He wanted to give up the reins of the business to his children.

Can anyone please help me with this question ASAP

KELLY’S FARM

Al Gorey owned a farm growing organic fruits and vegetables. He wanted to give up the reins of the business to his children. To achieve that objective, he arranged for a new company called Fresh Pty Ltd (“Fresh”) to be set up to purchase his business and the land which it occupied. 

On 3rd May 2017, Fresh was incorporated and its constitution is a combination of all the replaceable rules and the following provisions:

“Clause 1

The sole object of the company is to carry on organic farming.

Clause 2

Al Gorey shall be director and Chairperson for life.

Clause 3

Tipper Gorey shall be employed as a Farm Consultant until 2025 at a salary of $50,000 per annum.”

The company issued 10 shares each to Tipper and Bud (Al’s wife and son) and 80 shares to Kelly (Al’s daughter). Kelly was going to appear in all the advertising for Fresh promoting the benefits of buying organic fruits and vegetables. However as she did not like being involved in management, she declined the position of director. In the application for registration, the directors were listed as Al, Tipper and Bud. Tipper was appointed as Managing Director and Al was appointed the Chairperson of the Board.

On 5th May 2017, Fresh entered into a contract with Al to purchase the business and the land at an overvalue of $700,000. Tipper signed the contract as Managing Director.

On the basis of the above, answer all of the following parts giving full reasons for your answer and referring to relevant cases and statutory provisions. Marks will not be given for discussion of issues outside these topics. 

Part A. Advice to Al

Al is unhappy about the following events:

On 10th August 2017, Kelly requested the Board for an extraordinary general meeting, which was refused. Without giving any notice to Al and Tipper, Kelly conducted a General Meeting on 20th August 2017, which was attended by Bud and herself. She named herself Chairperson and proposed and declared that three resolutions were passed at the meeting. Bud did not vote on any of the proposals. The first resolution deleted Clause 2 from Fresh’s constitution, and the second dismissed both Al and Tipper as directors. The third resolution appointed Kelly to the Board of Directors. Advise Al and Tipper on their dismissals. (5 marks)

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