Much worse than crying “Wolf”…

May 14, 2008 – 10:01 am

What a crazy situation:

In late 2006, Darrell Roberson came home from a late-night card game to find his scantily clad wife with another man in a pickup in the driveway. Tracy Roberson was with her lover but cried rape, and her husband fired four shots into the truck as Devin LaSalle drove off, killing him.

Darrell Roberson was arrested, but a murder charge was dropped, and a grand jury indicted Tracy Roberson instead.

The wife has been convicted of involuntary manslaughter, and faces between 2 and 20 years in gaol.

Presumably when the charges were dropped against the husband this means that the prosecutors thought it was reasonable for him to unload four shots into the back of an alleged rapist? While it may be understandable to wish to kill someone whom you suspect raped your partner, surely this kind of vigilante behaviour should not be condoned.

If the wife knew that her husband carried a gun and was likely to shoot at a rapist, she should not have cried “rape”, because she ought to have known that would endanger the life of her lover. I presume it was just a spur-of-the moment decision made in horror when she saw her husband arrive home: no thought went into it at all.

However, the decision to drop charges against the husband but proceed against the wife reflects a sexist desire to blame the promiscuous and faithless wife, and condones the husband’s thoughtless act of violence. Presumably, he, too, acted without thought, but his behaviour was also unreasonable. I think that the husband also bears equal responsibility. In my opinion, you can’t just shoot and kill someone like that. It may lead to the death of an innocent man (as it did in this case). There’s no place in society for that kind of behaviour. Hmm, well, it appears maybe there is, if you’re in Texas.

(Via Jonestown)

By Legal Eagle | Posted in Fark!, Law | Comments (1)

Riding the porcelain plane?

May 13, 2008 – 10:28 pm

Apparently a New York man is suing an airline for US$2mill because the pilot forced him to sit on a toilet during part of the flight. He was given a last minute seat on a plane, but then a flight attendant complained her jump seat was uncomfortable, so the pilot moved him to the toilet so she could use his seat.

US$2mill? How did they come up with that figure? What loss did this guy suffer if he wasn’t actually physically injured by his experience? Obviously, he should not have had to spend an hour and a half in the toilet while there was turbulence on the plane, and it is clearly in breach of safety regulations. But I do wonder how people come up with these outrageous figures for damages. Perhaps he is arguing that he has a pathological fear of flying as a result? Or maybe it’s a publicity bid to force the airline into settling? The mind boggles.

I must confess that I have once spent most of a flight in the toilet. However, that was voluntary, and for entirely different reasons (I ate a dodgy prawn in Kuala Lumpur). Ugh. Note to self: do not eat prawns in KL again from dodgy food courts; at least, not unless I see the person cook it on a big flaming wok in front of me. Actually, now that I think about it, I’ve had bad luck in that regard. I’ve also had to fly Air Lao while very ill. However, it was probably fortunate that I was so ill. I seriously wanted to die at that point, and so it did not worry me that the plane was a second-hand Soviet jet without radar (the pilots had to take off and navigate by sight). Nor did I care when great gusts of water vapour started coming in the baggage holds when we entered the clouds. Luckily I landed safely and got treatment at the Vientiane American Hospital (which was an experience in itself). Ah, fun times!

By Legal Eagle | Posted in Fark!, Law | Comments (0)

Belated Mother’s Day post

May 13, 2008 – 11:17 am

I don’t feel like the best mother today. My daughter was sick last week, and didn’t have to go to creche. I don’t think she had quite realised that she would have to go back this week now that she was better. She screamed “NO CRECHE, WANT TO STAY HOME WITH MUMMY!” and kicked the car and her precious Tigger toy with rage the whole way to creche. She managed to wriggle out of her car seat while we were on the freeway (!!!) which was alarming, to say the least. I had to carry her under my arm, kicking and screaming, into the creche. Sigh.

I’m not really into Mother’s Day, and we didn’t do anything special on Sunday. But I do think it’s nice to recognise mothers (and fathers) because it’s a damn hard job sometimes.

When I was younger, one of the high schools I attended told me I could do anything and be anyone I wanted to be. Initially, I took this positive and salutory message on board. But when I was older (and more cynical) I wondered why there weren’t more prominent women in history if this were so? Was it simply that the patriarchy had ignored them, or were there other reasons?

When I fell pregnant with my first child, I realised why women hadn’t taken over the world (particularly before the advent of contraception). One of my forebears had sixteen children, one every two years from when she was in her late teens to her 40s. How could one possibly take over the world, come up with fantastic inventions, or write a sonata if one was otherwise occupied with bearing children for all that time? The only way would be if you were either unmarried or childless, or you were rich and could farm the children off to a wet nurse and then a nanny.

It is simply exhausting being pregnant. I don’t think I’ve ever been so tired in my whole life. During my last pregnancy, I used to hide in the toilets at work and lean against the cubicle wall for 15 minutes or so because I was so tired. Once you have the child, it is totally dependent on you for at least the first three months. Although it is now out of your womb, it still feels like there’s an invisible umbilical cord tying you to your child, and you are still tired because you have to feed the child at 3 hourly intervals. Imagine doing that over and over again, up to 16 children! Don’t get me wrong; I love being a mother. But I really hate portrayals in the media which indicate that it is a piece of cake, and that you can still keep on doing exactly what you did before. You can’t, unless you get someone else to do the mothering for you. It’s a trade off.

Sometimes I feel like I’m juggling multiple balls and if I don’t watch out, I’ll drop them all. The prominent balls are child, husband, family, work, study and friends. I think blogging probably deserves a ball of its own too. Other balls include cooking, washing, housekeeping and finances. The balls which often get dropped are things like getting time to do art and looking after myself (yes, I really need a haircut) and housekeeping (yuk). It’s so hard to keep it all going sometimes. The washing backs up and no one has clean underpants. Or I forget to pay a bill. Or I forget to call someone back, because I’m just trying to keep all the other balls in the air as best I can…hopefully that person is understanding. The priority will always be my child and my husband over anything else, and sometimes other things suffer. I won’t always get it right, and I won’t always be a good mother: but I’m trying my best. 

So, being a mother is a tough job. I salute all the mothers out there who are juggling everything just as I am. I especially salute my own wonderful mother: I don’t think I ever realised how much she did and how hard she worked for us until I had my own house and family. Also I salute supportive partners (like my own) who help cook dinner, or give the baby a bath, or just let Mums have a sleep in.

In the end, however, I wouldn’t change my position for quids. My daughter is the funniest, dearest thing in the whole world, and she gives me so much joy. I am blessed to have her. I don’t really need a special Mother’s Day because she tells me that she loves me a few times a day, and follows up with kisses and hugs. She brought me a “present” while I was sitting on the toilet the other day - consisting of her book about dogs in a shoe box. The only downside to the “present” was that I then had to read it to her after I opened the “present”…a bit of a Trojan horse present if you ask me. I’m also looking forward to having another child: it will be funny and dear as well, I am sure, although possibly in quite different ways to number one.

By Legal Eagle | Posted in Children, Feminism, Motherhood, Personal, Pregnancy | Comments (0)

Tyler Cowen’s ‘libertarian heresies’

May 10, 2008 – 9:03 pm

Tyler Cowen gave last night’s keynote address at the Institute for Humane Studies Fellows’ Research Colloquium, and in it he revealed a selection of five ‘libertarian heresies’. Three of them particularly struck me.

First, he made a cogent case for the idea that we (in the developed world, at least) are freer now than we were in the past, and that it’s unwise for libertarians to look back on any particular era as some sort of libertarian elysium. If government was small way back when, in large part it was because everything was small. There is a tendency among some libertarians to argue for the future by going back to a past that did not exist; Cowen exposed this tendency very effectively.

Next, he argued for a form of positive liberty. This is not the positive liberty of Isaiah Berlin, with its totalitarian tendencies and desire to tell others how to live - something that has plagued the political left for many years and arguably persists to this day. Rather, Cowen’s positive liberty is closer to Amartya Sen’s account of ‘capabilities’ - people should be able to do certain things, and the most successful society is one where the most people can do the most things. Then - and this is where there was an audible gasp around the room - he argued that roughly 70% of the liberties worth having fall into this ‘ability’ version of positive liberty.

Once people had cleared up that he wasn’t riffing on a notion of ‘ve vill give u zees because vee think it vill be gooood for you’, some of the grounds for the audible gasp drained away. Cowen’s and Sen’s ‘positive liberty’ has a modesty absent from Berlin’s account, and lacks the obsession with inequality that - later in the address - Cowen dismissed using Hayek’s words: as a ‘category mistake’.

Finally, in language sure to gladden the heart of jurisprudes everywhere, throughout the address he placed considerable emphasis on the rule of law and the benefits that flow from it. What poor countries need is not more liberty, but more law, law that is abstract, end-independent but - and this is the clincher - also enforced. He then moved into territory that is politically dangerous, but needs to be addressed: one of the things that helps promote both liberty and prosperity throughout the Anglosphere is citizens’ widespread ability to be loyal to a set of abstract concepts. Russia, he pointed out, is failing as a free society not because it is poor - Putin’s shrewed management of high commodity prices has put paid to much Russian poverty - but because Russians tend to privilege their friends and contacts above all else, leading to epic levels of corruption. Corruption, of course, is a signal rule of law failure.

He then asked, somewhat rhetorically, if liberty was confined (and defined) by culture: ‘We should not presume that our values are as universal as we often think they are’. What happens, he asked rhetorically, if - in order to enjoy the benefits of liberty and prosperity - societies have to undergo a major cultural transformation, including the loss of many appealing values? Cowen focussed on Russian loyalty and friendship, but there are potentially many others. Think, for example, of the extended family so privileged throughout the Islamic world, or the communitarian values common in many indigenous societies.

Serious food for thought.

(And for those looking forward to a collection of DC pics, two things. One, I forgot to bring my camera cable to the US, so I can’t upload anything until I get back to Oxford; and two, I got rained on for the length of the National Mall yesterday. The weather - not to put too fine a point on it - has been shite. Truly shite).

By skepticlawyer | Posted in Economics, Law | Comments (14)

Welcome ter dis ere blawg…

May 8, 2008 – 6:27 am

Well, not strictly a ‘blawg’, but distinctly lawyerly. Do take the time to look around. Enjoy ;)

By skepticlawyer | Posted in General | Comments (6)

So, what does ‘progressive fusionism’ look like?

May 8, 2008 – 4:33 am

This piece had its origins in a pair of posts written by Don Arthur over at Club Troppo, and followed up by Andrew Norton, Andrew Leigh, Will Wilkinson and Backroom Girl. The idea that libertarians and ‘progressives’ could hammer out some of their differences and reach a compromise far more workable than that between conservatives and libertarians is an interesting one. Parts of the debate are, I think, misconceived. Some of Rawls’ ideas about liberty - even the ones I find superficially very attractive - are pretty sketchy. That said, I do think ‘progressive fusionism‘ has potential, and I devoted part of my Oxford jurisprudence assessment to exploring the idea.

At bottom, of course, are the links between liberty and equality, and to what extent (if any) the two conflict. True to my training in analytical philosophy, I’m concerned to pin down concepts like ‘equality’ and ‘liberty’, at least as they’re used by Rawls and Hayek. Like Don, I think that Rawls and Hayek are closer together than they appear. Unlike Don, I don’t think Rawls’ normative framework is as persuasive as it appears, and I don’t think it’s clearer than Hayek’s. I found this when I came to consider one of the ideas at the heart of his ‘principles of justice’ - the idea that liberty is lexically prior to equality.

I think that liberty should have priority over equality, but that lexical priority is too rigorous a requirement. This is an admission I make reluctantly – I am, after all, a libertarian. It is nonetheless a necessary admission.

In this piece, I argue that to give liberty lexical priority over equality – particularly if one accepts some or all of John Rawls’ system as set out in A Theory of Justice – not only excludes equality (however conceptualised). It also excludes other values that are essential to good governance, as well as endorsing a thin conception of liberty. In short, according liberty strict lexical priority over equality is too demanding. That said, I also find Rawls’ suggestion – incipient in Theory, but later made explicit in Political Liberalism – that ‘basic wants’ must be satisfied before liberty can take its place at the top of the ‘values heap’ troubling.

Read More »

By skepticlawyer | Posted in Economics, Law, Philosophy, Politics | Comments (14)

Ethics and the law - when can a lawyer “dob in” a client?

May 7, 2008 – 10:33 pm

A while back, a non-lawyer friend asked me out of curiosity if a lawyer could (or should) report a client to authorities if the lawyer knew or suspected that client was committing fraud. It’s a little complicated. One’s first thought may be: ”Surely the primary duty of a lawyer is to uphold the law, and therefore the lawyer should report the client to authorities?” But in fact, there are competing duties to the court, to society and to one’s client. A lawyer’s communications with a client are subject to a duty of confidentiality, and accordingly, if the lawyer ”dobbed in” the client to authorities, this may breach the legal code of ethics. The rationale behind the duty of confidentiality is that clients would be reluctant to give full and frank instructions or to trust their lawyers if there was not such a duty. Thus, there is a complex weighing-up process of different interests and duties, and the “ethical” response is not always clear.

It seems that this precise issue has recently arisen in the US in a number of cases. As this New York Times article relates, a lawyer who breaches client confidentiality may face the risk that he is guilty of professional misconduct, even if the client is dead and the breach may lead to the freeing of an innocent man.

The case involved the murder of a couple in Fayetteville, North Carolina in 1984. Three men were arrested and charged with the murders: Jerry Cashwell, Lee Hunt and Kenneth West. Staples Hughes, a state defence lawyer, was assigned to defend Cashwell. During an initial interview, Cashwell confessed to Hughes that he had committed the murder by himself, with no assistance from the other men. Cashwell committed suicide in prison in 2003. Hunt was also convicted with murder, and is still subject to life imprisonment. He has always protested his innocence. He provided an alibi at trial, but was convicted in part because of a scientific analysis called comparative lead bullet analysis, which tied the crime scene bullets to a box of bullets owned by Hunt. This analysis is now said to be misleading and unreliable. 

Hunt’s lawyers sought to overturn his conviction before the Superior Court in North Carolina by challenging the bullet evidence, but also by leading evidence from Staples Hughes as to his former client’s confession. As Hughes commenced giving evidence, the judge warned him that he was going to have to report Hughes’ breach of client confidentiality to the State Bar as professional misconduct. This was despite the fact that Cashwell was dead. In the event, Hughes was cleared of professional misconduct.

However, the case raises the tension of the lawyer’s duty to his or her client and the lawyer’s duty to society. In the US, there seems to be agreement that client confidentiality can be breached where it would save someone from execution, but it gets a little more hazy when the person is not sentenced to death, but to life imprisonment. If the client is still living, it seems confidentiality must be maintained. I do think that Hughes did the right thing by testifying in favour of Hunt; Cashwell could no longer be harmed by the breach of confidentiality, as he was dead.

I tend to think that if I had been in Hughes’ position in the first place, I would have told Cashwell that he should exonerate the other defendants. Perhaps Hughes did tell Cashwell to do so. We don’t know. I do know that I would probably have refused to act for Cashwell thereafter - yes, it’s true, I don’t have the stomach to be a public defence lawyer. I would also have sought advice from the Ethics Committee of my law society, so that I could be more certain that my actions were in good conscience and in accordance with ethical legal practice. But it’s a very difficult problem. No wonder I’ve always avoided the practice of criminal law with a 10 foot barge pole - it’s issues like these which have always troubled me.

(Other sources used: Innocence Network and The News and Observer)

By Legal Eagle | Posted in Law, Personal liberty | Comments (2)

Opes investors fail at first hurdle

May 3, 2008 – 11:40 am

I know that some people have lost a lot of money through the collapse of Opes Prime, so it seems a bit ghoulish to be fascinated by it - but there you have it, I can’t help myself - I’m fascinated. There are so many interesting equitable and property law questions raised by it (tracing, equitable mortgages, mere equities, trusts in undifferentiated property), not to mention corporate governance issues. Some of my favourite topics!

Anyway, I saw yesterday that Finkelstein J of the Federal Court had handed down an important judgment from the point of view of investors seeking to reclaim their shares (Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Limited [2008] FCA 594).

I should explain briefly how the Opes Prime arrangement worked before getting into the judgment. Investors “loaned” their shares to Opes Prime in return for a cash advance. As a term of the Securities Lending Agreement (SLA), Opes promised that when the money advanced to the investor was repaid to it, Opes would redeliver shares to the investor which were equivalent in number and type to those originally provided. The value of the cash advance supplied was less than the value of the shares provided to Opes. The difference between the value of the cash advance and the value of the shares is referred to as the “margin”. Problems occur if the value of the shares fall below the value of the cash originally advanced to the investor, because then the value of the security is less than the value of the loan, and will not be sufficient to recompense Opes if the investor does not pay it back. In those circumstances, a “margin call” should be made to the investor, whereby the investor is required to “top up” the amount of shares provided so that the value of the shares is again greater than the value of the cash. One of the issues seems to have been that margin calls were not made when they should have been made to certain significant and substantial investors. And of course, the general stock market slump contributed to the drop in value of the shares beyond the margin.

As Finkelstein J notes at [9]:

In this case credit risk is all important. Boiled down to its essence, a party’s exposure to loss in the event of default is equal to the margin. That is to say, if the non-defaulting party is on the short side of the margin (ie the value of the assets delivered to him is less than the value of the assets provided) he will suffer a loss and, in the case of insolvency, be required to prove for the difference in the insolvency of the defaulting party.

In other words, the investors will have to pay the difference if their shares are not adequate security for the cash advances they received.

The investors are alleging that they were told by Opes that they would retain some form of ownership in their original shares. In fact, this was not true from a legal perspective (as will be discussed in greater detail below). Opes loaned the shares received from investors to its bankers, ANZ Bank (the defendant in this case) and Merrill Lynch. In return for this, Opes received cash advances, which were presumably used in part to fund the provision of cash collateral to investors. However, ANZ became aware that Opes was in financial difficulties, and appointed receivers to the firm. ANZ and Merrill Lynch commenced selling the shares that had been provided by Opes as security for its loans. Presumably this drove the value of shares even further below the margin. It was at this point that shocked investors started challenging the sales, as they had thought they retained some kind of ownership in the shares, and that it was not in ANZ’s power to sell them off.

In Beconwood, the plaintiffs claimed that they had retained a proprietary interest in the shares which they had loaned to Opes in two ways:

  1. Through an equity of redemption pursuant to a mortgage of the legal title to the shares
  2. Through an equitable charge over the shares

Both of these interests are proprietary security interests. Let me explain the equity of redemption first. In general law land, the actual title to the property is transferred to the lender, but the borrower retains the beneficial interest in the property (so he or she can live there and enjoy the property). What happens when the borrower has paid back all of her loan? It is then that the equity of redemption comes into play - it means that the lender has to transfer the legal title back to the borrower - the borrower is entitled to “redeem” her property.

An equitable charge is a little different. Legal ownership in the security property is never transferred to the lender at all - the lender merely has a right to sell off the borrower’s property if the borrower defaults.

The investor failed to make out either kind of security interest. In essence, this came down to Clause 3.4 of the SLA between Opes and the Investor, which stated as follows:

Notwithstanding the use of expressions such as “borrow”, “lend”, “Collateral”, “Margin”, “redeliver”, etc., which are used to reflect terminology used in the market for transactions of the kind provided for in this Agreement, all right title and interest in and to Securities “borrowed” or “lent” and “Collateral” which one Party transfers to the other in accordance with this Agreement will pass absolutely from one Party to the other free and clear of any liens, claims, charges or encumbrances or any other interest of the Transferring Party or of any third party (other than a lien routinely imposed on all securities in a relevant clearance system) without the transferor retaining any interest or right to the transferred property, the Party obtaining such title being obliged only to redeliver Equivalent Securities or Equivalent Collateral, as the case may be. Each Transfer under this Agreement must be made so as to constitute or result in a valid and legally effective transfer of the Transferring Party’s legal and beneficial title to the recipient.

In other words, it was clearly stated in the SLA that full ownership of the shares was transferred to Opes. All that the investor was entitled to upon repayment of the cash advance was equivalent shares - not necessarily the same shares as those which were originally provided to Opes. The point to be made about shares is that they are fungible - one share is very much like another, and it doesn’t particularly matter which one you get as long as you get an equivalent back. Finkelstein J makes the point that economically speaking, the arrangement was very much like a mortgage, but legally speaking, the analysis just could not be sustained.

The plaintiff then tried to argue that there was a necessary implied term in the SLA that the investor had a charge over any shares of the equivalent type held by Opes until it received its shares back, but it also failed in this respect too.

Finkelstein J’s judgment seems correct to me. Regardless of the representations Opes may or may not have made to its clients, it is the terms of the SLA which are fundamental, and the terms are explicit that the investors do not retain an interest in the shares. Clearly the investors did not read the terms of the SLA closely enough.

Finkelstein J makes an interesting analysis of US law. It is clear that the US has been using these kind of “securities lending arrangements” for longer than Australia, and that the market in the US is highly regulated in respect of these arrangements (unlike the Australian market). Perhaps the Australian regulators need to consider instituting US-style regulation if these kind of securities lending arrangements continue in popularity.

By Legal Eagle | Posted in Economics, Equity, Insolvency law, Law | Comments (11)

Seinfeld makes it to court

May 3, 2008 – 10:09 am

I’ve written previously on how Alice in Wonderland has made it into many Court judgments. Well, now Jerry and Elaine have made it into a judgment too!

In Parish Oil Co Inc v Dillon Companies Inc, the US Court of Appeals in Colorado mentioned Seinfeld in an anti-trust case:

Indeed, the plaintiffs’ reading would apparently render unlawful in the State of Colorado a promotional gimmick so common that it features in an episode from Seinfeld:

JERRY: “Atomic Sub”? Why are you eating there?

ELAINE: I got a card, and they stamp it every time I buy a sub. Twenty four stamps, and I become a Submarine Captain!

JERRY: What does that mean?

ELAINE (embarrassed): Free sub.

Seinfeld: The Strike (NBC television broadcast Dec. 18, 1997).

If the first twenty-four sandwiches are sold for $4 apiece at a cost to the maker of $3, the customer who follows through and redeems the offer will have spent $96 to buy $75 worth of sandwiches. But the last one is sold below cost (in fact, it is “free”), making it illegal under the plaintiffs’ version of the UPA. We do not believe the Colorado legislature would have acted so cavalierly as to ban such customer-rewards programs—indeed, to make them criminal—without more clearly expressing an intent to do so.

The plaintiff had sought to challenge a scheme whereby consumers at a particular supermarket got reduced cost petrol from a particular supplier if they had purchased groceries of a specified value. I’m sure this is familiar to all and sundry (our house abounds in vouchers for cut-price petrol from various outlets).

I think it’s awesome that the Court used Seinfeld to illustrate its point.

Now my only wish is that a court use the episode from Treehouse of Horror IV  to illustrate the concept of nemo dat quod non habet (you cannot give what you do not have). In a portion of this episode, Ned Flanders appears as the devil and tempts Homer with a donut in exchange for his soul. Homer, of course, accepts the offer and signs the contract. He cannot resist eating all of the donut, and the devil appears to claim his soul. However, Marge and Lisa are able to show that Homer could not give his soul to the devil because he had already given his soul to Marge on their wedding day (Marge produces a signed photo as evidence of this). Accordingly, the devil cannot take Homer’s soul, but turns his head into a huge donut… There you have it: nemo dat quod non habet in a nutshell.

Well, I’m a property lawyer, of course my wishes are nerdy.

(Via Core Economics)

By Legal Eagle | Posted in Economics, Law | Comments (0)

Breaking the Habit…

May 3, 2008 – 7:06 am

I’ve been impressed with the imagery that rap/metal group Linkin Park wheel out for their music videos, and making a choice for a YouTube selection is very difficult. I finally settled on the anime-inspired Breaking the Habit, which was created by the artists who did the animated sequences in the first Kill Bill. Yes, it’s metal again (go figure), although Linkin Park hover around the edges of several different genres.

By skepticlawyer | Posted in General, Music | Comments (0)