was one of four directors of a construction company called

QUESTION

Sharpe was one of four directors of a construction company called Top Level Constructions Pty Ltd (herein after Top Level), with its headquarters in Sydney. Following the devastating floods in Queensland, the Premier of Queensland called a meeting of engineers and builders to discuss major reconstruction plans to rebuild houses and infrastructure to repair the State.Sharpe, who was holidaying in Queensland at the time of the natural disasters, attended the Premier’s meeting. Over a cup of coffee at the Premier’s reconstruction meeting, Sharpe exchanged business cards with Jack, who is a director of his own civil engineering company called Fixit Pty Ltd. After studying Sharpe’s business card, Jack told Sharpe that Fixit Pty Ltd had already secured reconstruction projects worth $50 million and that his company desperately needed to partner with a construction company to share the work to build new roads and bridges and meet the tight deadlines for completion of these building projects.Sharp was quick to spot the potential value of this business opportunity and promised Jack to reply to his offer within 48 hours. Sharpe cancelled the rest of his holidays, packed his bags, and flew back to Sydney the same day. Within 24 hours of receiving the offer from Fixit Pty Ltd, Sharpe urgently held a board meeting of directors and informed the directors of Top Level of the $50 million worth of construction opportunities offered by Fixit Pty Ltd. Sharpe impressed upon the board the need to act quickly as the business opportunity arose in a very competitive environment.True enough, just before the commencement of the board meeting, Jack telephoned Sharpe and reminded him that he was waiting on a reply and was most anxious to get the reconstruction project started to avoid financial penalties for any delay in the completion of the project. The board of Top Level, however, was divided in their opinions on whether to accept the proposal conveyed by Sharpe. Brian, a co-director, and Sharpe were in favour of the company partnering with Fixit Pty Ltd; whilst the other two directors of Top Level were hesitant to take on projects in a different State and preferred to take on business opportunities in New South Wales following major infrastructure development announcements by the newly elected Liberal government in NSW.The board of Top Level, however, indicated that it would re-examine the proposal put by Sharpe at the next monthly meeting of the board. Sharpe, who trusted his business instinct, feared the loss of a valuable business opportunity. Sharpe immediately resigned as a director of the company and registered his personal company called Better Built Pty Ltd. Sharpe is the sole shareholder and director of the newly formed company. Sharpe, on behalf of Better Built Pty Ltd, successfully partnered with Fixit Pty Ltd and made substantial profits in a sum of $20 million. The directors of Top Level have recently become aware of the commercial success of Better Built Pty Ltd.(a) Advise the directors of Top Level Construction Pty Ltd whether the company can sue Sharpe and/or Better Built Pty Ltd to recover the $20 million profit. Your answer must be supported by relevant precedents.(b) Advise ASIC, with reference to the facts above, whether there has been any contravention of the Corporations Act 2001 (Cth) and, if so, the course of action ASIC can take and the potential results of its course of action.

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