Australian Law

Question _: Candy, Sweetie and Rocky are best mates and share a passion for cooking. They are huge fans of the MasterChef program on television and draw inspiration from the many fabulous meals and desserts presented to the celebrity judges in the program. They all aspire to run their own business one day, specializing in baking scrumptious cakes and pastries. One day, after a huge sugar hit (where all three ofthem consumed large quantities of a decadent dessert], Candy, Sweetie and Rocky hit upon the idea of opening up their own patisserie, called 'Sugar Hit'. They orally agreed to each contribute $50,000 to the business and to share all profits and losses. Rocky searched for suitable premises to conduct their business. Rocky was lucky to find a cozy shop on Rocky Road (Sydney). He immediately signed a five-year lease on behalf of himself, Candy and Sweetie with the landlord, Mr Macaron, for a monthly rental of $1,500 and a commencement date of 1]uly 2023. Candy and Sweetie, who also love fashion, decided to take on the task of working out the style, theme and fit-out of the patisserie. Candy and Sweetie ew to Paris to get new and fresh ideas for the business. They both paid for their ights, accommodation and other business-related expenses with their business credit card issued by Friendly Bank, which totaled $30,000. Upon their return to Sydney, Candy and Sweetie signed up with Sweet Treats Ltd to fit-out the business and to supply industrial ovens and other essential baking equipment to run the business. The cost of the business fit-out and equipment totaled $120,000 which was far more than Candy, Sweetie and Rocky budgeted for. Rocky is upset at the large expenses generated by Candy and Sweetie in such a short time and accuses them of spending lavishly with poor control over their business budget. Rocky is unhappy with Candy's and Sweetie's management style so he borrows $30,000 for the business from Friendly Bank but uses that money to set up a company called Happy Glaze Pty Ltd in which he is the sole member and director. Happy Glaze Pty Ltd is contracted to supply all baking products and ingredients to Sugar Hit. Unknown to Rocky and Candy, Sweetie reached out to her mother, Mrs Eclair, for financial help. Mrs Eclair agreed to loan the business $50,000 in exchange for 50% of the profits made by the business. Mrs Eclair firmly insisted to Sweetie that she was not to be treated as a partner ofthe business. But because Mrs Eclair is also a trained chef, it was also agreed that Mrs Eclair could, from time to time, come to the business and share her creative ideas. When Rocky and Candy hear of the 'sweet-heart' deal struck by Sweetie with her mother, they are furious as this deal does not align with their vision ofthe business. When Candy and Sweetie discover the 'sweet-heart' deal struck by Rocky, on behalf of Sugar Hit with Happy Glaze Pty Ltd, to the value of $60,000 in favour of Happy Glaze Pty Ltd, they are furious as they think this deal is unfair to the business. After an acrimonious and heated meeting on the business premises in October 2023, Rocky storms off saying "I'm out of here.\" Candy and Sweetie both suffer a meltdown and also decide to quit the business. In all of the commotion, Holy Cannoli, a junior employee is badly burnt by the hot oven carelessly left open by Sweetie and has incurred medical expenses totaling $10,000 which remains unpaid. With the fallout amongst the three mates and prior to a dissolution of their business affairs, Rocky sees an opportunity to continue the business alone and so immediately transfers the business lease into his own name and continues to run the business. With the fallout amongst the three mates, in addition to the issues identified above, Sweet Treat Pty Ltd is still owed $120,000 for the supply of the fit-out and business equipment. Friendly Bank is still owed $30,000 on the amounts due on the unpaid business credit cards, with interest accruing at 10% per month. [a] With reference to all of the facts above, advise Candy, Sweetie and Mrs Eclaire of their potential liabilities as well as any potential remedies they may have available; and (b) Advise Rocky of all of his potential liabilities as well as any potential remedies he may have available. In your answer, also discuss whether Candy and Sweetie can make Rocky account for the lease [a valuable business asset as the lease today is now worth twice the value at the time of execution] and for any profits made to date by Happy Glaze Pty Ltd. Hint: No discussion on the law concerning directors' duties, or the content on the tort of negligence is required. Answers must be in Australian Law