Problem Question Characters: Alma Almason, CEO of Teen Theatre Pty Ltd (TT) Sai Sander, CEO of North Brisbane Theatre Ho

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Problem Question
Characters:
Alma Almason, CEO of Teen Theatre Pty Ltd (TT)
Sai Sander, CEO of North Brisbane Theatre House Pty Ltd
(NBTH)
Ira Iyer, CEO of Live Entertainment Pty Ltd (LE)
Alma Almason is the CEO of Teen Theatre which produces high quality
theatre productions aimed at
educating teenage children. Alma is the sole director and
shareholder of Teen Theatre Pty Ltd (TT).
TT sells tickets to theatre shows and runs the shows.
In October 2021 Alma was hopeful that COVID-19 was almost over and
that TT’s productions would
become even more successful after the lockdowns with people
desperate to get out and see live
theatre shows.
Alma, on behalf of TT, signed an agreement to use a theatre in
North Brisbane owned by North
Brisbane Theatre House Pty Ltd (NBTH). Just before the first show
Alma received a call from Sai
Sainder, the CEO of NBTH who told her that the theatre had burnt
down and would need to be
completely reconstructed and that reconstruction was not likely to
go ahead for some time. Alma
was upset and immediately started looking for an alternative venue.
Alma found a bigger theatre
which was recently constructed and owned by Live Entertainment Pty
Ltd (LE) in Brisbane’s
Southbank in the heart of the cultural precinct and immediately
commenced discussions with LE for
the use of the theatre. LE’s theatre had 1000 seats. During
negotiations, at which several actors
were present, the sole director of LE, Ira Iyer told Alma that a
pedestrian bridge would be completed
by the local casino before 4 January 2022 and this bridge would
link the city centre directly with the
theatre’s entrance. Alma thought that the completion of the bridge
would certainly increase ticket
sales due to the ease of access to the theatre from the city. The
casino displayed billboards
everywhere advertising the bridge and its completion date. Alma
replied to Ira saying:
“I am so excited to use the LE theatre. Our shows are the best and
we will fill every seat in the
theatre for every show. Just imagine the profit from 1000 ticket
sales per show! The bridge
will be ready just before the first show and patrons can get here
quickly and easily from the
city.”
Ira smiled and Alma, on behalf of TT, entered into a contract with
LE for the use of the theatre for its
52 shows each year for 3 years from 5 January 2022. Alma started to
advertise upcoming shows and
found out that the council license issued to LE upon construction
of the theatre only allowed for 500
patrons. The maximum capacity of 500 was based on safety issues and
not related to Covid-19
restrictions. This meant TT was unable to sell 1000 tickets per
show and could only sell 500 tickets to
legally seat 500 patrons. TT’s FaceBook page was inundated with
requests for more tickets and more
shows from the public which TT could not offer since the actors for
the shows were booked out with
other companies. The first month of shows sold out within
hours.
Alma, who lacked business skills and experience, went back and
checked the written contract and
there was no mention of the reduced capacity of the theatre.
Unfortunately, Alma did not consult a
reputable legal team who would likely have checked the licence and
highlighted the theatre capacity
restrictions. Alma did not check with the council and entered into
the contract without knowing the
information that the theatre capacity was greatly reduced and only
half the available seats could beAYN456 Business and Corporations
Law Assessment 2, Sem 1, 2022. Not for distribution
used. If Alma had known the capacity was only 500 she would not
have entered into the contract
and would have found an alternative venue.
Alma tells Ira she will no longer use LE’s theatre for TT’s
remaining shows because:
1. The pedestrian bridge which Ira said would be completed by 4
January 2022 is now delayed until
April 2023 due to a delay in vital construction materials.
2. Despite having 1000 seats, the theatre can only hold 500 patrons
due to the restrictions on the
licence issued by the council.
On 1 March 2022 Alma made a payment to LE and refused to make any
further payments. Alma’s
accountant has calculated it has cost $1000 in reduced ticket sales
per show for the 8 shows held
since TT entered into the contract. Alma has moved TT’s shows back
to an alternative venue in West
Brisbane at a cost of $2,000 which covered the removalists for the
theatre props and $1000 to cover
the new social media campaign to let patrons know about the return
to the prior venue for the
remaining shows. The new theatre in West Brisbane has a capacity of
1500 and the tickets to all of
TT’s shows for 2022 are sold out in the new venue.
LE is demanding payment for the outstanding money owed. Alma comes
to you to ask if she can
escape the contract with LE and seek compensation for the profit
from ticket sales TT lost due to the
reduced theatre capacity. Alma tells you that in addition to
compensation for loss of profit she
wants LE to be to be fined by the Australian Competition and
Consumer Commission and wants LE
to pay extra damages as a punishment for keeping silent about the
information regarding the
council licence.
Alma also recently received a phone call from the CEO, Sai Sainder,
at NBTH who informed her that
TT was required to pay the agreed amount in the contract for the
use of the NBTH theatre as TT had
signed the contract and the fire was an accident. Alma and Sai
agree that neither she nor Sai could
ever have expected the theatre to burn down and that neither party
to the contract assumed the
risk for such an event.
Unfortunately, the law firm partners are unwell so as a Business
Law student you need to advise
Alma on the following:
• Is it likely Alma and TT Pty Ltd can prove misleading and
deceptive conduct and can TT
escape the contract? Why/why not. Are there any risks for Alma and
TT Pty Ltd in your
advice.
• If misleading and deceptive conduct is proven what are the likely
remedies for TT and
punishments (if any) for Live Entertainment Pty Ltd ? You should
refer to statutory
remedies only.
• Can NBTH and TT both walk away from the contract? Explain to Alma
the likely common
law principle which Alma and TT may be able to rely on and apply it
to the facts.
Total = 20 marks (worth 20% of your final mark)
Please refer to the CRA for a breakdown of the mark
allocation.
Some hints and tips are below.AYN456 Business and Corporations Law
Assessment 2, Sem 1, 2022. Not for distribution
Getting Started:
The ACL retains the general prohibition on misleading and deceptive
conduct that existed in
section 52 of the TPA and all State and Territory fair trading Acts
(FTAs).
This means the effect of section 18 remains unchanged and,
accordingly, the existing jurisprudence
on section 52 and its State and Territory equivalents remains
applicable under the ACL
Focus primarily on the major issues that may be relevant to this
question including:
• Section 18 of the Australian Consumer Law (contained in schedule
2 of the Competition and
Consumer Act 2010 Cth) . You may refer also to relevant cases
previously contained in s52 of
Trade Practices Act 1974 Cth.
• Section 4 of the Australian Consumer Law (contained in schedule 2
of the Competition and
Consumer Act 2010 Cth).
• Common law doctrine of frustration
• Relevant sections regarding remedies from a breach of section
18
In preparing, you can read (at least) summaries of the
following:
• Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1)
(1988) 39 FCR 546
• Demagogue v Ramensky (1992) 110 ALR 609
• Concrete Constructions Group Pty Ltd v Nelson (1990) 92 ALR
193
• Gates v City Mutual Insurance Society Ltd (1986) 160 CLR 1
• ACCC v Dukemaster [2009] FCA 682
• Taylor v Caldwell (1863) 3 B & S 826
• Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982)
149 CLR 337
Key words
Misleading and deceptive conduct, frustration, damages.
The law in question where relevant is Queensland. Note there are a
range of frustrated contracts
Acts with slightly different risk allocations. Queensland is common
law with no statute.