Equity Law, Maureens Inheritance - Coursework Example

Assignment Cover Sheet External Students Please note that External Student Support do not accepts electronic submission for units with Learnline sites. You may continue to submit assignments to this area in hard copy via post or personally to the assignment drop box in the library foyer. If your Learnline unit site does not allow you to submit electronically from the site contact External Student Support for further advice. STUDENT NUMBER S199219 STUDENT NAME Ranya Hamzeh External Student Support The Flexible Delivery Team Charles Darwin University PO Box 41246 Casuarina NT 0811 Phone: (08) 89466483 For assignmentqueries : Email: assignments@cdu.edu.au POSTAL ADDRESS 6/27 Mc Court Street Wiley Park POSTCODE 2195 PHONE 0423937549 E-MAIL UNIT NAME Equity UNIT CODE LWZ210 Semester __1____ Year _2011________ LECTURER NAME ASSESSMENT NUMBER & TITLE PBL 1 DUE DATE 27/03/2011 DATE OF POSTING 27/03/2011 APPLIED FOR EXTENSION?  YES  NO  N/A REFERENCE NUMBER: ….....….....…..... 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I have read the University’s Academic and Scientific Misconduct Policy and understand its implications.* http://www.cdu.edu.au/governance/documents/3.3academicandscientificmisconduct.doc Signed: ________________________________________________ Date: ___________________________ *If this assignment is submitted in electronic format, you are deemed to have made the declaration set out above. Office use only Assessor use only DATE RECEIVED PLEASE PLACE GRADE HERE DATE SENT TO LECTURER RECEIVED AT ACCESS SERVICES FROM LECTURER Please affix assignment barcode here (if applicable) Problem 1 Maureen’s Inheritance Task: Maureen has asked: Whether she has a valid claim to her son’s inheritance under Uncle Norman’s will. Yes. Maureen has a valid claim over her son’s inheritance under Uncle Norman’s will. This is because her son Joe is the sole beneficiary of Uncle Norman’s will and is considered as a Testator1. The doctrine of lapse of clause in all wills if Joe does not predeceases Norman for at least 30 days the estate can be divided in accordance to the rules of intestacy. This doctrine will however not hold because Norman died a week after Joe’s death. Joe had future property right, which was expressed through the expectancy of the inheritance of the will. It was thus possible for Joe to legally enforce the inheritance from Uncle Norman after the death of his uncle. Norman expressed to Joe that Andrew his brother was not in a suitable position to inherit the estate because he was of poor character. The principle of Admissibility of extrinsic evidence allowed Maureen to apply to disentitle Andrew on the grounds of poor character and conduct as in the case of Coates v National Trustees Executors and Agency Co Ltd2. Maureen’s claim would be reinforced if Andrew’s position was known to Norman’s lawyer. Did her son transfer his inheritance to her by the witnessed letter that she received and is able to produce and prove? Yes. Her son transferred his inheritance to her by the witnessed letter that she has and is able to prove. The letter that Joe wrote to her mother did not fulfil all the requirements to assign a future property. This is because one cannot assign future property because it does not exist at the present. Future property is recognized and assigned in situations where it has been paid. The property in this case had not been paid to Joe because Uncle Norman was still alive. Joe would only have assigned the property if it had come into existed before his death or at the time of assigning3. However, Equity Law provides a remedy for such transactions. According to Equity, if the assignee gives a consideration for the intended assignment of future property, then Equity will consider such benefit to other party as an advantage. This advantage should wherever possible be adequate to bind the assignee’s conscience to some extent. Since there is no property at the moment, Equity cannot force the assignor in question to give the property to person who gave the consideration. The transaction is thus considered by Equity as a contract to assign property if and when it is available and is enforceable if and when the said property comes into existence. Joe’s letter to his mother is considered as an instrument to execute an assignment of property if and when it comes into existence. Can she, in effect, displace her husband as claimant to his brother’s estate? Yes. Maureen can displace her husband as claimant to his brother’s estate. One reason that makes this possible is that Norman made it clear to Joe that Andrew was not of good character to inherit and manage any property. It is for this reason coupled with his love for Joe that he left all his inheritance to him. The second reason is that if she had the letter from Joe, then she could successfully displace her husband as claimant of the property. This is because the letter completed the transaction considered by Equity as a contract to assign property if and when it came into existence. The property was now in existence because Uncle Norman was deceased and his will was in effect which made Joe the owner of the property4. Problem No. 2 Unwanted Shares Task: Brian has asked the legal firm: Does Belinda have a valid claim to the shares? Yes. Belinda has a valid claim to Andrew’s shares. In the intestate succession rules, for decedents who do not leave wills or do not appropriate distribution of their wealth, the state’s default statutory provides the grounds for disposition of the person’s assets. Though Belinda was Andrew’s long estranged wife, she did not cease to be the immediate heir despite that fact that they had separated for 12 years. This is because they had not divorced. If Brian can prove what was said and done between him and his older brother, will the legal system recognise him as the legitimate owner of the shares? Yes. If Brian can prove that what was said and done between him and his older brother, the legal system will recognise him as the legitimate owner of the shares. This is based on the principle of Action in Reliance. Action on Reliance principle demands that when a statement is made in good faith, it induces a contract. If the answers to the above questions are yes and no respectively, does a legitimate legal basis remain for Brian to refuse to repay the dividend money that he has already received from his brother? Yes. A legitimate legal basis remains for Brian to refuse to repay the divided money that he had received from his brother. Brian is however expected to relinquish the ownership of the shares to Belinda who is the legitimate heir according to intestate succession rules. In Ricketts v. Scothorn case, Ricketts had promised to pay her $2,000 claiming that none of her grandchildren had a job and he did not want her to work5. She was given the money to enable her quit her job. The promise to give her money was held as a contract and was enforceable. The rule in this case is that when a promise is given without consideration it does not create a valid contract in ordinary circumstance. The doctrine of promissory estoppel prevents a person from using lack of consideration as a defence to violate of contract. Thus, a promise can be implemented even if it was given without consideration if the promise has realistically relied on the promise at a risk. Similarly, Brian reasonably relied on the promise that Andrew his brother gave to him to receive the dividends. If Brian can prove that what was said and done between him and his older brother, the legal system will recognise him as the legitimate owner of the shares. Problem No. 3 Tax Planning Task: Harold has asked the legal firm whether his idea is possible and if so how should it be done. Yes. Harold’s idea is possible. Married taxpayers can make a reasonable saving of income tax by creating two separate independent income tax files, one for the husband and one for the wife. If the wife before the marriage was already paying income tax, then she can continue to file her income tax return in the same place where she was assessed. Her surname would change to include that of her husband but her Permanent Account Number would reman the same. After the marriage, all that is required is to create another income tax return through for her to file the income tax return with her new surname. If she is married to a different town, one should prepare a separate income-tax file for the wife6. Harold should follow this process and ensure that he creates a separate income-tax file for his wife. He should however be careful not to make direct gift or transfer from his income to his wife as this would be subjected to clubbing provisions7. Norman can make transfers directly his wife’s account and thus eliminate the chances of making direct transfers that can attract clubbing provisions. Clubbing of income implies that income of other person is included in assessee’s total income. For instance, income of the husband, which is reflected as income of the wife, is clubbed in the income of the husband and is taxed in the husband’s file. Clubbing provision prevents a person from transferring his/ her income to another person and claiming that it is not his or her income. If this happens, the income diverted to other people’s account is still counts towards the assesse’s total income8. Problem No. 4 The Beef Boom Task: Tom has asked the legal firm does he have any rights to take any legal action against Aus-Live Exports Pty Ltd, Mr Lash and or Allen Carmichael. No. Tom does not have legal rights against Aus-Live Exports Pty Ltd, Mr Lash and or Allen Carmichael9. Mr Lash as the representative of Aus-Live Exports Pty Ltd had clearly informed Tom that the offer he had made to him of purchasing Tom $3 per kilogram live weigh on farm was subject to approval by Allen Carmichael his business partner. Tom therefore over-relied on the promise and made no attempts of a follow-up to confirm whether Allen Carmichael had approved the deal. Although this can be argued as a case of action in reliance, the offer made by Mr Lash was not conclusive. Just like the case of Francis v South Sydney Football Club (2002) FCA 1306 in which the promise made by the coach to the player did not bind, Mr Lash’s promise too was not binding10. The coach promised a contract to the professional rugby player if he agreed to defer his treatment through surgery for a later date. The club however failed to re-new his contract after the season. Consequently, the player could not get any contract with another club. The player sued the club for damages as a result of loss of career due the supposedly breached contract, breach of fiduciary duty, negligence, misleading or deceptive conduct11. The court ruled that no estoppels was valid against the club because it was unreasonable to rely on statements made by a coach of a club12. This is because the coach was not the overall decision-maker in the club. The coach did not have the absolute authority over the club because his decision, statements or any promise were subject to the approval by higher authorities in the club. In a similar manner, Mr Lash was only a representative of the company Aus-Live Exports Pty Ltd. This implied that his decisions were subject to approval by other parties in the company. Tom was thus negligent for over-relying on Mr Lash’s offer because Mr. Lash lacked absolute authority over the company13. Tom should have thus made a follow-up of the supposed offer before turning down other suitable offers for his animals. It is thus not reasonable to rely on promises that have not been confirmed14. Based on this argument, it is thus right to conclude that Tom might not succeed in his attempt to enforce equitable promissory estoppels against Aus-Live Exports Pty Ltd, Mr Lash and or Allen Carmichael15. This is because his reliance on the offer (Promise) made by Tom was unreasonable. The case cannot be argued on the basis of fiduciary duty because even though Mr Lash was representing the company in good faith, he lacked the absolute authority to act on behalf of the company16. He made it clear to Tom that he had to seek approval from another party before making it a valid deal. Problem No. 5 Uranium Punt Task: Helen has asked the legal firm if the above statements made by Uncle Gordon are correct and if not what are her rights and remedies, if any, against Uncle Gordon, Masterson Investments Pty Ltd, Mr Masterson or Gorpat Nominees Pty Ltd. The statements that Uncle Gordon made to Helen are not correct. Uncle Gordon is guilty of fraud and misrepresentations under equity law. In the first statement, Uncle Gordon told Helen that she agreed for the sale of the shares and was pleased with the offer that Gordon made. This is not correct because Uncle Gordon engineered the sale of the shares at a lower price in an effort to benefit himself. The company that bought the shares, Masterson Investment Pty Ltd was owned by Uncle Gordon’s business partner Howard Masterson. In fact, he informed him that he was executing this move a temporary measure to acquire the shares because he did not have a company of his own at that time. It is thus not correct that he did not purchase the shares because there was an agreement between him and Masterson Investments Pty Ltd that he would transfer the shares to his own company later on17. The third statement that it did not matter who purchased the shares provided that Helen was happy with the deal is not also correct. Helen was happy with the deal because she was not aware of the current market price of the shares. If Uncle Gordon had informed her of the current price of the shares, she would possible have rejected the deal. It was the responsibility of Uncle Gordon as the custodian of the property in form of shares to inform Helen f the current price of the shares ad the best price to purchase them. The last statement is not also true. Although it was five years since the shares were sold, it was not late for Helen to pursue for her legal rights in the light of equity law. Helen discovered the fraud and misrepresentation at that time and there fore it was her right to pursue for compensation. Helen thus has legal rights against Uncle Gordon, Masterson Investments Pty Ltd, Mr Masterson and Gorpat Norminees Pty Ltd. Masterson owned Masterson Investments Pty Ltd and was a business partner to Uncle Gordon. The two were liable for fraud18. After noticing that the seller was Uncle Gordon when signing the sale deal, Mr. Masterson should have confirmed his suspicion from Uncle Gordon. Uncle Gordon. Under equity law, if one has full information and discloses art of it only and the other party believes that it was full discloser, then one is guilty of fraud 19(Cushman v. Kirby). Helen is thus entitled to seek damages for the loss suffered in the fraud deal. Uncle Gordon will compensate her for the loss sustained and place her in the position she would be had the fraud not occurred. The amount of compensation will depend on the price of the shares at that moment20 (Bean v. Sears, Roebuck & Co.) Problem No. 6 Abused Car Task: Alan has asked the legal firm what are his legal rights in these circumstances. Alan’s situation is a case of misunderstanding and mistake. The main issue in this case is whether the negligent failure of a party to verify important facts concerning an item in which the two parties of a contract are mistaken excludes the rescission or reformation of the contract. It was his responsibility to inspect the car fully and confirm that what Bruce told him was actually correct. Alan had inspected the car and confirmed that it was in excellent mechanical condition. It is the responsibility of purchasing party to verify the facts regarding an item for which the two parties are not sure (Beachcomber Coins, Inc. v. Boskett). In Beachcomber Coins, Inc. P, v. Boskett D, P a retail coin dealer bought a coin from D and the to parties believed that it was an expensive 1916 Denver Dime21. At the case hearing, Beachcomber proved that the coin was not real. Boskett asserted that the fake coin was not the one that he had sold to P. The trial court held that according to trade industry regulations, the purchasing party holds the risk of genuineness. The negligent failure of a party to verify facts concerning an item in which both parties are mistaken does not exclude rescission or reformation of the contract22. The trial judge in Beachcomber Coins, Inc. V Boskett application of the trade industry rules was not supported by evidence. The fact that a dealer would examine the coin under magnification and then refer it to American Numismatic Certification service does not warrant the application of trade. The court decided that trade law application must be so prevalent as to determine the conclusion that arties contracted with regard to and intended their agreement to be controlled by the law. In the case of Sherwood v. Walker reversed the ruling in which it had ruled that a mutual mistake concerning the subject matter of a contract might render the contract void. It was decided that the contract for the purchase of the cow was enforceable because both parties believed that the cow was barren. This decision was based on the prior law that when a horse is sold under the belief that it is sound and the two parties have this belief, the purchaser must commit himself and pay the agreed price for the horse. In a similar manner, Alan was responsible for the risk of genuineness. He should have confirmed that the car met the conditions described by Bruce. A contractual mistake is a trust that is not agreement with the facts23 Problem No. 7 Tile Trade Task: On a visit to Australia to see family, Giuseppe has decided to get advice in relation to the matters set out in the facts above. For that purpose he consulted the legal firm and asked for guidance. As these events happened in jurisdictions outside of Australia, the firm has explained to Giuseppe that it cannot provide advice on the applicable foreign law. He has said however that he would still appreciate a briefing on what would be his position under Australian law24. Under the Australian law, when the performance relies on the existence of a particular thing and such existence is taken as the basis of the agreement, performance is excused when that thing ceases to exist. An action is impossible when it is not practical and it is impracticable when it can be performed without incurring excessive and unrealistic expenses25. In this case, the two parties to the agreement had assumed that the 40 containers of tiles were still in transit in the ship, which was not the case. The ship together with its cargo had already been destroyed by fire by the time the two made the agreement. Since Giseppe did not have insurance, he demanded for a refund from Giolio. Giulio claimed that he had entered the contract in good faith and was not aware of the loss of the ship and the tiles when he made the deal. He refused to refund the money claiming that he had sent a large proportion of the money to the manufacturer. In Mineral Park Land Co. V. Howard case, the rule of the law applied determined that when the performance relies on existence of a particular thing and such thing is key to the formation of a contract, performance is excused when and if that particular thing ceases to exist26. The issue in Howard’s case was whether the facts warranted the Defendant in its failure to take from the Plaintiff’s land all of the earth and gravel needed. The court ruled that the facts of the case warranted the failure. In the case, the defendant claimed that the plaintiff did not get all the gravel required from the plaintiff’s lane. The land in question was under water and would have been very expensive to dig it out. It was economically impracticable to dig the gravel. Thus, an existing impracticability warranted an excuse from performance27 In the case of Giuseppe, Giulio was excused from performance because the tiles, which formed the bases of the agreement, ceased to exist. It is immaterial that the ship was already destroyed by the time the two entered into the deal because Giulio obviously made the contract in good faith. Bibliography Administration of Wills, Trusts, and Estates by Gordon W. Brown, Delmar Cengage Learning Coates v National Trustees Executors and Agency Co Ltd (1956) 95 CLR 494 at 509 A Hudson, Equity and Trusts (3rd edn Cavendish Publishing 2003) C Mitchell and DJ Hayton, Hayton and Marshall's Commentary and Cases on the Law of Trusts and Equitable Remedies (Sweet & Maxwell, 2005) 12th edn Ricketts v. Scothorn 57 Neb. 51, 77 N.W. 365 (Neb. 1898), Karayan John. Strategic corporate tax planning. New York: John Wiley and Sons, 2002 Swenson Charles & Karayan John. Strategic business tax planning. New York: John Wiley and Sons, 2002 Price Jeffrey. Strategic tax planning. London: Gee in association with Sweet & Maxwell, 1988 Joel Leeman, "Silence is Deadly: The Peril of Inaction After Calling Someone an Infringer", Sunstein IP Update (June, 2010) Francis v South Sydney Football Club (2002) FCA 1306 P Birks, ‘The Content of Fiduciary Obligation’ (2000) 34 Israel Law Journal 3; (2002) 16 Trust Law International 34 Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 4th edition, Butterworth: 2002, David Swarbrick. Estoppel (England) - 1980- 1984, website of swarb.co.uk "Estoppel, in its various forms including proprietary and equitable estoppels" Lucian B. Cox, Equity: Principles and procedures in Virginia and West Virginia § 288 (1951) Pakinson, The Principles of Equity, 2nd edition, LBC: 2003, JH Langbein ‘Questioning the Trust Law Duty of Loyalty’ (2005) 114 Yale Law Journal 929 - 990 inter alia, Stuart-Smith, J & de Chassiron, A, ‘Recovery of Damages After Misrepresentation’ (2000) 150 NLJ 865; Rix J, op cit supra Guenter Treitel, G.H & Atiyah, P.S ‘Misrepresentations Act 1967’ (1967) 30 MLR 369 Cushman v. Kirby Supreme Court of Vermont, 1987 148 Vt. 571, 536 A.2d 550 Bean v. Sears, Roebuck & Co., 129 Vt. 278, 282, 276 A.2d 613, 616 (1971). 23 Beachcomber Coins, Inc. v. Boskett, 166 M.J. Super. 442, 400 A.2d 78 (N.J. Super A.D. 1979). Restatement Contracts, 2d, § 151, p 383. Randy E. Barnett, Contracts (2003) Aspen Publishers Ewan McKendrick, Contract Law - Text, Cases and Materials (2005) Oxford University Press Mineral Park Land Co. v. Howard 172 Cal. 289; (Cal. 1916). Scott Fruehwald, "Reciprocal Altruism as the Basis for Contract," 47 University of Louisville Law Review 489 (2009). Read More