LEEDS METROPOLITAN UNIVERSITY FACULTY OF BUSINESS & LAW

Transcription

1 LEEDS METROPOLITAN UNIVERSITY FACULTY OF BUSINESS & LAW RE-SIT EXAMINATION PAPER MODULE TITLE: Foundations of Equity & Trusts CRN: 446, 9997 TITLE OF ASSESSMENT: COURSE(S): Re-Sit Examination Graduate Diploma in Law, Postgraduate Diploma in Law LEVEL: 6, 7 DATE OF EXAMINATION: Monday, 25 th July, 2011 START TIME: 14:00 FINISH TIME: 16:15 READING TIME: DURATION: EXAMINER(S): 15 minutes 2 hours, 15 minutes Bridget Walker, Judith Dillingham Notes for candidates: The examination will comprise four questions which will be broadly based on issues raised by the scenario which is provided in advance of the examination. Candidates are required to select and answer three of the questions. Permitted Materials: You are permitted to have with you in the examination an unannotated copy of Blackstone s Property Statutes only. This examination forms 75% of the overall assessment. Page 1 of 5

2 Foundations of Equity & Trusts (PG Diploma) Re-Sit Examination Scenario You are a trainee solicitor with the firm Toddy and Alexander LLP (which you may refer to as the firm ). Last week Bernard Tiga and Charlotte Amozi, who have been appointed executors and trustees of the will of their late friend Desdomona Smith, instructed your firm to apply for probate of the will on their behalf. They have also provided you with details of a family trust ( the family trust ) of which Desdomona was the sole trustee. They understand that, after they prove the will, they will not only be responsible for administering the will but also the family trust. They have decided that they would like to appoint an additional trustee to assist them in running the family trust as soon as they can. They have made an appointment to come back to discuss the terms of the will and the circumstances surrounding the family trust so that they could be made fully aware of the situation and of their obligations. The will is reproduced below. The details of the family trust which Bernard and Charlotte have discovered are these; The trust was established by the will of the late Edmund Smith who was Desdomona s husband. He died in Desdomona, as well as being the sole trustee, was the life tenant of the family trust. The interest in remainder was to be divided between Edmund s nieces Frances and Georgina subject to them attaining the age of 25. Frances is currently aged 18 and Georgina is aged 16. The assets included Castleview, a large holiday house in Northumbria, and its contents which included a significant amount of valuable furniture and some paintings. There was also 500,000 in cash assets. Desdomona had invested the cash assets in three accounts with different banks at an interest rate of 1.2% p.a. and had mandated all the interest directly to her own bank account. At the moment Desdomona s son Hugh is living in the house. It is known that Desdomona had stripped the house of its paintings and replaced them with prints. She gave half of the paintings to her son Ian and sold the other half, keeping the proceeds of sale of 25,000 for herself. Bernard and Charlotte were told by neighbours that a large furniture van marked Ashlands Auction House was seen yesterday at Castleview and that Hugh had been seen helping the driver load furniture into it. This is the Last Will and Testament of me Desdomona Smith of Bagend, The High Street, Little Hammerton, North Yorkshire 1. I revoke all former wills and testamentary dispositions. 2. I appoint as the executors and trustees of this will Bernard Tiga of 10, Crabtree Vale, Harlowgate, North Yorkshire and Charlotte Amozi of 10 Western Edge View, Moorsey, West Yorkshire (hereinafter referred to as my Trustees ). 3. I give 10,000 to my Trustees to ensure that my cat Persephone is well looked after for her lifetime. Page 2 of 5

3 4. I give 100,000 to my Trustees to pay for the erection of a memorial to myself in Little Hammerton. The memorial is to be a ten foot high bronze of my favourite Kune-kune Andromeda, with a simple plaque on it saying that it is in memory of me. 5. I give 80,000 to the Little Hammerton Orienteering Association for the purchase, insurance and running costs of a vehicle to take members and supporters to events. 6. I give 50,000 to the Little Hammerton Riding Association for the purpose creating a new cross country course. 7. I give 100,000 to my Trustees on trust to divide the money as they see fit between all of my fellow members of the Little Hammerton Reading Guild. 8. I give 50,000 to my Trustees to be divided equally amongst my relatives. 9. I give 500,000 to my Trustees so that they can use it to establish a charity to provide outings for the ex soldiers of Little Hammerton. 10. I give 50,000 to North Yorkshire Environment Awareness charity number and 50,000 to the Daleview Farm Charity for people with learning difficulties charity number I give the residue of my estate to my Trustees to pay funeral expenses, debts and executorship expenses and to divide what remains equally between themselves. The will is then dated and properly executed and attested. Page 3 of 5

4 Re-Sit Examination Questions 1. Advise the executors with regard to clauses 4 and 6 of Desdomona Smith s will. Your advice should make reference to decided cases and should deal with both relevant legal and relevant practical issues. 2. You are told that the charity referred to as Daleview Farm in clause 10 of Desdomona Smith s will cease to exist six months before her death. Advise the trustees in relation to this. (40%) Explain the requirements of law and principle which must be satisfied in order to establish a new charity. You should explain whether, in your opinion, clause 9 could be effective in establishing a new charity. (60%) 3. Consider whether any cause of action might arise in relation to Desdemona s previous investment of cash assets of the family trust. In addition, advise the trustees as to their duties and responsibilities in relation to future investment of the family trust fund. 4. Hugh has now left Castleview but an inspection has shown the property to be in a very poor state of repair, such that insurance on the property has been refused. The family trust does not have sufficient funds to pay for the repairs and so has put the property on the market. The asking price of 500,000 has not been offered. The nearest offer was of 395,000. Bernard has recently inherited some money and has said that he will pay the full asking price for Castleview. Charlotte is particularly pleased about this as she has been worried that, being unable to insure the premises, the trustees could find themselves liable for injury suffered by any trespassers. With reference to decided cases explain the nature of the fiduciary duties which bind trustees and advise Bernard and Charlotte as to the proposed sale of Castleview to Bernard (You are not required to discuss the potential liability of the trustees under the Occupiers Liability Act of 1984). Page 4 of 5

5 Page 5 of 5 This page left intentionally blank.