Reference no: EM133212274

In the wake of the COVID19 outbreak, worldwide demand for oxygen cylinders increases dramatically, but their weight makes them expensive to transport, which in turn pushes up prices. Richard Court, who graduated with a BSc in chemistry from the University of Western Australia, discovers a new way of designing hardened plastic cylinders which are far lighter than the old metal ones. Richard decides to commercialize his idea, and on 3 July registers with ASIC a company called Light Gas Pty Ltd. Richard is the sole shareholder and Managing Director of the company. The type of plastic that Richard has developed requires special chemicals which themselves take a significant amount of time to manufacture, and in anticipation of this, on 30 June Richard had signed a contract with Chemical Man Ltd in terms of which Chemical Man would manufacture 5 000 liters of a chemical called hydroxone. The contract specified that both payment and delivery would take place on 25 July. Richard signed this contract as' Richard Court, Managing Director, Light Gas Pty Ltd. On 6 July, Richard signed a contract to buy a gas compression machine costing 2 million from Compression Solutions Pty Ltd. He signed this contract as' Richard Court, Managing Director, Light Gas Pty Ltd. The contract required Light Gas Pty Ltd to pay for the machine in three installations of $ 300 000, the first installation falling due on 1 August. The compressor was delivered and gas production began. Richard finds that the gas manufacturing business is far more costly than he anticipated and so, in order to improve his fortunes, he does two things: First, in order to raise more capital for Light Gas Pty Ltd he persuades a number of relatives to invest in it. Because he issues a large number of shares, Richard ends up no longer having a majority holdig ir, the company, and on 15 July the shareholders elect a new board, consisting of Anne, Roy and Liam. Anne is elected as the new Managing Director, replacing Richard. The new board holds a meeting on 20 July and decides not to proceed with the contract with Chemical Man Pty Ltd as they believe that they can source hydroxone more cheaply from another supplier. They sent a letter to Chemical Man informing that company that Light Gas would not pay for, or take dolivery of the hydroxone. Second, Richard decides to branch off privately into the business of making pharmaceuticals. The manufacture of pharmaceuticals requires a license, and the relevant legislation prohibits the granting of a license to 'any person who has a criminal conviction involving drug possession. Unfortunately, Richard had been convicted of drug possession during his student days, so he registers another company, General Pharmaceuticals Pty Ltd, of which he owns 99 shares and his wife, Elizabeth, 1 share, with himself as Managing Director and his wife as Company Secretary. He asks Elizabeth to lodge an application for a license on behalf of the company with the Pharmaceutical Control Board. Unfortunately, things do not turn out well: On 10 April, the employees at Light Gas Pty Ltd go on strike, and because this means its income was severely reduced and it was unable to pay the $ 300,000 installment to compression Solutions Pty Ltd. Meanwhile, General Pharmaceuticals Ltd has received a letter from the Pharmaceutical Control Board refusing the license application, citing Richard's previous conviction as its reason. Richard has now approached you for legal advice in relation to a lawsuit by Chemical Man Pty Ltd for breach of contract, a law suit from Compression Solutions Pty Ltd claiming $ 300 000, and the letter received by General Pharmaceuticals Pty Ltd refusing the license.