LAWYER AND CLIENT.

Auckland Star, Volume LXI, Issue 286, 3 December 1930, Page 10

LAWYER AND CLIENT.

BUSINESS ASSOCIATION. TRANSFER OF SHARES. ''; _... . "... ;. j_ , . CANCELLATION DECLARED VOID. Judgment for' the plaintiff was' given by Mr Justice Smith, in the Supreme Court yesterday, in "the action between Robert , N. Oborn, mattress.'" manufacturer (Mr. Richmond and and W. D. Anderson, solicitor, ..(Mr. JFinlay), in regard to a transfer- of 999 shares in Robert Oborn, -a company in liquidation. Plaintiff asked that the cancellation of the transfer - be declared null, and void, and. that the defendant should indemnify- him in respect .of the liability ,for. .uncalled capital upon the shares. Alternatively, the plaintiff claimed £999 as damages. His Honor"found that the facts settled the questions of law in the case. He concluded, on the evidence, that the defendant acquired an "unconditional right to the 999.shares. Defendant had not set up the case that he held the transfer merely as security, and he- was precluded by ( his answers to interrogatories from setting up that case. On the question whether the cancellation could stand, his Honor found it was plain that defendant was acting not only as Oborn's business associate, but also ,'.as his solicitor at the time tho transfer was prepared, and also at the time the transfer was cancelled. He was also acting as solicitor to and director of the company. That was Oborn's solicitor was - clear from tho fact that part of Oborn's property '■was not to be taken over t>y the comp'any immediately but was to be leased to the company with an option to purchase, and yet the defendant was advising all parties. / "Oborn and the defendant were not at arm's length in this matter," stated hie Honor. „ "The cancellation of tho transfer cannot stand. In effect, it amounted to a release" of a valuable .financial right in delicate financial circumstances in favour \of the solicitor, personally, without such release having been given under the guidance of independent advice. There was no evidence, the judgment stated,'to show that defendant had ever instructed Oborn. not to vote in respect of the 1)99 shares. TJie defendant was

not seeking to retain property of his client. He was seeking, to impose burdensome property Of his own upon liis client. It was not proved that Oborn ratified the cancellation or waived his ■ rights after the removal of the corififdential relationship between hirneelf and the defendant. The right which Oborn had against the defendant was a ripli to indemnify against liability upon 999 shares. • •• Hie Honor gave judgment that the cancellation of the -transfer' of shares was? null and void and that it be recti- ' fled accordingly. He,also Screed that defendant indemnifv the plaintiff in .respect of the liability for the uncalled capital in respect of the shares. Plaintiff was allowed costs as on a claim/ for' £ 999. r 'V