You must use the ILAC method when answering problem questions.

(Each 15 marks)

QUESTION 1

Harry Price is a director of Harry Motors Ltd (Harry), a company which operates a car and truck service business in the town of Harry in far-western New South Wales.

In 2017, Harry attended an aeroplane industry conference.She met James, who told her that there was an opportunity to set up a tractor-servicing franchise in her area.She registered a company called Harry's Tractor Servicing Pty Ltd, and set up its business in a town close to Harry.In its first year of operation, it made a profit of $ 1.5 million.

When she was on the aeroplane back from the conference, Harry began a conversation with Emily, a mining executive who was sitting next to her.Emily told her that there were exciting zinc mining opportunities in the Harry area. Harry had a geological survey done and sets up another company, Harry Zinc Mining Pty Ltd, which made a profit of $ 4 million in its first year.

Harry did not inform the board about either of these ventures.

Harry has been given specific responsibility for ordering parts from various suppliers for use by Harry. This is a critical function because Harry's clients depend on Harry being able to supply parts quickly so that their vehicles have spares, particularly during the grain harvest season. Stocks of oil filters start to run low in the month before the harvest. Jacob, the stores manager told Harry about this.However, Jacob subsequently discovers that Harry did not order the oil filters, with the result that Harry has had to turn away customers, and has lost $ 600 000 in profits.

Assume you are an investigator appointed by ASIC who has discovered these facts. Advise as to all liabilities that arise, including all remedies that are available. You must cite relevant statute and caseLAW