THIS PAPER IS NOT TO BE REMOVED FROM THE EXAMINATION HALLS

UNIVERSITY OF LONDON LA3002 October

DIPLOMA IN THE COMMON LAW

LLB

ALL SCHEMES AND ROUTES

BSc DEGREES WITH LAW

Law of Trusts

Tuesday 22 October 2013: 14.30 – 17.45

Candidates will have fifteen minutes during which they may read the paper
and make rough notes ONLY in their answer books. They then have the
remaining THREE HOURS in which to answer the questions.

Candidates should answer FOUR of the following EIGHT questions.

Candidates should answer all parts of a question unless otherwise stated.

© University of London 2013

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1. ‘[I]t is in the interests of beneficiaries of family discretionary trusts, and
advantageous to the due administration of such trusts, that the
exercise by trustees of their dispositive discretionary powers be
regarded, from start to finish, as an essentially confidential process.’
(Briggs J, in Breakspear v Ackland (2008)).

Discuss.

2. Explain the nature and validity of the following clauses in Annette’s will
concerning the distribution of her estate:

(a) 500 shares of New Found Investments in trust for the

surviving members of my college hockey team;

(b) my trustees may use some of my residuary estate to help

my family and friends with necessary expenses;

(c) the remainder of my estate shall be distributed as my

trustees see fit among students and alumni of St
Matilda’s College who, in the opinion of my accountants,
have worthy proposals to start new business ventures.

Annette’s estate includes 2,500 shares in New Found Investments Ltd,

she played hockey for St Matilda’s College from 1954-7, and she had
long been a client of the accounting firm of Badger and Fox.

3. Three years ago, Conor executed a will that contained the following
clause: ‘I hereby leave my house to Harper to use as agreed, and also
my bank accounts for her own use.’ Six months later, Conor gave
Harper a sealed envelope on which was written: ‘Instructions to be
opened after my death’. Harper agreed to follow the instructions. Two
years after that, Conor asked Harper if she would also pay the money
from his bank accounts to Patty, who was one of the witnesses to
Conor’s will. She agreed.

Conor died recently and his estate was administered. Harper received
title to his house (a fee simple estate) and £50,000 from his bank
accounts. Harper opened the envelope. It contained a letter (signed
by Conor) asking her to hold the house in trust for Billie.

Advise Harper about what she should do with the house and money.

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4. Consider the validity of the following bequests made by Adam, who
died recently:

(a) £100,000 to provide top London theatre tickets to those

who cannot afford them;

(b) £100,000 to protect badgers and foxes from government

plans to reduce their numbers;

(c) £100,000 for research and study of the history, causes,

and politics of animal rights groups and environmental
activists;

(d) £100,000 for the Newt Conservation Trust.

There never was a Newt Conservation Trust, but there is an Amphibian

and Reptile Conservation Trust, which is a registered charity
concerned with the conservation of all amphibians, including newts.

5. Mike married Carol two years ago. Shortly after their marriage, he
transferred both his bank account and his fee simple estate in a
commercial warehouse into their joint names. He also purchased 100
company shares for Jan, who is Carol’s 22-year-old daughter from her
first marriage. Mike died recently and Carol became the sole legal
owner of the bank account and fee simple estate as the surviving joint
tenant. Greg and Peter are Mike’s sons from his first marriage and the
sole beneficiaries of his estate. They claim that the bank account, fee
simple estate, and company shares are all held in trust for Mike’s
estate.

Advise Carol and Jan. What difference, if any, would it make to your
advice if Mike and Carol had not been legally married to each other?

6. ‘The law governing the assets of unincorporated associations had been

in a terrible mess, but thanks to the reasons for judgment in Hanchett-
Stamford v Attorney-General (2008) it is now quite simple. Those
assets are held in trust for the current members as joint tenants,
subject to the terms of their contract.’

Discuss.

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7. ‘The typical case of a trust is one in which the legal owner of property is
constrained by a court of equity so to deal with it as to give effect to the
equitable rights of another. These equitable rights have been
hammered out in the process of litigation in which a claimant on
equitable grounds has successfully asserted rights against a legal
owner or other person in control of property. Prima facie, therefore, a
trustee would not be expected to be subject to an equitable obligation
unless there was somebody who could enforce a correlative equitable
right, and the nature and extent of that obligation would be worked out
in proceedings for enforcement.’ (Roxburgh J, in Re Astor’s Settlement
Trusts (1952)).

Discuss.

8. ‘Lord Neuberger’s analysis in … Sinclair Investments divides into three

broad categories the situations in which a fiduciary obtains a benefit in
breach of fiduciary duty. The first category (“Category 1”) is where the
benefit is or was an asset belonging beneficially to the principal…. The
second category (“Category 2”) is where the benefit has been obtained
by the fiduciary by taking an advantage of an opportunity which was
properly that of the principal. The third category (“Category 3”) is all
other cases. According to the analysis and conclusion of Lord
Neuberger, the situations in Categories 1 and 2 give rise to a
constructive trust, but those in Category 3 do not.’ (Etherton C, in FHR
European Ventures LLP v Mankarious (2013)).

Discuss.

END OF PAPER

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