Studocu Practice MCQ Combined

lOMoARcPSD|17474563
Equity and trust mock exam
equity and trusts (University of Worcester)
Scan to open on Studocu
Studocu is not sponsored or endorsed by any college or university

Downloaded by Simple Slatt (slattsimple@gmail.com)
lOMoARcPSD|17474563
LLB
EQUITY AND TRUSTS
Mock Examination
TIME ALLOWED: ONE HOUR
There are 50 marks available for this examination. It has two parts:
Part A Multiple Choice Questions (MCQs) (10 marks).
You must attempt all questions.
For each MCQ, there are four suggested “answers” of

which only ONE is the most appropriate answer. So, for
example, if you decide the answer to Question 1 is A,
write “Q 1: A” in your answer.
Part B Written Question (40 marks).
You must attempt all parts of this question.
This is an open book assessment.
69246701a5153887f80422f1f10c7616.docx 71 © The University of Law Limited

lOMoARcPSD|17474563
LLB
PART A: MULTIPLE CHOICE QUESTIONS (10 MARKS)
Each of the five questions in Part 1 is worth two marks.
QUESTION 1
Lloyd is a trustee holding valuable paintings ‘on trust for Zelda absolutely’. Zelda is 9
years old.
Which ONE of the following statements is CORRECT?
A. Zelda will have no interest in the paintings until she is 18.
B. Zelda has a vested interest and can demand the paintings immediately.
C. Zelda’s interest is contingent on attaining 18.
D. Zelda has a vested interest but cannot demand the paintings until she is 18,
because until then, she cannot give a good receipt.
QUESTION 2
Which ONE of the following gives Ahmed’s children equitable interests under a
trust?
A. ‘I give £100,000 to Ahmed and express the wish that he uses the money to pay his
children’s school fees.’
B. ‘I give £100,000 to Ahmed with the power to appoint the money to his children in
such shares as he thinks fit but in default to hold on trust for Oxfam.’
C. ‘I give £100,000 to Ahmed to hold it for the benefit of his children in equal
shares.’
D. ‘I give £100,000 to Ahmed in full confidence that he will use the money to pay
his children’s school fees.’

lOMoARcPSD|17474563
LLB
QUESTION 3
James died recently. His will included the following provision:
‘I give £200,000 to my trustee to hold on trust to improve the health of

young people aged between 11 and 18 and to campaign for a law making
the playing of football a compulsory part of the school curriculum for boys
and girls up to the age of 18’.
A. This trust is not a valid charitable trust because it is not exclusively charitable.
B. This trust is not a valid charitable trust because it is administratively

unworkable.
C. This trust is a valid non-charitable purpose trust.
D. This trust is a valid charitable trust for the advancement of health and
education.
QUESTION 4
Sajid’s will contains the following clause:
‘I give £300,000 to my trustee to hold on trust to provide scholarships

for children of employees of Redco Ltd to go to university.’
Redco Ltd is a company which was set up by Sajid’s father. It employs 200 people.
A. The trust is a valid charitable trust for the advancement of education.
B. The trust is not a valid charitable trust due to uncertainty of objects.
C. The trust is not a valid charitable trust because it has insufficient public benefit.
D. The trust is not a valid charitable trust and it is therefore, void.

lOMoARcPSD|17474563
LLB
QUESTION 5
A trustee was holding a substantial trust fund (comprising company shares) ‘on trust
for Amy for life remainder to Hari’ Amy died last week. Hari left a voicemail message
for the trustee telling him to hold the trust shareholdings on trust for Hari’s 20 year-old
daughter Jade. Unfortunately, Hari was killed in a car accident yesterday.
A. Hari’s direction to transfer the legal title to the trust shareholdings to Jade has
also effectively disposed of Hari’s equitable interest.
B. Hari’s direction to the trustee was ineffective because it was not in signed
writing.
C. Hari direction to the trustee was ineffective because he should have executed a
stock transfer form in Jade’s favour.
D. Hari’s direction to the trustee was ineffective because he was not a beneficiary
under a bare trust able to give such a direction.
TOTAL PART 1: 10 MARKS

lOMoARcPSD|17474563
LLB
PART B WRITTEN QUESTION (40 MARKS)
You will recall from the Advance Facts that Frank Randall died recently. The Advance
Facts are repeated below the questions.
In relation to Clause 3 of the will, you have discovered that Upton Villa Football Team
has 3.7 million fans and followers.
(a) Explain whether the legacy in Clause 3 of Frank’s will is valid and if it
is not, the reasons why it might fail.
The clause 3 of Frank Randall will is complicated as the objects which are the fans of
Upon Villa FC would be complex to distinguish as Mary would not have a blue print to
see whom seems fit to be awarded the £100,000. This is because in order to be
eligible there would of needed to be a more specific distinguishment on how to know
which Upton Villa fans are actual fans or not. Therefore, as Mary is the trustee this
will would not be valid.
(b) The law should not allow trusts to be valid and to come into existence if the
description of objects is so vague that it would be impossible for trustees to
carry out their duties.
Critically evaluate whether the certainty of objects test for discretionary

trusts is sufficiently rigorous that trustees of discretionary trusts which
pass the test can carry out their duties.
Identifying a specific fans which are loyal is too vague as identifying the correct fans
would be too difficult as there is a possibility of a board spectrum of fans
claiming there loyal and to identify the suitable candidates and we could see
this in the case of IRC v Broadway Cottages [1955] as this case failed
because they could not identify the list of beneficiaries it would require a lot of
research which is too complex as the trustee is only one person as does not
have the capability to identify the correct fans.
(c) When Mary comes to see you, she says that two months before Frank died,
he told her that he was giving her his shares in Bestco Ltd. Bestco Ltd is a
private company founded by their grandfather. Mary has never been involved
in the company but says that she would find the income from the shares very
useful. Frank sent the share certificate to the company with a letter saying that
he was transferring the shares to Mary. No further action has been taken
because the company secretary has been on sick leave.
Explain what will happen to the Bestco Ltd shares.
Since there was a prior agreement with Frank that he wanted to transfer his
shares to Mary as Frank informed Bestco LTD of his decision that Mary would
have his shares and sent the share certificate over. Therefore under the
Company act 2006 sec774 the shares are valid to pass onto Mary as its under
Frans will that Mary inherits it.

lOMoARcPSD|17474563
LLB
CA 2006 sec774
TOTAL PART 2: 40 MARKS
TOTAL FOR PAPER: 50 MARKS

lOMoARcPSD|17474563
LLB
EQUITY AND TRUSTS
Mock Examination - Advance Facts
Instructions to candidates
These facts relate to the written question in Part 2 of the Equity and Trusts mock
examination, which carries 40 marks. You should use them to help you anticipate
some of the issues to which that question will relate. This will help you demonstrate
skills of critical evaluation and/or critical analysis.
Please read these facts.
You are a trainee solicitor. Frank Randall died recently. His sister, Mary Green, has
some queries about the estate and is coming to see you this afternoon. She has
provided you with a copy of Frank’s will (set out below). It appears to have been
properly signed and witnessed.
Will of Frank Randall
THIS IS THE LAST WILL of me Frank Randall of 6, Jasmine Close, Sutton,

Birmingham B4 5TH which I make on 4th October 2019 revoking all former wills.
1. I appoint my sister Mary Green (‘my Trustee’) to be the executrix and trustee of
this my will.
2. I give my house to my brother Joshua Randall.
3. I give £100,000 to my Trustee to hold on trust for such loyal fans of Upton Villa
Football Team and in such shares as my trustee shall think fit.
4. I give £50,000 to my sister, Mary.
5. I give the remainder of my estate subject to the payment of debts, funeral and
testamentary expenses and legacies to Save the Children UK, Registered
Charity Number 213890, 1 St John’s Lane, London, EC1M 4AR.
Signed by Frank Randall in our joint presence)

and then by us in his )
Assume valid execution.

lOMoARcPSD|17474563
Equity and Trusts MCQ 2 - MCQ with questions and answers
Equity and Trusts (University of Essex)

lOMoARcPSD|17474563
Equity and Trusts MCQ 2
Is the direction “£1,000,000 to be held on trust for the benefit of any

good footballer” problematic?
Yes, in relation to certainty of objects
Yes, there are issues relating to certainty of objects. The description
‘good footballer’ is conceptually uncertain as we cannot be certain
what is meant by a 'good' footballer – a premier league footballer,
footballers who have won the Ballon d'Or, footballers who have scored
20+ goals in a season, footballers (goalkeepers) who have saved 5+
penalties in a season, any footballer who has been awarded 'player of
the match' at whatever level they play? The word 'good' is not
conceptually certain so there is no certainty of objects.
Which section of the Wills Act 1837 states that “gifts to an attesting
witness shall be void”?
S. 15 Wills Act 1837
S. 15 Wills Act 1837 stops anyone who is a witness to a will (or their
spouse) benefiting under the will that they have witnessed. Exception:
if the witness is a beneficiary under a secret trust.
Is the direction “£300,000 for my wife to be disposed of as she thinks

proper for her own use and benefit; anything remaining at her death is
to be shared equally between Leighton Baines and Duncan Ferguson”
problematic?
No, there appear to be no issues with this direction

This direction appears to be valid. The direction is sufficiently
imperative (certainty of objects): a life interest is created in favour of
the wife and, when she dies, “anything remaining” (certainty of subject
matter) is to be shared equally between two named individuals (wife,
LB & DF = certainty of objects). See: Re Last
What does s.53(1)(b) Law of Property Act 1925 deal with?

Declarations of trust of land
S.53(1)(b) Law of Property Act 1925 deals with declarations of trusts
in land.
S.53(1)(b) Law of Property Act 1925 states that declarations of

trusts of land must be…
…manifested and proved by some writing (or by will)

lOMoARcPSD|17474563
S.53(1)(b) Law of Property Act 1925 states: “a declaration of trust

respecting any land…must be manifested and proved by some
writing signed by some person who is able to declare such trust or by
his will”.
s a direction “£1,000,000 is to be held on trust. Trustees shall apply the

net income of the fund in making at their absolute discretion payments
to or for the benefit of any of the employees or ex-employees of ABC
Ltd. or to any relatives or dependants of such persons in such amounts
at such times and on such condition (if any) as they think fit”
problematic?
Note: ABC Ltd. is a small company that has been in operation for 5
years.
There appear to be no issues with this direction.
This direction to hold £1,000,000 on trust (certainty of subject matter)
is imperative (certainty of intention). This direction confers
a discretionary trust power and the relevant test (for certainty of
objects in a discretionary trust) is the ‘is/is not’ test. We need to be
able to say with sufficient certainty that any person coming forward
is/is not an employee or ex-employee of the company or a relative or
dependant of such person. This is a valid direction.
It is very similar to the clause considered by the House of Lords
in McPhail v Doulton. See: McPhail v Doulton and Re Baden’s Deed
Trust No.2.
Is the direction ‘half of the value of my car collection is to be held on
trust for Demarai Gray’ problematic?’
The direction appears to be valid. We have an imperative instruction
(certainty of intention) and a named beneficiary (certainty of objects).
The total VALUE of the car collection can be quantified in £, therefore
HALF of the total value of the car collection can be quantified (certainty
of subject matter).
Remember that money (£) is fungible – when we calculate the value of
something in £, every £ in that valuation is indistinguishable from
every other £ in the valuation.
See, for example: Hunter v Moss (fungible property)
Is the direction “£200,000 to my brother George, in the hope that he
will share the money fairly between my nieces” problematic?
Yes, in relation to certainty of intention

lOMoARcPSD|17474563
The direction uses the words ‘in the hope that’ - these are examples
of precatory words. These words, taken with a direction that the
money should be shared ‘fairly’ (which is very vague), don’t evidence
sufficient certainty of intention to impose a legal obligation on
George to share the money between my nieces. George would take the
money absolutely. See: Adams v Kensington Vestry.
S.53(1)(c) Law of Property Act 1925 states that dispositions of

equitable interests must be…in writing (or by will)
S.53(1)(c) Law of Property Act 1925 states: “a disposition of an
equitable interest or trust subsisting at the time of the
disposition, must be in writing signed by the person disposing of the
same, or by his agent thereunto lawfully authorised in writing or by
will”.
What does s.53(1)(c) Law of Property Act 1925 deal with?
All dispositions of equitable interests (in land and in personalty)

S.53(1)(c) Law of Property Act 1925 deals with all dispositions of
equitable interest (in land and in personalty).
Is the direction “my two Ferraris are to go to Leslie Knope and Jerry
Gergich. Leslie is to have whichever Ferrari Jerry does not want”
problematic?
Possibly - if Jerry dies before making his choice
This could be problematic: if Jerry died before making his choice, Leslie
would not be entitled to a Ferrari. The method of choice was stipulated
but cannot be followed and we cannot be certain which Ferrari Leslie
should have (certainty of subject matter: beneficial interest).
See: Boyce v Boyce)
A direction to “transfer all of my interest in the ‘Everton-are-best Trust’
to Mason Holgate” is…
…an attempted disposition (it is a subsisting interest/trust)
his is an attempted disposition. It is a deals with a subsisting interest
(i.e. the trust and the equitable interest under that trust are already in
existence).
Note: we do not know what the ‘Everton-are-best Trust’ property
comprises (it could be land and/or personalty).

lOMoARcPSD|17474563
Equity & Trusts 2 - Formative MCQ Question and Answers
Employment Law Advanced (University of Sussex)

lOMoARcPSD|17474563
FORMATIVE QUESTIONS AND ANSWERS

In her will Violet leaves her shares in Fintex to her son Nigel to enjoy
while he is alive, and then to her grandson Eddie. Which of the
following is the best summary of the legal position?
a) Nigel holds the life interest in the shares and will receive the benefit of any
dividends. Eddie holds the remainder interest, meaning the shares will pass to
him on Nigel’s death.
b) Nigel holds the life interest in the shares but as Eddie holds the remainder
interest, any dividends will be paid to Eddie.
c) Nigel holds the life interest in the shares but as Eddie holds the remainder
interest, and dividends will be shared with Eddie.
d) Nigel holds the life interest in the shares, meaning he is free to dispose of
them in his lifetime. If he does not, then the shares will pass to Eddie on Nigel’s
death
Krishna has recently won the lottery and wants to create a trust for her
children Ajay (aged 8) and Amalie (aged 10). She wants to give her
trustees flexibility to distribute the trust property to them depending
on need e.g. if they want to put a deposit on a house, start a new
business or take a Masters degree. What would not be an effective way
of doing this?
a) Give the trustees a fiduciary power to distribute the trust property.

b) Create a fixed trust, stipulating that the trustees need to distribute the trust
property to Ajay and Amalie in defined shares.
c) Create a discretionary trust.
d) Create a secret trust, indicating to the trustees that Ajay and Amalie are to
receive the funds according to need.
George works for a Michelin starred restaurant, where the customers

are wealthy and often pay large tips. The restaurant owners pay below
the national minimum wage (NMW), but top this up with tip money,
which the head waiter collects separately in a separate bank account,
so that the overall wages meet the NMW requirement. What is the best
summary of the position in terms of trust law?
a) The restaurant owners are entitled to do this as the tips are paid as part of a
contractual arrangement between the customers and the restaurant. HMRC v
Annabel's (Berkeley Square) Ltd. [2009] EWCA Civ 361applies.
b) The restaurant owners are not entitled to do this as this breaches employment
law regulations on the NMW.
c) The restaurant owners are not entitled to do this as the head waiter is a
trustee of the tips. HMRC v Annabel's (Berkeley Square) Ltd. [2009] EWCA Civ
361 applies.
d) The restaurant owners have the discretion to distribute the tips to whichever
staff they think are the most deserving.
Paul is in his 80s and has had a recent health scare, meaning he wants
to get his finances in order. He has always put off writing a will, but has
decided to now. Paul had a brief holiday romance in his younger years
and had a son Frank, who his family, apart from his brother David, do

lOMoARcPSD|17474563
not know about. Paul has had some contact with Frank, and wants to
set up a trust for Frank’s daughter Alicia, but does not want the rest of
his family to know. Paul’s trustees are two solicitors, who have known
the family for a long time and provided various pieces of advice over
the years. What is the best way for Paul to leave the money to Frank?
a) Paul should instruct new solicitors as trustees, as the current trustees will have
to tell the family, given the longstanding relationship.
b) Paul can create a secret trust by leaving the money to David, so that it will
appear in will as a gift to David. David knows about Alicia and it is likely he will
make sure she receives some of the legacy.
c) Paul can create a secret trust by leaving the money to David, so that it will
appear in will as a gift to David. Paul will need to tell David the details of the
trust, including details of the beneficiary and the trust property.
d) It is not possible for Paul to set up this trust, as this would be in contravention
of the Wills Act 1937s9, which states that any such provision needs to be in
writing, signed by the testator and witnessed.
Annie bought a flat in Brighthove with her girlfriend Katie for £250,000.
Annie had had a series of unsuccessful relationships, and wanted to
register the flat in her sole name, in case this relationship failed too.
She told Katie that it was much easier to do this and that the
conveyancing fees would be cheaper if in one name only. Annie paid the
deposit of £50,000 and took out a mortgage for the rest. They moved in
together and paid the mortgage instalments from a joint bank account.
Some years later, they split up and Katie claims a beneficial interest in
the flat. Which of the following is correct?
a) As the house is in Annie’s name, she is the sole owner of the beneficial
interest, as per Stack v Dowden
b) Katie could establish a beneficial interest if she can show detrimental reliance
as per Lloyds Bank v Rosset
c) Katie has established a beneficial interest through a common intention
constructive trust through her conduct i.e. her contribution to the purchase price
through the mortgage payments as per Lloyds Bank v Rosset
d) Katie would be entitled to a share of the beneficial interest on a resulting trust
basis as per Jones v Kernott
Which of the following is the best explanation as to the role of the

maxim?
A) A maxim is a rule of equity and if a particular maxim is applicable to a case,

the court must always follow it.
b) A maxim has the same force as secondary (delegated) legislation.
c) Maxims provide a flexible framework of guidance for the courts.
d) At least two maxims must be considered by the courts in each case.
Which maxim is most appropriate for Comiskey v Bowring-Hanbury

[1905] AC 84?
a) Where the equities are equal, the first in time shall prevail.
b) Equity looks to substance rather than form.
c) Those who seek equity must do equity.
d) Equity treats as done that which ought to be done.

lOMoARcPSD|17474563
Which of the following is not a principle of trust law as stated by Lord

Browne Wilkinson in Westdeutsche Landesbank Girozentrale v Islington
LBC [1996] AC 669?
a) There must be identifiable trust property (with the exception of constructive

trust in dishonest assistance in breach of trust).
b) Where a trust is established, the beneficiary has a proprietary interest in the
property, which can be enforced in equity against any subsequent holder of the
property.
c) Equity operates on the conscience of the legal owner.
d) Where a trust is established, the beneficiary has a proprietary interest in the
property, which can be enforced in equity against any subsequent holder of the
property except a bona fide purchaser for value.
Which of the following is not an equitable remedy?
a) An injunction.
b) Specific performance.
c) Damages.
d) Rescission.
How must an equitable interest be disposed of under the Law of

Property Act 1925?
a) If it is personal property, an oral declaration is sufficient, if real property, it

needs to be in writing.
b) A disposition of an equitable interest must be in writing and signed by the
transferee or their agent, otherwise it is void.
c) It is not possible to dispose of an equitable interest.
d) An oral declaration is sufficient, provided that it is certain and the appropriate
tax is paid.
Where all the beneficiaries of trust are adults and of full legal capacity,
if they are all in agreement, they can bring the trust to an end, even if
this was not the settlor’s intention. This is known as:
a) The rule in Beswick v Beswick.

b) The rule in Balfour v Balfour.
c) The rule in Patel v Mirza.
d) The rule in Saunders v Vautier.
Which of the following is the best way of rebutting a presumption of a

resulting trust?
a) By evidence supporting the presumption of advancement.

b) By evidence supporting a gift.
c) By any evidence indicating that a resulting trust was not intended.
d) By evidence indicating that the property transferred was intended as a loan
In Re Vandervell's Trusts (No. 2) [1974] 3 All ER 205, the Court of

Appeal decided that once the trustee company exercised the option (to
buy back the shares), the shares were subsequently held on the trusts

lOMoARcPSD|17474563
of the children’s settlement. What is the best summary of Lord Denning

MR’s reasoning?
a) It was clearly Mr Vandervell’s intention to divest himself of the shares in favour

of the children, ‘Equity sees as done that which ought to be done’.
b) It was the intention of Mr Vandervell and the trustee company that the shares
should be held for the benefit of the children’s settlement after the exercise of
the option by the trustee company.
c) It was the intention of Mr Vandervell and the trustee company that the shares
the option by the trustee company. The fact that the £5,000 used was taken from
the children’s fund meant that the shares did not thereafter form part of Mr
Vandervell’s estate.
d) It was the intention of Mr Vandervell and the trustee company that the shares
the option by the trustee company. The children had provided valuable
consideration by purchasing the option from their settlement fund, meaning the
‘Equity’s darling’ rules applied
Which of the following is the best summary of the position of s60(3)

Law of Property Act 1925 in relation to voluntary transfers?
a) This provision abolished the presumption of a resulting trust for all voluntary
transfers.
b) This provision abolished the presumption of a resulting trust for voluntary
transfers of land, Lohia v Lohia [2001] EWCA Civ 1691
c) This provision relates to the technicalities of conveyancing and therefore does
not affect the creation of a resulting trust, Prest v Petrodel Resources Ltd. [2013]
3 WLR 1
d) There has been much debate over the effect of s60(3), with the issue not
resolved by the courts because the presumptions have become more easily
displaced by evidence.
Dyer v Dyer [1788] 2 Cox Eq Cases 92 sets out which of the following
principles in relation to resulting trusts?
a) Property is held on trust for the person or persons who supply the purchase
money, regardless of whose name the property is in.
b) Property is held on constructive trust if it would be unconscionable for the
legal owner to retain the beneficial interest.
c) In the absence of evidence to the contrary, the beneficial and legal title to
property, are held by the person or persons supplying the purchase money.
d) There is a rebuttable presumption of beneficial ownership of property for the
person whose name the property is in.
In Bankruptcy of Abrahams [1999] BPIR 617 a wife was entitled to her

husband’s, from whom she had separated, share of winnings, as well as
her own, from a National Lottery syndicate. Why?
a) The presumption of advancement meant that his share was held on resulting
trust for her.
b) The presumption of advancement meant that his share was held on
constructive trust for her.

lOMoARcPSD|17474563
c) She had paid his £1 share towards the ticket as well as her own, giving her a
right to the winnings under a resulting trust.
d) She had paid his £1 share towards the ticket as well as her own, giving her a
contractual right to the winnings.
In Tinker v Tinker [1970] P 136, the husband found himself “on the
horns of a dilemma”, per Lord Denning MR at 141in relation to property
he had conveyed into his wife’s name. Which of the below statements
best summarises that dilemma?
a) He did not have sufficient evidence to rebut the presumption of advancement

to his wife.
b) He had not completed the necessary formalities for the transfer of land per
the Law of Property Act 1925.
c) To keep the property out of reach of his creditors, it would have to belong to
his now ex-wife, because to rebut the presumption of advancement, he would
have to rely on evidence of an illegal purpose.
d) He had not effectively disposed of his equitable interest as per the Law of
Property Act 1925, meaning that it ‘resulted’ back to him, and was therefore
available for his trustees in bankruptcy to distribute to his creditors.
Which maxim of equity does the rule on relying on evidence of an

improper purpose (illegality), most closely relate to?
a) He who comes to equity must do equity.

b) Equity looks to substance not form.
c) He who comes to equity must come with clean hands.
d) Equity abhors a vacuum.
The cases of Lohia v Lohia [2001] and Ali v Khan[2002] are often cited
together in relation to an interpretation of s.60(3) LPA 1925. Is this
because:
a) Lohia was a first instance decision and needed to be confirmed by a higher

court.
b) Lohia and Ali v Khan considered different issues on the same point of law and
both cases are needed to give a complete picture.
c) Ali v Khan contradicted Lohia and uses a different rationale to explain the
relevant point of law. Lohia now only has a historical significance.
d) The same judge, Morritt VC, sat in both cases and the reasoning he gave in
Lohia he developed in Ali v Khan.
In Stack v Dowden, Lady Hale called on judges to consider the

‘domestic context’. In effect, this means:
a) a shift in focus away from financial contributions.

b) that financial contributions no longer need to be considered at all.
c) that childcare is now exclusively recognised as being an indirect contribution.
d) that family law should prevail over trust law in this context.

lOMoARcPSD|17474563
MCQ revision Equity and Trust
Equity & Trusts (Manchester Metropolitan University)

lOMoARcPSD|17474563
1. Why couldn’t judge give conclusion in favour of Mr. Inwards?

- He referred to Errington and Errington where he said that the promise must have
been protected by a contractual license/ promise.
- He held there to be no promise by father/contractual arrangement thus should not
stay in property at all, no evidence expressly/impliedly that he could live there.
- This case was not within Errington’s case thus sons claim failed.
- However, COA: held: Equity created by equitable estoppel where one acted to their
detriment.
2. Which following statement is true for express trust?

- Express Trusts: Deliberately created trusts.
Why an express trust: declared intentionally, settlor will intent to settle specific property on
trust for clearly identifiable beneficiary to be held by trustees according terms set out.
3. What act caused to fusion of equity and common law

The Judicature Acts 1873 and 1875
4. Which of the following is discretionary trust?

discretionary trusts: trustees given discretion/flexibility to what extent B is to benefit. How
it is distributed is down to trustee.
5. Difference between Grant v Edwards and Burns v Burns, why could the court assist
the former case and not the latter.
- Either, there was a common intention to share the beneficial ownership in grant but
not burns because of the discussion that place or//
6. Why was the first instance judge unable to see a way to help Mr. Baker junior in
inwards v baker.
- Because he felt bound by the decision in Errington’s case and thought there needed
to be a contract.
7. Following the judicature acts, equitable remedies are available in which courts?
- All of them.
8. What John Seldon mean when he described equity akin to length of Chancellors
foot
- Equity subject to subjective standard of each new chancellor

lOMoARcPSD|17474563
Brien 2e mcq solutions - MCQ answers
Equity And Trusts (Victoria University)

lOMoARcPSD|17474563
EQUITY AND TRUSTS GUIDEBOOK

SECOND EDITION
CHRIS BRIEN
MULTIPLE CHOICE QUESTIONS – CHAPTERS 1- 12
SOLUTIONS
CHAPTER 1
1. Which of the following statements is the best explanation of ‘equity’?
C. Equity refers to the principles that were initially created by the English High Court.
2. The judicature system brought significant changes. Which one of the following
statements is the most accurate?
C. Every state in Australia enacted legislation.
3. Complete the sentence. The phrase ‘against the conscience’ refers to…
B. a recurring theme throughout equity.
4. Complete the sentence. The decision in Harris v Digital Pulse Pty Ltd (2003) 56
NSWLR 298 is significant because…
A. it is a recent example of a fusion fallacy.
5. Complete the sentence. The equitable maxims are useful when answering legal
problems because they indicate:
C. how equity developed, and provide guidance.
6. Equity is based upon the concept of ‘unconscionability’, that is to say…
Prepared by Chris Brien, author of Equity and Trusts Guidebook 2e

© 2015, Oxford University Press. All rights reserved.

lOMoARcPSD|17474563
B. abuse of positions of confidence, insisting upon rights in circumstances that are harsh, the
inequitable denial of obligations and the unjust retention of property.
7. Complete the sentence: ‘Circumstances of inequality do not of themselves call for

the intervention of equity. It is…
B. the concept of unfair advantage being taken of serious inequality that is central to the
notion of unconscionable conduct. It must be established that it would be against the
conscience for a court of equity not to acknowledge what has occurred between the parties.’
8. The judicature system has been adopted throughout Australia. Which Australian
jurisdiction was the first and which was the last to do so?
B. South Australia was the first and New South Wales was the last.
9. Which of the following statements is most accurate?
B. Equity follows the law, equity is equality and equity acts in personam.
10. Which of the following statements is the best explanation of the judicature
system?
B. Procedure was fused and both common law and equitable principles could now be
administered by the one court.


lOMoARcPSD|17474563
CHAPTER 2
1. Which of the following statements most accurately explains equitable interests?
C. They arise when equity needs to give effect to its doctrines and principles.
2. Complete the sentence. Equitable interests are recognised…
A. in equity but not by the common law.
3. Which one of the following statements most accurately explains personal property?
C. Personal property comprises both tangible items (choses in possession) such as a debt
and intangible items (choses in action) such as a car.
4. Complete the sentence. An equitable interest may be …
A. personal, proprietary or a mere equity.
5. Which one of the following statements most accurately explains the concept of
property?
A. Property comprises both real (land and fixtures) and personal (chattels). Personal
property can then be classified as intangible (choses in action) and tangible (choses in
possession).
6. Which of the following statements is the most accurate?
A. ‘Equity in fact calls into existence and protects equitable rights and interests in property
only where their recognition has been found to be required in order to give effect to its
doctrines’.
D. ‘The general rule is that legal interest will take priority, where there is a bona fide
purchaser who does not have notice of the prior equitable interest. This includes actual and
constructive notice.’
C. ‘In some cases the court may see that what the testator intended was to attach a charge
or a trust upon the property, in other cases it may include a personal liability is intended. The
view taken would depend partly on the language used to describe the obligation, and partly
on the nature of the obligation.’
9. Complete the phrase: ‘Circumstances of inequality do not of themselves call for the
intervention of equity. It is…


lOMoARcPSD|17474563
10. Equity is based upon the concept of ‘unconscionability’, that is to say,


lOMoARcPSD|17474563
CHAPTER 3
1. Which of the following statements most accurately explains an assignment?
D. An assignment is the immediate transfer of an existing proprietary right, vested or

contingent, from the assignor to the assignee.
2. Complete the sentence. Writing is required when …
A. an interest in real property is involved in a dealing.
3. Interests that cannot be dealt with include which of the following?
B. Future property when it is a mere expectancy.
4. Complete the sentence. When making a declaration of trust …
B. the three certainties must be satisfied.
5. What does the law require to be satisfied when a chose in action is purportedly
being assigned?
C. It must be absolute, reduced to writing, and notice must be given to the debtor.
6. In Shepherd v Federal Commissioner of Taxation (1965) 113 CLR 385, a distributor

was granted a licence to manufacture castors in return for a monthly payment of 5%
of the sale price. He then purported voluntarily to assign ‘all [his] rights title and
interest in and to an amount equal to ninety per centum of the royalties which may
accrue during a period of three years from the date of this assignment’.
Which of the following statements is the most accurate?
D. The decision is significant because the High Court of Australia held in favour of the
taxpayer since the purported assignment involved future property. The purported assignment
was ineffective in the absence of consideration.
7. In Anning v Anning (1907) 4 CLR 1049, a settlor who was close to death purportedly
assigned via a deed his personal estate to his wife and children. The property
included both real and personal property. Each item except for an interest in
partnership (only equitable) could have been dealt with at law. The question before
the court was whether a purported assignment that failed at law would be effectively
assigned in equity.
How did the High Court of Australia decide the matter?
A. Griffith CJ referred to Milroy v Lord (1862) 4 De GF & J 264 in that the settlor had to do
‘everything that was necessary to be done’—those things that only the settlor could do. In his
opinion the assignment was effective in equity, since notice, which was required by statute,
could be given by someone else. Isaacs J held that the assignment was ineffective in equity
unless it was for valuable consideration. All requirements must be met if it is to be effective
in equity. Higgins J held that the assignment was ineffective since notice as required by law
was something that only the assignor could do.


lOMoARcPSD|17474563
8. In Milroy v Lord (1862) 4 De GF & J 264, Thomas Medley voluntarily assigned 50,000
shares to Lord, to be held on trust for Milroy, but the register was never updated.
Medley lived for a further three years. The question for the court was whether
anything had been effectively achieved in law or equity for the shares to have formed
part of the estate. Which of the following statements is correct?
A. Turner LJ held that the shares did form part of the estate. For a voluntary settlement to be
valid: (i) ‘the settlor must have done everything which was necessary to be done to transfer
the property’ and (ii) ‘if settlement is intended to be effected by a particular mode, the court
will not give effect to it by applying another form’.
9. In Corin v Patton (1990) 169 CLR 540, Mr and Mrs Patton held Torrens title land as
joint tenants. Mrs Patton was seriously ill and did not want her property passing to Mr
Patton (right of survivorship). She preferred her property to be given to the children.
In an effort to break the joint tenancy, she assigned her interest. Three documents
were executed:
- A memorandum of transfer was completed in favour of her brother, Mr Corin,

subject to a mortgage with the State Bank of New South Wales, which held the
certificate of title.
- A trust deed indicated that he held the property in favour of Mrs Patton.
- The will of Mrs Patton gave her estate in equal shares to the children.
When Mrs Patton died, the transfer had not been registered nor had any other steps
been completed. Which of the following statements is correct?
A. The case is significant because nothing had been achieved at law or in equity. The most
liberal view in Anning v Anning (1907) 4 CLR 1049 was that of Griffith CJ, which would have
required the production of the title documents—something that only Mrs Patton could do.
10. In Norman v Federal Commissioner of Taxation (1963) 109 CLR 9, a purported

assignee was entitled to receive dividends on certain company shares and interest on
a loan. The terms of the loan agreement permitted the debtor to pay out the balance at
any time without notice. The Taxation Commissioner considered the purported
voluntary assignment to be ineffective to avoid the payment of tax. The question
before the court was whether the property could be classified as either future or
presently existing property.
Which of the following statements is accurate?
A. There was a unanimous decision with respect to the dividends being regarded as future
property—a mere expectancy. The directors of the company could not be compelled to pay a
dividend. The majority of the court, comprising Dixon CJ, Menzies and Owen JJ, considered
the interest on the loan to be future property since it could be repaid at any time without
notice. The minority, comprising Windeyer and McTiernan JJ, held that the interest was a
present right to receive interest that was payable in the future.


lOMoARcPSD|17474563
CHAPTER 4
1. Which of the following statements most accurately explains undue influence?
D. It protects the vulnerable and is concerned with the nature and quality of consent.
2. Complete the sentence. The ’wife’s special equity’…
A. arises in the context of relationships that have a presumption of undue influence. The
onus is on the party benefiting from the transaction to establish that no undue influence was
apparent.
3. Which of the following is the most accurate description of unconscionable

conduct?
B. It is very similar to undue influence and estoppel.
4. Complete the sentence. Equitable estoppel…
A. was defined by Deane J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
and comprises six elements.
6. Louth v Diprose (1992) 175 CLR 621 is a significant decision because
C. the lack of education is a factor in establishing undue influence but infatuation was
enough for the court to set aside the transaction in favour of the 40-year-old solicitor.
7. The decision in Australian Competition and Consumer Commission v CG Berbatis

Holdings Pty Ltd (2003) 197 ALR 153 involved the following:
A. The trial judge, French J held that Mr & Mrs Roberts were under a ‘special disadvantage’
because of their situation. Before the Federal Court the decision was overturned. On a
subsequent appeal, the High Court of Australia agreed with the Full Federal Court in
deciding that no unconscionable conduct occurred. The majority considered that in all
commercial bargaining there are differences in bargaining power and that this was no
exception.


lOMoARcPSD|17474563
10. In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Brennan J identified
the following elements with regard to the doctrine of estoppel:
A. The parties were in a pre-existing legal relationship or they were about to enter into a
legal relationship. The defendant induced the plaintiff to make an assumption that certain
things were to occur. The plaintiff conducted their affairs in reliance on this expectation. The
defendant knew or ought to have known what the plaintiff was doing. The plaintiff suffered
detriment. The defendant failed to minimise the detriment.


lOMoARcPSD|17474563
CHAPTER 5
1. Which of the following statements most accurately explains fiduciary obligations?
A. Fiduciary obligations arise from the ‘position of the parties’.
2. Another way of explaining fiduciary obligations would be to indicate that where

they arise:
B. the party who is a fiduciary must avoid any conflict of interest and any profit acquired is
held under a constructive trust in favour of the party to whom fiduciary obligations are owed.
3. Complete the sentence. Joint venturers are…
C. fiduciaries depending upon the circumstances.
4. Complete the sentence. Confidential information only occurs…
C. when information is subject to an obligation of confidence.
5. Complete the sentence. Information subject to an obligation of confidence may be...
C. expressly stated, an implied term or arise because equity would acknowledge that the
information has been received in confidence.
6. Which is the most accurate statement with regard to protecting privacy?
D. Specific privacy legislation has been enacted in most Australian jurisdictions except South
Australia and Western Australia.
7. Complete the sentence: A charter of rights and responsibilities…
D. has been enacted in the Australian Capital Territory and Victoria.
8. Equity provides little protection for confidential information, unless…
A. the nature of the relationship is established and how the information is communicated is
assessed.
intervention of equity. It is …


lOMoARcPSD|17474563
CHAPTER 6
1. Which of the following statements most accurately explains a trust?
A. Property held by one person in favour of another person.
2. Complete the sentence. Trustees are fiduciaries…
A. but not all fiduciaries are trustees.
3. In creating an express trust which of the following must occur?
C. The ‘three certainties’ must be satisfied, and it must be completely constituted.
4. Complete the sentence. Powers of appointment create problems because...
B. hybrid testamentary powers in discretionary trusts infringe the principle prohibiting the
delegation of will-making power.
5. Complete the sentence. ‘Precatory’ words …
B. are not required when creating a trust.
6. In Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, a company

lacked sufficient funds to pay a share dividend that had already been declared. A loan
agreement was entered into and the funds were placed in a special bank account. The
company then went into liquidation and the share dividend was not paid.
Which of the following statements is accurate with regard to how the matter was
resolved?
A. The House of Lords held that given the mutual intention of all the relevant parties, an
express trust had been created. When the funds could no longer be used to pay the
dividend, the monies were held under a resulting trust in favour of the creditor.
7. ‘Complete constitution’ of a trust may be achieved…
D. four ways: by the declaration of a trust, the transfer of property by inter vivos, by a
testamentary or post mortem expression of intention and by a direction to a trustee.
8. In Re Baden’s Deed Trusts, McPhail v Doulton [1971] AC 424, a settlor created a

trust, which gave discretion to the trustees to use the net income of the property for
the benefit of the staff or former staff of a particular company, their ‘relatives’ and
‘dependants’. The executors claimed that since it was a trust power it was void for
uncertainty as it was impossible to ascertain the number of beneficiaries. Which of
the following statements accurately indicates how the matter was decided?
A. The House of Lords unanimously considered it a trust power. The majority, comprising
Viscount Dilhorne, Lord Reid and Lord Wilberforce, pronounced the ‘criterion of certainty’
test: whether it was possible to indicate that a particular person was a member of the class.
Lord Wilberforce also made a distinction between linguistic/semantic uncertainty and


lOMoARcPSD|17474563
evidentiary uncertainty. The trust may fail under the former because the language is too
vague. In the latter, it may simply be an evidentiary problem. Lord Wilberforce also noted
that a trust power might also fail if the trust was administratively unworkable.
9. A post mortem or testamentary trust must satisfy the statutory requirements for the
creation of a valid will. They are:
A. it must be in writing, signed by the testator and witnessed by two people.
10. Complete the phrase: ‘Circumstances of inequality do not of themselves call for
the intervention of equity. It is …


lOMoARcPSD|17474563
CHAPTER 7
1. Which of the following statements is the best explanation of a charitable trust?
B. A charitable trust is a form of an express trust where a charitable purpose replaces

beneficiaries.
2. Complete the sentence. The preamble to the Statute of Charitable Uses 1601 is a
‘shopping list’ of charitable purposes. Lord Justice McNaughten in Pemsel noted four
classes of charitable trusts:
C. relief of poverty, advancement of education, advancement of religion and other purposes

beneficial to the community.
4. Complete the sentence. A cy-près scheme enables...
C. the court to sever or read down charitable purposes that are illegal, impracticable or
impossible to be fulfilled if there is a general charitable intention.
5. Complete the sentence. Where a trust has both charitable and non-charitable
purposes…
C. the trust fails but may be saved by legislation.
6. Trusts for political purposes are charitable. Which statement below is correct?
C. Under the common law, they are not if they seek to bring about a change in the law.
Commonwealth legislation now provides a means for this activity to be considered
charitable.
7. Legislation concerning charitable activities has recently been enacted by the
Commonwealth. Which of the following statements is the best explanation of this
development?
C. The statute embraces and extends existing charitable principles.
8. In Church of the New Faith v Commissioner of Payroll Tax (1983) 154 CLR 120, the
issue was the meaning of religion. Which of the following statements accurately
reflects the decision of the High Court of Australia?
A. Mason ACJ and Brennan J held that religion involves two elements: a belief in a
‘supernatural being, thing or principle’ and ‘canons of conduct in order to give effect to that
belief’. Murphy J extended this approach by indicating the list of religions is not closed.
Murphy J considered that freedom of religion was a critical part of Australian society and not
a matter for the courts. Wilson and Deane JJ noted that there are additional criteria such as
that the ways of behaving must have some spiritual significance, the group must be


lOMoARcPSD|17474563
recognisable and the participants must consider themselves to be practising a particular

religion.
9. In Re Lysaght (Dec’d) [1966] Ch 191, a testatrix provided funds to establish a series

of scholarships for British-born students who were not of Roman Catholic or Jewish
faiths to attend the Royal College of Surgeons. The College rejected the gift and
sought assistance from the Court. Which of the statements is correct?
B. The case is significant since the court found a general charitable intention by the testatrix.
This is the essential part of a cy-près scheme that enabled the severing of the religious
discriminatory part of the gift.
10. Commonwealth legislation has greatly assisted charities and not-for-profit

entities. Which of the following statements is correct?
D. The legislation reflects society’s changing values as to what is charitable. It expands the
common law definition of charity and operates throughout Australia as a national scheme. It
also provides for greater accountability and confidence by such entities.


lOMoARcPSD|17474563
CHAPTER 8
1. Which of the following statements most accurately explains a resulting trust?
A. Property held by one person in favour of another person.
2. Complete the sentence. A resulting trust is imposed by law…
C. automatically: where there is non-disposal of the beneficial interest, and this may arise
where an express trust has failed or there is a surplus of property after a non-charitable trust
has been satisfied. Alternatively, a resulting trust may come into operation based upon the
presumed intention between the parties.
3. In creating an express trust, which of the following is true?
C. The three certainties must be present and it must be completely constituted.
4. Is a resulting trust subject to the statutory requirements of writing?
C. No.
5. Complete the sentence. Illegality…
B. may be used to rebut the presumption of advancement but it is dependent upon statutory
interpretation.
6. In Re Gillingham Bus Disaster Fund [1958] Ch 300, a memorial fund was created
after twenty-four Royal Marine cadets were killed in a motor vehicle crash.
Contributions were received from the local people. A trust was established by the
mayors of the affected towns ‘to defray funeral expenses, care for the disabled and
such worthy causes …’. A total of £9000 was collected, with a surplus of £6000.
Clarification was sought as to what was understood by the term ‘and such worthy
causes’.
How did the court decide the matter?
A. Harman J held that the trust failed for uncertainty. His Honour considered that an inquiry
should be undertaken to ascertain the identities of the donors. His Honour noted that a cy-
près scheme should not be applied. Such a scheme would involve a variation of the creator’s
intention and this could only take place where there was a general charitable intention.
7. In Re West Sussex Constabulary’s Widows, Children & Benevolent (1930) Trust

Funds [1971] Ch 1, two police forces were to be merged. Money in their trust funds
had been obtained from three different sources:
• gifts and legacies (personal property under a will)
• street collections
• money that was raised in sweepstakes.


lOMoARcPSD|17474563
The question before the court involved the status of the funds collected when
there was a surplus after the non-charitable purpose had been fulfilled. How did the
court resolve the matter?
B. Gough J noted that the identities of the people who contributed to the first category (gifts
and legacies) were known, so the property was held under a resulting trust. Contributions in
the second category (street collections) were given anonymously, so the surplus would be
directed to the Crown. The third category (sweepstakes), in which raffle tickets were
purchased, was a simple contract. People bought a chance to win—it was out and out.
8. In Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, Rolls Razor Ltd
sought to raise £200,000 to pay share dividends that had already been declared. The
funds were borrowed from Quistclose Investments Ltd and placed into a separate
account with Barclays Bank. Before the dividends were paid, Rolls Razor Ltd went
into liquidation. There was competition between Barclays Bank and Quistclose
Investments Ltd. Barclays Bank sought to use the money to cover other Rolls Razor
debts. Quistclose claimed the money under a resulting trust when the purpose of the
trust could not be performed. How did the court decide the matter?
A. Wilberforce LJ noted the mutual interest of Rolls Razor and Quistclose was critical in
determining whether a trust existed. Emphasis was placed on the particular terms of the loan
that indicated that the funds were to be used exclusively for a defined purpose. Discussion
also focused on a primary trust being established on behalf of the shareholders, and when
that trust could not proceed, a second trust arose in favour of Quistclose.
9. Complete the sentence: The phrase ‘against the conscience’ refers to…


lOMoARcPSD|17474563
CHAPTER 9
1. Which of the following statements most accurately explains the differences

between an express trust and a constructive trust?
C. Constructive trusts are imposed by law, are largely contrary to the intentions of the parties
and are not subject to the statutory requirements of writing.
2. Which of the following statements most accurately explains the differences

between a resulting trust and a constructive trust?
C. Resulting trusts, like constructive trusts, arise through the operation of law, but the latter
come into existence when it would be contrary to equitable principles to deny the existence
of the trust.
3. In Barnes v Addy (1874) LR 9 Ch App 244 the House of Lords identified two limbs
by which third parties may be held responsible under a constructive trust. Which of
the following statements is most accurate?
D. Under the second limb, more is required that under the first limb.
4. The High Court of Australia in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007]
HCA 22 had an opportunity to review their earlier decision in Consul Development Pty
Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373. This enabled the court to do which of
the following?
B. Revisit the same issues and endorse the decision in Consul Development Pty Ltd v DPC
Estates Pty Ltd (1975) 132 CLR 373.
5. De facto/domestic relationships are considered in which of the following matters?
D. Baumgartner v Baumgartner (1987) 164 CLR 137, Muschinski v Dodds (1985) 160 CLR
583, Green v Green (1989) 17 NSWLR 343 and Calverley v Green (1984) 155 CLR 242.
6. In Giumelli v Giumelli (1999) 196 CLR 101, Mr and Mrs Giumelli operated an orchard
in partnership. They encouraged their son Robert to work in the business without
receiving remuneration with the promise that he would receive an unspecified part of
the land. The agreement allowed Robert to build a house or subdivide the portion of
property. Robert’s first marriage broke down in 1981 and he later remarried. His
parents disapproved of his new wife and refused to transfer the land. The issue
involved the imposition of a constructive trust as a remedy based upon the doctrine
of estoppel.
Which of the following statements accurately describes how the matter was resolved?
A. The Supreme Court of Western Australia imposed a constructive trust over the entire
orchard, to secure the transfer of the promised land. On appeal before the High Court of
Australia, Gleeson CJ, McHugh, Gummow and Callinan JJ (with Kirby J in agreement)
upheld the finding of detriment in acting in reliance on the promise to transfer land. The court
considered that the imposition of a constructive trust was inappropriate since the partnership


lOMoARcPSD|17474563
was an ongoing business and other family members had made improvements to the land.
The court ordered payment of money to represent the value of the agreement and it was to
be a charge on the property until paid.
7. Selbourne LJ in Barnes v Addy (1874) LR 9 Ch App 244 noted that a third party may
become liable as if they were a trustee, in which of the following circumstances?
A. If a stranger acts as a trustee without authority, if a third party receives trust property with
the knowledge that it was held under a trust, or if a third party does not receive trust
property, but has assisted the trustee in breaching their fiduciary obligations.
8. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, the parties entered
into a joint venture agreement to purchase and develop a parcel of land. The local
council rejected two development applications as the land was too narrow for the
proposed building. The principal of Farah Constructions, Mr Elias, and his wife and
two daughters purchased adjoining properties. Mr Elias, who controlled Lesmint Pty
Ltd, wanted to purchase the narrow land from Say-Dee. It was in these circumstances
that a second limb Barnes v Addy situation arose.
Which of the following statements accurately describes how the court resolved the
matter?
A. In the High Court of Australia, Gleeson CJ, Gummow, Heydon, Callinan and Crennan JJ
endorsed the decision in Consul Development. Assistance in a dishonest and fraudulent
design on behalf of the trustee or fiduciary is essential. In a second limb Barnes v Addy
situation, a third party will be held responsible if they have:
• actual knowledge
• wilful shutting of one’s eyes to the obvious
• wilful and reckless failure to make enquiries that a reasonable person would make
or
• knowledge of the facts that would have indicated the circumstances to a reasonable
person.
10. Which of the following statements is accurate with respect to constructive trusts?
A. There are four types of constructive trusts:

• where equity gives effect to that which ought to be done.
• where property has been acquired under a transaction that is liable to be set aside in
equity.
• where a profit has been made improperly by a fiduciary.
• where a third party, with or without receipt of trust property, participates with the
requisite degree of knowledge in a breach of trust or other fiduciary duty.


lOMoARcPSD|17474563
CHAPTER 10
1. Which of the following statements most accurately explains the role of a trustee?
D. The trust instrument, statute and the court define the role of a trustee.
2. Trustees are fiduciaries. This means they must avoid any conflict of interest, and
any property that is acquired because of their position is held under a constructive
trust.
Which of the following statements is correct with respect to third parties becoming a
trustee/fiduciary?
B. There are certain circumstances whereby a third party may become effectively a
trustee and as a consequence a fiduciary.
3. Complete the sentence. A beneficiary may bring a trust to an end when…
A. they are a sole beneficiary, who is of age and is entitled to an absolute interest.
4. Who can be a trustee?
D. Any person who is capable of holding property, a statutory trustee company or the public
trustee/state trustee
5. Complete the sentence. Beneficiaries are entitled to receive information from

trustees…
A. when it is a trust document.
6. Which of the following statements is correct with regard to the source of a trustee’s
powers and responsibilities?
D. The trust instrument, the court, the relevant trustee legislation for the particular jurisdiction
and fiduciary obligations.
7. In Hardoon v Belilios [1901] AC 118, the registered holder of certain partly paid
Hong Kong bank shares sought indemnification upon winding up the monies he was
responsible for since he held the legal title. The beneficial interest in the shares was
held by the defendant. The issue before the court was whether beneficiaries had to
indemnify the trustees.
Which of the following statements most accurately describes the decision of the
court?
A. The trustee’s indemnity is not limited to trust assets. If funds are not sufficient then
trustees can seek indemnity against the beneficiaries themselves. Trustee indemnity is
available in rem and in personam.


lOMoARcPSD|17474563
8. The Supreme Court of Victoria in JW Broomhead (Vic) Pty Ltd (in liq.) v JW
Broomhead Pty Ltd [1985] VR 891 extended the principle from Hardoon v Belilios
[1901] AC 118 to apply to unit trusts.
B. Those unit trust holders who have not disowned the trust and who are sui juris (of age)
and not bankrupt or insolvent must indemnify the trustee.
9. A third party or stranger may be held responsible under a constructive trust in

which of the following circumstances?
D. In all of the above.
10. Which of the following statements most accurately summarises who can be a
trustee?
D. Both (a) and (b) above.


lOMoARcPSD|17474563
CHAPTER 11
1. Which of the following statements most accurately explains tracing?
C. Tracing is not a remedy, nor a cause of action.
2. Complete the sentence. A bona fide purchaser for value and without notice of the
prior interest…
A. brings tracing to an end.
3. Complete the sentence. Tracing may take place where there is …
C. a pre-existing fiduciary relationship or a proprietary equitable interest.
4. Complete the sentence. ‘Pari passu’ is…
D. a method of proportioning property according to the value of contributions when

undertaking tracing in equity.
5. Complete the sentence. ‘Money first in’…
D. is a principle derived from Clayton’s Case (1816) 1 MER 572 and modified by Re Hallett’s
Estate; Knatchbull v Hallett (1880) 13 Ch D 696.
6. The House of Lords in Re Diplock [1948] 1 Ch 465 considered the following events.
In 1936 a testator died and devised his residue estate to ‘such charitable institutions
or benevolent object or objects as his executors should in their absolute discretion
think fit’. Approximately £210,000 was distributed to almost 200 charitable institutions
over the next few years. The issue before the court was the ability to trace property
where it is in the hands of a third party. Which of the following statements is an
accurate description of the court’s decision?
A. The property could be traced into the hands of a charity because they were volunteers,
• if the property had not been mixed with other property.
• if a charity had used the funds to refurbish or extend a building, then tracing could not
occur.
• if a charity had used the funds to pay a creditor, then tracing could not continue.
• if the property was placed in a mixed fund, the rule in Clayton’s Case (1816) 1 MER
572 would operate so ‘money first deposited is assumed to be money first withdrawn’.
7. In Foskett v McKeown [2001] 1 AC 102 the English Court of Appeal considered

these events. Approximately £2.6 million was put forward in an express trust to
develop a number of properties in Spain. The funds were misappropriated and a
proportion was used to pay the life insurance premium of a Mr Murphy. The trustee
unfortunately subsequently committed suicide. The issue in question was that of


lOMoARcPSD|17474563
tracing into a mixed fund.

How did the court resolve the matter?
A. The English Court of Appeal held that the contributors were able to trace their property
but they were not entitled to a pro-rata of the insurance proceeds. On appeal before the
House of Lords, the majority comprising Lord Millet and Lord Browne-Wilkinson held that the
contributors were entitled to a claim as a proportionate share of the proceeds on the basis of
their contributions.
8. How do you apply the process of tracing?
B. Where tracing is available, apply Re Hallett’s Estate; Knatchbull v Hallett (1880) 13 Ch D

696 and the principles in Foskett v McKeown [2000] 3 All ER 97. If the ‘first in’ principle is
taken to its completion, it may be that the first beneficiary or proprietary equitable interest
holder recovers their property. Any subsequent beneficiary or proprietary equitable interest
holders would not recover any property because the fund has been exhausted. If the ‘pari
passu’ or proportionate method is used, each beneficiary or proprietary equitable interest
holder would be able to recover at least some of their property according to the nature of
their contribution.
9. Complete the sentence: ‘The High Court of Australia’s decision in Scott v Scott
(1963) 109 CLR 649 is significant’ It is ‘significant’ because
A. it is an authority for the principle that beneficiaries are entitled to a proportionate share of
profits if the asset that had been bought with their funds, as a breach of fiduciary obligations
by the trustee, had increased in value.
10. Equity is based upon the concept of ‘unconscionability’, that is to say…


lOMoARcPSD|17474563
CHAPTER 12
1. Which of the following statements most accurately explains equitable relief?
C. Equitable relief is both flexible and discretionary—first consider whether damages at

common law are adequate.
2. Complete the sentence. Injunctions, Mareva orders and Anton Piller orders are …
B. separate equitable remedies.
3. Complete the sentence. When damages in equity are awarded…
D. they may be substituted for or in addition to an order for specific performance or an

injunction.
4. Complete the sentence. Damages in equity are awarded…
B. to compensate.
5. Complete the sentence. A breach of fiduciary obligations may give rise to…
D. the imposition of a remedial constructive trust, an account of profits or damages in equity.
6. In Harris v Digital Pulse Pty Ltd [2003] 56 NSWLR 298, an employee who was a
fiduciary benefited from the position when he established himself as a competitor to
his employer. He was in breach of an express term in his contract and was dismissed.
The employer sought exemplary damages. The trial judge, Palmer J in the New South
Wales Supreme Court, ordered exemplary damages together with an account of
profits. The matter was then appealed. The considered in what circumstances
common law damages were available for a breach of fiduciary obligations.
Which of the following statements accurately reflects the views of the New South
Wales Court of Appeal?
A. Spigelman CJ and Heydon JA in the New South Wales Court of Appeal held that
exemplary damages are not available for equitable wrongs. They emphasised the historical
development of equity and noted that the Judicature Act only simplified procedure. It did not
create new legal principles, so the decision would be the same. Mason P, in dissent, came
to the view that the decision by Palmer J did not subvert any of equity’s general doctrines.
7. In Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1,

the landlord of a shopping centre sought to restrain a tenant, a supermarket, from
breaking a 35-year lease with several years remaining. The English Court of Appeal
had to determine if damages would be an appropriate remedy. How did the court
resolve the matter?
C. Rich LJ at 296 noted that damages would not be an appropriate remedy since it would:
not compensate the plaintiffs [the landlord] for the disappearance of the supermarket, or for
the effect of that on the other businesses in the shopping centre … who assumed obligations


lOMoARcPSD|17474563
under their leases in reliance on there being a supermarket in the shopping centre and who
will be adversely affected [and who] have no remedy against the defendants.
8. In Coulls v Bagot’s Trustee (1967) 119 CLR 460, a contract gave a construction
company the right to carry on a business on the property of Mr and Mrs Coulls.
Royalties were to be paid to Mr and Mrs Coulls as joint tenants. Note that the contract
was between Mr Coulls and the company. The matter came before the court when Mr
Coulls died, as to whether the company should pay his estate or Mrs Coulls since she
was the surviving joint tenant.
A. Since there had been no assignment of Mr Coulls’ interest to his wife. Mrs Coulls was not
privy to the contract and could not obtain relief. Barwick CJ and Windeyer J both considered
the rights of Mrs Coulls as a third party to compel payment under the contract. Windeyer J at
503–4 noted that a party who has contracted for the conferral of a benefit to a third party is
entitled to an order of specific performance compelling payment of that benefit, but the third
party has no rights of her own.
9. In Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55, the plaintiffs were
German manufacturers of frequency converters for use in computers. The defendants
were agents for the manufacturers and were located in the United Kingdom. The
plaintiffs claimed that the defendants were in secret communications with other
German manufacturers and that they were passing on confidential information. The
English Court of Appeal had to consider what was required in the circumstances for
Equity to provide relief.
Which of the following statements accurately describes the decision by the court?
B. Ormond LJ noted at 62 that there are four elements that must be satisfied. First, there
must be an extremely strong prima facie case; second, the likelihood of damage for the
applicant must be very strong; and third, there must be clear evidence that the material is in
the possession of the defendants and that there is a real possibility the information may be
destroyed. The final or fourth requirement is that an undertaking as to damages must be
made.
10. Complete the phrase: ‘Circumstances of inequality do not of themselves call for
the intervention of equity. It is…


Studocu Practice MCQ Combined

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Studocu Practice MCQ Combined

Uploaded by

Copyright:

Available Formats

lOMoARcPSD|17474563

Equity and trust mock exam

equity and trusts (University of Worcester)

Scan to open on Studocu

Studocu is not sponsored or endorsed by any college or university

EQUITY AND TRUSTS

TIME ALLOWED: ONE HOUR

Part A Multiple Choice Questions (MCQs) (10 marks).

You must attempt all questions.

For each MCQ, there are four suggested “answers” of

Part B Written Question (40 marks).

You must attempt all parts of this question.

This is an open book assessment.

69246701a5153887f80422f1f10c7616.docx 71 © The University of Law Limited

Downloaded by Simple Slatt (slattsimple@gmail.com)

PART A: MULTIPLE CHOICE QUESTIONS (10 MARKS)

Each of the five questions in Part 1 is worth two marks.

Which ONE of the following statements is CORRECT?

A. Zelda will have no interest in the paintings until she is 18.

C. Zelda’s interest is contingent on attaining 18.

69246701a5153887f80422f1f10c7616.docx 72 © The University of Law Limited

Downloaded by Simple Slatt (slattsimple@gmail.com)

James died recently. His will included the following provision:

‘I give £200,000 to my trustee to hold on trust to improve the health of

Which ONE of the following statements is CORRECT?

B. This trust is not a valid charitable trust because it is administratively

C. This trust is a valid non-charitable purpose trust.

Sajid’s will contains the following clause:

‘I give £300,000 to my trustee to hold on trust to provide scholarships

Which ONE of the following statements is CORRECT?

A. The trust is a valid charitable trust for the advancement of education.

B. The trust is not a valid charitable trust due to uncertainty of objects.

69246701a5153887f80422f1f10c7616.docx 73 © The University of Law Limited

Downloaded by Simple Slatt (slattsimple@gmail.com)

Which ONE of the following statements is CORRECT?

TOTAL PART 1: 10 MARKS

69246701a5153887f80422f1f10c7616.docx 74 © The University of Law Limited

Downloaded by Simple Slatt (slattsimple@gmail.com)

Critically evaluate whether the certainty of objects test for discretionary

Explain what will happen to the Bestco Ltd shares.

69246701a5153887f80422f1f10c7616.docx 75 © The University of Law Limited

Downloaded by Simple Slatt (slattsimple@gmail.com)

TOTAL PART 2: 40 MARKS

TOTAL FOR PAPER: 50 MARKS

69246701a5153887f80422f1f10c7616.docx 76 © The University of Law Limited

Downloaded by Simple Slatt (slattsimple@gmail.com)

Please read these facts.

Will of Frank Randall

THIS IS THE LAST WILL of me Frank Randall of 6, Jasmine Close, Sutton,

2. I give my house to my brother Joshua Randall.

4. I give £50,000 to my sister, Mary.

Signed by Frank Randall in our joint presence)

Assume valid execution.

69246701a5153887f80422f1f10c7616.docx 77 © The University of Law Limited

Downloaded by Simple Slatt (slattsimple@gmail.com)

Equity and Trusts MCQ 2 - MCQ with questions and answers

Equity and Trusts (University of Essex)

Scan to open on Studocu

Studocu is not sponsored or endorsed by any college or university

Equity and Trusts MCQ 2

Is the direction “£1,000,000 to be held on trust for the benefit of any

Is the direction “£300,000 for my wife to be disposed of as she thinks