Legt 2741 Assignment
There are three main parties to this case; Flywell Ltd (F), the parent company, Jetover Ltd (J), the subsidiary, and the Australian Pilots Association (APA) which is representing the 200 pilots currently employed by J. F incorporated J as a wholly owned subsidiary of F and appointed four directors for J from the six directors of F. Two hundred of F’s pilots were made redundant and immediately rehired by J on lower wages and entitlement previously enjoyed at F. New pilots hired by F receive 20% more pay and entitlements for the same work than pilots of J.
The issue here is that are the original contractual entitlements received at F applicable to the pilots of J?
Firstly it must be emphasised that through …show more content…
1. Were the profits treated as the profits of the parent?
All the profits of J were transferred to F in the form of a dividend. However, there is no evidence that F treated the profits of J as its own prior to receiving the dividend. Applying the decision in Industrial Equity Ltd v Blackburn , it can be argued that F and J are separate legal entities in a corporate group because F only recognised J’s profits as its own after the dividend was paid out. Even though this is the case in principle, the existence of J as nothing more than a puppet of F, should allow the assumption that F considered J’s profits its own.
2. Were the persons conducting the business appointed by the parent?
The 4 directors of J were appointed from the Board of 6 directors of F.
3. Was the parent the head and the brain of the trading venture?
F is the only shareholder of J and thus holds all the voting rights for the appointment of the directors of J that will manage the company.
4. Did the parent govern the adventure, decide what should be done and what capital should be embarked on the venture?
F incorporated the company, appointed directors to J from its own Board and receives all of J’s profits.