Management - Question One You Assessment Answer

Question One: You are a licensed conveyancer with a client who is a property developer. Your client purchases a large lot of land, which he intends to subdivide and sell the smaller blocks. You prepare the contracts of sale for the subdivided blocks and you note that the property has two small houses already built on it. The property is also next door to a livestock farm and is partially in a floodplain, which would restrict the location and types of houses that can be built. You are aware that your client has already started advertising the subdivision with a local real estate agent. The advertising contains statements like: “Live in rural paradise” “Come and breathe the serenity” and “Be one with nature” What risks are there for your client or any other party involved? What advice would you give your client? What precautions should you take to minimise those risks? Question Two: Sandra bought a lounge suite for $5,000 at a large retail store after signing up for a ‘store account.’ She agreed to pay off the account at $150 per month. Prominent signs in the store said that the store account was ‘interest free’ for one year, then 3% interest per annum after the first year. When she signed the store account contract, she hadn’t read the terms and conditions because she had been in pain after slipping over in the store and hurting her back. The salesman got her to sign when she was waiting for the ambulance to arrive. The contract included a condition that said that the store can seize and sell any property (of any nature and value) belonging to the account holder if the account holder defaults in payment of the store account. Another clause says that once the goods are delivered, the store accepts no liability for wear and tear, loss or damage to the goods. About a year after buying the lounge, a split opens up in the fabric on the side of the lounge. After one and a half years of making payments, Sandra misses one payment and the store has sent her a letter of demand asking that she hand over her car. What are the legal issues in this scenario? (NB: You do not need to consider negligence for personal injury) Question Three: Catherine and James enter into a partnership to establish a conveyancing business. Catherine handles all the insurance and fills out the proposal form. Catherine is not aware of her partner's business history. Catherine does not know that James is an undischarged bankrupt and so, she does not disclose this on the proposal form. Catherine also does not disclose that in her previous business, an insurance claim was declined (by a different insurer) as she was suspected of having deliberately burned down her business premises. It was never proven that Catherine did this and she had not fought the insurance company because she had been unwell at the time and had been made a good purchase offer for the property by a neighbour. After they obtained insurance cover, the premises are damaged by fire. The Insurance Assessor’s report states that the cause of the fire is faulty electrical cabling in the property. After ten months of assessing the claim, the insurer refuses to pay. Advise Catherine and James about the legal issues with the insurer. Question Four: Stephen is an experienced conveyancer and keen social media contributor. Recently, a friend, Tom, contacted Stephen on Facebook and asked him, “Hi Stephen, units in Newcastle near my work are on the market. The price is about $350,000 per unit, which is a bargain for the area. I’m thinking of buying. What do you think?” Stephen replied, “It sounds fantastic. What an investment.” Tom then asked Stephen “Do strata owners have to contribute to building works on the common property or is this work should be covered by the building insurance?” Stephen replied, “If insurance covers the work, then it is unlikely that there would be any cost to the owners.” Tom relied on the advice and bought the unit. Not long after purchasing, a special levy was raised to pay for additional works on the common property and the cost of the levy was four times what Tom had expected to pay in levies for the unit for the year. Tom tries to sell the unit but all the purchasers want a price reduction to compensate for the additional levies. Advise Tom whether he has a cause of action in negligence against Stephen. Would your advice be different if Stephen had provided the advice in his office, at a scheduled appointment?