Advise wendy if she is entitled to a proprietary remedy

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Reference no: EM133474507

Case: Cleaver is also assisting another client, Wendy, with the purchase of a nightclub. In order to complete the purchase, Wendy pays $500k into Cleaver's trust account. Cleaver holds the money on trust for Wendy: it can only be disbursed with Wendy's instructions. The Saturday after the money is received, Cleaver is at Richmond Race Club watching the greyhound races. Cleaver places a number of bets over the course of the afternoon. Come nightfall, Cleaver is running out of money - he only has $10,000 left in his bank account. But Cleaver wants to continue betting on the dogs! Cleaver sends a text message to his secretary, Nicole, which reads: "Nicky, can you plz transfer $100k from Wendy's trust account to my personal account. Need the money urgently." Nicole receives the message and is unsure of what to do. Nicole manages Cleaver's trust account and knows that the trust account is a very special account. She tries to remember the exact rules about transferring money out of a trust account. But all Nicole can remember is that there are a lot of rules, and they are pretty complicated. She tries to call Cleaver, but he does not pick up his phone. Worried about losing her job, Nicole logs into the banking platform and transfers $100k to Cleaver's personal bank account. Over at the Richmond Race Club, Cleaver notices that money has been deposited into his account. He places two bets of $25k (each) on the last race of the night. The first bet is not successful. The second bet has a return of $100k (which includes the return of the $25k that Cleaver bet)! That $100k is paid immediately into Cleaver's bank account. To celebrate his success, Cleaver shouts a round of drinks for everyone at the bar. That costs $1.5k, and is paid out of Cleaver's bank account.

Assuming a breach of trust by Cleaver, advise Wendy:

e) if she is entitled to a proprietary remedy in relation to the money in Cleaver's bank account, and to what extent?

f) if she has any claim against Nicole. (You do not need to consider specific remedies Wendy may seek as a result of a claim against Nicole)

Reference no: EM133474507

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