IRAC Sample answer to Tina and Aristotle question
法律essay代写 The facts further state William makes these claims without a proper basis and makes promises that do not appear to
Example of yow you could use the IRAC method to answer this question 法律essay代写
Tina and Aristotle Papadopoulos are an elderly couple who immigrated to Australia from Greece in the 1950s. They both worked very hard in their family fruit shop business in Oakleigh. Tina and Aristotle want to spend more time with their grandchildren. They are now ready to retire and have sold their fruit shop for a nice profit of $750,000.
Tina and Aristotle want to invest this money. They make an appointment to see William a financial adviser who advises clients on a variety of financial products and investments.
William recommends they invest the bulk of their money in Big Dreams Ltd by acquiring shares. Tina and Aristotle are hesitant because they have never purchased shares before. William convinces them it’s a good investment and claims they will receive double their investment in 18 months. 法律essay代写
In fact, Big Dreams Ltd is performing poorly financially and William has no basis for making these claims.
William also convinces Tina and Aristotle to take out life insurance with a particular company even though Tina and Aristotle specifically say they do not think they need this. William is keen to sign them up because he receives a $400 Coles gift card for every client he signs up.
William prepares all of the necessary paperwork and obtains the life insurance policy for Tina and Aristotle. William does not give the couple an opportunity to read the paperwork because he does not believe either Tina or Aristotle would understand it anyway.
It turns out the life insurance policy is very expensive and the share investment falls through.
Advise Tina and Aristotle whether William has breached the common law, the ASIC Act or the Corporations Act. Refer to remedies and defences where appropriate.
The sample response below is not a perfect answer. It is provided as guidance only. 法律essay代写
The legal issue in this question is whether William has breached his duties as a financial adviser under the Corporations Act, ASIC Act and the common law. When giving financial advice to the plaintiffs Tina and Aristotle.
Corporations Act 2001 (Cth) (CA)
Under the CA a financial adviser must hold an Australian Financial Services Licence issued by ASIC s911A.
Under s912a(1)(aa) a licensee must have in place adequate arrangements for the management of conflict of interest.
Pursuant to s 766 a person is providing financial service if they provide advice or deal in a financial product. Section 766B defines financial product advice to mean a statement that could influence a person’s decision on financial products. If that financial advice is personal, the financial adviser must provide the customer with certain disclosure documentation: s 766B(3).
Under s961B financial advisers must act in the best interests of the client in relation to the advice. 法律essay代写
S961G Advice must only be given if it is reasonable to conclude that it is appropriate for the client.
S961J A provider must give priority to the client’s interests if they know or reasonably ought to know of a conflict of interest.
Section 963A prohibits conflicted remuneration. This means that financial advisers are not allowed to accept any benefits (secret or non-secret). That could influence them to encourage a client to select a particular financial product. However, they are allowed to accept ‘soft dollar benefits’ which means a gift of less than $300.
Common law 法律essay代写
Under the common law principles. A person has an obligation to take reasonable care to avoid foreseeable risk of loss or damage: Donoghue v Stevenson (1932)
In addition, a financial adviser may be liable for negligent misstatement if they give a client negligent advice that the client relies on to their detriment: Hedley Byrne v Heller ; MLC v Evatt (1968); Shaddock v Parramatta (1981)
Financial advisers are fiduciaries and must act in the best interest of their clients (Daly v Sydney Stock Exchange (1986)
ASIC Act 2001 (Cth)
The ASIC Act 2001 also contains provisions that regulate the behaviour of financial advisers. These provisions are contained in:
SS 12CA, CB, CC which relate to unconscionable conduct,
S 12DA which relates to misleading and deceptive conduct,
S 12DB which relates to false or misleading representations, and
S 12ED which relates to due care and skill; fitness for purpose
The facts tell us that William is a financial adviser. This means he must have an Australian Financial Services Licence issued by ASIC. In the scenario William is giving advice to clients about purchasing shares and life insurance. Both of these types of products are considered to be a financial product under s 763A CA.
The facts tell us William is giving specific financial advice. Which means he is likely taking into account Tina and William’s personal circumstances. If that financial advice is personal, the financial adviser must provide the customer with certain disclosure documentation: s 766B(3) CA. This means William will have to provide Tina and Aristotle with a Financial Services Guide, Statement of Advice and Product Disclosure Statement. A consequence of failing to provide these documents means that Tina and Aristotle may be able to get out of the contracts and also avoid paying William’s fees.
Because William is providing personal advice he also has a duty to act in Tina and Aristotle’s best interests s961B.
To demonstrate he is acting in the plaintiff’s best interest, William must have identified the objectives, financial situation and needs of Tina and Aristotle. All judgement and advice given must be based on their relevant circumstances.
Here the facts tell us that William has failed to identify his client’s needs. Because he has failed to do this he cannot be reasonably aware of their best interest sand as a consequence he has not complied with s961B(1) of the CA. 法律essay代写
The facts further tell us that William convinces Tina and Aristotle to “invest the bulk of their money” in Big Dreams Ltd which is performing very poorly financially. We are told that the plaintiff’s aim was to generate some extra income so they could spend more time with their grandchildren during retirement. Although it’s not explicitly stated in the facts of the case. A reasonable assumption is that Tina and Aristotle wanted a safe diversified portfolio of low-risk investments.
Without knowing their circumstances there is no basis that William could “reasonably conclude” that his advice is appropriate for them. As such he contravenes s961G of the CA.
With respect to the life insurance policy, Tina and Aristotle specifically state they “do not think they need this”. By obtaining it for them anyway, William has not given priority to their best interests and has breached s961J of the CA.
William might try to argue that Tina and Aristotle aren’t retail clients but wholesale clients because their investment was above $500,000. According to this line of argument, William could argue he wasn’t required to provide all the chapter 7 disclosure documentation to them. See S761G(4). William will have the burden of proof in establishing Tina and Aristotle aren’t retail clients.
The facts further state William makes these claims without a proper basis and makes promises that do not appear to be rooted in fact. Accordingly, William may be liable for negligent misstatement under the common law and may be liable to pay Tina and Aristotle damages for any loss: Hedley Byrne v Heller ; MLC v Evatt (1968); Shaddock v Parramatta (1981).
There are also a lot of similarities between the facts of this case and Ali v Hartley Poynton (2002) where the court held the defendant was negligent in making inflated representations as to returns, failing to conduct a proper needs analysis, failing to disclose risks, failing to actively monitor the investments so as to mitigate loss and failing to maximise profits and manage risks.
In the contract of service between the advisor and clients there are also implied terms such as due care, skill and diligence. Like the adviser in the Ali case. William did not give his clients information and the best advice possible and failed to reveal any personal interests such as commissions received.
ASIC ACT 法律essay代写
The same facts may give rise to a claim of misleading and deceptive conduct generally under s 12DA of the ASIC Act or specific false and misleading representations under s 12DB of the ASIC Act. William may also have breached s 12ED of the ASIC Act for failing to use due care and skill when giving advice to Tina and Aristotle to invest in a company that is doing badly financially.
Further William may be liable under the ASIC Act for engaging in unconscionable conduct or misleading and deceptive conduct. Sections 12CA, CB, CC of the ASIC Act prohibit unconscionable conduct, which is unfair conduct that takes advantage of a person’s vulnerability. There are 3 elements of unconscionability under the High Court case Commercial Bank of Australia Ltd v Amadio (1983).
1 the weaker party must have been under a special disability so that there was not real equity between the parties.
2 The stronger party must have been aware of that special disability. 法律essay代写
3 It must have been unfair or unconscientious for the stronger to procure agreement in the circumstances in which it was procured.
We are told Tina and Aristotle are elderly and English isn’t their first language. They didn’t receive independent legal advice and they placed all their trust in William. This may constitute a special disability, as there was no real equity between the parties. William is certainly aware of this special disability. This is supported by the fact he failed to show them the paperwork because he believed they wouldn’t “understand it anyway.”
These actions may be deemed unconscionable conduct and give Tina and Aristotle a right to rescind the contract.
William has also breached s 963A of the CA by accepting a $400 Coles store card for every client he signs up. Any ‘soft dollar benefits’ over $300 are prohibited See R.G 175 and constitute a conflict of interest. Where there is a conflict of interest there must be a disclosure in the SOA, FSG 法律essay代写
Based on the preceding analysis, it is likely William has breached financial adviser provisions under the Corporations Act and ASIC Act. As well as the common law generally.
Tina and Aristotle have suffered a loss as a direct result of his advice and should be able to recover their loss by taking civil action against him.
Under s912A(1)(g) a licensee must have an internal dispute resolution procedure together with membership of an external ASIC approved dispute resolution scheme such as FOS.
The sum of money involved in this case is above FOS’s jurisdiction of $150,000. Taking this dispute to court would be very costly for Tina and Aristotle and hopefully can be avoided at all costs.
ASIC has the power to make a banning order against William for not complying with the financial services laws and obligations under s912A. 法律essay代写