THIS PAPER IS NOT TO BE REMOVED FROM THE EXAMINATION HALLS

UNIVERSITY OF LONDON LA3002 October

DIPLOMA IN THE COMMON LAW

LLB
BSc DEGREES WITH LAW

Equity and Trusts

Tuesday 18 October 2016: 14.30 – 17.45

Candidates will have THREE HOURS AND FIFTEEN MINUTES 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: one copy of Blackstone’s Statutes on Property Law (OUP).

© University of London 2016

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1. Donald held £120,000 in trust for his daughter, June. Donald’s girlfriend,
Chloe, advised him to invest the trust fund as follows:

(a) he paid £70,000 to Eli to buy shares in Apze Co;

(b) he paid £50,000 to Robin to buy a painting.

Eli and Robin are Chloe’s good friends. Robin is an art dealer.

The shares in Apze Co are worth £10,000. Eli had asked Chloe for help
finding a buyer and agreed to share half of any profit from the sale with
her. Eli paid £30,000 of the sale proceeds to Chloe and spent the rest.
Chloe spent her share of the sale proceeds.

The painting is worth £20,000. Robin spent the sale proceeds.

June has discovered what has happened and seeks your advice about
any claims she may have against Chloe, Eli, and Robin. She does not
want to sue her father Donald.

Advise June.

2. Boris died recently. His will states that his entire estate is to be held in
trust to be used as follows:

(a) to encourage and promote the game of chess;

(b) to get the national curriculum changed so that the game

of chess is taught in schools;

(c) to support the Riverbend Chess Club.

Marietta and Melody have been appointed as the executors of Boris’s

estate and the trustees of his will trusts. They seek your advice
concerning the validity of those trusts. The Riverbend Chess Club was
a non-profit organisation that promoted the game of chess, but it ceased
to exist ten years ago.

Advise Marietta and Melody.

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3. Five years ago, Anna (then age 70) and her daughter Mona (then age
40) opened a joint bank account together. Since then, Anna deposited
a total of £500,000 in the account and Mona contributed nothing to it.
Mona used the account to pay Anna’s bills and withdraw cash for Anna.
Mona also paid £250,000 out of the account to buy a house in her own
name. She did so at Anna’s request for the benefit of Anna’s friend
Shawna, who lives in the house. Anna wanted to buy the house as a gift
for Shawna, but asked Mona to purchase it in her own name to keep it
hidden from Shawna’s many creditors. Mona did not use the account
for any other purpose.

Anna died recently. Mona is now the sole owner of the bank account,
which has a balance of £150,000. According to Anna’s will, Jake is
entitled to her entire estate. Jake claims that Mona holds the bank
account and the house on resulting trust for Anna’s estate.

Advise Mona.

4. Frank made a will which stated:

“I leave my estate to my daughters Amy and Rachel in equal

shares. I trust that Amy will use her share in accordance with
my wishes.”

Three months later, Frank met with Amy and Rachel and told them that
his entire estate would be divided between the two of them when he died.
He also told them that he had an illegitimate son named Jason and
asked them if they would give Jason 10% of the estate. They both
agreed to do so.

Frank died recently and his will was probated. His estate consists of real
and personal property. Amy and Rachel seek your advice. Are they
required to share the estate with Jason?

Advise Amy and Rachel.

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5. “It is often said that constructive trusts arise regardless of intention, but
that is not true. Most constructive trusts give effect to the intentions of
the parties.”

Discuss.

6. “Trustees should never be liable for breach of trust if they have acted
honestly and reasonably, and they should never be exempt from liability
if they have failed to do so.”

Discuss.

7. “There is no reason to treat powers of appointment held by trustees any

differently from discretionary trusts.”

Discuss.

8. “While most trusts for non-charitable purposes are void, there are ways
to get around that prohibition.”

Discuss.

END OF PAPER

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