#10112 - Ws1 Prep Task - Business Law and Practice

Scenario 1

Alan, our firm will not be able to act for you or advice you in relation to your potential removal from Warwick Biosciences Limited. We are constrained by the SRA Code of Conduct, specifically:

Principles: 4 (best interest of client), 6(behave trustworthily for the public) and 7(comply with the law)

The conflict is confirmed by the fact that Warwick will want Alan to take a small remedial amount and Alan will want to get a large/full amount from Warwick. A firm cannot guarantee to act in the best interest of both clients.

O(3.5) states that we should not act where there is a client contact (between Warwick and Alan), or a significant risk of a client conflict unless either of the two exemptions apply.

Neither the exception where the clients have a substantially common interest (O(3.6) or where the clients are competing for the same objective (O(3.7)) will apply. Both clients have opposite objectives (IB(3.2) and (3.3)). Arguably, the clients could not be represented even-handedly (IB(3.5))

Scenario 2

Principles: 2 (Act with integrity), 4(Best interest), 5 (standard of service), 6(public trust), 7(regulations)

As we offered advice to TM before we owe duty of confidentiality to him. However, we also owe duty of disclosure to Grand First Bank. Nevertheless, confidentiality supersedes disclosure (O4.3).

O(4.4) states that I should not act for Grand First Bank in a matter where they have an interest adverse to McKenna for whom you hold confidential information which is material to GFB in that matter, unless that confidential information can be protected by the use of safeguards. GFB must give informed consent by writing.

IB 4.5

IB 4.7

Conclude: W could act if Safeguards are put in place and if it is Reasonable to act (This applies usually to large firms only with the capacity to place safeguards). There would be a risk of Professional Embarrassment if the Bank finds out that we should not have acted because we were keeping relevant information from them regarding TM. Therefore, it is better to inform the client that we CANNOT ACT on this matter. (The bank will probably understand that something’s up)

Scenario 3

Is Factors a Subsidiary of Gemini under S.1159 of the Companies Act 2006?

1159 Meaning of “subsidiary”etc

(1)A company is a “subsidiary” of another company, its “holding company”, if that other company—

(a)holds a majority of the voting rights in it, or

(b)is a member of it and has the right to appoint or remove a majority of its board of directors, or

(c)is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it,

or if it is a subsidiary of a company that is itself a subsidiary of that other company.

(2)A company is a “wholly-owned subsidiary” of another company if it has no members except that other and that other's wholly-owned subsidiaries or persons acting on behalf of that other or its wholly-owned subsidiaries.

(3)Schedule 6 contains provisions explaining expressions used in this section and otherwise supplementing this section.

(4)In this section and that Schedule “company” includes any body corporate.

Therefore, NO, Factors is not a subsidiary of Gemini and they will not be allowed to use the same premises. David would have...