Equity and Trusts: Advice on Claims Against Louis Litt and Harold

This report analyzes a legal case involving Donna Paulsen and her claims against Louis Litt and Harold Paulson. The report addresses issues of unconscionable conduct, misrepresentation, and breach of fiduciary duty. It examines the actions of Louis Litt, who facilitated a transaction resulting in significant financial loss for Donna, and Daniel Paulsen, who misused his power of attorney. The report applies relevant laws, including the Competition and Consumer Act 2010, and case precedents like Australian Consumer Commission v Lux Distributors Pty and Strong v Bird, to assess the validity of Donna's claims and potential remedies such as rescission and equitable fraud. It provides a detailed analysis of the legal issues, rules, and application of equity principles to determine the potential outcomes of the claims against both Louis Litt and Harold Paulson. The report concludes with a memorandum of advice summarizing the legal positions and recommending appropriate actions for Donna.

Equity and Trusts
Name
College of Affiliation

Name:
Box Number
Address
Date: 30th August 2017
30th August 2017
Donna Paulsen
Address
Ref: You’re Rights against Louis Litt and Harold
YOU’RE INSTRUCTIONS
The following is a letter advising on the legal position that you have against Louis Litt
and Harold, who is the son of Daniel Paulsen.
FACTS OF THE CASE
Louis Litt facilitated a trade where you managed to use $ 750,000 to buy products whose
market value was $ 250,000. These products were bought from ATS, which is a company
that had links with Louis. In fact, the company paid Louis $ 300,000 for services that
were not offered. Unfortunately, ATS managed to close down at the end of June 2016.
Another case is on Daniel Paulsen. He has the power of attorney over the assets of your
mother. Nonetheless, he sold your mother’s house for $ 500,000, and gave $ 250,000 to
his son Harold, who went on to buy a house and renovate it, which now costs $ 250,000.
LEGAL ISSUES IDENTIFIED
Basing on the facts that are identified in this case, there are a number of legal issues that
you need to consider, for you to successfully bring a case in court. The following are
some of the issues that should be under consideration:
• Whether the transaction ordered by Louis Litt was an act of unconscionable
transaction.
• Whether Louis Litt can be held liable for the transaction.
• Whether you can hold Jessica Pearson for the transaction.
• Whether you can recover the $ 250,000 that your uncle gave to his son Harold,
after selling the house belonging to your mother.
RULES

In this case, Louis Litt had extensive influence over the financial affairs of DPA, the
company that is managed and owned by Donna, and ATS, where Louis was also an
employee. One of the laws that can be used for purposes of addressing the abnormal
profits that was made by ATS through the misrepresentation of the prices of software is
the 2010 Competition and Consumer Act. Subsection 20 (1) of the act is very clear on
issues touching on the misrepresentation of prices. According to this subsection of the
act, the law denotes that no person should engage in any unconscionable actions or
behavior while engaging in commerce or trade.
Section 21 (1) of the Consumer act further prohibits the engagement of unconscionable
trade by business organizations that supply products and goods to other organizations.
Moreover, a similar case that can be used to examine the liability of Louis Litt and ATS
is on Australian Consumer Commission v Lux Distributors Pty. In this case, the court
ruled that it is unacceptable for an individual to use their influence for purposes of
convincing another party to buy a product; thus, the plaintiff can seek remedies if the
product bought has been misrepresented.
Regarding the position she has on her inheritance, one of the laws that can be used for
purposes of determining whether she should claim for a revocation was established in the
leading case of Strong v Bird. In this case, the principle established is that, if a testator
has gifted a person who is the executor of his will, the principles of equity will hold that
gift to be valid. For this rule to hold in a court of law, the testator must have had the
intention of ensuring that the gift is irrevocable and immediate. This was the intention of
Edith your mother.
ANALYSIS
By making you the executor as well as the beneficiary of the will, she had the intention
of ensuring that you access the gifts immediately, and the process to be irrevocable
(Posner, 2014). On this note, Harold will have to return back the $ 250,000 given by his
uncle, and this is because the uncle violated his power of attorney by acting on his
interests and not that of Edith. Note that, the traditional remedies for issues touching on

equity and trust has been damages. For instance, the principles of equity have a notion or
a maxim that denotes that any wrong must be followed by a remedy (Pettit, 2012).
Damages are a remedial function that reflects the principles of equity. Nonetheless, the
Judicature Act of 1875 provides a number of equitable remedies that you can claim.
These remedies include rescissions, an account of profits, declarations, specific
restitutions and imposition of a constructive trust (Watt, 2013). Nevertheless, you can
always claim for a rescission as a remedy for the unconscionable act that Louis did for
you.
Note that, it is because of the advice of Louis, that you agreed to buy the software and
supplies from ATS for $750,000. This is despite the market value for the products being
$ 250,000. A rescission can be sought for purposes of ordering the revocation of the
contractual obligation or relationship between Donna and Louis. One of the cases that
have set up this principle of rescission is Alati v Kruger. In this case, the court was of the
opinion that it is possible for the plaintiff to claim rescission, and this is in case there was
a misrepresentation of facts, or a breach of contractual obligations.
CONCLUSION
Finally, you can claim full rescission, in the case involving you and Harold. Daniel did
not have the authority to give $ 250,000 to his son Harold, since it was not the interest of
Edith, the mother of Donna. Daniel was acting on the interest of his son and that of
himself. Moreover, when it came to your contractual relationship with Louis and ATS,
you cannot successfully claim for a rescission, because the company ATS has already
been closed. This is a principle that is established in Clark v Dickson.

Memorandum of Advice
Confidential
Attorney: Zane, Specter & Ross
To: Donna Paulsen
From:
Re: Letter of Advice on Claims against Louis Litt, ATS and Harold Paulson
As per your instruction, you sought to seek an advice on the possible claims that you may
have against Louis Litt, ATS and Harold Paulson. Some of the major issues that arise out
of your case are:
 Whether it is fraud or misrepresentation on the prices of software that were
supplied to you by ATS. The market value for the software was $ 250,000, yet the
amount of money that you used for the software was $ 750,000.
 What sought of remedy you can claim for the misrepresentation of the prices for
the products.
 Whether there is a claim against Daniel Paulson and his son Harold, for
unauthorized use of $ 250,000.
Before having an understanding on the relevant claims that you can bring against the
people mentioned, there is a need of understanding various aspects of law, that emanate
from their relationship with you, and the applicable laws that you can use to bring a claim
against them. Take for example the case of Louis Litt and ATS. By selling for you
softwares at $ 750,000, yet the market value for these softwares is $ 250,000, we can
assert that an element of fraud and misrepresentation occurs.
Louis had an influence over the purchases and supplies, and he receiving about $ 300,000
from ATS without providing any services, it is possible to assert that the money was used
to influence the contract. It is based on these facts that we bring up the concept of
unconscionable conduct, and why it is against the law. Note that, a business transaction
can be considered as unconscionable, if it is harsh and beyond the commercial bargaining
and value that one of the parties to the transaction might get. In this case, you have
suffered greatly, because of the great amount of money you have lost, due to the unfair
value or purchase price of the supplies you got from ATS.

The supplies coasted you $ 750, 000, yet the actual value of the supplies is $ 250,000.
This means that you lost about $ 500,000, which is a significant amount of money.
Basing on these facts, it is possible to assert that the transaction was unconscionable, and
you can successfully seek a claim under the common law doctrines of equity. One of the
laws that you can use for purposes of laying a claim against Louis is Competition and
Consumer Act of 2010 s 20 (1).
According to this law, it is prohibited for a person to engage in trade or commerce by
behaving in an unconscionable manner. It is this law that Louis Litt managed to breach
and this is because he used his influence to order for softwares and supplies whose
market value was $ 250,000, but he actually allowed the company to pay $ 750,000. This
is unacceptable and uncalled for. Under the common law doctrines of equity, you can
claim for a partial rescission. However, that is $ 500,000 against ATS. Nevertheless, it is
unfortunate that ATS has been closed, thus you cannot claim for a rescission from the
company, and this is based on the principles established in Clark v Dickson.
Note that, the principle of rescission as a remedy for unconscionable acts was reinforced
in Australian Competition and Consumer Commission v Lux Distributors Pty. Moreover,
the concept of equitable fraud occurs in this relationship between you and Louis Litt.
This is because Louis received $ 300,000 from ATS without providing any services or
products to the company. This is an element of fraud, and you can ask the court to declare
the contract you have with Louis to be void, and be restored to you initial position. This
is a fact that is supported in the case of Yerkey v Jones.
Finally, in the case of Harold, you can rely on the common law principle that was
established in Strong v Bird to lay a claim on the property belonging to your mother. This
includes the $ 250,000 that Daniel wrongly gave to his son Harold. Daniel did not have
the authority to give any property to his son, because it was not serving the interest of his
client Edith. On this note, you can invoke the provisions contained in Vadasz v Pioneer
Concrete, to claim the $ 250,000 from Daniel Paulson. Note that, you are only entitled to

4 250,000, since the aim of rescission is to return you to the initial position of the will,
which was $ 500,000.
In some case where the plaintiff has committed a bad conduct in that case the
defendant may claim doctrine of unclean hands. The doctrine of unclean hands may
prevail under some situation the person that is it may be the defendant or the plaintiff has
failed to honour the contract agreement. In that case the doctrine may prevail. If the
plaintiff has acted dishonestly or has fraudulently this against the nature of the contract,
in that case the doctrine of unclean hands may prevail. If the plaintiff has performed a
crime that is in relation with the contract, in that case the doctrine of unclean hands will
prevail. If the plaintiff has forced the person to go into contract with him and late comes
to court for aid against that person for that same contract, in that case the defendant may
claim for doctrine of unclean hands. In case the contract that the plaintiff has gone into
has been achieved with violence or committing any fraud, in that case the doctrine of
unclean hands could be claimed from the side of the defendant.
Taking example of a Famous case: John Everet Vs Joseph Williams
In the case that John Evert vs. Joseph Williams, were both highway robbers, who
entered into a partnership where they robbed highway travellers and split the loot of their
robberies. After the looted things were sold and divided, Evert thought that he did not get
the fair share of the looted amount and took Williams to the court. As the court came to
know about the act of both the parties that the disputed amount that they were talking
about was actually an amount of loot. The court dismissed the case and issued warrant
against both the parties declaring them guilty.

As the case tells us that in this situation where both the parties are guilty of
starting the problem that they want to resolve in court, they will not get any aid from the
side of the court. So in order to get any aid or resolution one needs to be free from any
wrongful act.
This means that those who seek justice should do justice.
As when a defendant appeals for the doctrine of “clean hands” to cancel the
charges that have been brought upon him then the court will see if the plaintiff has
performed any misconduct or not and if he has then it needs to be found whether the
misconduct is in relation to controversy for which the plaintiff has appealed for.
The court will see if the Plaintiff is engaged in a fraudulent or illegal misconduct
more or less in relation to the case or he has performed any misconduct at the end and
ants that status quo should be resolved back to the previous situation. If the desired relief
and harm the interest of other in that case it can be denied by the court.
The doctrine says that justice is not served by doing any harm to the third party.
So if ever there is a situation that by any decision if taken by the court can harm someone
in that case the decision will not stand in the court of law.