Equity And Trust Problem Assignment
- Country :
Australia
PART 1 (20 marks)
Priya is an artist who creates original artworks depicting Sydney Harbour and its environs. She then prints fifty posters from each of the works and sells them from her stall in the Rocks Markets on Saturdays and Sundays for $75.00 each. Each weekend, she sells approximately 50 prints, worth a total of $ $3,750 gross – before the deduction of expenses. On both days, she employs Hans to assist with the sales and the set-up of the stall. Priya also leaves work early on Saturdays to visit her parents. There is no employment contract and Hans is paid in cash.
Hans works for Priya for 4 months and realises how profitable the business is. Han shares a unit in Newtown with his sister, Gilda. When Hans tells Gilda how successful the business has become, she devises a plan.
Every week, Hans steals 3 or 4 posters from the stall. He takes them home and Gilda sells them on e-bay for $40.00 each. Hans and Gilda divide the proceeds of the sales equally.
About 6 months after Hans began stealing the prints, a potential customer approaches Priya at the stall and says; ‘Oh, I can buy this exact same print for $40.00 online’ and walks away.
Priya is devastated. After confronting Hans, he confesses and states – ‘But you can’t prove it’ and walks away.
In addition to any potential criminal charges – which you do not need to discuss, Priya asks your advice whether she has any other claim against
- Hans (10 marks); and/or
- Gilda (10 marks).
Equitable fraud
PART 2 (25 marks)
Severus Snape is the head of the Board of Trustees of the Hogwart’s Educational Trust. The other trustees are Ron Weasley and Hermione Grainger. The Trust provides scholarships for young wizards and witches only and is supported by donations from former students of the school. It does not accept applications from the wider community. The beneficiaries are existing and potential future students of Hogwarts, but the school also has full fee-paying students as well.
There is approximately $500,000 in the Trust bank account, which is used not only to provide the scholarships, but also for repairs to the old buildings, buying new equipment and general operating costs.
In March 2023, Snape electronically withdraws $60,000 from the bank account, without the knowledge of the other two trustees, who never take any part in the running the Trust. He takes the money to a local casino and loses it all.
He then seeks the advice of the school’s solicitor, Mr Tulkinghorn, on whether he can commence proceedings on behalf of the Trust against the former headmaster, Dumbledore, who once called him ‘a snake’. Tulkinghorn advises that such an action would be very, very unlikely to succeed, especially since Dumbledore is deceased. Snape ignores the advice, and commences a defamation suit, planning to use the Trust’s money to fund the proceedings, as representative of the Hogwarts Educational Trust,. The judge finds in favour of Dumbledore’ estate and Snape is ordered to pay the estate’s costs as well as his own legal bills. These come to $150,000.
Ron Weasley finally checks the Trust bank account and discovers that there is $60,000 missing from the account. He also learns that Snape has incurred the legal fees on the Trust’s behalf. When Ron and Hermione confront Snape about the missing funds and the litigation, he replies that –the $60,000 was an investment that went wrong, the litigation was a legitimate expense of the Trust and that Trust will indemnify him for this and any other expenses that he has incurred on his own behalf.
- Was the money lost by Snape at the casino an investment? (10 marks)
- Can Snape be indemnified from the Trust funds for the litigation costs? (10 marks)
- Do Ron and Hermione have any liability for Snape’s actions? (5 marks)
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