Question
Ailish has run a small patisserie ('Bonne Vie') in Ultimo as a sole trader for many years. In recent times she has been extremely busy
Ailish has run a small patisserie ('Bonne Vie') in Ultimo as a sole trader for many years. In recent times she has been extremely busy after a famous YouTuber who goes by the name of 'Vide' films a video of themselves at the patisserie enjoying one of Ailish's special vegan chocolate tarts. Vide has over 30 million subscribers on YouTube and Ailish's cafe is now overrun by fans of Vide wanting to recreate the famous video. Ailish struggles with the demand for her products so she decides to expand her operation by opening a new store in Broadway shopping mall ('Un Grande Vie').
Ailish is advised by her accountant to set up a company to develop and run the store, which she does by registering "The Good Life Cafe Pty Ltd" ('TGLC'), with Ailish being the sole director of the company and her family trustee company holding the only shares in the new company. All workers are employed by GLC (labour) Pty Ltd ('Labour'), which has her accountant as the sole director and Ailish's family trustee as the sole shareholder. Ailish also transfers her interest in Bonne Vie into another new company BV Pty Ltd of which she is the sole shareholder and director. Ailish continues to own the intellectual property for the cafes and their products in her own name and personal capacity. Ailish grants a trademark license to TGLC and BV to use the trade mark in their cafes. Ailish regularly works in both cafes and many customers ask specifically for her.
The expansion of the business was financed by one of Ailish's long-time friends Eric, who took security over all of the assets of TGLC and BV Pty Ltd and is owed $1 million. The terms of the loan agreement mean that Eric has the right to approve or deny major decisions for the businesses (which may pose a risk to business profits).
Over time, both businesses become incredibly successful and TGLC expands to several new locations in Sydney (each owned and run by TGLC). Ailish regularly appears on television and on social media promoting the cafe businesses. Everyone who works in the cafe stores treat Ailish as 'the boss' and follows her instructions.
Labour problems with some of the workers leads to bad publicity as overseas students are being exploited and underpaid by GLC (Labour). Ailish decides (through the family trustee company) to simply put that company into liquidation and then start up a new labour hire business (GLC (Labour) II Pty Ltd) with the same director and shareholders. A class action has been threatened by local lawyers. To make matters worse, one of the cafes operated by TGLC has a food poisoning outbreak, with several customers ending up in hospital, because the food storage system used was inadequate. Ailish had been told by the local manager that the refrigerator was defective, but she hadn't had time to order a new one.
Assume you are Ailish's lawyer, what risk does she have, and each of her companies have, in getting sued for the labour problems?
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