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 20 October 2015: 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.

Permitted materials
Students are permitted to bring into the examination room the following
specified document: either one copy of Blackstone’s Statutes on Property Law
(OUP) or one copy of Core Statutes on Property Law (Palgrave Macmillan).

© University of London 2015

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1. Grady was the registered shareholder of 1,000 shares in Wonder Co.
He decided to sell 500 of those shares to his good friend Terry for
£10,000 even though the shares were then worth £20,000. Terry happily
agreed and paid £10,000 to Grady, but nothing was done to transfer the
shares to Terry.

Grady then decided to give the other 500 shares to his niece Hannah.
Grady executed the appropriate transfer form, placed it in an envelope
with the share certificates for 500 shares, and wrote Hannah’s name on
the envelope. Grady then telephoned Hannah and told her about the
intended gift and that she could pick up the envelope on her next visit
and arrange to get the shares transferred into her name.

After hanging up the telephone, Hannah said to her 16-year-old son

Tony: “My uncle is giving me 500 Wonder Co shares. I’m going to use
them to start a trust fund for you. Consider them part of the new fund. I
already do.”

Grady died a few days later, before Hannah could pick up the envelope.
Grady was still the registered shareholder of all 1,000 Wonder Co shares
when he died. Sara was appointed as Grady’s executrix and is entitled
to his entire estate.

Who is entitled to the Wonder Co shares and why?

Would your answer be any different if Hannah was appointed as Grady’s

executrix instead of Sara?

2. Harold owned a cottage near Cambridge, shares in WilCo, and a bank

account with a balance of £2,000. His business was in trouble, so he
borrowed £20,000 from Pay Day Lenders (“PDL”) in order to purchase
new equipment. His business still continued to fall and, fearing what
would happen to his assets if PDL pursued the outstanding debt, Harold
made the following transactions: (a) he transferred the cottage to his
nephew Freddie, (b) he transferred the Wilco shares to his wife Velma,
and (c) he gave £2,000 to his niece Betty for the express purpose of
buying her first car.

Harold’s business picked up the following year and he was able to pay
his debt to PDL. He asked Betty what she did with the money he gave
her and she said that she spent £1,500 of it to buy a car. Harold now
wants Velma to return the shares, Freddie to return the cottage, and
Betty to repay £500.

Advise Harold.

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3. Harvey died recently. His will contained the following provisions:

“(a) £250,000 to provide a home for elderly members of the

Green Party living in London;

(b) £250,000 to maintain a wildlife sanctuary in a London

Park from which members of the public are absolutely
excluded;

(c) £250,000 to provide a social, cultural, and educational

centre for retired women taxi drivers in London;

(d) £250,000 to provide scholarships for students to attend

schools or universities in London provided that up to 75%
of the trust income is applied each year if at all possible
to educate the children of employees of Transport for
London.”

Kate was appointed as Harvey’s executrix and seeks your advice

regarding the validity of his will trusts.

Advise Kate.

4. Albert and Brian are the trustees of a family settlement trust for Cecil for
life, with the remainder for Cecil’s children equally. One of the trust
assets is a lease with two years remaining before it comes to an end.
Albert and Brian tried to purchase the freehold reversion for the trust but
the landlord refused. Albert told his friend Debra about this. She
happened to know the landlord socially and after persisting for four
months was able to contract to purchase the freehold.

Debra could afford only half the purchase price and so she asked Albert
to pay the other half and become joint tenants with her. Albert was happy
to buy the freehold with her, but thought it might look strange if he was
both a tenant (as trustee) and a landlord, so he suggested that Debra
should become sole legal owner holding it in trust for them both in equal
shares. Debra agreed and the purchase was completed accordingly.

When the lease came to an end, Debra sold the freehold with vacant
possession, making a profit of £25,000 each for herself and Albert.

Cecil has discovered what has happened and seeks your advice about
any claims he might have against Albert and Debra.

Advise Cecil.

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5. “There is no reason to treat half secret trusts any differently from fully
secret trusts.”

Discuss.

6. “If there is sufficient certainty of intention to create a trust, then problems

with certainty of subject matter or certainty of objects should not be
allowed to defeat the settlor’s intentions. The courts should strive to give
effect to those intentions if at all possible.”

Discuss.

7. “The equitable tracing rules are far too generous to the victims of a
breach of trust or fiduciary duty.”

Discuss.

8. In AIB Group (UK) plc v Mark Redler & Co (2014), Lord Reed said: “The
liability of a trustee for breach of trust, even where the trust arises in the
context of a commercial transaction which is otherwise regulated by
contract, is not generally the same as a liability in damages for tort or
breach of contract. Of course, the aim of equitable compensation is to
compensate: that is to say, to provide a monetary equivalent of what has
been lost as a result of a breach of duty. At that level of generality, it has
the same aim as most awards of damages for tort or breach of contract.
Equally, since the concept of loss necessarily involves the concept of
causation, and that concept in turn inevitably involves a consideration of
the necessary connection between the breach of duty and a postulated
consequence, there are some structural similarities between the
assessment of equitable compensation and the assessment of common
law damages.”

Discuss.

END OF PAPER

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