Examiners’ reports 2018

Examiners’ reports 2018

LA2002 Equity and Trusts (Level 5) – Zone A

Introduction
It is important to take care at the beginning of the examination to read the questions
carefully, determine what each question is about and to decide which four questions
to answer. There is a limited range of topics that might be examined and no two
questions will be about the same topic (although some slight overlap may occur). If
you think that two different questions are about the same issues then you have
misunderstood one or both of the questions.
The six questions are set to allow you to demonstrate your knowledge and
understanding of the law and your ability to apply it to specific issues. There are no
trick questions. If you ask yourself why the examiners are asking a question, you
can identify what it is really about and whether it will provide you with a good
opportunity to perform at your best.
Always pay careful attention to the question asked. For example, Question 1 asked
you to advise Henry and told you that Augusta ‘transferred both houses’ to him.
Despite ‘transfer’ meaning giving legal title, some candidates queried whether
Henry had received legal title to the houses.
It is equally important to pay careful attention to the question asked, whether it is a
problem question or an essay question. If, for example, you are asked to discuss a
quotation, it is not sufficient to write a general essay on that area of law. You need
to consider carefully what specific issues are raised by the quotation.
After you decide which four questions to answer, divide the remaining time evenly
among them and, for each question, plan your answer before you begin writing.
This will help to ensure that you do not miss important points and that your answer
will be coherent and well presented. While this may leave you with only 30 minutes
of actual writing time per question, a shorter, thoughtful and relevant answer is
much better than a longer, rambling and sometimes irrelevant one.
As in previous years, the most common reasons why candidates performed poorly
on the examination were because they: (a) failed to manage their time properly and
thus did not provide four complete answers; or (b) failed to address questions
properly and wrote one or more answers that were mostly irrelevant. Some
candidates performed poorly on problem questions because they wasted time
describing the law generally before answering the question. Even if the description
of the law is accurate and relevant, it does not demonstrate to the examiners that
the candidate understands how to apply the law to the problem unless the legal
principles are repeated as they are applied. That is a poor use of time.
Level 5 and Level 6 examination papers
There were four different examination papers in Equity and Trusts this year, with
Zone A and Zone B papers set for both level 5 (LA2002) and level 6 (LA3002). The
questions were set and marked in order to evaluate the achievement of different

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learning outcomes at each level (see the Module Descriptor). Level 5 candidates
are expected to ‘classify types of trusts and identify their main distinctive features
and purposes’, while level 6 candidates are expected to ‘compare and contrast
types of trusts and explain their main distinctive features and purposes’. Level 5
candidates are expected to ‘identify appropriate available remedies’, while level 6
candidates are also expected to ‘evaluate’ them. Level 5 candidates are expected
to ‘explore key issues in judicial decision-making’, while level 6 candidates are
expected to ‘evaluate’ them.

Comments on specific questions

Question 1
Augusta was an elderly woman with no children of her own. She was the
registered owner of two houses in London: Linden Lodge and Maple Manor.
She transferred both houses to her nephew Henry, who became the new
registered owner. Augusta asked Henry to hold Linden Lodge in trust for her
and to keep Maple Manor for himself as a gift. Henry agreed.
Augusta died unexpectedly two months later. According to her will, her
brother Bobby is entitled to her entire estate. Bobby claims that he is entitled
to both houses because Henry is holding them in trust for Augusta’s estate.
Henry seeks your legal advice.
Advise Henry.
General remarks
This is a problem questions about formalities and resulting trusts, which are
discussed in Chapters 6 and 12 of the module guide and Chapters 5 and 6 of Penner.
Law cases, reports and other references the examiners would expect you to use
LPA 1925, ss.53(2), 53(1)(b), 60(3), Rouchefoucauld v Boustead [1897] 1 Ch 196,
Hodgson v Marks [1971] 2 WLR 1263, Lohia v Lohia [2001] EWCA Civ 1691, National
Crime Agency v Dong [2017] EWHC 3 (Ch).
Common errors
Common errors included errors about the role of intention in making a gift and failure
to refer to Hodgson.
A good answer to this question would…
explain that oral evidence to prove an express trust for Augusta is inadmissible under
s.52(1)(b) LPA 1925 and consider whether Rouchefoucauld may be applied to
prevent fraud. It would also consider the lack of intention to make a gift following
Hodgson. It may expressly exclude the presumption of advancement as B is the
nephew of A, and ask whether the presumption of resulting trust applies to voluntary
conveyances of land under s.60(3) LPA 1925 (Lohia).
Poor answers to this question…
simply set out the general rules on resulting trust and applied the presumption of
advancement.
Question 2
Alice died recently. According to her will, the residue of her estate is to be
held in trust for so long as the law allows:
a) to promote ice skating in the UK,

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b) to construct and maintain a monument to the memory of the great

British figure skater Jennifer Nicks who died in 1980, and
c) to improve the facilities of the Dibley Ice Skating Club (DISC).
Geraldine and Hugo have been appointed as the executors of Alice’s estate.
They seek your advice concerning the validity of those trusts.
DISC is a non-profit association with 250 members. It owns and operates a
sports club with two ice skating rinks, changing rooms, a dining lounge, a
bar, and other facilities for use by its members. Annual membership dues are
£1,000 per adult and £500 per child.
Advise Geraldine and Hugo.
General remarks
This is a problem question about trusts for charitable and private purposes, and gifts
to unincorporated associations, discussed in Chapters 9 and 10 of the module guide
and Chapters 9 and 13 of Penner.
Law cases, reports and other references the examiners would expect you to use
Charities Act 2011, ss.1–4, especially s.3(1)(g), Preamble to the Charitable Uses Act
1601, Morice v Bishop of Durham (1805) 10 Ves 522, Mussett v Bingle [1896] WN
170, Re Lipinski’s Will Trusts [1976] Ch 235, Hanchett-Stamford v A-G [2008] EWHC
330 (Ch).
Common errors
Common errors were assuming that all sport was beneficial to the public rather than
considering whether ice skating itself fulfilled the public benefit requirement, not
recognising an anomalous trust and introducing irrelevant case law under a general
discussion of charities.
A good answer to this question would…
consider that clause (a) is most likely a valid charitable trust for the advancement of
amateur sport. Clause (b) is not charitable but could be valid as an anomalous
testamentary trust for the creation and maintenance of monument for a deceased
person, while clause (c) is a gift to the members of DISC.
Poor answers to this question…
gave a general explanation of the Charities Act and the preamble without relating it
to the specific facts and introduced irrelevant matter such as cy-près.
Student extract
The case of Re Nottage establishes that mere sport that is outside the scope
of education will not be considered a charitable purpose. This is illustrated in
IRC v Glasgow City Police Athletic Association, that where the purpose of the
charity was to increase the efficiency of armed forces, it was held to be
charitable, However, training people for athletics was considered not
charitable as it did not entail any educative motive.
Comments on extract
The student brings out the nice difference between sport per se and sport for a
beneficial purpose and cites the case law to good effect. It weighed up the arguments
for and against classifying each of the purported trusts as charitable by reference to
the 2011 Act, the Preamble and the relevant case law. It adduced only those facts of
the cases that were relevant to the question. It was awarded a low first-class mark. It
would have needed a more express application to the facts to merit a higher mark.

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Question 3
In BCCI v Akindele (2000), Nourse LJ said: ‘I have come to the view that, just
as there is now a single test of dishonesty for knowing assistance, so ought
there to be a single test of knowledge for knowing receipt. The recipient’s
state of knowledge must be such as to make it unconscionable for him to
retain the benefit of the receipt.’
Discuss.
General remarks
This is an essay question about knowing receipt, which is discussed in Chapter 17 of
the module guide and Chapter 11 of Penner.
Law cases, reports and other references the examiners would expect you to use
BCCI v Akindele [2001] Ch 457, Westdeutsche Landesbank Girozentrale v Islington
LBC [1996] AC 669, Re Montagu’s Settlements [1987] Ch 264, El Anjou v Dollar
Holdings plc [1994] EWCA Civ 4, C. Mitchell and S. Watterson ‘Remedies for knowing
receipt’ in C. Mitchell (ed.) Constructive and resulting trusts (Hart, 2010) 115.
Common errors
These included concentrating on dishonest assistance at the expense of knowing
receipt, which was the focus of the quotation.
A good answer to this question would…
discuss the nature of liability for knowing receipt, the degree of knowledge or notice
required and whether a test based on unconscionability is useful (Akindele). It might
compare knowing receipt with dishonest assistance but should not dwell on the latter.
Poor answers to this question…
did not refer at all to Akindele or to the precise question posed by the quotation.
Question 4
Frank was a security guard employed by Dooley Jewellers. Maggie paid
£50,000 to Frank and, in exchange, he allowed her to steal diamonds from
Dooley Jewellers’ secure storeroom late one night.
Frank used the £50,000 to open an investment account for his daughter Judy.
Maggie sold some of the diamonds for £1 million, which she used to buy a
house in London for her father Norman.
Maggie vanished without a trace. Frank became ill and confessed his
involvement in the theft just before he died. Dooley Jewellers seeks your legal
advice. It wants to claim Judy’s investment account and Norman’s house.
Advise Dooley Jewellers.
General remarks
This is a problem question about constructive trusts, which are discussed in Chapter
13 of the module guide and Chapters 4 and 12 of Penner.
Law cases, reports and other references the examiners would expect you to use
FHR European Ventures LLP v Cedar Capital Partners LLC [2015] UKSC 45,
Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, Angove’s
Pty Ltd v Bailey [2016] UKSC 47.
Common errors
Common errors included treating this as a question on tracing.

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A good answer to this question would…

discuss whether F is a fiduciary and whether the bribe is held on trust for DJ (FHR
European Ventures). It would consider whether the proceeds of theft are held on trust
(Westdeutsche, Angove’s).
Poor answers to this question…
simply gave the rules for constructive trust or tracing.
Question 5
In Re Boyes (1884), Kay J said: ‘There is a well-known class of cases where
no trust appears on the face of the will, but the testator has been induced to
make the will, or, having made it, has been induced not to revoke it by a
promise on the part of the devisee or legatee to deal with the property, or
some part of it in a specified manner. In these cases the Court has compelled
discovery and performance of the promise, treating it as a trust binding the
conscience of the donee, on the ground that otherwise a fraud would be
committed, because it is to be presumed that if it had not been for such
promise the testator would not have made or would have revoked the gift.’
Discuss.
General remarks
This is an essay question about secret trusts, which are discussed in Chapter 14 of
the module guide and Chapter 6 of Penner.
Law cases, reports and other references the examiners would expect you to use
Re Boyes (1884) Ch D 531, Blackwell v Blackwell [1929] AC 318, Re Gardner [1920]
2 Ch 523, Kasperbauer v Griffiths [2000] WTLR 333, Ottaway v Norman [1972] Ch
698, Re Young [1951] Ch 344, Wills Act 1837, s.9.
Common errors
These included not referring to the quotation and giving general rules on secret trusts.
A good answer to this question would…
discuss the theoretical basis of finding secret trusts, whether they are express,
constructive trusts or testamentary dispositions and the difference between the
‘dehors the will’ theory and ‘fraud’ theory.
Poor answers to this question…
did not refer to the quotation and instead gave the general rules on secret trusts.
Question 6
In Re Baden’s Deed Trusts (No.2) (1973), Sachs LJ said: ‘Once the class of
persons to be benefited is conceptually certain it then becomes a question of
fact to be determined on evidence whether any postulant has on inquiry been
proved to be within it: if he is not so proved, then he is not in it. … The
suggestion that such trusts could be invalid because it might be impossible
to prove of a given individual that he was not in the relevant class is wholly
fallacious.’
Discuss.
General remarks
This is an essay question about certainty of objects, which is discussed in Chapter 5
of the module guide and in Chapter 7 of Penner.
Law cases, reports and other references the examiners would expect you to use
Re Baden’s Deed Trusts (No.2) [1973] Ch 9, Re Gestetner’s Settlement [1953] Ch
673, Re Gulbenkian’s Settlement Trusts [1968] 3 WLR 1127, IRC v Broadway
Cottages Trust [1955] Ch 20, McPhail v Doulton [1971] AC 424.

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Common errors
The most common error was to confuse conceptual certainty with evidential certainty.
A good answer to this question would…
discuss the requirement of certainty of objects and compare discretionary trusts with
powers of appointment and fixed trusts.
Poor answers to this question…
gave a general answer on certainty and dwelt on certainty of intention and subject
matter.
Student extract
Lord Wilberforce in McPhail v Doulton pointed out that trustees should not
approach their duties in a narrow way but ‘ought’ to make such a survey of
the range of objects or possible beneficiaries as will enable them to carry out
their fiduciary duties. In Re Baden’s Deed’s Trusts Sachs LJ said that the
trustees must assess the size of the problem in ‘a business-like way’.
Comments on extract
This was the conclusion. Although conclusions should be broader than the body of
the essay, this is too broad to be an accurate reflection of the courts’ views and does
not actually say very much at all. It also makes no reference to the question, which
was about the tests to be applied in determining the range of objects. While there is
nothing incorrect here, neither is there anything specific enough to warrant more than
a mid-2:2 mark.