Assessment Task 2 – Research Assignment 77947 COSEC 2017 Spring
Requirement:
You are expected to research a specified topic reading and interpreting cases, journal articles and law
reform policy reports. You are also expected to analyse the effect and operations of these laws and
policies on companies and their stakeholders and you are expected to report on corporate legal issues
using a Report format.
Objectives: This task addresses subject learning objectives 1 and 3.
This task contributes to the development of the graduate attributes 1.0, 3.0 and 5.0.
Weight: 30% Length 2,250 words
Submission:
The assignment is divided into Part 1 and Part 2.
Part 1 (consisting of the first 400 words) is to be submitted to your lecturer in your designated class
during Week 5. Part 1 is designed to allow students to express how they intend answering the
assignment, the references they will use and the citations they will apply. Part 1 is not compulsory – it
is only recommended for use by students who require some feedback as to their approach to the
assignment.
Assume you have submitted Part 1, this will be returned to you by the lecturer in your class in Week 6
(to be collected by you in that class).
The feedback provided by the lecturer is designed to help you to improve upon your assignment quality.
Feedback will only be of value if you have clearly explained in Part 1 what are the material facts, what
are the issues involved and what is the law that you are going to research and comment upon.
The combination of Part 1 (400 words) and Part 2 (1850 words) represent the complete assignment
submission and the total assignment of 2250 words is due in week 8, Friday 22 September and is to
lodged by you in the Law Office Level 3 Law School in Building 5B. You do not submit your complete
assignment to your lecturer in class.
Problem Task
Aussieair Ltd is a company that was originally formed in late 2009 to provide charter air services to a limited range
of clients; one of these clients is the Australian Federal Government. The services provided included charter flights
for military and the Department of Immigration (therefore transporting illegal immigrants around Australia). The
revenues derived from these activities were regular but not profitable. The Board of Aussieair, and its senior
managers, had a meeting in January 2011 and decided to attempt to diversify their operations by applying for a
commercial aviation licence; therefore a licence to transport the general public on a fare paying basis. 1 In June 2011 Aussieair obtained a licence from the Australian Aviation authorities that enabled Aussieair to provide
normal commercial passenger services both interstate and overseas. As Aussieair is intending to target the
discount passenger area it realised that to be successful in the Australian aviation market it must keep the salary
structure of the pilots and the senior managers at a minimum, only then would its staff unit costs be competitive in
the air travel industry. The pilots and senior managers of Aussieair were approached and asked to take a 25% pay
and conditions cut to ensure that Aussieair staff unit costs were lower than their competitors. The pilots and staff
declined to take the 25% cut in pay and conditions.
In light of this refusal, the Board met in July 2011 and decided to form and register a new company in Papua New
Guinea. This company would be called PNGair it would have six directors three appointed from Aussieair and three
directors appointed by the PNG Government. The capital to run the company would be provided by Aussieair,
directions and guidance for running the company would be provided by Aussieair and all of the profits and or
losses were to be remitted to Aussieair in Australia. Aussieair would account for them as either dividends or as a
reduction in the value of their investment.
The Aussieair Board also passed a resolution that the Australian aviation commercial licence; therefore a licence to
transport the Australian general public on a fare paying basis, be transferred to PNGair and that aircraft and
facilities owned or leased by Aussieair be sold to or subleased to PNGair as required. The aviation commercial
licence transfer to PNGair was approved by the Australian Federal government in August 2011; this meant that
PNGair from that date could operate within Australia as a domestic and international carrier; therefore, a licence
to transport the Australian general public on a fare paying basis.
Pilots and senior managers of Aussieair were made redundant in September 2011 and they were paid in full their
redundancy entitlements. They were immediately offered employment in PNGair (but they were to be based in
Australia and not in Papua New Guinea) under the new salary and conditions applicable to PNGair (the salary and
conditions payable by PNGair was based on the exchange rate and comparable salary rates in PNG); however, the
new salary and conditions meant that all of the Aussieair pilots and senior managers received, on average, 25%
less than the salary and conditions formerly paid by Aussieair. All of the Aussieair pilots and senior managers
begrudgingly accepted the new employment wages and conditions of employment.
The employee associations, representing the former pilots and the senior managers of Aussieair, are concerned
that their members are being disadvantaged at having to accept these new reduced salary and conditions, whilst
still living and operating out of Australia. They were even further upset to find out that the Board of Directors, who
participated in the cost-cutting exercise and the enforced redundancy, at the October 2011 Aussieair AGM
awarded themselves substantial remuneration increases and share bonuses. The employee associations want you to consider commencing an action against Aussieair.
They want you to advise them on the chances of their success in having the Australian salary
and conditions that were originally paid to employees in Aussieair being enforced on PNGair
such as all PNGair employees will receive equivalent Aussieair salary and conditions.
Students are expected to research, analyse and apply relevant provisions of the Corporations Act and any relevant company
law precedent to support their answer. You must only consider the Australian Corporation Law and corporation’s law
precedents – treatment of laws that fall outside of the Australian Corporations Law will not be rewarded. In particular PNG
law is not to be considered. Reasonable assumptions are permitted. 2