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PAST EXAM PAPER 1 Question 1 Larry Maggiorie is a trainer of thoroughbred horses. He purchases thoroughbred yearlings, trains and grooms them for racing and when ready, “on sells” them to interested purchasers. This activity is carried on from his property known as “Fantasia” in Victoria. On 4 October 2012, Larry travels to Vanuatu and on that day attends the Western District Yearling Sales in Port Vila. He purchases a yearling named “Prized Prince” for the sum of $325,000 with the intention of grooming the horse for the above purpose. The terms of the contract for the purchase of “Prized Prince” contains the following terms, inter alia: Western District Yearling Sales Pty Ltd are the sole agents for the owners of thoroughbred horses sold from its premises in Port Vila; (ii) The owners of each thoroughbred horse and Western District Yearling Sales warrant that each thoroughbred horse sold is free from disease and/or malnutrition and fit for the purpose of “training and grooming” in “rich horse racing events anywhere in the world”; (iii) Should any dispute develop between the vendors, agents and purchasers with respect to the purchase of any thoroughbred horse sold by the agents, such dispute will be resolved according to Port Vila law; (iv) In the event that a purchaser of a thoroughbred yearling takes legal action, that action shall be barred unless initiated within 24 months from the date the cause of action accrues.

(i)

After transporting “Prized Prince” to Fantasia, it dies on the 9th of October 2012 as a result of botulism poisoning suspected to have been caused by contaminated feed ingested by the horse during the week preceding its purchase by Larry. Upon making further inquiries, Larry discovers that the vendor of “Prized Prince” was Gus Gillett presently residing in Port Vila. Please answer the following question:

(a) Larry commences an action against Gus Gillett for breach of contract and misleading and deceptive conduct in the Supreme Court of Victoria on 14 May 2015. Upon service of the writ, Gus Gillett desires to have the proceedings against him either stayed or dismissed. Advise both parties. Your answer must include a discussion of the steps that Gus should take to protect his position, all the possible grounds upon which each party can rely (with respect to the application to stay or dismiss the proceedings) and how the court should rule. Give reasons for your answer. Your answer must also include a discussion of relevant case authorities.

QUESTION 2 Eric Basser was seriously injured when an unopened soft drink bottle, purchased by his wife from a local supermarket, exploded in his hands. Investigations completed by Eric’s legal advisers reveal that: (a) the soft drink was prepared by Magic Soft Drinks Pty Ltd; (b) the soft drink was “bottled” and packaged by Smart Bottlers Pty Ltd; (c) the soft drink bottles were distributed to all retail outlets by Acme Distributors Pty Ltd; and (d) the manufacturer of the glass bottle containing the soft drink was Plenty Glass Pty Ltd; (e) each of these parties have lodged claims with their respective insurers who have denied liability without giving Eric reasons for their denial. Notwithstanding these investigations, Eric’s legal advisers are not certain who the correct defendant or defendants are to be. Please answer the following question: (i)

What procedures, both in Equity and in the Supreme Court Rules, are available to Eric’s legal advisers so as to ascertain the proper defendant or defendants in Eric’s proposed action in the Supreme Court? Your answer must include a discussion whether Eric will be successful in this regard.

(ii)

Assume that Eric’ legal advisers are unsuccessful in ascertaining the proper defendant or defendants in part (i). What course of action should Eric’s legal advisers now adopt? Your answer must

include  a discussion of the relevant Supreme Court Rule(s) applicable; 

the advantages and disadvantages that exist in the course of action adopted; and

 how the disadvantages might be overcome. In this regard, how useful to your advice is that each of the possible defendants were insured?

(iii)

Assume that the correct defendant is Smart Bottlers Pty Ltd. Prepare a general indorsement on behalf of the plaintiff.

(iv)

Soon after Smart Bottlers Pty Ltd is served with the writ, it writes to Eric’s legal advisers and makes a formal offer of compromise to Eric of $1.25 million. The offer is rejected by Eric’s legal advisers. At the conclusion of trial, a verdict is entered in favour of Eric in the sum of $653000 plus costs. What cost consequences flow from this verdict? END OF EXAMINATION

PAST EXAM PAPER 2 SJC Ltd (SJC) is incorporated in Victoria. Its primary function is research into diseases of the brain especially “dementia” and other related illnesses amongst the elderly. In recent times, SJC has received much “positive” publicity in Australia as well as in England because of its discoveries into the causes of “dementia”. In fact, its research is well advanced in formulating a cure for this illness. SJC needed to raise extra capital to fund this “leading edge” research and approached Varmano & Associates Pty Ltd (Varmano) to assist it in this capital raising activity. Varmano is incorporated in Victoria and carries on business in Melbourne as finance brokers. On 20 March 2011, SJC entered into a “placement” agreement with Varmano. This agreement entailed SJC “placing” for sale 5 million shares in SJC. Varmano was to find buyers for these shares which, it was hoped by SJC,

would sell for $10 per share. The relevant terms of the placement agreement included, inter alia, that (iii) the agreement would be for a period of 2 years, terminating on 19 March 2013; (iv)Varmano would use its best endeavours to procure the sales of the shares and advise SJC monthly of all sales made; (vi) sales of the shares were to be at the rate of at least 2500 per month; (vii) Varmano would be paid commission at the rate of 3% on all sales; (viii) notwithstanding the completion date of the agreement, SJC reserved the right to “terminate” the agreement at any time if, in the opinion of its Managing Director, sales were unsatisfactory; (x) at the completion of the agreement or earlier if the agreement was terminated in accordance with clause (viii) , Varmano was to account to SJC for all the sales made; (xiii) the law that applied to the agreement was that of Victoria and the Supreme Court of Victoria would have jurisdiction to hear and determine any dispute that may arise between the parties. In fact, the managing director of SJC was dissatisfied with the performance of Varmano and sought to terminate the agreement in accordance with clause (viii) of the agreement by letter dated 24 April 2012 to Varmano and sought to recover proceeds of any sales of shares made and damages. It alleged that the sales were not meeting the “target” of 2500 per month pursuant to clause (vi) of the agreement. Varmano responded by alleging that SJC‘s actions amounted to a repudiation of the agreement. It denied that those set targets were not being met. It wrote to SJC on 18 May 2012 accepting the “repudiation” and sought damages. Varmano holds in trust the sum of $1.2m being the proceeds for the sales of shares made to the date of the alleged repudiation of the agreement by SJC and refuses to account to it. SJC approaches its lawyers, Shady Neglect & Co instructing that firm to

immediately commence proceedings in the Supreme Court of Victoria seeking from Varmano the proceeds of the sales held in trust by Varmano, damages, interest and costs. The following statement of claim is prepared: IN THE SUPREME COURT 2012

12786 of

OF VICTORIA AT MELBOURNE

BETWEEN

SJC LTD

(Plaintiff)

And

VARMANO & ASSOCIATES PTY LTD

(Defendant)

STATEMENT of CLAIM Date of document:

7 August 2012

Filed on behalf of:

The Plaintiff

Prepared by: 2013

Lawyers Code:

Shady Neglect &Co,

Tel No. 84347967

Lawyers, 123 Smith St Melbourne 3000

DX 7089 Melb

1. The Plaintiff is duly incorporated in accordance with the provisions of the Corporations Act 2001 (Cth) and can sue and be sued in its own name; 2. The defendant carries on business as financial brokers which include, the placement and/or sales of shares on behalf of incorporated bodies; 3. On 20 March 2011, the Plaintiff and the Defendant entered into an agreement (the placement agreement) in relation to the sale of 5 million shares Particulars (i)

The agreement was partly written, partly oral and partly implied;

(ii)

Insofar as it was in writing, it was contained in a formal contract signed by their duly authorised company representatives and witnessed by Harry Johnson;

(iii)

Insofar as it was oral, the agreement was contained in a general discussion between Isaac Stewart for the plaintiff and Reginald Cooper for the defendant;

(iv)

Insofar as it was implied, it was implied so as to give effect to the parties’ intention;

4. Pursuant to clause (iv) of the agreement, the defendant was to use its best endeavors to procure the sales of the shares as agreed, but it is alleged, and proof will be provided, that the defendant failed to use its best endeavors;

5. The allegation made in paragraph 4 hereof is supported by the fact that the defendant did not allocate any or any sufficient resources to perform the task that it was contractually bound to do and accordingly, such conduct constitutes a breach of the agreement; 6. Further and in the alternative, at all material times the defendant was aware of the identity of a group of investors who specialise in investing in medical science, namely the “Bellbird Capital Fund”, but took no steps to contact that Fund with a view of possibly obtaining a placement of shares; 7. The matters above referred to constitutes a breach of the agreement above referred to; 8. Further and in the Alternative, the conduct of the defendant constitutes misleading and deceptive conduct

(i)

(ii)

Particulars Statements made by the defendant to the plaintiff, in the course of conducting its business with the plaintiff (details of which are well known to the defendant),were misleading and deceptive and lead the plaintiff into error; Full and better particulars will be provided at or prior to trial.

9. As a result of the aforementioned matters, the plaintiff has suffered and continues to suffer, injury, loss and damage;

10.The defendant, at all material times, did engage in discussions and various communications with the plaintiff in an attempt to resolve differences of opinion as to what constitutes “best endeavors”. 11.Notwithstanding anything hereinbefore mentioned, the parties did

arrive at an agreement as to the liability of the plaintiff to pay the defendant commission. The agreement was that the defendant not be paid any commission at all. The plaintiff denies that the defendant has a right to seek damages for the non-payment of such commission. AND THE PLAINTIFF CLAIMS

(a) Damages; (b) Interest; (c) Costs (d) Such further Order or Orders as this Honourable Court deems appropriate.

Shady Neglect &Co Lawyers for the Plaintif Dated: 7 August 2012

On 11 August 2012, the writ with the Statement of Claim attached, is filed in the Supreme Court of Victoria. It is duly served on the defendant on 15 August 2012.

Question 1 (a) Identify and briefly explain 10 breaches of the rules of pleadings in the Statement of Claim.

(b) What course of action should the defendant take in view of the way the pleadings have been drawn? Will the Defendant be successful in that action? (c) The defendant employs Killem &Co to act on its behalf. It prepares a defence which admits that a “placement” agreement was reached between the parties, but d e n i e s that the agreement was breached. No other allegations are made against the plaintiff. The defence was filed and served on the plaintiff lawyers. The plaintiff desires to obtain a quick resolution to the matter and desires judgment as soon as possible. Advise the plaintiff as to what avenues (if any) are open to it and how successful will it be.

Question 2 Assume that the matter proceeds to a hearing before Pitstop J sitting alone. Two days into the trial, the defendant realises that it has a claim against the plaintiff for commission w i t h respect to the sales made by it and damages for wrongful termination of the placement contract. What should Counsel for the defendant do? Advise Counsel for the plaintiff as to its rights.

Question 3 Assume that the matter proceeds. You can further assume that the matter has reached verdict and the plaintiff has completely failed in its claim and the defendant has been awarded the sum of $1.2 million by way of commission and damages. An order was made on those terms. Please answer the following questions: (a) The defendant sought costs on the basis that “costs should follow the event”. The plaintiff not only resisted that order, but it too, sought costs. Advise the plaintiff.

(b)Soon after judgment, the plaintiff discovers that, at all material times, the defendant was unlicensed and its conduct in procuring placement of shares was therefore contrary to the provisions of the Australian Security and Investment Commission Act. As a consequence, it was not entitled to any commission and/or damages. It consults its lawyers about this issue. Upon reviewing their file, its lawyers discover that, despite serving a Notice of Discovery upon the defendant, the defendant failed to disclose various documents passing between it and the Australian Securities and Investment Commission which revealed the suspension of the defendant’s licence it had in its possession. It maintained that those documents were destroyed in keeping with its “documents retention policy”. What advice would you give the plaintiff as to its rights? END OF EXAMINATION...