Reference no: EM132168391

Question 1

Engineers Australia's National Congress approved a new draft Code of Ethics and Guidelines on Professional Conduct in 2010. The draft Code explains:

‘The shared values of the engineering profession are:
- Public wellbeing, health and safety and sustainability
- Responsible leadership
- Personal and professional honesty and integrity
- Professional competence and currency of knowledge and expertise
- Social justice, inclusiveness and equity'

In light of the ideas discussed in Chapter 13 of L Griggs, E Clarke and I Iredale, Manager and the Law, 3rd ed, Lawbook Co Thompson Reuters, 2009, analyse and evaluate these ‘values' as providing an appropriate ethical framework for engineers.

Comment specifically on the utility of this ethical framework for engineers in management decision-making contexts. To what extent, if at all, are the ethical challenges and dilemmas confronting professional engineers different when performing management roles?

Question 2

‘The law reflects the changes that are occurring in society and can be an instrument for change, such as in the area of law reform. Recognising that legal rules are changeable, managers should be active in bringing about beneficial changes that enhance business activity. Managers should also utilise the law as a valuable tool to carry out and achieve management goals.'
(L Griggs, E Clarke and I Iredale, Manager and the Law, 3rd ed, Lawbook Co Thompson Reuters, 2009, p 15.)

Discuss the above statement in the context of the changing role of contract in modern business organisations.

Question 3

Marillo Ltd is a global corporation involved in various engineering and large infrastructure projects in different countries around the world. Although its Head Office is located in New York, it has branch offices to oversee it operations in various countries. Its Australian office is located in Melbourne. While its board of directors usually meets in New York, they do occasionally hold board meetings and make decisions involving local projects in countries where they have significant interests. Marillo Ltd has a significant presence in Australia with mining and natural gas operations currently underway in Western Australia and Victoria.

Marillo Ltd has recently been made aware by its research division of the prospect of substantial coal seam natural gas deposits within metropolitan Melbourne, Australia. As an initial step to confirm the nature and size of these deposits, Marillo must conduct test drills into the gas deposits and take some samples. The undertaking of this project will require engaging local private contractors to undertake various aspects of the drilling project. As well, negotiation, licenses and agreements will need to be entered into with the Victorian government as well as needing to work co-operatively with relevant local councils. The Board of Marillo Ltd also appreciate that significant community consultation will also be necessary for such a potentially sensitive project.

The Victorian state government is very keen to push ahead with the initial stage of this project despite significant opposition from various groups. Accordingly, the Victorian Department of Planning and Mining granted an exploration license to Marillo Ltd. However, the terms of the license state that Marillo Ltd must not drill or prospect within 400 metres of inhabited houses or within 100 metres of gardens or orchards, without written consent from the owners. A site of particular interest to Marillo is located in inner western Melbourne. The area designated for drilling is an open area south of a large recreational park and wetlands and alongside a canal, mostly surrounded by unoccupied industrial buildings. Drilling would involve a mobile drill rig, about the height of a power pole, and trucks to move water and chemicals used in the drilling process in and out of the site.

In May 2012 Marillo Ltd entered into ‘Heads of Agreement' with the Victorian state government as a public private partnership in relation to the development of the project and for sharing profits on sale of gas should the project prove to be commercially viable and profitable. As a first step, Marillo has entered into a written agreement with Zebeid Consultants, a consulting firm comprising engineers, geologists and surveyors who will project manage the operation on behalf of Marillo. In their discussions, Zebeid had exaggerated their level of experience in managing such projects. They told Marillo that they had considerable experience when in fact, while they had managed several major construction projects, they had never managed a gas exploration and drilling project and never in a built up metropolitan area. But as the representatives of both Marillo Melbourne office and Zebeid were old university friends, Marillo didn't worry too much about pursuing a full due diligence on Zebeid, even though this was required under Marillo's contract management policy. Due diligence was also specifically required under the heads of agreement with the Victorian government concerning the engagement of any contractors for the project. As part of their agreement with Marillo, Zebeid is required to liaise with various government agencies. A specific term of the agreement between Marillo and Zebeid is that Zebeid will engage in ‘appropriate community consultation at every stage of the project'.

Zebeid has contracted with Panda Pty Ltd, a local drill operator in order to commence the test drills. The contract with Panda specifies that the drill must be delivered and installed by the end of June 2012 so that drilling can commence in July. Panda has agreed to this timeline by email. The particular drill required for this project is unusually long and Panda has had to arrange special permits to give it road clearance to transport the drill to the site. This has caused considerable traffic congestion on surrounding roads. Added to this, as Panda were getting the drill onto the site it got tangled up in overhead power wires and brought these down. This caused a power failure in the surrounding area for several hours which directly affected some local businesses including a small goods wholesaler who had a consignment of small goods go bad due to shutdown of it refrigeration units during the power failure caused by Panda. The small goods wholesaler couldn't complete some of its supply contracts as a result.

In the meantime, it has also become clear that Zebeid has done little by way of community consultation and there is mounting community anger over the whole project. As a result, a group of local residents have applied for an injunction in the Victorian Supreme Court requesting that all work at the site stop until there is an independent review of the entire project and the involvement of the Victorian government.

Required

(a) Discuss the legal status of the ‘Heads of Agreement' between Marillo Ltd and the Victorian government. Support your answer with reference to Australian contract case law that you have studied.

(b) Analyse the contract between Marillo Ltd and Zebeid Consultants. Is there any basis for arguing that that agreement maybe unenforceable? Explain the contractual and commercial implications if the injunction requested by the group of local residents is successful. Your answer must be supported by relevant case law that you have studied.

(c) Consider the contract between Zebeid and Panda and the conduct of Panda. Is there any basis under either the law of contract or the law of negligence in Australia for legal action to be taken against Panda by anyone?

Support your answer with relevant case law and if relevant sections of the Civil Liability Act. You are NOT required to consider available remedies in answering part (c).