Memorandum

MEMORANDUM

____________________________________________________________

___________

To: Betty Paismore

From: Eidan Havas & Joel Coward

Subject: Review of consultation conducted with Mr. Barry Fisher

Date: March 5th, 2007_____________________________________________

An interview was conducted with Mr. Fisher by my colleague and I, to facilitate matters of concern that had been identified in his previous correspondence with Ms. Betty Paismore.

Preparation

We had concluded that there were four main legal issues as well as some non-legal issues that needed to be addressed and explored in order to provide our client with adequate and concise counsel.

The legal issues identified were:

1. The potential existence of a partnership?

2. Issues of Liability in regards to the partnership, the loan taken out by Mr. Fisher and also concerns of future legal action.

3. If a partnership is established, does Mr. Fisher want it dissolved and procedures for termination and possible breaches, if any of the partnership.

Other matters of concern were:

1. A possible conflict of interest

2. Matters of trust and confidence in relation to Joe, Barry, Peter and their conduct.

Nature of the Business

As our interview with Barry began, it was made clear that his major concerns revolved around liability issues regarding his business entity. As our meeting began to wind down, I told Barry that if we could establish a partnership that he would be entitled to half the profits, but would also assume unlimited liability.

In order to properly assess our client's current situation it is important to consider first the nature of the business. A partnership is a relationship that subsists between persons carrying on a business in common with view to profit. Based on the facts, Barry and Peter's idea to develop and sell the land consists of a Ð''commercial character' and would be considered a Ð''trade, occupation, or profession'.

The traditional approach used by the courts has been to Ð''look for repetition or continuity of acts or the intention of such reputation'. Barry and Peter's agreement only contemplated the development of this particular land and no on-going business relationship was contemplated by Barry or Peter. However, the Partnership Act now recognizes that a partnership may be entered into Ð''for a single adventure or undertaking'. In an analogous case, parties to a joint-venture agreement for the construction of a shopping centre were found to be in a partnership despite both the construction being a single non-repetitious act and the absence of any reference in their agreement to partnership.

An essential feature of any partnership is that each partner is both a principal and an agent of the other partners for the purposes of conducting partnership business and each participant benefits from and is legally bound by the action of the others. The mutual agency requirement does not mean that both Barry and Peter must take an active rule in management. Whether all partners need to be active is a rule that developed in Lang v James Morrison & Co. Ltd. Based on the facts provided to us by Barry, he carries on the Ð''same business' and does so as an agent for Peter and thus, it is unnecessary that each partner should have an active role.

All partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses, whether of capital or otherwise, sustained by the firm. Both Barry and Peter shared a common purpose of developing and selling the land with a clear intention to make a profit. Barry is a financier, while Peter is a licensed Real Estate Agent. Based on the information our client gave us, Barry put up the money for the building in the form of a loan, while Peter took care of the marketing, selling, and management aspects of the units. When all the units were sold, Barry's loan would be repaid, expenses incurred by Peter would be repaid, and then the remaining profit would be shared equally by the two friends. The receipt by a person of a share of profits of a business is prima facie evidence that they are a partner in the business. Barry and Peter each posses unique skills that rely on each other, in order to ensure the success of the business entity.

Barry and Peter's agreement, by which this loan would be repaid with interest from the proceeds before the profits were divided evenly, is similar to the agreement reached in Canny Gabriel Jackson Advertising Pty LTD v Volume Sales Pty Ltd where it was held that the Ð''contract exhibited all the indicia of a partnership.' Based on the facts supplied to us by our client, this business entity is most similarly structured as a partnership. Nevertheless, in order to come to a complete and accurate conclusion, more questions need to be asked as well as more evidence gathered.

Fiduciary Duty

Partners are bound to exercise the utmost good faith in their dealings with one another until dissolution. A fiduciary obligation arises when partners enter into negotiations that involve disclosure of sensitive information. Every partner must account to the firm for any benefit derived by the partner without the consent of the other partners from any transaction concerning the partnership.

A partner must account to the firm for any profit from any partnership related transaction in which a significant possibility of conflict existed b/w the duty & any personal interest. Courts of equity will intervene to insist on personal benefits being handed back to the partners.

The Equitable obligation is owed for any benefit or gain;

1) Which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed b/w his duty & his personal interest in the pursuit or possible receipt of such a benefit or gain; or

2) Which was obtained or received by use of or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any benefit or gain is held by the fiduciary