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To: SUPERVISING PARTNER- STEVIE ROSE
From: Junior Lawyer
Date: 18 September 2020
Re: Legal advice to David Brewer- Equity Rights and Agreements
This particular memorandum shall set out the legal advice and research that has been conducted in the matter of David and the breach of his equity rights. He seeks remedy for the same under the provisions of Principles of Equity. The laws of equity are used to bring both the parties to a same standing before the law is applied to them. Else, one party may be in huge losses and the other enjoying unjust enrichment.
The only negligence that can be attributed on the part of David was that of not conducting a due diligence before he signed the sale deed to purchase the business called ‘The Apothecary’. However, he has appointed a legal practitioner, who was supposed to conduct a due diligence of behalf of David. Thus, David cannot be held liable for negligence.
The provisions specified in rules 8-11 hold that no legal practitioner shall take part in any transaction or suit or agreement where a situation of conflict of interest arises. The provisions of the Australian Solicitors Conduct Rules (ASCR) identify three kinds of conflict that might be faced by any legal professional. They are:
In the current scenario, Johnny represents two clients- Twyla and David. Both are current clients and have been represented by the same lawyer in the sale agreement that was made. In a situation of this sort, the lawyer cannot practically come up with an agreement which maximises the benefit of both the clients. One of the clients has to suffer a minor loss compared to the other. It is due to this reason that the professional ethics do not allow a situation of this sort to arise and prohibit a single lawyer to represent both the parties in a transaction. According to the principles of Equity laws, it is essential that all the concerned parties must have acted in good faith. Johnny, having acted as a solicitor for Twyla for the last 10 years had to have the information that was specified in clauses 30-32 of the lease agreement with Ray Butani under which the land for business had been leased for 10 years. The act of not informing David of the same is evidence of the fact that Johnny was not acting in good faith for David. Thus, Johnny is in breach of the rules of professional ethics as prescribed by Professional Conduct and Practice Rules, 2005 and Australian Solicitors Conduct Rules (ASCR).
The information with regard to the transactions of Moira Levy- the stockbroker is incomplete and a decision with regard to her personal gains can only be made after information if given by the client. The decision to invest in the particular Motel-SCML was an independent decision that was taken by David without any influence of Moira. However, she acquired the required percentage of shares from her own holdings or of holding of her relatives. Thus, if the shares have been sold at a price higher than the market rate at the time of purchase, she made personal profits out of it. If such personal profit is proved, she would be held guilty of unjust enrichment. If such personal profits are not proved, then Moira would not be held guilty as she had no intention to harm to client. The decision to sell her own shares of SCML was a personal decision for which she cannot be held liable. The subsequent downfall of the prices of the shares could not have been anticipated by her as it was due to a sudden pandemic and she could not have warned David or any other customer about such an event. By the time she was made aware, she did pass on the information to all her clients, including David. This can be proved by the fact that other clients of Moira sold their shares on time and received profits out of it, while David forgot to put up his shares for sale. Moira cannot be held liable for the losses caused due to the personal acts of David. Thus, the decision with regard to the liability and claim against Moira should be kept on hold till full information is received about the market standards at the time of purchase of the shares.
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