Paper Code: LAWS308-14Y (HAM) ‘THE UNIVERSITY OF WAIKATO Te Whare Winangeo Waikato 2014 B SEMESTER EXAMINATIONS DEPARTMENT PAPER TITLE TIME ALLOWED NUMBER OF QUESTIONS IN PAPER NUMBER OF QUESTIONS TO BE ANSWERED VALUE OF EACH QUESTION GENERAL INSTRUCTIONS SPECIAL INSTRUCTIONS CALCULATORS PERMITTED Te Piringa - Faculty of Law Equity and Succession Three hours FIVE FOUR All questions are of equal value. SECTION A: Compulsory. Answer BOTH parts SECTION B: Answer 3 out of 4 questions Students may utilise “clean” copies of authorised statutory materials. No photocopied or other printed statutory materials may be utilised. “Clean” copies means no annotations and no attachments eg ‘post-it’ notes. Small section markers are permitted, Underlining and highlighting are permitted. Students are allowed to take in up to 5 sheets of Ad handwritten notes (writing allowed on front and back), Relevant statutory provisions are attached. No electronic devices are allowed TURN OVER2 Paper Code: LAWS308-14Y (HAM) SECTION A (Compulsory) QUESTION ONE (Compulsory - answer both parts) The following two entities wish to apply to the Department of Internal Affairs ~ Charities to register as legal charities. Advise the entities as to whether each of their objects would be charitable at law. Your answer must make reference to relevant case law and statute. Part A 1) Save Our Whales: to promote the preservation and study of whales in the Pacific through the research and publication of a variety of materials, including pamphlets, and through lobbying of national and international governments to ensure stringent legislative protection. [9 marks] 2) Freedom Trust: to promote the word of God through spiritual healing centres and through offering financial relief by way of interest free loans to unburden persons of a life of debt so as to promote religious living. The spiritual healing centres are private centres available for those of the Christian faith, although they are open 4 times a year to the general public. [9 marks] AND Part B In limited circumstances a charitable trust may be varied. Set out the legal methods by which such variations may be undertaken, (7 marks} SECTION B (Answer 3 out of 4 Questions) QUESTION TWO - Answer All THREE Parts a) Jo and Sam had beea in a relationship for 2 and a half years and after Jo won a large sum of money on Lotto, Sam persuaded Jo that they should buy a property and live together. Jo was reluctant but eventually did buy a house with some of the Lotto prize money and the property was registered in both their names. After 2 months, the couple split ‘Sam argued with Jo that they both have a 50% share in the house now that they have separated. Jo is adamant however that Sam should have no interest in the house even though it is registered in both their names. Which party is correct in their assertions? Your answer must make reference to any relevant statutory provisions and case law. [9 marks] TURN OVERPaper Code: LAWS308-14Y (HAM) AND b) Miriam’s daughter, Hanna, was moving to Auckland for her first job and had nowhere to live. Miriam therefore purchased a house for Hanna and it was registered in Hanna’s name. Miriam said that Hanna could live there until such times as Hanna had saved enough for a deposit to purchase a house in her own name. After a year, Miriam and Hanna had an argument. Hanna sold the house and retained the proceeds of the sale. Advise Hanna whether she is legally entitled to retain the proceeds of the sale of the house. [8 marks] AND A will-maker left provision in his will for the following two purposes: i) Firstly, a fund to provide medical assistance to those injured in a large boating accident on a lake in Queenstown. After a number of years, the purpose of the fund was achieved. The trustees seek your advice as to how best to deal with the surplus funds; [4 marks] AND Secondly, a fund for the education of the testator’s daughter. The daughter is now 22 years old and has graduated from university, and a portion of the fund is undisposed. Advise the trustees as to whether the daughter is legally entitled to the remaining fund. [4 marks] TURN OVER4 Paper Code: LAWS308-14Y (HAM) QUESTION THREE - Answer either Part 1 OR Part 2 Either Part 1 A) Critically assess the methods of tracing available that would enable a person to follow their property after ithas fallen in to the hands of a person not entitled to that property. Your answer should include discussions of common law and equitable tracing. [12.5 marks] AND circumstances in which the remedy account for profits may be available to an individual and how a court may determine the issue of allowances for a defendant in a claim of account for profits. [12.5 marks] Or Part 2 A) An interim injunetion is a discretionary equitable remedy that may restrain a person from carrying out an act, or may require a person to carry out an act. Discuss the methods by which courts determine the applicability of granting interim injunctions, ‘making reference to relevant authorities to illustrate your answer. [12.5 marks} AND B) John, Sarah and Bob are trustees of a family trust. The trust has a number of properties and Jchn and Bob wish to increase the capital of the trust by selling two of the properties. The trust instrument permits such actions. Sarah is reluctant to agree as she is also a life tenant and thinks that selling the properties may cause a short term impact on her life interest. She tells John and Bob that she will not agree to the sale, but they go ahead and sell the properties without Sarah’s consent. What issues pertaining 10 trustees’ duties does this situation illustrate and why? Your answer should utilise common law authorities. [12.5 marks] TURN OVERPaper Code: LAWS308-14Y (HAM) QUESTION FOUR Ben Jackson was the sole director of “Benson Associates” (Benson). Benson advertised in national newspapers that the company was going to build a block of executive office suites on a piece of land in Auckland. The advertisement offered the opportunity to purchase one of these suites “off the plans”, that is before they were built, at a reduced price of $180,000. The advertisement said that only five of the suites would be sold in this way and the remaining fifteen suites would be at least $60,000 more expensive. The scheme was expected to attract property owners who rented office space to professional people. Ben Jackson had some huge billboards made up showing a coloured picture of a very attractive block of offices with smaller pictures of a fully equipped gymnasium, a restaurant and some glamorous interiors. The name “Benson Associates” and a phone number was written in large letters across one comer of the pictures. He had the billboards put up on a disused piece of land in the Auckland CBD. Ben was a very plausible salesman and within three months Ben had taken deposits of $40,000 from ten people, giving him a total of $400,000, ‘As the sole director of Benson, Ben had easy access to the company’s accounts. He used this money to buy a light aircraft, ownership of which he transferred to his family trust, the Jackson Family Trust. Ben then wound up Benson Associates leaving very little money in the accounts to pay creditors. Frank was one of the men who had paid Benson $40,000. When Frank saw the billboards had been removed and there was no sign of construction work starting, he became suspicious. Frank made enquiries and discovered the Auckland City Couneil owned the land the billboards had been on and that Benson Associates no longer existed. Ben Jackson has disappeared taking the aircraft and leaving a string of debts. Criminal proceedings are in progress but Frank and the other creditors want to know if they can get any money from the assets held by the Jackson Family Trust. As well as the aircraft the main assets are a large house in Devonport, two luxury cars and some jewellery left to Mrs. Jackson (Sally) by her mother. The Jackson Family Trust was set up at the time Ben married Sally (his second wife) on the advice of his father to reduce his liability for maintenance payments to his first wife. The house and cars were transferred to the Jackson Family Trust at the time when Ben set up Benson Associates. The trust settlement instrument gives Ben the power to appoint and dismiss trustees. The trustees are Ben’s brother, Grant, and Bruce, a newly qualified solicitor who has been unable to find a full-time job as a lawyer since he qualified and who works as a chef to make ends meet. Throughout his life Grant has always done whatever Ben wanted and Bruce simply needs to be a trustee to maintain the idea that he is indeed a lawyer. Ben and his family have been living in the house without paying rent to the trust and they use the cars as their own, Mrs. Jackson’s jewellery is held by the trust for the benefit of the two daughters she had with Ben. Basing your answer on decided cases, do you think it is likely that the family trust will be opened to allow creditors to be paid with trust assets? Do not discuss any criminal liability [25 marks} TURN OVER6 Paper Code: LAWS308-14Y (HAM) QUESTION FIVE ~ Answer both parts A) and B) A) Julian is a lawyer who works for a prestigious firm, Bailey Price, where his specialism is to assess potential cases to determine the likelihood of success in court. If Julian thinks a client is likely to lose any particular case he tells the partners at Bailey Price and they advise the client to settle out of cour. Julian is very good at what he does and Bailey Price has built up a reputation for winning its cases in court. However Julian is on a fixed wage and he resents the large bonuses the partners get for winning cases based on the work he has done. A well-known property developer, Ron Smith, approached Julian and talked to him about a case against him in which Bailey Price is representing the plaintiffs. The plaintiffs are very likely to win but Ron offered Julian $200,000 to make sure his case did not come to court. Julian accepted and persuaded the partners that a recently decided case made it impossible for the plaintiffs in Ron’s case to win. Bailey Price advised its client to settle out of court. Ron spread the word about what Julian could do and for ten years Julian carried on sabotaging cases, receiving $1.5 million overall. He was very clever in hiding what he was doing but eventually it was discovered. One of the partners has a daughter in law school and when she read a brief that Julian had prepared she told her father that his interpretation of the law was wrong. When Julian’s employer gained access to Julian’s financial records it was discovered that Julian had bought houses that had been registered in the names of his sister and mother. He had bought a luxury motorboat and given it to his father as well as giving expensive jewellery to his wife and daughters. To whom do the proceeds of Julian’s dishonesty belong? Illustrate your answer with decided cases on fiduciary relationships and constructive trusts. Do not discuss any criminal liability. B) Ken Dance is a builder and carpenter in New Zealand. He negotiated with an Australian kitchen refurbishment company called ‘A-door Your Kitchen’ (A-door). Ken and A-door agreed a scheme by which Ken received the right to use the technique developed by A-door and their special equipment to refurbish kitchens in New Zealand. The equipment consisted of templates for the cupboard doors and drawer fronts, specially developed saws to give a smooth cut edge, non-toxic glue and a unique kind of paint that gave a brilliant shine finis! Ken found he was not making enough profit because he had to pay so much in the way of royalties to A-door. Ken started to make kitchens using the materials from ‘A-door’ but without paying any royalties. He was very successful and made $2 million in two years. By the time A-door found out what Ken was doing A-door had been deprived of $200,000 in lost royalties. Explain whether A-door is likely to be successful in an action against Ken in equity and why that is preferable to suing for breach of contract. [25 Marks]‘New Zealand Legislation Charities Act 2005 | 5 a @ @a) eo) @) + Waming: Some amendments have not yet been incorporated | Meaning of charitable purpose and effect of ancillary non-charitable purpose In this Act, unless the context otherwise requires, charitable purpose includes every charitable purpose, whether it relates tothe relief of poverty, the advancement of education or religion, orany other matter beneficial to the community. However.— (@) the purpose ofa trust, society, or institution is a charitable purpose under this Act ifthe purpose would satisfy the public benefit requirement apart from the fact that the beneficiaries of the trust, orthe members of the society or institution, are related by blood; and (b) —amarae has a charitable purpose ifthe physical structure of the marae is situated on land that is ‘a Maori reservation referred to in Te Ture Whenua Maori Act 1993 (Maori Land Act 1993) and the funds of the marce are not used fora purpose other than— (the administretion and maintenance of the land and of the physical structure of the marae: (i) apurpose that is a charitable purpose other than under this paragraph. The promotion of amateur sport may be a charitable purpose ifitis the means by which a charitable purpose referred to in subsection () is pursued. To avoid doubt, ifthe purpeses of a trust, society, or an institution include a non-charitable purpose (for example, advocacy) that is merely ancillary to a charitable purpose of the trust, society, or institution, the presence of that non-charitable purpose does not prevent the trustees of the trust, the society, or the institution from qualifying for registration as a charitable entity For the purposes of subsection (3), a non-charitable purpose is ancillary to a charitable purpose of the trust, society, or institution ifthe non-charitable purpose is— (@) ancillary, secondary, subordinate, or incidental to @ charitable purpose of the trust, society, or institution; and (b) not an independent purpose of the trust, society, or institution. Sesion (2A) inserted, on 25 Februy 2012 by soon § ofthe Charities Amendment Act 2012 (2012 No 4).New Zealand Legislation Charities Act 2005 — — — _ - | + Waming: Some amendments have not vet been incorporated Part 2 13 a @ @) @ ) Charitable entities Subpart |. Register of charitable entities Registration requirements Essential requirements An entity qualifies for registration as a charitable entity if— (@) inthe case of the trustees of a trust, the trust is ofa kind in relation to which an amount of income is derived by the trustees in trust for charitable purposes; and (b) inthe case of a society or an institution, the society or institution— (is established and maintained exclusively for charitable purposes; and ’) is not carried on for the private pecuniary profit of any individual; and (©) the entity has a name that complies with section 15; and (@)__allofthe officers ofthe entity are qualified to be officers ofa charitable entity under section 16, ‘The trustees ofa trust must be treated as complying with subsection (I)(a) (a) in accordance with aruling made under Part 5A of the Tax Administration Act 1994— (@—anamount ofincome derived by the trustees in trust is treated as having been derived by the trustees in trust for charitable purposes for the purposes of section CW 41 of the Income Tax Act 2007; or (i) income is treated as having been derived directly or indirectly froma business carried on by, or for, or for the benefit ofthe trustees in trust for charitable purposes for the purposes of section CW 42 of the Income Tax Act 2007; or (b) the income derived by the trustees is deemed to be income derived by trustees in trust for charitable purposes under section 24B of the Maori Trust Boards Act 1955. A society or an institution must be treated as complying with subsection (1)(b) if in accordance with a ruling made under Part SA of the Tax Administration Act 1994, that society or institution is treated as being a society or institution that is established and maintained exclusively for charitable purposes and not carried on for the private pecuniary profit of any individual for the purposes of section CW 41 or CW 42 ofthe Income Tax Act 2007. ‘Subsections (2) and (3) cease to apply in relation to an entity if— (@) the period for which the ruling applies has expired; or (b) the ruling has ceased to apply because of section 91G of the Tax Administration Act 1994; or (©) _ the ruling has otherwise ceased to apply to the entity. Despite subsections (1) to (3), an entity does not qualify for registration as a charitable entit (a) the entity is a designated terrorist entity as defined in section 4(1) of the Terrorism Suppression Act 2002; or (b) the entity has been convicted of any offence under sections 6A to 13E ofthe Terrorism Suppression Act 2002. Sesion 1320): amended, on 1 Api 2008, by setion ZA 21) ofthe Income Tax Act 2007 (2007 No 97) Sesion 132): amended, on 1 Api 2008, by section ZA 2(1) ofthe Income Tax Act 2007 (2007 No 97)cet et Peer} ‘New Zealand Legislation Charitable Trusts Act 1957 32 a Q) @) a) © Property may be disposed of for other charitable purposes Subject to the provisions of subsection (3), in any case where any property or income is given or held upon trust, ors to be applied, for any charitable purpose, and itis impossible or impracticable or inexpedient to carry out that purpose, or the amount available is inadequate to carry out that purpose, or that purpose has been effected already, or that purpose i illegal or useless or uncertain, then (whether ornot there is any general charitable intention) the property and income or any part or residue thereof or the proceeds of sale thereof shall be disposed of for some other charitable purpose, or a combination of such purposes, in the mannerand subject to the provisions hereafter contained in this, Par. Subject to the provisions of subsection (3), in any case where any property or income is given or held upon trust, ors to be applied, for any charitable purpose, and the property or the income which has accrued or will accrue is more than is necessary for the purpose, then (whether or not there is any general charitable intention)any excess property or income or proceeds of sale may be disposed of for some other charitable purpose, or a combination of such purposes, in the mannerand subject to the provisions hereafter contained in this Part. This section shall not operate to cause any property or income to be disposed of as provided in subsection (1) or subsection (2}— (@) fin accordance with any rule of law the intended gift thereof would otherwise lapse or failand the property or income would not be applicable for any other charitable purpose: (b) ino faras the property or income can be disposed of under Part 4 Subject as aforesaid, this section shall extend to cases where the charitable purpose affecting any property or income is defined by a scheme approved by the court under this Part or otherwise or approved by the Attomey-General under Part 4, and in any such case the original purpose or purposes may be restored, with or without modifications. ‘The provisions of this section shall apply with respect to trusts created, and to schemes approved, before or after the commencement of this Act. Compare: 1908 No 164 15,1951 No 29 52New Zealand Legislation Charitable Trusts Act 1957 61A a @ @ (4) (3) (O} M Trusts for recreational and similar purposes Subject tothe provisions of this section, it shall forall purposes be and be deemed always to have been charitable to provide, or assis’ inthe provision of, facilities for recreation or other leisure-time occupation, if the facilities are provided in the interests of social welfare: provided that nothing in this section shall be taken to derogate from the principle that a trust or institution to be charitable must be for the public benefit. The requirement of subsection (1) thatthe facilites are provided in the interests of social welfare shall not be treated as satisfied unless— (@) the facilities are provided with the purpose of improving the conditions of life for the persons for ‘whom the facilities are primarily intended; and (b) either — (those persons have need of such facilities as aforesaid by reason of their youth, age, infirmity, disablement, poverty, race, occupation, or social or economic circumstances; of (ii) the facilites are to be available to the members ofthe public at large or to the male or female ‘members of the public at large. Without restricting the generality of the foregoing provisions of this section itis hereby declared that, subject to the said requirement, subsection (1) applies to the provision of facilities at public halls, community centres, and women's institutes, and to the provision and maintenance of grounds and buildings to be used for purposes of recreation or leisure-time occupation, and extends to the provision of facilities for those purposes by the organising of any activity. Nothing in this section shall be taken to restrict the purposes which would be regarded as charitable if this, section had not been passed. ‘Nothing in this section shall— (@) apply to make charitable any trust, or validate any disposition, of property if before 26 June 1963 that property or any property representing or forming part of it, or any income arising from any such property, has been paid or conveyed to, or applied for the benefit of, or set apart for, the persons entitled by reason of the invalidity of the trust or disposition; or (b) affect any order or judgment made or given before the commencement of this section; oF (©) require anything properly done before that day, or anything done or to be done in pursuance of a contract entered into before that day, to be treated for any purpose as wrongful or ineffectual. Except as provided in subsection (7), nothing in this section shall require anything to be treated for the purposes of any enactment a having been charitable ata time before the date of the commencement of this section, so as to invalidate anything done or any determination given before that date. Repeated} ‘Compare: Recreational Charis Ac 1988 81, 30)+3) (UK) Section A: inserted, on 2 October 1963, by section 3 ofthe Charitable Trusts Amendment Act 1963 (1963 No 21), Section 61A() repealed, on 1 January 1972, by section 101A} ofthe Stand Cheque Duis Act 1971 (1971 No 51)aria New Zealand Legislation Charitable Trusts Act 1957 61B Inclusion of non-charitable and invalid purposes not to invalidate a trust a 2) eo) ) In this section the term imperfect trust provision means any trust under which some non-charitable and invalid as well as some charitable purpose or purposes is or are or could be deemed to be included in any ofthe purposes to or for which an application of the trust property or any part thereof is by the trust directed or allowed; and includes any provision declaring the objects for which property is to be held or applied, and so desenbing those objects that, consistently with the terms of the provision, the property could be used exclusively for charitable purposes, but could nevertheless (ifthe law permitted and the property was not used as aforesaid) be used for purposes which are non-charitable and invalid. No trust shall be held to be invalid by reason that the trust property is to be held or applied in accordance with an imperfect trust provision. Every trust under which property is to be held or applied in accordance with an imperfect trust provision shall be construed and given effect to in the same manner in all respects as if — (a) the trust property could be used exclusively for charitable purposes; and (b) no holding or application of the trust property or any part thereof to or for any such non- charitable and invalid purpose had been or could be deemed to have been so directed or allowed. This section shall apply to every trust under which property is to be held or applied in accordance with an imperfect trust provision, whether the trust is declared before or after the commencement of this section: provided that this section shall not apply to any trust declared by the will of any testator dying before, or to any other trust declared before, 26 October 1935 (being the date of the passing of the Trustee Amendment Act 1935), ifbefore I January 1957 (being the date of the commencement of the Trustee A 1956)— (@) the trust has been declared to be invalid by any order or judgment made or given in any legal proceedings; or (b) property subject to the imperfect trust provision or income therefrom has been paid or conveyed to, or applied for the benefit of, or set apart for, the persons entitled by reason of the invalidity of the trust Sesion 618: insened, on 2 October 1963, by scion 41) ofthe Charitable Trusts Amendment Ac 1963 (1963 No 21)New Zealand Legislation Property (Relationships) Act 1976 2E a @ | + Waming: Some amendments have not vet been incorporated Previous title has changed Meaning of relationship of short duration In this Act, relationship of short duration means, — (@) in relation to a marriage or civil union, a marriage or civil union in which the spouses or partners have lived together in the marriage or civil union— (fora period ofess than 3 years; or Gi) fora period of 3 years or longer, ifthe court, having regard to all the circumstances of the marriage or civil union, considers it just to treat the marriage or civil union as a relationship of short duration: (ad) (Repeatesy (©) _inrelation to a de facto relationship, a de facto relationship in which the de facto partners have lived together as de facto partners — (fora period ofless than 3 years; or for a period o° 3 years or longer, ifthe court, having regard to all the circumstances of the de facto relationship, considers it just to treat the de facto relationship as a relationship of short duration For the purposes of paragraphs (aXi) and (bX) of subsection (1), in computing the period for which the parties have lived together as a married couple, civil union partners, or as de facto partners, the court may exclude a period of resumed cohabitation that has the motive of reconciliation and is no longer than 3 months. Section 2: insented, on | February 2002, by sextion 8 ofthe Propeny (Relationships) Amendment Act 2001 (2001 No 5) Section 2E(1Xa) replaced, on 19 Aupust 2013, by sation 9 ofthe Mariage (Defnition of Marge) Amendment Act 2013 2013 No 20) Section 2E(1Xaby repealed, on 19 Angust 2013, by section 9 ofthe Mariage (Defnition of Mariage) Amendment Act 2013 2013 No 20). Section 2E(2): amended, on 19 August 2013, by seston 9 ofthe Mariage (Defniton of Mariage) Amendment Act 2013 (2013 No 20) Section 2E(): amended, on 26 April 200, by setion 34) ofthe Propety (Relationships) Amendment Act 2008 2008 No 19).PROPERTY LAW ACT 2007 Subpart 6—Setting aside of dispositions that prejudice creditors 344 Purpose of this subpart The purpose of this subpart is to enable a court to order that property acquired or received under or through certain prejudicial dispositions made by a debtor (or its value} be restored for the benefit of creditors (but without the order having effect so as to increase the value of securities held by creditors over the debtor's property).@@Compare: 1952 No 515.60. 345 Interpretation (1)@For the purposes of this subpart — (a)Ba disposition of property prejudices a creditor if it hinders, delays, or defeats the creditor in the exercise of any right of recourse of the creditor in respect of the property; and (b)e disposition of property is not made with intent to prejudice a creditor if itis made with the intention only of preferring one creditor over another; and (c)Bia disposition of property by way of gift includes a disposition made at an undervalue with the intention of making a gift of the difference between the value of the consideration for the disposition and the value of the property comprised in the disposition; and (d)@a debtor must be treated as insolvent if the debtor is unable to pay all his, her, or its debts, as they fall due, from assets other than the property disposed of. 2)flln this subpart, unless the context otherwise requires, — Gdisposition means— (a)Ba conveyance, transfer, assignment, settlement, delivery, payment, or other alienation of property, whether at law or in equity: (b)2the creation of a trust: (the grant or creation, at law or in equity, of a lease, mortgage, charge, servitude, licence, power, or other right, estate, or interest in or over property: (d)the release, discharge, surrender, forfeiture, or abandonment, at law or in equity, of a debt, contract, or thing in action, or of a right, power, estate, or interest in or over any property (and for this purpose a debt, or any other right, estate, or interest, must be treated as having been released or surrendered when it has become irrecoverable or unenforceable by action through the lapse of time): (e)Bithe exercise of a general power of appointment in favour of a person other than the donee of the power: (0a transaction entered into by a person with intent by entering into the transaction to diminish, directly or indirectly, the value of the person's own estate and to increase the value of the estate of another person proceeds, in relation to any property, means— (a)Bithe proceeds of the sale or exchange of the property; and (b)Bif the property is money, other property bought with that moneyproperty includes the proceeds of any property.008 Compare: 1952 No 51s 60 346 Dispositions to which this subpart applies (1)8This subpart applies only to dispositions of property made after 31 December 2007— (a)Bby a debtor to whom subsection (2) applies; and (b)Bwith intent to prejudice a creditor, or by way of gift, or without receiving reasonably equivalent value in exchange. &(2)@This subsection applies only to a debtor who— (a)@was insolvent at the time, or became insolvent as a result, of making the disposition; or (b)awas engaged, or was about to engage, in a business or transaction for which the remaining assets of the debtor were, given the nature of the business or transaction, unreasonably small; or (intended to incur, or believed, or reasonably should have believed, that the debtor would incur, debts beyond the debtor's ability to pay. Compare: 1952 No 51s 60 347 Application for order under section 348 (1)80nly the following may apply for an order under section 348: (aa creditor who claims to be prejudiced by a disposition of property to which this subpart applies (whether the disposition was made before or after the debtor became indebted to the creditor): (b)dithe liquidator, if the debtor is a company in liquidation or an overseas company being liquidated under section 342 of the Companies Act 1993, @(2)QThe application must specify the disposition claimed to be prejudicial, and the property or compensation sought through the application.@@(3)@The application, together with a notice communicating the effect of sections 348 and 349, must be served on— (a)fthe person in whose favour the disposition of property was made; and (b)any other person from whom property or compensation is sought through the application. Compare: 1952 No $1560 348 Court may set aside certain dispositions of property (2)BA court may make an order under this section— (a)fion an application for the purpose (made and served in accordance with section 347); and (b)@if satisfied that the applicant for the order has been prejudiced by a disposition of property to which this subpart applies. (2)BThe order must do 1, but not both, of the following: (a)vest the property that is the subject of the disposition in the person (for any applicable purpose) specified in section 350: (b)@require a person who acquired or received property throughthe disposition to pay, in respect of that property, reasonable compensation to the person (for any applicable purpose) specified in ‘section 350. (3)flf the order does what is specified in subsection (2)(a), it may also require a person who acquired or received property through the disposition to physically restore some or all of that property that is tangible personal property to 1 or more persons specified in the order.00(4)@Person who acquired or received property through the disposition means a person who acquired or received property— (a)@under the disposition; or (b) through a person who acquired or received property under the disposition. @(5)@The order must not have effect so as to increase the value of a security held by a creditor over the debtor's property.@0(6)@Subsection (5) overrides subsection (2) and section 350.28(7)BThis section is subject to section 349.000 Compare: 1952 No 51s 60 349 Protection of persons receiving property under disposition (1)@A court must not make an order under section 348 against a person who acquired property in respect of which a court could otherwise make the order and who proves that— (a)@ithe person acquired the property for valuable consideration and in good faith without knowledge of the fact that it had been the subject of a disposition to which this subpart applies; or (b).the person acquired the property through a person who acquired it in the circumstances specified in paragraph (a). @(2)@A court may decline to make an order under section 348, or may make an order under section 348 with limited effect or subject to any conditions it thinks fit, against a person who received property in respect of which a court could otherwise make the order and who proves that— (a)Bithe person received the property in good faith and without knowledge of the fact that it had been the subject of a disposition to which this subpart applies; and (b) the person's circumstances have so changed since the receipt of the property that it is unjust to order that the property be restored, or reasonable compensation be paid, in either case in part or in full. Compare: 1952 No 51s 60