the directors of Gemsales Pty Ltd
Jack, Nolan, Andy, Helen and Erica were the directors of Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesalers to the local market. The company decided that as the market was becoming more competitive it needed to expand its business as it felt with increased volumes of sales it would be able to lower its prices and be more competitive. In order to do so it obtained a $4 million dollar loan from the Friendly Bank Ltd.
$3 million was used to buy more stock and $1 million was used to buy a large new warehouse and showrooms from Traders Pty Ltd. Andy was not at the meeting that had made these decisions as he was in hospital recovering from a serious accident. Erica, as was her usual custom, had not attended the meeting but signed the requisite documentation agreeing to the expansion of the business and the getting of the loan. Helen who attended, said she did not know if she agreed and abstained from voting.
Jack and Nolan both voted to go ahead with the expansion and the getting of the loan. At about this time Nolan has established contact with Mark, who was setting up a new business as a retailer of jewellery. Mark was looking for reliable suppliers, but said he would not deal with Gemsales Pty Ltd as he did not like Jack, the Managing Director. Not wishing to miss out on such a lucrative business opportunity, Nolan arranged to set up his own business as a jewellery wholesaler and a contract was entered into between Mark and Nolan for the supply of jewellery.
Six months later, Nolan resigned as a director. At the same time it was clear the company had over-extended itself and was insolvent and could not pay the interest on its loans. It also became clear that Nolan was a major shareholder in Traders Pty Ltd and the other directors were unaware of this at the time of the purchase of the warehouse and showrooms. Furthermore, Nolan had been approaching other established customers of Gemsales Pty Ltd and had secured orders for his own business. Advise as to the liability of the parties both under common law and the Corporations Law.
QUESTION 2 “Ben Buckley and Associates” is a talent agency that represents “big name acts” during their tours of Australia. Ben, the principal of the agency, is extremely pleased to have secured the contract to act as exclusive agent for a huge American entertainer named “Slick Parsley”. “Slick”, as he is known to most people, is due to tour Sydney, Melbourne and Brisbane in a week’s time on his “Fresh Spices” tour. This contract is a huge career break for Ben, so he has decided to make sure he does everything himself, both for the kudos, and to ensure nothing is left to chance. Ben therefore goes to great lengths to ensure all stationary, business cards and promotional material clearly displays the statement
the directors of Gemsales Pty Ltd
“Ben Buckley, exclusive agent to Slick Parsley in Australia”. He has even had this statement included in the extensive television advertising for the tour. Ben also includes as a term of the contract that he will be the “exclusive” agent for Slick Parsley while he is in Australia. Ben, however, is horrified to learn that Slick has two dogs he wishes to take with him on tour. “Jekyll” and “Hyde” are a pair of miniature maltese/poodle crosses that Slick simply cannot bear to be apart from. Ben realises that the dogs need to accompany Slick otherwise he will fret too much to perform. Ben however hates dogs and cannot bear the thought of touching or having anything to do with them. He therefore hires renown Sydney “Dog Whisperer” Rusty Wagtail to take care of the two dogs while Slick is on tour.
Rusty’s contract with Ben states that Rusty will take care of “all matters dog related” such as feeding, grooming and accommodating. It is also clear that Ben remains responsible for all other “dog” matters not specifically related to the day-to-day management of the dogs such as customs declarations and the like. Rusty subsequently flies to the USA to assist Slick with the two dogs. He is surprised however to see there are actually three dogs, the third being another female MaltiPoo named “Nessie”. Slick tells Rusty that the other two dogs are in love with Nessie and cannot travel without her. There is no time to get in touch with Ben for guidance, so Rusty therefore makes what he considers to be an “executive decision” to board all three dogs onto Slick’s luxury private jet.
He tells Slick that he will “take care of it” when they get to Sydney. All three dogs fly off to Australia with Slick and Rusty. Slick’s plane gets into some engine trouble just off the New South Wales coast, necessitating a diversion away from Sydney and a subsequent emergency landing at the small Byron Bay airport. The plane lands and skids to a halt near the perimeter fence, and all are ordered to evacuate the plane immediately. The crew ensure Slick evacuates safely, and the three dogs are left for Rusty to take care of. He hurriedly grabs all three in his arms and jumps down the emergency shute. Then, in a selfless act of care for the animals, Rusty hurriedly runs away from the plane and throws all three animals over the perimeter fence to safety. After medical checks and other such requirements, all are free to go.
Customs clears two of the dogs due to their prior approvals. Nessie, however, is still at large somewhere behind the perimeter fence. Rusty finds her, shaken but in otherwise good health, and once again makes an “executive decision” to simply pick Nessie up and take her to the accommodation with the other two dogs. He tells Slick that “everything is taken care of”. He does not inform Ben about any of this. Two days later, however, an ardent fan takes a movie with his video recorder attached to a drone of the three dogs in Slicks plush rented harbour side apartment.
Word gets out that one of the dogs is in the country illegally. Slick is prosecuted and expelled from Australia before he could do any concerts, thus disappointing thousands of eager fans. The three dogs are kept in quarantine pending destruction. Explain how the law of agency in Australia may impact on the legal positions of Ben, Slick, Rusty, Jekyll, Hyde, Nessie and “the fans”. In your answer, refer to relevant legislation and cases where appropriate.