Dreamworld Accident and Corporate Responsibility

This assignment analyzes the fatal accident at Dreamworld theme park, focusing on the company's inadequate response and breach of ethical and legal responsibilities. It examines the company's actions following the incident, highlighting their focus on damage control rather than addressing the root causes and supporting affected families. The essay also discusses relevant legislation and case laws, ultimately evaluating Dreamworld's corporate governance failures.

Running head: BUSINESS LAWS
Business Laws
Name of the student
Name of the university
Author note

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Answer 1
The concept of corporate governance denotes the way through which companies are
governed by its officers and directors. According to the principles provided by the concept of
corporate governance the organization must be governed by the authorities responsible for its
operation in such a manner that it would be able to achieve its objective and goals in the best
possible way1. The controlling officers namely the executives and the directors must also ensure
that the organization comply with the principles of corporate social responsibility and ensure the
benefits of its shareholders where the society being one of them. When a company has an
appropriate policy for its governance it automatically enhances the trust which the potential and
present stakeholders of the company have towards its management. Good corporate governance
also enhances the confidence of the investors to make investment towards the organization.
Certain recommendations have been laid down by the Australia Securities Exchange
(ASX) so that the companies in organization can carry out the process of good corporate
governance in an effective manner. The aims of the provided recommendation are to ensure that
the organization is not only able to address its own needs but also the needs of the society. There
are seven recommendations which have been provided by the ASX in relation to good corporate
governance and such principles are reviewed on a periodic basis in order to eradicate the effect if
any. Currently the latest version of the recommendation is the third edition which has been
provided by the ASX. Particularly in relation to the seventh principle of corporate governance
recommendation in relation to Risk management have been provided for the organizations. The
recommendations provided various strategies which the organization may take in relation to
mitigating the risk which may cause injury to the society and the company itself because of its
1 Baxt, R., and Fletcher, K.L., Fridman, S., Corporations and Associations Cases and Materials on, (Butterworths,
Australia, 10th edition, 2008).

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operations2. The recommendations suggest that the company must have a risk mitigating
committee which would have at least one independent director to identify and address risk. It is
a evident fact that if the company is prone to risk and its operations affect the society its
reputation will be hampered which would subsequently discourage any investor in associating
with the organization3.
According to the facts of the case it has been provided that the company Ardent Leisure
Pty Ltd (Ardent) not only failed to recognize the risk but also to effectively handle its after
effects. There were no measures taken by the management of the organization in relation to
avoiding the harm which had been caused do to the accident which took place in their Dreamland
Amusement park. The lives of four patrons were lost in relation to the accident which took place
in the park. In case there was a proper risk management strategy implemented by the company
such grave negligence would have been prevented. It is a fact that accidents are not under human
control however the root cause of accidents in negligence. In the given situation the company
was also criticized for not being able to handle properly the after accident period which caused
increased hardship to the relatives of the deceased patrons. In case there was a proper risk
management framework as suggested by the ASX the company would have been able to identify
and address the risk in a proper way.
Answer 2
The ASX does not mandatorily impose any of its recommendations of the company as it
realize that specific set of recommendation may not be suitable for an organization as its
operations may get hampered. Therefore the organizations in Australia are provided the right to
2 Ciro T, Symes C, Corporations Law in Principle LBC Thomson Reuters, (Sydney, 9th edition 2013).
3 Parker, Clarke, Veljanovski, Posthouwer, Corporate Law,( Palgrave 1st edition 2012).

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choose their own method of corporate governance in relation to their operations4. However the
ASX have a very unique principle to ensure that the organizations are accountable towards the
process of corporate governance. The policy is known as the ”if not why not” policy. According
to the policy of the ASX an organization has to show that why they are not adopting the
recommendations provided by the ASX if they feel that it is not suitable for them. Through the
process the regulator not only provides for scope for the organization for adopting their own
principles but also making them accountable in relation to the process of corporate governance.
Where a company has failed to comply with the provisions of corporate governance as
recommended by the ASX they are liable to be imposed with pecuniary penalties. There is no
fixed amount of penalties imposed on the organizations as they are determined through the
analysis of the breach committed by them. In the recent case as related to Sino Australia Oil and
Gas Limited (Company) the ASX was successful in imposing a penalty of $1000000 through
the court as the organization was found to be guilty of not complying with the provisions of ASX
in relation to corporate governance. In the case of Ardent it has been already discussed above
that the organization has not been able to implement proper risk management strategy in relation
to corporate governance5. It is also evident that the company could have been able to avoid the
harm which had been caused to the patrons and moreover would have been able to address the
period after the accident in a better way of they had implemented appropriate and adequate risk
management strategies6. However a careless attitude had been demonstrated by the organization
towards its operations which is evident for the absence of any risk management strategies within
4 Li, G, Riley, S. Applied Corporate Law: A Bilingual Approach (LexisNexis 1st Edition 2009).
5 Pearson, Gail. Failure in corporate governance: financial planning and greed’ (2016) 13(2) Handbook on
Corporate Governance in Financial Institutions 185.
6 Harris J, Corporations Law, (LexisNexis Study Guide 1st edition 2008).

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the organization7. It can therefore be concluded that the reason for the death of the patrons and
the hardship faced by the relatives of the diseased has resulted solely out of the negligence of the
organization in relation to risk magnet strategies. The organization would also suffer losses in
relation to reputation and its overall value in the society. This is solely because the organization
has ignored the good governance principles and therefore not on the loss of reputation the
organization would also be imposed with pecuniary penalties by the ASX for its actions.
Answer 3
According to Section 180(1) of the Corporation Act 20018 any director or officer who is in
control of the organization as per the doctrine of “Directing minds and will” has the
responsibility of managing the specific organization with bona fide intentions and towards its
best interest9. The section also provides a test for determining the liabilities under this section10.
According to the principles of the test a reasonable director is paced in the position of the
director alleged to have breached the section in the same circumstances when the potential
breach was committed and then analyze whether the same actions would have been committed
by reasonable director or not11. In case it is found that the reasonable director would not have
committed the action the alleged director is determined to be guilty of violating section 180(1) of
the CA. in the case of AISC V Cassimites one of the issues before the court was to find out
whether the extent of application of section 180(1). In answer to such question it was provided
by the court that even if the duties under the section are limited only towards the company and
not the society, the duty may not only be breached because of financial losses suffered by the
7 Tomasic, R.,Jackson, J.,Woellner, R., Corporations Law - Principles, Policy and Process (4th Edition
Butterworths., Sydney, 2002).
8 Corporation Act 2001 (Cth)
9 zpatrick, Symes, Veljanovski, Parker, Business and Corporations Law;( LexisNexis 3rd edition 2017).
10 Vermeesch,R B, Lindgren, K E, Business Law of Australia (Butterworths, 12th Edition, 2011).
11 Harris J, Butterworths Questions and Answers Corporations Law:, (LexisNexis, 3rd Edition Sydney 2009).

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company but also the loss of reputation and value in relation to the society. The breach of this
section under the CA provides for financial penalties by the directors personally and also may
extend to a disqualification from management order under section 206A of the CA.
In the given circumstances it has been provided that Ardent has already suffered various losses in
relation to the accident which took place at Dreamworld. The losses are in form of financial
losses suffered by the organization as the park was closed for a considerable period of time. In
addition the organization had to pay compensation to the family of the deceased as well as suffer
losses in relation to reputation and value in the society. In the case of AISC V LINDBERG the
court ruled that if a director is found to be not acting in the best interest of the organization and
therefore breach section 180(1) of the Act they would be imposed with pecuniary penalties as
well as disqualification from management for a certain period. In this particular case the director
who was found to be guilty of violating section 180(1) of the CA was imposed with a pecuniary
penalty of $100000 along with a disqualification from management period of two years by the
court.
In the given issue related to Ardent if the test provided by section 180(1) of the CA is applied it
would be analyzed that a reasonable director would have followed the recommendations
provided by the ASX in relation to risk management and would have in place proper risk
management strategies. Therefore the directors have violated the section when their actual action
would have been different from that of a reasonable director. Actual harm which is although not
necessary for the breach off the section has been caused to the company as it has suffered losses
of value and reputation. Therefore along with the financial and goodwill losses suffered by the
company the directors of Ardent are also liable for additional penalties under section 1317E and
206A of the CA.

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Answer 4
It has been evident from the above discussion that Ardent did not had in place any policy or
strategy to address the issue arising out of the Dreamworld accident. The highlight of the news
was that the companies in relation to the post accident stage were grossly incompetent to handle
the situation. It not only did not contract the relatives of the deceased but also provided untrue
news in relation to the accident12. The company had indulged in a defensive mode throughout
the post accident period trying to defend it policies and strategies which were grossly
incompetent to handle the situation. Reacting to the criticism faced by the organization in
relation to its strategies of risk management it has implemented certain new polices into its
governance system related to the management of risks. This can also be seen as a result of the
constant pressure from media. The criticism also resulted in the resignation of Deborah Thomas
the CEO of the organization. In response to the incident the organization closed the park for a
period of 45 days in order to appropriately carry on the process of inquiry. The rid which led to
the fatal accident has been permanently made out of operation by the company. The company
has also established a risk management committee in accordance to the corporate governance
recommendations provided by the ASX. The aim of the organization is to be global brand in
relation to entertainment and particularly expand its operations in the USA. In addition the
company has hired risk management experts from delloitte and a former Queensland policeman
to handle the situation the organization is in with respect to the accident. The stock value of the
organization has also gone down considerably following the fatal incident. The organization has
been subjected to damage control since the incident took place. This has led the entire company
to shift its focus from its core operations towards the management of the incident. The company
12 The Guardian. (2017) <https://www.theguardian.com › World › Australia › Dreamworld>.

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did not follow the basic rule provided by the ten commandments that in case of any accident the
relatives of the affected party has to be contacted13.
The actions which have been initiated by the organization after the accident cannot be regarded
as adequate measures. The company had been focusing majorly on providing explanations for its
actions rather than finding out proper measures to address the situation and to ensure any such
situation does not take place in the future14. This action of the organization has also backfired as
its stalk value have been consistently going down.
13 Booth, Simon A. Crisis management strategy: Competition and change in modern enterprises. (1st Edtion,
Routledge, 2015).
14 Dreamworld’S Parent Ardent Leisure Is In Damage Control (2017) NewsComAu
http://www.news.com.au/finance/business/other-industries/dreamworld-parent-company-ardent-leisure-in-crisis-
after-fatal-theme-park-accident/news-story/00c3d7a283c19e05427f273bb3a44e39

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Bibliography
Books
Baxt, R., and Fletcher, K.L., Fridman, S., Corporations and Associations Cases and Materials
on, (Butterworths, Australia, 10th edition, 2008)
Booth, Simon A. Crisis management strategy: Competition and change in modern enterprises.
(1st Edition, Routledge, 2015)
Ciro T, Symes C, Corporations Law in Principle LBC Thomson Reuters, (Sydney, 9th edition
2013)
Fisher S, Anderson C, Dickfos, Corporations Law – (Butterworths Tutorial Series, 4th Edition
Butterworths, Sydney 2014)
Harris J, Butterworths Questions and Answers Corporations Law:, (LexisNexis, 3rd Edition
Sydney 2009)
Harris J, Corporations Law, (LexisNexis Study Guide 1st edition 2008).
Li, G, Riley, S. Applied Corporate Law: A Bilingual Approach (LexisNexis 1st Edition 2009).
Parker, Clarke, Veljanovski, Posthouwer, Corporate Law, Palgrave 1st edition 2012
Tomasic, R.,Jackson, J.,Woellner, R., Corporations Law - Principles, Policy and Process (4th
Edition Butterworths., Sydney, 2002).
Vermeesch,R B, Lindgren, K E, Business Law of Australia (Butterworths, 12th Edition, 2011).
zpatrick, Symes, Veljanovski, Parker, Business and Corporations Law; (LexisNexis 3rd edition
2017)
Case Laws
ASIC v Matiner Corp [2015] 327 ALR 95 at [144]
Australian Securities and Investment Commission (ASIC) v Cassimatis [2015] NSWSC 1744

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Journals
Pearson, Gail, ‘Failure in corporate governance: financial planning and greed’ (2016) 13(2)
Handbook on Corporate Governance in Financial Institutions 185.
Legislations
Corporation Act 2001 (Cth)
Website
Dreamworld’S Parent Ardent Leisure Is In Damage Control (2017) NewsComAu
http://www.news.com.au/finance/business/other-industries/dreamworld-parent-company-ardent-
leisure-in-crisis-after-fatal-theme-park-accident/news-story/
00c3d7a283c19e05427f273bb3a44e39
The Guardian. (2017) <https://www.theguardian.com › World › Australia › Dreamworld>.