Scallop Fishing
The Fisheries Management Act of 1991 is one of the laws that regulate the manner which fishing is carried out in Australia. According to the provisions of this law, for anybody, including a corporation to engage in fishing activities in the protected waters of Australia, they must have a permit that allows them to fish in these protected areas. Furthermore, the Fisheries Management Act of 1991 provides authority to the minister in charge of fisheries to issue out the license and permits, and set up the quota for purposes of determining the number of protecting fish that a person or a company can extract from water.
This authority is delegated to local authorities, and they have the capability of determining the quota of fish that an organization or a person should fish from water. In this case, the Scallop Fishing and Marketing Act has established a quota system for purposes of regulating the amount of tones of scallops that an individual can fish from the coastal waters of Jarvis Bay. The established quota is 50 tones. On this note, even if Bob Beech forms a company, he will not be allowed to fish more than 50 tones that has been established by the Scallop Fishing and Marketing Act. The major treason is that the fishing license that he gets cannot be considered as a personal property, and this is in accordance to the 2007 Fisheries Management Act.
One of the common law principles that can be used for purposes of examining the rights of the company formed by Bob Beech, to exceed the quota system that is placed by the Scallop Fishing and Marketing Act is the 1989 case of Harper v Minister of Sea Fisheries and Others. In this case, there was an establishment of a quota system aimed at regulating the manner which fishing was carried out in the in Tasmanian waters. The number of permits that were issued out for fishing was limited, and the intention was to preserve the fish that was found in the Tasmanian waters. The plaintiff challenged the validity of the quota system and the permit fee that was being issued out by the authorities responsible for regulating fishing in the Tasmanian waters.
The court ruled that the regulation of the fishing and issuance of permit was done in accordance to the Tasmanian Fish Regulation of 1962 and the Fisheries Act of 1959. Moreover, the court ruled that the permits issued out for regulating the fishing industry in Tasmanian waters is not a license, and the basis of it being issued out is to conserve the environment; which is based on the principle that commercial exploitation of endangered species must be regulated and constantly monitored. This is for purposes of protecting the species and ensuring their survival. The court further went on to rule that under the concept of the permit system, the public is deprived of using the protected coastal waters, which is given to the people who are holding the permit of using the water under consideration, but under the control and monitoring by the licensing authority. In as much as the public is deprived of using the protected waters and there is a limit on the amount of fish that a commercial company can extract from the protected waters, the intention is noble, since it aims at protecting the endangered species which are beneficial to the environment.
Regulations and Laws
Through this ruling, it is possible to denote that the regulation of the fishing waters in Jarvis Bay of New South Wales is an issue that is protected by the law, and the common law precedent that is established under Harper v Minister of Sea Fisheries and Others. This prohibits anybody, including a company from engaging in fishing activities that exceeds their quota. In fact, the decision of the court in Harper v Minister of Sea Fisheries and Others denoted that the fishing permit issued by authorities is not a personal property that would allow the company to transfer its rights or engage in unregulated fishing activities in the coastal waters.
Therefore, the advice to Bob Beech is the fact that even if he forms a company, he will only be allowed to fish 50 tonnes of scallop as the quota that has been established for purposes of commercial fishing.
New Nirvana will be held responsible as per the principles established in Chandler v Cape Plc. The limited liability of a company is one of the major characteristics that is normally used for purposes of determining what a company is. It refers to a concept where the shareholders of a company are limited to the amount of shares that they own in a business organization. The reason for the emergence of this principle is to encourage economic growth, by encouraging members of the public and investors to invest in the company, and this is by minimizing the extent of risks that they face, after investing in a corporate organization. This concept of limited liability also applies to a company that is holding other companies.
This is a principles established in Salomon v Salomon, which argued that even if a company has a holding company or has invested in the shares of another company, it will still enjoy the benefits of limited liability. This is a provision that was further enforced in Adams v Cape Industries Plc where the court made a ruling that the law recognizes the creation of a holding or a subsidiary company, and under the provisions of the statutory and common law principles, the holding company will be treated as a separate legal entity; having all its liabilities and rights that are enjoyed by separate legal entities. By following this line of argument, it is possible to denote that Nuclear Sounds Nuclear Pty Ltd can be treated a separate legal entity, in as much as it is a holding company for New Nirvana Ltd.
However, it is important to assert that there are exceptions to this rule that protects a corporate organization from the actions and activities of its holding companies, because of the principles of limited liability. These exceptions are brought about through a concept that is referred to as piercing the corporate veil. Under this principle, the courts will be responsible for looking behind the corporation veil, with the intention of holding the members of the company liable for their misconduct or debts that they owe to creditors. On this note, the effects of piercing the corporate veil is ignoring the legal personality principle of an organization, and holding the parent of controlling company liable for the misconduct of the company under consideration. Adams v Cape is one of the leading common law cases that established the principles of the piercing of the corporate veil.
Quota System
This case established three important conditions and principles that must be present if the courts would have to pierce in to the corporate veil and ignore the separate legal status of holding companies. One instance where the courts can be involved in piercing the corporate veil is if they are interpreting a statute that seeks to recognize the holding company and a parent company as a legal single unit. Another instance where the courts can be allowed to pierce the corporate veil and ignore the status of the holding company as a separate legal unit is if the organization or the company has been creating for purposes of advancing a fraudulent activity. The courts will also ignore the separate legal entity of a corporation if the holding company has been established for purposes of avoiding the obligations of an organization. For instance, if the organization or the holding company formed is a sham or a facade for the parent company, which should actually exist as a single unit. However, it is important to denote that lessening the liability of a company through the formation of holding companies is not illegal as per the corporation law; hence, while using this principle to determine whether to ignore the separate legal entity of an organization, there will be a need of establishing other grounds to use, in piercing the corporate veil.
It is important to denote that the three guiding principles of piercing the corporate veil is not established in the case of New Nirvana Ltd and its subsidiary company Nuclear Blasts Sound Pty Ltd. This is because the holding company was not established for avoiding the obligations of New Nirvana or the company was established for fraudulent activities.
Furthermore, it is important to assert that the 2012 case of Chandler v Cape plc provided another ground that can be used for purposes of ignoring the separate legal characteristic of an organization. In this case, the court ruled that for purposes of determining the liability of a parent company in circumstances of negligence and debts, there is a need of looking at the level of control that the parent company has over the holding company. If the parent company has an overall responsibility over the holding company, then the company the principles of duty of care is established. In this circumstance, the parent5 company will be held liable for the negligence of the holding company.
In the case of New Nirvana Ltd and Nuclear Blasts Sound Pty Ltd, there is a need of denoting that New Nirvana had an overall control over the activities of Nuclear Blast Sound Pty Ltd, hence, it will be liable for negligence, as per the principles that are established in the case of Chandler v Cape Plc.
3. The corporations act section 140 (1) gives an explanation of what a company’s constitution is, and it identifies a constitution as a type of contractual obligation that regulates the manner which the stakeholders of a company interact with one another. For instance, the constitution creates a contractual obligation and relationships between the shareholders of the company and the directors of the company under consideration. However, it is possible to assert that the constitution created by a company is a different type of constitution, and it has a number of varying elements, that distinguish it from the normal contracts of an organization.
The first element is that the shareholders of the company are engaged in a contractual obligation with the company, by virtue of the number of shares they hold within the company. Another important element of a company’s constitution is the ability of the company to change the constitution under consideration through a special resolution that is passed by the shareholders of the organization. The resolution must be passed unanimously. This is a provision that is contained in section 136 (2) of the 2001 Corporations Act, which allows a company to replace its constitution through a special resolution passed by its shareholders. For instance, in the case of Don, Simon and Michael, a special resolution was passed by majority of shareholders, who were 2, to replace the solicitor because he was not efficient in carrying out his mandate. The capability of a company to replace its constitution through a special resolution is also established in the 1939 Australian case of Peters American Delicacy v Heath. In this case, the High Court ruled that shareholders of a company have a statutory right to change the constitution of a company through a special resolution. In the 1900 case of Allen v Gold, the High Court ruled that the shareholders if a company can change the constitution of a company through a special resolution, if it aims at benefitting the company.
Therefore, it is possible to assert that Simon and Michael were right to change the director of the company since they are shareholders of the organization, and they were the majority. Furthermore, the change was aimed at protecting the interests of the organization. Additionally, the case cannot go to the court before arbitration, since the constitution required that the case had to be settled first by an arbitration panel, before it reached the court. Don does not have the numbers to change this provision in the constitution.
Statutes
Corporation Act (2001) section 140 (1).
Corporations Act (2001) section 136 (2)
Fisheries Management Act (1991)
Common Laws/Case Laws
Adams v Cape Industries Plc (1990) CH 433
Allen v Gold (1900) 1 Ch 656
Chandler v Cape plc (2012) EWCA Civ 525
Harper v Minister of Sea Fisheries and Others (1989)HCA 47
Peters American Delicacy v Heath (1939) HCA 2
Salomon v Salomon (1896)UKHL 1
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