QUESTION 2

Sasha and Emi are two friends who met when they worked together as chefs at a famous restaurant

in New York, but both have now moved to Adelaide. They have decided to set up their own

restaurant which will 'fuse' the best of the cuisines of Japan (where Emi was born) and Australia

(where Sasha comes from. Each of them has come from New York with $100 000, which they want

to invest in the new business.

(a) They decide that a company would be the best structure for their situation. Sasha and Emi

would be the two directors.

They want to reflect their own names in the business so they call it Sashemi.

Advise them what registration steps they need to take to be able to trade as a company, and

with this business name

[5 Marks]

(b) They decide to issue 10000 $10 shares to each of them, reflecting the capital they have

equally contributed.

Emi's situation is quite straightforward. She is single with no family in Australia. She intends

to simply own her shareholding in her own name.

Sasha, on the other hand, has a partner, who is a doctor, and two young children. Before her

spell in New York, Sasha and her partner established a Family Trust, and Sasha wants her

interest in the new company Sashemi Pty Ltd, to be held through the family trust.

Advise Sasha whether, and if so how, her interest in the restaurant company can be held

through the family trust.

[5 Marks]

(c) It is one year after the company was incorporated, and business is going well. An important

Japanese trade delegation visits Adelaide, and the restaurant hosts a banquet for them.

Unfortunately the banquet, designed to showcase local produce, includes a mushroom

which may have been poisonous, and was picked by Sasha in the local forest. The husband

of one of the visiting delegation becomes seriously ill. He is in hospital for several weeks,

which causes great expense and delay, including him missing key acting auditions back in

Japan, and causes anxiety to his wife, not to mention embarrassment to the local

government.

Emi is for furious with Sasha her careless mushroom-collecting. When the visitor starts

proceedings against the restaurant for a six-figure sum, Emi says that as it is Sasha's fault,

Sasha or her family trust should be liable to pay the damages.

If the proceedings are successful, where does the liability to pay the damages lie?

[5 Marks]

(d) It is three months after the mushroom affair, and it turns out the restaurant won the

proceedings. (An expert witness showed that mushroom wasn't poisonous to humans, and

that the visitor had an unknown allergy to

all

mushrooms).