10. Charles' father passed away some 12 months ago, leaving behind to him some properties, money...

 

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10. Charles' father passed away some 12 months ago, leaving behind to him some properties, money and some shares of a company called Brightman Company Ltd., which was established by Charles' father and two friends of his, viz. Stanley and Larry. Charles now holds 30% of the total shares while Stanley and Larry each holds 35%. Being a shareholder, Charles has chance understanding the business of the Company, which was doing very well until about two years ago when the Company lost two major customers. The profit of the Company, though positive, has dropped by nearly 40%. Since Stanley and Larry are over 70 and eager to retire, they suggested to Charles to take over the whole Company by acquiring their shares at a bargain price. Charles was given the Company auditor's reports produced by Wong & Luk Accounting Firm for his reference. Eventually Charles acquired 100% ownership of the Company. However, upon assuming the actual management of the Company, Charles found that the situation is worse than what he expected or understood from the auditor's 1460030 Mou page 4 of 6 Consel report. Upon detailed examination of the accounts, Charles found that the report actually had misrepresented the profity of the Company. Charles now intends to sue Wong & Luk. With reference to the facts given above, please answer the following questions: What is likely to be the use of action applicable in this case? What Charles need to prove against Wong & Luk? (You are only required to list the legal issues that Charles needs to prove. No need to give details of each issue.) c) Do you think Charles stand a good chance of success in his claim against Wong & Luk? (le. YES or NO) d) Please provide legal reason/argument and relevant authority to support (16 marks) your views. 10. Charles' father passed away some 12 months ago, leaving behind to him some properties, money and some shares of a company called Brightman Company Ltd., which was established by Charles' father and two friends of his, viz. Stanley and Larry. Charles now holds 30% of the total shares while Stanley and Larry each holds 35%. Being a shareholder, Charles has chance understanding the business of the Company, which was doing very well until about two years ago when the Company lost two major customers. The profit of the Company, though positive, has dropped by nearly 40%. Since Stanley and Larry are over 70 and eager to retire, they suggested to Charles to take over the whole Company by acquiring their shares at a bargain price. Charles was given the Company auditor's reports produced by Wong & Luk Accounting Firm for his reference. Eventually Charles acquired 100% ownership of the Company. However, upon assuming the actual management of the Company, Charles found that the situation is worse than what he expected or understood from the auditor's 1460030 Mou page 4 of 6 Consel report. Upon detailed examination of the accounts, Charles found that the report actually had misrepresented the profity of the Company. Charles now intends to sue Wong & Luk. With reference to the facts given above, please answer the following questions: What is likely to be the use of action applicable in this case? What Charles need to prove against Wong & Luk? (You are only required to list the legal issues that Charles needs to prove. No need to give details of each issue.) c) Do you think Charles stand a good chance of success in his claim against Wong & Luk? (le. YES or NO) d) Please provide legal reason/argument and relevant authority to support (16 marks) your views.

Answer rating: 100% (QA)

a The likely cause of action applicable in this case is negligence Charles can sue Wong Luk for prof... View the full answer