means that you need to pass through a metal detector before entering. Aerosols, sharp objects (scissors, nail clippers) or knives are not allowed. Avoid bringing large or heavy bags.
• Photography of any kind is not allowed anywhere inside the court buildings, and phones must be turned off.
• Be completely silent while observing a court proceeding.
• Courts are generally busy places. Be courteous and avoid standing in front of doors. If you are in a large group, avoid crowding into a courtroom all at once. Magistrates and Judges will send people out if the courtroom becomes too crowded, and they do not take kindly to people making noise in the court. Follow all instructions from court/tribunal staff.
• Always make sure you bow to the judge when entering and exiting the courtroom.
• It is important to avoid talking about cases while around the court. Remember that the families and friends of people involved in the case may be around. Show discretion and qcommon sense – save the discussion for class.
YOUR REPORT
In your report, you should:
• State the names of the parties and the name(s) of the judge(s) presiding.
• Explain the nature of the hearing.
• Explain how this hearing relates to the subject matters in the Law of Investment Course.
• Summarise the facts and legal arguments presented in court.
• Describe the witnesses (if any), lawyers, parties, and the case’s outcome (if finalised).
• Describe your own views / impressions / thoughts about the case and the court procedures in general. For example, do you think the witnesses were credible? Do you think the barristers were skilled and persuasive? What do you think about the judge(s)?
Your first step should be reading the “Daily Court List” on the court websites. The daily court list is usually updated on the day before the hearing. You should also telephone the registrars at the courts for more information about the cases prior to going to observe the case.
If the case spans for many days, it is not essential you attend all of those sessions. Only one single session is required for this assignment.
 
QUESTION 1
OPTION 2 – Discuss the legal issues arising from the following article

14-137MR Directors of Queensland lending business sentenced on dishonesty charges

Friday 20 June 2014

Mr Ronald David Williams and Mr Gary David Maile, former Directors of Selection One Finance Pty Ltd (Selection One), were today sentenced in the Brisbane District Court after pleading guilty to breaches of director duties.

Mr Williams and Mr Maile pleaded guilty to one count each of failing to exercise their powers and discharge their duties as company directors in good faith in the best interests of the company and that their failure was intentionally dishonest.

Both Mr Williams and Mr Maile were sentenced to four years and three months imprisonment with a non-parole period of 16 months.

ASIC had alleged that Messrs Williams and Maile operated a business through Selection One which borrowed funds from investors for approximately 12 months at an interest rate of 3% per month or 36% per annum.

Messrs Williams and Maile represented to investors that the funds would be on-lent to third parties as short term loans at 6% per month, thus allowing the high returns to investors. The proportion of money actually on-lent to borrowers was very small compared to the amount of investor funds received. Selection One’s poor financial performance meant it was only able to survive by raising new investors funds to pay the high rate of interest promised to its existing investors.

Selection One’s poor performance was not disclosed to new or existing investors and Messrs Williams and Maile did not take any steps to alter or abandon the company’s high risk business model, continuing to encourage investors to invest in Selection One.

On 3 March 2009 Selection One was placed in voluntary administration with outstanding debts of approximately $20,915,330 owed to 88 investors.

ASIC Commissioner, Mr Greg Tanzer, said it was a fundamental responsibility of company directors to act honestly and in the interests of the company they govern.

‘The jailing of Mr Williams and Mr Maile should send a clear message there are serious consequences for company directors who act dishonestly. The investing public is entitled to expect that company directors are acting in their interests. ASIC will act to ensure that blatant breaches of directors’ duties are pursued in the courts’, Mr Tanzer said.

The Commonwealth Director of Public Prosecutions prosecuted the matter.

SOURCE: ASIC WEBSITE
 
QUESTION 2
Discuss the legal issues arising from the following article

Dick Smith shareholders sign up for class action

Sue Mitchell

April 21, 2016

Hundreds of investors who lost money in the collapse of retailer Dick Smith have registered interested in joining a class action suit led by Sydney law firm Bannister Law
Bannister Law is gauging the level of interest in a class action claim against former directors and auditors of Dick Smith, which collapsed in January owing around $400 million to creditors.
“Investors are angry and some people have lost a lot of money,” Bannister Law chief executive Charles Bannister told Fairfax Media.
“If we see merit in the action its possible that findings could be made against officers and related external parties that usually have insurance,” Mr Bannister said.

Photo: Edwina Pickles
The firm is investigating whether there was sufficient information to investors in the prospectus for Dick Smith’s initial public offer in 2013 and looking at disclosures and declarations by directors and auditors in Dick Smith’s 2015 annual report.
Dick Smith reported a 3 per cent increase in net profit to $43.3 million in 2015 and its auditors gave the company a clean bill of health
By November 2015 Dick Smith had cut its 2016 profit guidance and slashed the value of inventories by 20 per cent or $60 million. By the time the company collapsed in January it was losing $100 million a month.
The collapse is now being investigated by the Australian Securities and Investments Commission and is the target of a Senate inquiry, while a report by Dick Smith’s administrators, McGrath Nicols, is due in June.
Dick Smith’s collapse is now being investigated by ASIC.
“We’re monitoring the outcome of the ASIC investigation and administrators report – that will assist in our decision making process,” Mr Bannister said.
“We have clients who want to be lead plaintiffs in the case but we have to be satisfied ourselves that the matter has reasonable prospects of success,” he said.
“Hundreds of shareholders have registered since we gave notice (in January) that it was under investigation by our firm,” he said.
Bannister is looking at a number of key events and periods, particularly the sale of certain assets and non-disclosure of sub-holding accounts “which may have affected investors’ ability to make an informed decision.”
Anchorage Capital Partners bought Dick Smith from Woolworths for $115 million in 2012 and floated it for $520 million 14 months later. The private equity firm has maintained that Dick Smith was in a “strong financial position” when it cut ties with the group in 2015.
Mr Bannister has called on Dick Smith shareholders to contact him with a view to mounting a class claim in the Federal Court and is in discussions with “numerous” parties about funding a class action.
Dick Smith is not the only retailer facing class or group actions from investors.
Last year Melbourne City Investments Pty Ltd (MCI), an investment company set up by former Minter Ellison partner Mark Elliott, launched legal proceedings against Myer, alleging it suffered loss and damage as the result of statements at the time of Myer’s 2014 profit results and a profit downgrade in 2015.
In 2014 Slater & Gordon launched a class action against Billabong International seeking compensation for at least 400 shareholders who lost money when Billabong shares plunged after a profit warning in 2011.
Bannister Law is also pursuing a class action against Volkswagen Group Australia is currently pursuing class action suits against Volkswagon and Reckitt Benckiser, the makers of Nurofen.
SOURCE: HTTP://WWW.SMH.COM.AU/

HINTS FOR Q 2 AND Q 1 (OPTION 2)
• Approach the NEWSPAPER ARTICLE questions as if you are explaining an article to someone who has no legal knowledge at all. Start by identifying the key legal words or phrases in the article and explain what they mean (definitions). Then provide a more detailed discussion of how these legal concepts relate the matters being discussed in the article.
• Include your own thoughts and opinions as well.
• You should go through each paragraph, and explain whatever needs to be explained.
• You are expected to do some external research for this question, such as finding relevant sections in the Corporations Act, or finding relevant information in textbooks.
• The answer guide I have posted for the “Rio Savaged by Shareholders at local AGM” will give you some ideas about how to approach this question. The model answer I have posted for questions 1 and 2 of the 2009 semester 1 exam will also provide some guidance.