LAWS20059 Corporations And Business Structures

In corporate practice, there are many situations where people have to consider whether the company is insolvent. To do so, they have to look at the evidence. Your task is to explain the legal definition of insolvency under the Corporations Act 2001 and to explain the types of evidence that can be used to prove insolvency. To explain them, it is not sufficient to just list them. You need to explain how the evidence contributes to proving the elements of the definition. (You should NOT refer to statutory demands, which make it easier for a creditor to prove insolvency in certain situations. The effect of a statutory demand is simply to put the burden on the company to disprove insolvency, so a statutory demand does not avoid the necessity to look at the evidence.).

HINT: The law recognises two ways things can be proven. Sometimes, you can directly evidence something because the evidence itself directly shows what you need to prove. Thi is called direct evidence. Other times – especially when direct evidence is lacking – you use evidence that does not directly prove something but it leads to an inference about what you want to prove. This is called circumstantial evidence. It is often quite difficult to directly prove insolvency, so it is frequently necessary to rely on circumstantial evidence.

At the website of www.austlii.edu.au, locate the High Court case of Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd [1974] HCA 22 and the Partnership Act 1891 (Qld.), and answer the following question.

The Canny Gabriel case was a case in which the High Court found that there was a partnership under New South Wales law. Your task is to demonstrate that the same result would have been reached under Queensland law. In the Partnership Act 1891 (Qld.), identify the elements required to establish the existence of a partnership, and for each element, summarise the evidence in the Canny Gabriel case that would support it.

At the website of www.austlii.edu.au, locate the Victorian Supreme Court decision of In the matter of Gunns Plantations Limited (Administrators appointed) (Receivers and Managers appointed) [2012] VSC 513. You are required to do a summary of this case that identifies:-

• What was the court application about?
• What was the decision made by the court?
• What was the law addressed in that decision?
• What was the legal reasoning that led to the decision?
• What would have been the practical effect if the decision had gone the other way?