LAW2041-Equity & Trusts - Law Assignment Help

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Equity & Trusts

1 “[T]he lack of clarity of the law is a major weakness of third-party personal liability.”
Virgo, G. “The principles of equity and trusts” (OUP, 4th Ed, 2020) p. 625 Critically discuss whether the law on third party liability lacks clarity.

2 By his will, Almo appointed Brye and Coril as trustees of a trust for the benefit of his son, Danko, who is aged 15. Brye owns and runs a bookshop, while Coril is an engineer. The trust property consists of 20% of the shares in eVisual Ltd, a private company. The trust instrument provides that the shares should not be sold but should be given to Danko when he is 18.

Brye is approached by Filton, another shareholder in eVisual Ltd, who wants to buy the trust’s shares. Brye asks Coril for her opinion, but Coril says that she is happy to let Brye do what she thinks is best for the trust. Brye decides to accept Filton’s offer of £500,000 for all the trust’s shares.

Brye makes the following decisions about the money from the sale of the shares:

• She borrows £200,000 to open a new branch of her bookshop;
• She buys a share in a racehorse, Himalayan Salt, for £200,000.
• Danko then asks Brye if the trust could help a friend of his who is starting a new design business, Grandiose Designs. Brye agrees to invest £100,000 in the business.
• The new branch of Brye’s bookshop does very well, and she pays back the £200,000 to the trust fund.
• Grandiose Designs does not do well, and it is now insolvent.
• The racehorse, Himalayan Salt, is killed in an unfortunate accident.
• Filton and the other shareholders in eVisual Ltd decide to sell the company to a competitor, InterVision Ltd for £4,800,000, meaning that the shares that Filton bought from the trust are valued at £960,000.
• Advise Danko of any remedies that he might have against Brye and Coril.

3 Following the retirement of one trustee and the death of another, Lamo is the sole remaining trustee of the Mander Family Trust, which has a total capital of about £200,000. Lamo decided to pay himself a fee of £10,000 for his hard work in managing the trust on his own. This is in breach of the terms of the trust. He paid the money into his own account, which previously held £15,000 of his own money. 

• In January 2021, Lamo withdrew £4,000 from his account to pay for a trip to Bali; and used £6,000 to pay off the outstanding amount of the loan used to buy his car in 2019.
• In March 2021, Lamo bought shares in MegaCorp plc for £10,000, using money from his account.
• In June 2021, Lamo gave his son, Nul, £3,000 from his account. Nul used the £3,000, with £6,000 of his own money, to buy a motorcycle.
• In August 2021, Lamo received a lottery scratch card from a friend as a birthday present and he won £2,000 which he deposited in his account.
• Lamo used £3,000 from his account to purchase an antique vase.
• Lamo has recently been declared bankrupt. The shares in MegaCorp plc are worth £5,000 and the antique vase has been valued at £12,000.
• Advise the beneficiaries of the Mander Family Trust as to any proprietary claims that they can make. You should not consider personal claims.

• 4 ‘Like a constructive trust, a resulting trust arises by operation of law, though unlike a constructive trust it gives effect to intention. But it arises whether or not the transferor intended to retain a beneficial interest — he almost always does not — since it responds to the absence of any intention on his part to pass a beneficial interest to the recipient.’
• Air Jamaica Ltd v Charlton [1999] 1 WLR 1399, 1412 (Lord Millett).
• Critically discuss Lord Millett’s statement, with reference to decided cases and academic opinion.

5 Answer part a) or part b)

EITHER

a) In 1990, a group of people who had met at university set up The Theatre Organ Appreciation Society (‘the Society’), a non-charitable unincorporated association to ‘promote awareness and appreciation of theatre organ music’. Initially, the club was very successful, with over 200 members. The society fell into decline over the years, and currently has three members.
The Society’s assets include a bank account, which has a credit balance of £220,000: this consists of money raised from members’ subscriptions, donations and money raised from events such as organ recitals, and money from raffles. It also includes a bequest of £50,000, received in 2019 from a former member ‘for the purpose of acquiring and restoring a theatre organ and placing it in a permanent home’. However, the Society has not done anything with this money.

The remaining members have asked the treasurer to transfer the Society’s funds into their personal bank accounts and to dissolve the Society.
 

Advise the treasurer.

OR

b) ‘If a valid gift may be made to an unincorporated body as a simple accretion to the funds which are the subject matter of the contract which the members have made inter se I do not really see why such a gift, which specifies a purpose which is within the powers of the association and of which the members of the association are the beneficiaries, should fail.’

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