Business and Corporate Law Case Study Assignment: HI6027, T1 2019

This document provides a detailed solution to a Business and Corporate Law assignment, addressing two case studies. Part A examines a negligence claim against a bus line, analyzing duty of care, breach, foreseeability, exclusion clauses, and damages, with a focus on Jenny's injury and loss of enjoyment. Part B delves into the statutory and common law duties of company directors, as defined by the Corporations Act 2001 (Cth), and assesses the actions of directors in a case involving Vesna, Ilyych, Mikhail, Zvaid, and Sergey, highlighting breaches of fiduciary duty, including issues of discretion, conflict of interest, and misuse of information. The solution incorporates relevant case law, legislation, and legal principles, offering a comprehensive analysis of the legal issues presented.

BUSINESS & CORPORATE LAW

Part A

ISSUE
 Whether jenny can successfully sue
the Hunter Bus line for damages for
her injury and for the loss of
enjoyment of her holiday.

RULE
 To establish a claim under negligence, claimant must
prove that his claim include all the essential elements
to constitute Negligence as held in Donoghue v
Stevenson [1932] AC 562.
 A person would be charged with negligence only when:
• a) he had a duty of care towards another;
• b) he failed to carry out such duty and hence there is a
breach of duty of care;
• c) such breach caused an injury to another person;
• d) such event causing the injury was foreseeable;
• e) the person causing the injury and the aggrieve person
were in a proximate relation to foresee the risk.

RULE (CONTD..)
 Exclusion Clause might be cited by
the defendant as a defence.
 Strict Liability cannot be avoided by
defendant.
 Pure Economic Loss is not
entertained by the Court.

APPLICATION
 The Bus line owes its passengers a certain duty of care;
to protect the passengers from any probable danger that
might occur in the course of their journey in the bus.
 The bus line failed to provide safety precautions for the
passengers which could be held as a breach of their duty
of care.
 The accident was of a general nature which was quite
common and therefore could be marked as foreseeable.
 The bus line or its employees and Jenny, a passenger
are in such close proximity that they could have
predicted the foreseeable risk and could have prevented
it from happening.

APPLICATION (CONTD..)
 The Bus line could defend itself by
citing the ‘Exclusion Clause’ for
giving a written word of caution to
Jenny.
 However, in this case, duty of care
was in the nature of strict liability
which was unavoidable.

CONCLUSION
 Jenny would be able to recover
damages pertaining to her injury
sustained from the accident.
 But no damages would be awarded
for loss of enjoyment as it falls under
the rule of Pure Economic Loss.

Part B

ISSUE
 To determine the statutory and
common law positions of the
directors.

RULE
 The fiduciary duties of the
directors require the directors:
• to carry out their duties and responsibility
to the best interest of the business,
• not to do anything that could prove to be
detrimental to the company.
• to retain discretion pertaining to the
decision taken by the other directors and
shareholders of the company

RULE (CONTD..)
 Statutory Duty of directors under Corporations Act 2001
(Cth) include:
• section 180(1): duty to exercise powers and discharge duties with
due care and diligence
• Section 181: to execute their powers and discharge their duties in
good faith and for a proper purpose
• Section 182 : not to misuse their position for gaining advantage for
themselves or for someone else, causing detriment to the company
• Section 183 : not to improperly use the information that he may
have obtained for their position as a director of the company, for
gaining advantage for themselves or for someone else, causing
detriment to the company
• Section 191 : to give notification to the other directors pertaining
to his personal interest in relation to the affairs of the company, in
case any conflict of interest arises

APPLICATION
 Vesna took all the important
decisions on behalf of the company
on her own; however, making Mikhail
and Zvaid agreed to Vesna’s
decisions blindly.
 Vesna can be held liable for
breaching her director’s duty as laid
down under the Corporations Act
from section 180 to 184 and section
191 of the Corporations Act

APPLICATION (CONTD..)
 Ilyych had also breached his director’s
duties by signing a deal with another
competing company; not sharing such
critical information with the other
shareholders at times of conflict of
interest.
 Mikhail, Zvaid and Sergey did not exercise
their fiduciary duty to retain discretion
pertaining to the detrimental decisions
taken by Vesna and Ilyych.

CONCLUSION
 All directors held liable for breach of director’s
duties.
 Mikhail, Zvaid and Sergey would face civil
prosecution for not retaining discretion under
common law.
 Ilyych would face civil litigation for signing a
deal with a competing company while being a
director and shareholder of Borisda Builder
Pty Ltd.
 Vesna would face civil as well as criminal
prosecutions under the Corporations Act.

REFERENCES
 Journal Articles/Books
• ANDREW. KEAY, L. L. B. DIRECTORS'DUTIES. JORDAN Publishing Limited,
2016.
• Bruner, Christopher M. "Is the Corporate Director's Duty of Care a
Fiduciary Duty-Does It Matter." Wake Forest L. Rev. 48 (2013): 1027.
• Spamann, Holger. "Monetary Liability for Breach of the Duty of
Care?." Journal of Legal Analysis 8.2 (2016): 337-373.
 Case laws
• Anns v Merton London Borough Council (1978) AC 728
• ASIC v Rich (2003) 44 ACSR 341
• Donoghue v Stevenson [1932] AC 562
• Lamb v. London Borough of Camden [1981] QB 625
 Legislation
• Corporations Act 2001 (Cth)

THANK YOU