" Corporate Law Table of ContentsIntroduction ..................................................................................................................................... 3Issues ............................................................................................................................................... 3Rules ............................................................................................................................................... 3Application ...................................................................................................................................... 6Conclusion ...................................................................................................................................... 8References ....................................................................................................................................... 9 2 IntroductionWalter and Shirley Tate are retired people who have invested in a retirement savings companycalled Happy Days Ltd and are enjoying all the services that are provided by them. However,certain changes in the policies of Happy Days have been brought about by them, and this hasbeen detrimental to the best interest of Walter, Shirley and other aged personnel using theservices of Happy Days. These issues shall be analyzed in this paper by taking reference of theAustralian Case laws and the Corporations Act 2001 (Cth).IssuesThere are certain issues that have been given way by the retired people because of the newlyimplemented policies of Happy Days. It is important to discuss these issues raised and thusanalyze whether Happy Days has any remedies in these matters or not. The issues that arise inthe present matter are as follows:? Whether Happy Days has a right to call back its payments of dividends?? Whether the directors of Happy Days are bound to go according to the wishes of Walterand Shirley regarding diversification of their business?? Whether the increase of the fees by the existing communities by 30% is justifiedaccording to the Principles of Corporations Law?? Whether there are any remedies in the hands of Walter and Shirley against the statutoryprotections available for Happy Days?? Whether Walter has any rights to claim for compensation from Happy Days for his loss?? Whether Walter is eligible to sue the chairperson of Happy Days for defamation?RulesThe rules associated with the Corporations Law shall be discussed first to understand thestatutory requirements in each case. These rules shall be discussed in the subsequent paragraphs.The Corporations Act 2001 deals with the payments of dividends and about dividends in generalin Part 2H.5, Sections 254SA to 254W. It is essential to note the contents of each of these3 sections. Section 254T provides the circumstances in which dividend is supposed to be paid by acompany to its shareholders or investors. A company is not liable to pay a dividend unless a fewcircumstances. These are:? The assets of the company exceed its liabilities before the declaration about the paymentof dividends is made and at the same time, the exceeding amount of assets should sufficeto pay for the dividend;? When the dividend is being paid, its payment should be fair and reasonable to all classesof shareholders in the company;? The fact that the organization is giving a dividend to the shareholders should not beprejudicial for the company towards its eligibility to pay the creditors. Further, in Section 254U, it has been stated that it is entirely for the directors to decide todetermine whether a dividend shall be paid or not. It is also the discretionary power of thedirectors to fix the amount that shall be paid, the time when the payment shall be made and themethod of making the payments.In the case of Industrial Equity Ltd v Blackburn, (1977), it was ruled by the High Court ofAustralia that the payment of dividend is a discretionary right in the hands of the company.There is also no liability on the company that they have to continue with their payment ofdividends only because it has paid them once (Vickery & Pendleton, 2006). The benefit can becalled back at any point by the company unless there is anything contrary available in writing. Further, in the case of Commissioner of Taxation (Cth) v Sun Alliance Investments Pty Ltd (inliquidation), (2005), the High Court of Australia ruled that calling back the payments ofdividends is a right held by the company and can be executed even without taking consent of theshareholders. It is a general principle in corporate law that the business should work according to the wish ofthe shareholders. However, if the directors of a company, in the course of its operation realizethat a particular strategy is for their benefit, and that is not acceded to by its shareholders, thenthe directors can either call for a meeting of the shareholders. Then he can decide on the wish4 expressed by the majority or can take a suo moto decision for the best interest of the company(Lowry & Dignam, 2006). Two case laws can be cited in this regard. In the case of Astley v Austrust Ltd, (1999), it wasruled by the High Court that where the directors want to expand their business for the bestinterest of the company, they can go ahead with the decision provided it does not bring uponbigger liabilities on the company thereby making the shareholders lose their interests with thecompany (Hawk, 2005). Further, in the case of Commissioner of Taxation (Cth) v Sun Alliance Investments Pty Ltd (inliquidation), (2005), the High Court ruled that even when a particular class of shareholders doesnot agree with any decision of the management, the management is at liberty to choose thedecision that they wish to take provided the decision is in the best interest of the company(Gibson & Fraser, 2013).As far as the increased fees and the revised rates of the company are in question, it should benoted that this is governed by the rules laid down in the agreement between the company and theparty. In this regard, certain case laws can be discussed that uphold this view of the judges. Thecase of Copyright Owners Reproduction Society Ltd v EMI (Australia) Pty Ltd, (1958) should bediscussed firstly. In this case, the Copyright Owners claimed for a certain amount from theplaintiff for rendering services for the first two years. However, from the third year, the rateswere revised, and they started charging an extra amount. This led to differences between theplaintiff and the defendant (Ferrara, 2013). However, the High Court ruled that where thecontractual agreement states that the rates can be revised based on the terms and policies of thecompany, there is nothing that can prohibit the Copyright Owners from doing so (Gibson &Fraser, 2007). Another case that has to be discussed is that of R v Associated Northern Collieries, (2011). Inthis case, the court ruled that unless there is any expressed written agreement, on the contrary, acontractor is eligible to revise rates of rendering services with an increase in taxes and standardsof living (Dine & Koutsias, 2007). 5 The Corporations Act provides that the authorities should take due diligence in the dissipation oftheir duties in the everyday schemes. However, it also provides that, in case, they commit anynegligence in the course of their everyday activities, then the company remains liable in thosecircumstances (Brudner, 2014). However, there is a general defense available in the hands of thecompanies in this regard. If any person contributes towards the negligence of the company, thenthe company can claim immunity under the same. In the case of Joslyn v Berryman, (2003), the High Court gave the ruling that when a bystanderin a wrestling match in spite of knowing that he is incapable of running away in case of scuffle,chose to keep standing there, cannot claim for a compensation later because of his losses sufferedin the matter. Again, in the case of Liftronic Pty Ltd v Unver, (2001), the High Court gave theruling that contribution in any negligence does not bring any liability on the tortfeasor. Rather,the other party remains liable in such matters (Boros & Duns, 2010). Defamation is said to have been done when one person or entity makes false or derogatoryremarks about another person in front of a third person. There are certain defenses availableagainst defamation. These defenses include the speaking of truth or expressing an honest opinionregarding any person, publication of the matter in the case of public interest or absolute privilegein the thing or case of innocent dissemination (Bainbridge & Bainbridge, 2009). The case ofTheophanous v Herald & Weekly Times Ltd, (1994) can be taken in this regard. In this case, itwas said that where genuine or honest interpretations are provided, then the offense ofdefamation is not committed against the individual. However, hatred or hate speech does amountto defamation, and this was substantiated by the ruling of the High Court in the case of DowJones and Company Inc. v Gutnick, (2002). ApplicationHappy Days in the given scenario is a company that used to pay dividends to the investors on ayearly basis. However, recently, it has decided that it would not pay the dividends and use themoney generated by expansion and growth of the company. There is no law that Happy Days isbound to keep paying dividends to the investors over a continuous period. Expansion and growthof a business are one of the most important aspects of making a business successful. Thus, to6 maintain this success, if Happy Days tries to stop making payments of dividends and utilizes thatmoney generated for the said purpose, there is nothing that should stop them from doing this.Walter and Shirley cannot claim that the company is bound to pay them dividends. Moreover,the relied on the money for funding their yearly trip to New Zealand to meet their son which isentirely their personal trip. Happy Days is under no obligation to prepare funds for theirindividual investors' personal trips. Hence, it can be said that there is no obligation on the part ofHappy Days to keep their payments of dividends.As far as the second issue is concerned, it can be said that Happy Days is free to choose anylocality where they wish to expand their business. Till the time they are not causing anydisturbance or imposing any obligation on the present residents to move to their new locality,there is no law that can ask them not to buy any expansion project. As such, in the presentscenario, it can be said that as far as Walter and Shirley are in question, if they are allowed toretain their living place, they cannot ask Happy Days to revise any of their decisions. NeitherWalter nor Shirley can compel Happy Days to revise any of their decisions. They are notbestowed with the responsibility of making sure whether older Australians would prefer stayingthere or not. Hence, it is not justified on their part to ask Happy Days to make changesaccordingly. Coming to the third issue, it is well established in the factual background that the contractbetween Happy Days Ltd and the residents allowed for reviewing the annual fees. As such, it canbe said that the residents were aware that the fees could be renewed at any point in time, and theyhad, in fact, agreed to this. Hence, they cannot state that the 30% increase in the annual fees isagainst their interest. Whatever the reasons in the hands of Happy Days may be, the residentscannot claim otherwise. If they feel that the hike is unreasonable, they can approach theappropriate authorities howsoever. Walter and Shirley in the given situation can claim for an annual review for their losses.However, they cannot resort to any other means at this point. Nevertheless, it should also benoted that Walter is an aged individual and the Chairman of Happy Days did owe certainresponsibilities while entering into heated discussions with him. This breach on the part of theChairman was not a welcome move. However, Walter can on these grounds claim for7 compensation from Happy Days because of his miserable condition and the upcoming kneereplacement surgery. Nevertheless, the courts shall take into account if there was anycontribution towards the act by Walter. Howsoever, the defamatory statements made by the Chairman in this regard are not acceptable inthe matter, and Walter can claim for compensation in this regard.ConclusionThe matter can be concluded on the following points:? That Happy Days can call back its payment of dividends;? That Walter cannot stop Happy Days from the expansion project;? That Happy Days can increase their fees. However, the same can be revised;? Walter can claim for compensation because of the defamatory statements made againsthim by the Chairman of Happy Days.8 "