The following case studies were derived from the interviews conducted with lawyers as part of the research project which forms the basis of this book. The case studies were discussed by lawyers and academics at the seminar and conference held in August 1993 at Griffith University. Some of the case studies are also discussed earlier in this book. The interviews on which they are based are described in Chapter 10 by Debra Lamb.
Case Study 1
You are an employed solicitor in a large city firm. Your firm has acted for a wealthy property-developer for many years. One morning at work you receive a telephone call from the client’s accountant. The client has plans for a new development and the accountant seeks your advice concerning the stamp-duty implications of the proposal.
As your conversation with the accountant progresses, it becomes apparent to you that documents effecting part of the transaction may have already been prepared, and you suspect that the parties may have already executed them. Without discussing the matter further, you advise the accountant that you will send the client a letter of advice dealing generally with the stamp-duty implications of those types of transactions.
In your letter, you advise that if the transaction is carried out by the signing of the documents which have already been prepared, the stamp duty which would be imposed would amount to hundreds of thousands of dollars. You also advise that in your view, the transaction could be effected in a different manner with substantial savings in duty.
You also advise the client that if the documents have already been executed, then duty would be attracted immediately and you cannot see any valid means by which the transaction could be rescinded.
You subsequently receive instructions from the client on the basis that he wishes to proceed in the manner suggested by you with the substantial cost savings. However, you cannot shake your suspicions that the parties have already executed the documents prepared by the accountant.
What do you do? Do you specifically ask the client if he has signed the other documents? Or do you accept his instructions to proceed in the alternative manner, comforted by the fact that you did put some advice in your letter about duty (p.238) being attracted immediately a document is signed? After all, it’s only a stamp-duty matter and it isn’t hurting anyone.
Case Study 2
You are contacted by the managing director of a group of companies which is based in an overseas ‘tax haven’. The group is seeking advice on the operation of certain provisions of the taxation legislation. After researching the matter, you advise the group that the proposed transactions would attract taxation liability under the legislation, and that you can see no alternative arrangement that might circumvent the legislation or reduce the liability.
The managing director then requests your advice about the consequences of not declaring the income generated by the transaction. The group want to know the likelihood or risk of their being audited by the Australian Taxation Office, the chance of the non-disclosure being discovered in the event of an audit, and the type of penalties that might be imposed. The managing director makes it clear that they are considering this as an alternative.
What do you do? Do you provide the advice they ask?
Case Study 3
You are approached by a wealthy man who is planning to be married in six-months time. He asks your advice about how he can best structure his business and his assets to ensure that in the event of a divorce from his wife, his assets will be protected. He tells you that his future wife knows he is a wealthy man, but is totally unaware of the true extent of his fortune.
Do you provide the advice or do you tell the client that what he is planning to do is contraiy to the general intention of the Family Law Act?
Would it make any difference if you later discover that the prospective wife is actually your sister?
Case Study 4
You have just been admitted as a solicitor and have obtained employment with a large and reputable firm. You are given some files by the partner in charge of you, and you are instructed to familiarize yourself with them. On reviewing the first file, you discover that the partner has given the client incorrect advice. You immediately go and tell the partner of the error, however he decides not to alter his advice as he wants to save face with the client and does not want to appear ignorant of the law. When you review the other files, you discover that the partner has given the same incorrect advice to other clients. The advice concerns a technical point under the companies and securities legislation.
What do you do? Do you go and discuss the matter with the staff partner or (p.239) managing partner? Do you contact the clients? Do you do nothing further for fear that it may jeopardize your own career?
Case Study 5
You are a solicitor involved in an arbitration matter. The case concerns a dispute over who should pay the costs of a development. You have had some dealings in the past with the opposing solicitors and have always found them to be difficult to deal with. In most cases you feel that this was due to their incompetence.
During the course of the matter, you attend a meeting with your client and the opposing solicitor and his client. In that meeting, you agree to forward copies of certain documents to the opposing solicitors. You do this immediately after the meeting. Three weeks later the opposing solicitor’s client contacts you directly (by letter or by telephone) stating that he has still not received copies of the documents. He asks you to send him copies urgently. What do you do?
Case Study 6
You are acting for a purchaser in a simple conveyancing transaction. The vendor is representing himself. On the day before settlement, you receive from the vendor the settlement statement. On reviewing the vendor’s calculations, you discover that he has made an error in calculating the rates adjustment. The error amounts to almost $A300 and is in favour of your client.
What do you do? Are you obliged to take advantage of the error for your client’s benefit?
You decide to contact your client and seek their instructions. They instruct you to take advantage of the error and not to tell the vendor of his mistake. Do you carry out these instructions?
Case Study 7
You are acting for the plaintiff in a litigation matter which has been very protracted and very bitter. Neither party is prepared to concede even the smallest point. A dispute arises over the production of certain documents. The defendant’s solicitor threatens to bring an interlocutory application to compel production of the documents, unless you provide an undertaking that they will be produced. You are aware that the documents do in fact exist but recall your client saying that he is not certain about where they are stored. Your client is in Melbourne on a business trip and cannot be contacted for the next few days. The defendant’s solicitor has given you a deadline of 5 p.m. to provide the undertaking.
What do you do? Can you provide an undertaking to ‘use your best endeavours’ to produce the document?
(p.240) Case Study 8
You are employed as a Crown Prosecutor and are responsible for the prosecution of twelve prisoners who have been charged with a range of offences from assault to destruction of property. The offences were committed by the prisoners during a riot in the prison. One of the prisoners is a police informant.
The solicitor representing one of the prisoners, seeks access to the other eleven prisoners’ files, including the file of the informant. For obvious reasons, you do not want the identity of the informant made known to the. other prisoners as that could have terrible consequences in the prison. However, you recognize that the other prisoner is entitled to any information in the files which might help him to prepare his defence.
How do you handle the situation? Do you allow the solicitor access to all the files? How do you reconcile this with the promise to the informant to protect him and keep his identity secret?
Case Study 9
You are acting for a client in a property transaction. There are a large number of documents that must be signed by the client and his wife. The client says that he and his wife will have difficulties getting into your office to sign the documents, so you decide to post them out.
Several days later, the client arrives at your office with the documents. The documents are needed for a settlement that day. However, on inspecting the documents, you realize that only the client has signed the documents and not his wife as well. You point this out to the client and his response is ‘Oh, my wife is just downstairs. I’ll just go and get her to sign them.’ He does that and comes back five minutes later with the documents now bearing the wife’s signature.
You are suspicious as to whether the wife really is downstairs. Didn’t the client say he would have trouble getting his wife into your office? If the wife is downstairs, why didn’t she come up to your office? However, you are concerned that if you confront the client, whatever trust and confidence you had would evaporate. What do you do? If you do nothing, might there be some allegation at a later stage that the wife had not consented to the sale?
Case Study 10
You are contacted by a purchaser who would like you to represent him in a simple conveyance. The client delivers the contract to you, and you note that the purchase price is stated to be $A200,000. You conduct all the necessary searches and send the necessary documents to the purchaser for signing. You then receive a telephone call from the purchaser. He tells you that the vendor has agreed to reduce the purchase price to $150,000.
He wants you to send the contract back to him so that he can initial the change and he also asks you to prepare a new stamp-duty declaration with the lower (p.241) figure. When you ask the purchaser why the vendor has agreed to reduce the price he tells you that he was able to negotiate the new deal by threatening to pull out of the transaction. You consider this to be a pretty weak excuse, and you wonder if there might be some attempt at stamp-duty fraud. What do you do? Do you do what the purchaser asks?
Case Study 11
You are approached by a husband and wife who are contemplating purchasing a glass-manufacturing business. They need to obtain finance in order to make the purchase and their only asset is an existing house-property which is unencumbered. The business is a marginal operation and your clients are therefore having trouble raising the finance from traditional sources.
They eventually decide to visit a mortgage broker who finds a small private lender operating through a company who is prepared to lend on about 70 per cent of the value of the property, but with exorbitant interest rates. Your clients present to the lender a figure for the value of the house and the business which seems to you to be too high. However, the figures magically add up to the right amount in hundreds of thousands of dollars to allow your clients to obtain the loan and complete the purchase of the business. As a result, the purchase is at effectively 100 per cent finance.
You are concerned about whether the figures are realistic ones. What do you do? Do you make enquiries to satisfy yourself that the figures are accurate? Or do you see it as the responsibility of the lender to make its own enquiries?
Case Study 12
You are a sole practitioner in a general practice and have acted for many years for a husband and wife. In fact, you went to school with them both and you have all been friends for many years. You have acted for them in their business dealings and in various conveyances. One day, you are approached in your office by the wife who is clearly upset. She tells you that she has decided to separate from her husband and she wants you to act for her in the divorce. There are substantial assets that will have to be divided up and there are also two young children of the marriage. The wife is distraught and insists that you are the only lawyer whom she knows and that she will feel very uncomfortable if she has to go to anyone else.
Do you agree to act for the wife? Would it make any difference if the husband agrees that you can so act? What would your advice to the wife be if she asks you to act for both herself and her husband to attempt to settle the divorce in the simplest and cheapest way?
Case Study 13
You are an employed solicitor and have been instructed by your partner to prepare a letter of demand for a client who is trying to recover some outstanding rent. (p.242) The letter of demand has to be written within seven days. You prepare the letter as instructed and provide it to your partner for his signature within three days.
Ten days later the client telephones you and asks whether there has been any response by the tenant to the demand. You go and check with the partner and it is discovered that the letter has not yet been sent because it was overlooked by the partner. It is now too late to send it.
The partner instructs you to tell the client that he has reconsidered the matter and has decided that not much would be achieved by sending the letter, and that it would be better to just institute proceedings immediately. The partner does not want you to tell the client that he had overlooked signing the letter.
Do you do as the partner instructs or do you refuse and let the partner ‘do his own dirty work’? Can lying to a client ever be justified?
Case Study 14
You are a solicitor in a personal injury matter. You are instructed by an insurance company to act on behalf of the defendant. The plaintiff allegedly injured his back after he fell from his bicycle when it was struck by the defendant’s motor-vehicle. The plaintiff claims that he is now unable to work in a full-time occupation due to his back-pain.
Shortly before the trial, your client (the insurance company) produces a report which it instructs you to use in the proceedings. The document is a report from a private investigator which the insurance company had employed to undertake surveillance of the plaintiff. The report records in detail a conversation which the private investigator had with the plaintiff. The conversation had taken place at a football ground where the plaintiff had been training. The plaintiff admitted in the conversation that he only went to physiotherapy once a week and was managing OK. The private investigator had pretended to be a fellow sportsman and had struck up the conversation by commenting that the plaintiff appeared to be limping (although the videotape also taken at the time did not indicate that he was).
Can you use this evidence at the trial? Do you consider that it was obtained fraudulendy? What would you do if your client insisted that you use it at the trial?
Case Study 15
You have been practising as a solicitor in a small country town for many years. Two long-standing clients of your firm have requested that you act for them in a conveyance. The conveyance concerns the sale of a portion of one of the client’s land to the other client. It appears to be a straightforward conveyance and therefore you agree to act for both parties.
After you conduct your searches, you discover that the building erected on the land is actually encroaching onto another block of land owned by a third party. That third party is also a long-standing client of the firm. The three parties come and see you and request that you help them negotiate a solution.
What do you do? Do you act as a mediator and help to resolve the problem or (p.243) do you resign from the transaction and advise each of the parties to seek separate advice? Remember that it is a small country town, that there is limited legal advice available and that you cannot afford to lose clients.
Case Study 16
You are approached by two elderly uncles and their nephew who ask for your assistance. The uncles wish to sell a property to their nephew on a terms arrangement. After you explain the risks to them, both the uncles and the nephew consent to your acting for both of them in the transaction. You ascertain that the terms of the sale are very favourable to the nephew, however the uncles are aware of that. You eventually complete the transaction without any problems.
Many years later, you receive a visit from the two uncles. They are now very elderly and one is suffering from Alzheimer’s disease. They come to see you with one of their other relatives and explain that the nephew has failed in his repayments. They ask your advice as to their options and then instruct you to make demand on the nephew.
Do you see any problems in acting for the uncles? Do you think you should have to obtain the nephew’s consent first?
Case Study 17
You are a country solicitor living in a small town about four hours drive from Brisbane. You have been practising for over twenty years. Your father originally owned the practice but retired last year. One day you are contacted by a man who has been a client of the firm for the last fifty years. His son is going overseas and he instructs you to prepare a power of attorney for the son, appointing himself as the son’s attorney. You know the family and you know that the father and son work together in a business and that the father has always been extremely generous to his son. The father advises you that he needs the power of attorney to look after the business while the son is away. He also advises that he needs the document by tomorrow, which is the day the son leaves Australia. When you ask if the son can come into your office to sign he tells you that the son is already in Brisbane where he has been staying for a couple of days before he leaves. He plans to get the document signed when he drives down to see the son off. The son will be away for six months.
Do you act on the father’s instructions?
Case Study 18
You agree to act for a client who intends to purchase a hotel. The hotel property is worth over $A12 million. The client comes to you with two contracts — one sets out a particular price and terms and the other sets out a completely different price and different terms. The client wants to complete the sale by operating under (p.244) both contracts. The contracts were designed to do two things: (1) to mislead a financier by showing a value which was much higher than the amount which was actually being paid, and (2) to avoid stamp duty.
Although the deal would generate substantial legal fees for your practice, you refuse to act for the client under those terms and you advise him of the serious consequences of such conduct. The client then withdraws his business from your firm. You subsequendy discover that the purchase of the hotel was completed by the client and you have strong suspicions that the transaction was carried out in the way initially proposed through a different firm of solicitors.
Do you consider that you have any duty to report the conduct of the client or of the other firm of solicitors? Would your communication with the client be confidential?
Would your opinion change if you had evidence that indicated that your suspicions were definitely true?
Case Study 19
You are acting for an accused who has been charged with breaking and entering, and stealing property. The charge involves electrical equipment and jewellery. During a break in the trial, the accused’s Cohabitee makes a statement, in the presence of the accused, yourself, and your barrister, which destroys the accused’s alibi and indicates without a doubt that he is guilty of the charges. You confront the accused, however he tells you that his cohabitee was wrong and he refuses to change his plea to guilty.
What do you do? Can you continue to represent the accused and maintain the plea of not guity?
If you continue with the trial, should you advise the prosecution to call the cohabitee as a witness or advise them of her evidence?
Case Study 20
You are acting for the plaintiff in litigation arising from a construction dispute. You receive a letter by fax from the solicitor for the defendant which you immediately read. When you have almost finished the letter, you realize that in fact the letter was sent to you in error and had been intended for the defendant. The letter encloses a copy of an engineer’s report which is very unfavourable to the defendant and which suggests that they should try to settle the matter as their prospects of success are now slim.
What do you do? Do you take advantage of the error for your client’s benefit?
Case Study 21
You are a solicitor attending an inspection of discovered documents. The inspection is being carried out by an articled clerk. As you complete inspection of the (p.245) documents, you put them in separate piles, depending on whether you want them photocopied or not, and then the articled clerk hands you another bundle. When you are going through one bundle, you discover some obviously privileged documents including a document headed ‘game plan’ which apparently sets out the other solicitor’s tactics for the matter.
Do you read those documents and do you place them in the pile for photocopying? Or do you hand them back to the articled clerk?
Case Study 22
You are acting for a husband in a family law matter. The wife and her solicitor live in Tasmania. It is decided that the best way to complete discovery is for the wife’s solicitor to fly to Brisbane, as there are a substantial number of documents involved. After the solicitor arrives, she inspects your documents and you arrange for relevant photocopies to be made. Unfortunately, there is insufficient time for you to inspect her documents and therefore, she agrees to leave her documents with you for you to inspect, and then send them back to Tasmania.
As you review the documents, you discover the wife’s previous solicitor’s file. This file was not listed in the affidavit of documents. What do you do? Do you inspect the file or do you mention it to the wife’s solicitor first to ensure that it was intended to be left there for you to see?
Case Study 23
You are acting for a divorced wife who has just moved to Queensland from Western Australia with the three children of the marriage. She comes to seek your advice because her ex-husband has brought contempt proceedings against her. He claims that she has breached an order made by the Western Australian Family Court which stated that she was not to take any legal steps to change the surname of their children. She tells you that her Western Australian solicitor had advised her that this meant that she could not take any steps under the relevant Western Australian Act to change the children’s surname, but that if she came to Queensland she could change their surname because in Queensland there are no legal formalities.
You agree to act for the wife. In the course of the matter, you discover that the wife’s previous solicitor is now an employee of the firm which the husband has instructed to commence the contempt proceedings. You therefore write to that firm and advise them that you believe they should not be acting for the husband as there is a conflict of interest. They refuse to cease acting.
What do you do? Do you consider that there is a conflict of interest?
Case Study 24
You are acting for a wife in a custody dispute. After lengthy and costly negotiations, the parties agree that the wife will get custody and the husband will be (p.246) entitled to access. The husband’s solicitor drafts the order which states that the wife will have custody and that access will be as agreed by the parties. From your dealings with your client, you know that the effect of saying ‘access as agreed’, is that the husband will rarely get to see the children as the wife will rarely agree to it. An order of this type therefore suits your client perfectly as she does not want the husband to have access. You also suspect that the husband would not bother seeking a variation of the order as he is ‘fed up’ with the legal system.
Do you accept the order as it is, or do you suggest some changes to it to make the terms of access more secure? Do you ask your client for instructions on the point?
Case Study 25
You are acting for a wife who has custody of a six-year-old boy. Her estranged husband has brought an application seeking custody. The wife has made some allegations that the husband has sexually abused the boy, however there is no concrete medical evidence to support those allegations. You are fairly convinced in your own mind that they are true. The child himself is extremely intelligent and capable of manipulating the various experts who have examined him as well as his parents and the lawyers. The husband is alleging that the wife is mentally unstable.
You eventually persuade the wife to see a psychiatrist despite her objections, as you believe it could prove the matter one way or the other. After two sessions with the wife, the psychiatrist sends you a report stating that the wife is normal but that he is seeing her for one more session and that he is then going to recommend that she attend some counselling, as she is upset about the custody battle. After the third session however, the psychiatrist contacts you and tells you that there is in fact something radically wrong with the wife and that she has suicidal tendencies.
You know, from without prejudice negotiations with the husband’s solicitor, that the husband doesn’t really want custody of the boy. The wife, however, wants to take the matter to trial because she wants to hear the judge say that she deserves custody.
You are convinced that if the matter goes to trial your client will definitely lose because of her mental state, which in fact is deteriorating. You know that you will be able to reach a settlement with the husband’s solicitor as they are concerned about the child abuse allegations.
What do you do? Do you convince the wife to accept a settlement so that she will be given custody (even though you are concerned about the welfare of the boy) or do you leave it to the court to decide (in which case you will probably lose)? If you do leave it to the court to decide, do you disclose the existence of the psychiatrist’s report?
Case Study 26
You are acting for a wife in a matrimonial dispute. The parties are disputing both custody of the three children of the marriage and the property settlement. The (p.247) matter has been continuing for over thirteen months and in the last four months you have developed a personal relationship with the wife.
You know from the wife that the husband is aware of your relationship, however the husband’s solicitor is not. After a heated period of negotiations, you receive an offer of settlement form the husband’s solicitor. The offer gives the wife custody of the children but in respect of the marital property, is not as favourable as you would have hoped. The husband’s solicitor has made it clear that if the offer is not accepted they will persist with the custody dispute. They have also hinted that they have certain evidence that would mean that the wife might lose custody. You know what this evidence is — the wife has been ‘dumping’ the children with neighbours in order to conduct her affair with you. You certainly do not want to be called as a witness in any custody battle.
What do you do? Do you convince the wife to accept the proposed settlement to save your own skin?
Do you consider that the husband’s solicitor acted ethically in using the threat of continuing the custody proceedings to obtain a settlement?
If the husband’s solicitor was aware of the affair, do you think it would be ethical for him or her to use that information to obtain a favourable settlement?
Case Study 27
You are acting for a company in a property conveyance. Just before settlement, you discover that there is no document authorizing the company to enter the transaction. You discuss this with the company and they suggest typing up a minute of meeting and backdating it to show that they did have the required authority at the relevant time. The minute can then be presented to the other side to allow settlement to proceed. The company says that it had every intention to hold the meeting but overlooked it, and that it is purely a technical, internal matter. The deal is worth millions of dollars to the company.
What do you do?
Case Study 28
You are an employed solicitor in a large commercial law firm. Your partner asks you to handle a simple conveyancing transaction for a major client of the firm and his mother. You send out the documents for signing with express instructions that the signatures of both the client and his mother must be witnessed. When the documents are returned, you discover that the mother’s signature has not been witnessed. You therefore explain to the client that the documents we will have to re-signed by his mother. The client objects to this and says ‘I am a big client of this firm and I don’t want to be mucked around. My mother is old and I do not want her unnecessarily upset, and I am telling you that that is her signature and that ought to be enough’. He also says that he has been giving the firm work for twenty years. He wants you to witness the document.
(p.248) You are concerned that if you do not keep the client happy, he might go to your partner and complain. You want to make a good impression in the firm. What do you do? Do you do what your client wants?
Case Study 29
You have been acting for a large manufacturing and industrial company for many years. You have the confidence of the company’s chief executive and the board of directors. The company recognises the potential for large-scale exporting of steel products and therefore decides to make a major investment involving construction of a large steel-mill. The company phones you and advises you of its future plans. The project will require your legal expertise for almost six months full-time. You reschedule your other work commitments and agree to take on the project.
The plans are made and the chief financial officer then decides to implement some sort of structured financing for the deal. You advise the company to call tenders for the finance deal and up pops a finance house which is a leveraged-lease packager. They are appointed financiers.
Some weeks later, you discover that the packager is a company that has done thousands of packages right across Australia and has always used another partner in your firm as their lawyer. The packager says that your partner is the only lawyer they have ever used, and he knows their paper-work backwards. If they have to get another lawyer, it will add an extra $100,000 to their legal fees. That extra cost will be reflected in the bill that your client will have to pay.
Both clients are furious. You explain that, ethically, you feel that both yourself and your partner should retire from the transaction. However, the parties want you to continue acting. Your client’s plans will be set back by many weeks if they have to start again with another lawyer. They also refuse to pay any extra in legal costs. They demand that you continue to act.
What do you do? If you do decide to continue acting, do you take any steps to protect your client or yourself? Could you continue to act but insist that the other lawyer resigns?
Case Study 30
You are the managing partner in a medium-sized law firm and are responsible for recruitment of professional staff. The firm decides to advertise for an experienced solicitor to work in the firm’s intellectual property division. One of the applicants is a solicitor from another firm who are your opponents in a major litigation case. This applicant is by far the most suitable for the job. The applicant informs you that he has had no involvement in the case and insists that there will be no conflict of interest if he comes to work for you.
What do you do? Do you employ the solicitor? Would you ask for your client’s consent first?
(p.249) Case Study 31
You are a solicitor practising in Queensland. Your firm offers you the opportunity to work in their affiliated office in Kaimoa, one of the largest countries in South-East Asia. You eagerly accept the offer. After your arrival in Balu, the capital of Kaimoa, you soon realise that the business practices are very different from those you are accustomed to in Australia. It is quite common for money, or other property, to be paid to government officials to ensure that a job is completed quickly or to obtain governmental approval.
After you have been in Balu for about three weeks, you are approached by a client who wants to establish a factory to manufacture fertilizers and pest-control products. They wish to establish a new company to purchase the land, and they would like it done quickly because there is substantial interest in the project from financial backers. The normal time-frame for incorporating a company is three months as the bureaucracy moves very slowly. However, you have learnt that with the payment of a few hundred dollars, it can be achieved within a couple of days. Your client insists that they cannot wait three months and will go somewhere else if you cannot help them. This type of bribery appears to be very common in Balu, but you would never consider it in Australia.
What do you do? Would you pay the $300 or would you advise the client to go elsewhere? Would it make any difference if you employed an agent who was advertizing ‘Company Incorporations in Three Days for only $A400’ to incorporate the company for you?
Assume that the company is now incorporated and the purchase of the land completed. Your client anticipates having difficulty obtaining approval to build the factory as there is growing awareness in Balu of the need to protect the environment. They therefore instruct you to ‘pay whatever it takes’ to obtain the approval. What do you do? Do you consider that you can engage in this type of bribery when it appears that ‘everybody does it’? Or do you think you should maintain the ethical standards applicable in Queensland?
Case Study 32
You have acted for many years for a property investment company. The managing director of the company has been very successful in picking market-trends, however he lacks administrative and organizational skills. He often leaves it to the last minute to seek legal advice with the result that the company’s legal fees are much higher than they should be. For example, you often have to pay substantial surcharges to obtain speedy search results, or charge the company extra if excess work is involved. You are concerned about this because you know there are many investors in the company who would hate to see their money being spent in this way on legal fees. You think the company could be saving at least $A100,000 per year.
Do you think you have a duty to talk to the managing director and convince him that he could be using your services in a more effective way? If he refuses to accept your advice, should you tell the investors?
(p.250) Case Study 33
You are a junior solicitor working in the property law section of a large firm. You often have to contact the Titles Office or Stamp Duties Office to ask questions about procedures or the correct way to complete the various forms. The government clerks will usually give you better service if they think you are a lay person. However, if they know you are a lawyer often their response is that all the necessary information is on the form and they will be less helpful and more conservative in their advice.
One day when you need some urgent advice you decide to telephone the Stamp Duties Office. The clerk who answers the telephone asks you if you are a solicitor. What do you say? Is it OK to lie or should you be honest?
Case Study 34
You are contacted by a father who wants you to act on his behalf. He wants to sue his son for defamation. You invite the father to your office for a consultation. During this meeting you realise that the father is actually suffering from some type of mental disorder, although he is not so seriously affected that you would consider having him committed. He does appear to be capable of understanding the court process and of giving you instructions. After a consideration of the facts, it is apparent that the action clearly will be unsuccessful. You explain this to the father but he insists that you commence the action.
What do you do? Do you consider it to be an abuse of the court’s process to commence actions that have little prospect of success? Or do you believe that everyone has a right to their day in court provided they are prepared to pay for it?
Case Study 35
You are acting for a very wealthy client in a commercial building dispute. The other party is impecunious and your client instructs you to take every point and prolong the litigation in an attempt to bankrupt the opponent.
Do you do as your client instructs?
Case Study 36
You have acted for many years for a family comprising a mother, father, and three children. One of the daughters has just married a man, Jack Brown, who is the director of a company. The company has offered Jack a cheap housing-loan as part of his salary package. Now that he is married, Jack decides to buy a house. The house is purchased in the name of his wife and his mother-in-law.
Jack contacts you on the recommendation of his father-in-law, and instructs you to prepare a bill of mortgage in respect of the loan. You prepare the document and send copies to Jack and to the company. However, you make it clear to the company that you are acting for Jack and that they should get their own separate (p.251) legal advice. The company, however, advises that it is happy with the document and it is duly signed by Jack. It is never signed by the company.
In the following years, Jack, as director of the company, instructs you to act for the company in various commercial matters. About five years later, Jack has a falling-out with the company and resigns. The question then arises of what to do about the home loan? The mortgage documents provide that Jack is to repay the loan immediately upon ceasing employment, however Jack insists that that is an error and does not represent the parties’ original intentions. The documents have still not been signed by the company. You believe that your original instructions were that the loan was to be repaid immediately, however you do not have any diary-note to that effect and the document is your standard mortgage for such cases.
You receive instructions from both Jack and the new director of the company to act for them in the dispute. You contact the company and advise them that you have decided to act for Jack as he was your first client. The company asks whether you would be prepared to act as a mediator to attempt to resolve the matter.
What do you do? Could you act as a mediator? Or should you refuse to be involved at all? Might the problem have been avoided if you had refused to act for the company in its commercial dealings right from the beginning?
Case Study 37
You are good friends with Ben and John who are the directors and sole shareholders of a food-manufacturing company. You have acted for the company for many years. Ben and John have established the company from scratch and it is now very successful. They receive a substantial offer to purchase the business which they decide to accept. They retire as directors and sell their shares to the new owners. Some months later, an employee of the company comes to you and wants you to commence an action on his behalf against the company for breach of contract. The contract was negotiated by the new directors and they have not instructed you on any matters since taking over the company.
Can you act on the employee’s behalf? Is your duty of loyalty owed to the company itself, or to the interest that controls the company (which has now left)?
Assume that you do agree to act for the employee. After several disastrous years in which the company makes successive losses due to poor management, the new directors sell the business back to Ben and John. Ben and John again want to retain you as their legal adviser. The employee’s action against the company is still continuing. Ben and John demand that you withdraw from that action as they say you are acting in a conflict of interest. What do you do?
Case Study 38
You are a family law practitioner and are acting for a husband in a custody case. The matter has been very drawn-out and your client is becoming more and more discontent. During a consultation with the husband, he tells you that he is tired of waiting and he threatens to take the children on his next access visit and (p.252) ‘disappear’. You try to calm him down and you tell him that that sort of behaviour will ensure that he loses custody. However, you are not convinced that you have managed to get through to him.
What do you do? Would you take any steps to ensure that the husband does not carry out his threat? Would you, for example, warn the wife’s solicitor?
Case Study 39
You are acting for a defendant in a litigation matter. The plaintiff is suing your client for damages for misrepresentation. It is alleged that the misrepresentation was made by your client’s agent to the plaintiff. Your client has been unable to locate the agent and therefore has no knowledge of whether the agent had made the alleged statement. You cannot raise any defence and therefore you put the plaintiff to proof. At the trial, the plaintiff gives evidence that the agent had told him certain things.
Your counsel in cross-examination wants to put to the plaintiff the following questions — ‘You have said that the agent told you certain things, but that’s not right is it?’ or The agent didn’t say that, did he?’. Would you allow counsel to put those questions or do you think to do so would amount to misleading the court?
Alternatively, your counsel wants to try and trick the witness into saying certain things by pretending to have something written on a piece of paper which is in fact a blank sheet. Do you think this conduct is misleading?
Case Study 40
You are acting for a client who wishes to sell his shares in a private company. During negotiations about the purchase price with the purchaser’s solicitor, you make the following statement — ‘If you think I’m tough, you ought to see the investigating accountant’. The implication from the statement, which the purchaser recognizes, is that the accountant believes that the shares are worth even more than that. In fact, as you well know, the accountant has not yet completed his investigations and has not yet formed a view. The purchaser accepts your offer and the sale is concluded.
It later transpires that the shares were grossly overpriced. The purchaser brings an action against you, claiming that your conduct was misleading and deceptive. Do you think that the purchaser has strong prospects of success or would you argue that you were just being a tough negotiator and that your conduct is the normal business conduct?
Case Study 41
You are acting for a company who is being sued by a liquidator to recover an alleged preference. The liquidator is seeking to recover some $A250,000. After you investigate the matter, you discover that the liquidator must be under some misapprehension because the claim should really be for something in the order of $A850,000. You discuss the matter with your client and they instruct you to make (p.253) an offer of settlement to the liquidator for $A200,000. The plan is that this should distract the liquidator from making any further enquiries. You make the offer and it is accepted. You ensure that the liquidator signs a deed of release, which is drafted very broadly to prevent any further claims being brought against your client.
Do you think you are entitled to take advantage of the liquidator’s misapprehension in this way? Is this type of situation typical of the adversary system?
Case Study 42
You act for a property developer who is seeking a joint venture partner for a plan to build a high-rise development. After some months, a foreign company expresses some interest in the project. However, they indicate that they will not enter the venture until planning approval is obtained. Your client submits the plans to the local council and approval is granted. Your client immediately tells the foreign company and a joint venture agreement is prepared.
You subsequently discover that although your client advised the foreign company that approval had been granted, they neglected to advise them that certain conditions were attached to the approval. The effect of those conditions is that the project will be slightly delayed and there may be some extra costs incurred. When you mention this to your client they expressly instruct you not to tell the foreign company of those conditions.
What do you do?
Case Study 43
You act for a company which has just purchased a vacant block of land. They have drawn up plans to build a block of luxury units and are seeking a joint venture partner to finance the construction. A Japanese company expresses some interest in the project, however they indicate that they will not be prepared to advance any funds until at least 50 per cent of the units are pre-sold. Your client returns some weeks later to your office with a contract for the sale of five of the units. As the original plans were to construct only six units, the Japanese company is delighted. You are concerned however, because all of the units are being purchased by one company whose name you have never heard of before.
Do you consider that you have a duty to investigate whether this company exists, or do you see that as being the responsibility of the lawyers for the Japanese company?
Case Study 44
You are a solicitor practising in the area of environmental law. Your practice has grown considerably in recent years as the Government introduces tighter environmental controls. You have many clients who are large corporations. You are particularly concerned about two of your clients. One client owns a large warehouse where they have been storing various chemicals. A recent Commonwealth Act has (p.254) prohibited the storage of such chemicals in that manner as the chemicals have been known to seep into the surrounding environment.
Your other client has a large facility where it stores petrol and other flammable liquids which are used in the client’s various businesses. The same Commonwealth Act has restricted the large-scale storage of such products to particular types of storage facilities as there have been a number of instances where explosions have killed several people.
Immediately the new Act is passed, you contact both your clients and advise them of the new law. Their actions are both illegal, and in the case of the second client, life-threatening. Both clients accept what you tell them, however they refuse to alter their current practices. The first client claims that it has been storing its chemicals in that manner for over thirty years and has never had any problems.
The second client tells you that at present they cannot afford to alter their storage facilities to the required standards, but that they will attempt to do so over the next ten years as they anticipate making greater profits after the recession. They also claim that they have never had any explosions, however you know that their storage tanks are now twenty-five years old, which is the same age as a tank that recently exploded killing four people.
The Commonwealth Act imposes severe penalties for breach and the conduct of your clients would amount to a criminal offence. What do you do? Would you consider reporting your clients, and if so, to whom?
Case Study 45
You are contacted by a brother and sister whose mother has Alzheimer’s disease. The children desperately want the mother to sign a power of attorney so that they can look after her and her property. With Alzheimer’s disease, sufferers can have periods of lucidity and then revert to senility. The periods of lucidity are less common as the disease progresses. The mother’s illness has progressed to such a state that she is in an institution.
One day the brother and sister come to your office with the documents apparently signed by their mother. They inform you that there had been a period of lucidity and that the mother had been able to sign. They have a doctor’s certificate to the effect that the mother was capable of understanding what she was doing. However, this is the only period of lucidity the mother has had in eighteen months, and it was a very well-timed period as matters were coming to a head.
What do you do? Would you accept what the children have told you or would you make some enquiries, perhaps of the doctor? If you come across some evidence suggesting it is not the mother’s signature or that she was senile at the time, what would you do then?
Case Study 46
You are a young solicitor in a medium-sized law firm. As the most recently admitted solicitor, you tend to be given the worst clients to deal with. One of your (p.255) clients has brought an action to recover rent due under a lease. The client has been telephoning you every day, asking whether there is any news about her case. You rarely have any information to tell her and she is becoming a real nuisance. The action is at the stage where you are waiting for the defendant to provide their affidavit of documents. The Magistrate Court Rules allow them fourteen days to provide this document, however the defendant has been a little slow in meeting time-limits in the past. You have always done the courteous thing and allowed them extra time as you know that you might need the favour returned at another stage. Your client would probably be furious if she knew what you had done.
When your client makes her regular phone-call she asks you how long the defendant has to file their affidavit. You are tempted to exaggerate and say four weeks as that will give you a bit of breathing-space and might convince your client to stop calling so regularly. What do you say? Would you be completely honest or is it alright to exaggerate the truth?
Case Study 47
You are acting for a purchaser who presents you with four contracts of sale for four different registered properties. The contracts are in the name of your client and his wife in their own capacity and as trustees. Two of the contracts were signed on one day and the other two on different days. You give the documents to the conveyancing clerk in your firm to arrange for them to be stamped. He lists all four contracts on the one lodgement form and then lodges it with the Stamp Duties Office. As a result, the four contracts are assessed as one transaction and the stamp duty is therefore $A3,200 more than if they had been assessed separately. If the contracts had been lodged separately, the problem would not have arisen.
Would you tell the client that it is your firm’s fault that the contracts were lodged on the one form or would you simply tell him that they have been assessed by the Stamp Duties Office as one transaction?
Case Study 48
You are instructed by an insurance company to attempt to recover a judgment which they have paid on behalf of their insured driver who was intoxicated at the relevant time. Your biggest problem is in trying to locate the insured driver who seems to have disappeared since the trial.
You have a couple of telephone numbers of acquaintances of the insured. When you telephone these numbers, the people who answer the call all want to know why you are wanting to get in touch with the insured before they will tell you if they know where he is. Obviously if you identify yourself correctly, they will not give you any information. How do you respond to their question? Do you tell the truth or do you tell a ‘white lie’ and say you are an old friend? (p.256)