Equity And Trusts Assignment

Assessment task details and instructions

You are required to answer TWO questions in total. You must answer ONE question from Section A and ONE question from Section B.

Your answers must be fully researched and referenced as per OSCOLA; help and guidance is available via the following link: https://www.salford.ac.uk/skills-for-learning/home/using-and referencing-information/referencing

Section A:

1. Advise and explain if the following dispositions are valid. If they are not valid, you must explain what will happen to the property.

Kafeel owns a house in Leeds. He telephones Caroline and asks if she will hold the house on trust for Jamila. Caroline agrees and so Kafeel executes a transfer deed and sends it, together with the necessary land registry forms, to Caroline. He follows up the conversation with an email which states:

‘Dear Caroline. As discussed earlier, I do not need the Leeds house anymore, so I would like you to hold it on trust for Jamila. Yours, Kafeel.’

Faisal is currently holding 100,000 shares in Glazerite Ltd for Kafeel. Kafeel telephones Faisal and tells him to hold 50,000 shares on trust for Samira and to transfer another 50,000 shares to Chloe. Faisal fills in a stock transfer form transferring 50,000 shares to Chloe. He intends to look for the share certificates later and so he puts the form in a drawer but forgets all about it.

The next day, Kafeel slips and hits his head. He is rushed to hospital, where he is visited by Daria. Kafeel says to Daria: ‘I don’t have long.

Take my BMW. The keys are in my coat pocket, over there.’ At this point, Kafeel loses consciousness. Daria is escorted out of the room by a nurse before she can look for the car keys. Kafeel dies shortly afterwards.

Kafeel’s validly executed will appoints Manisha as his executor. It directs Manisha to allow any resident of Blackpool, at any time within a year following his death, to choose a vinyl album from Kafeel’s collection. The will leaves the residue of Kafeel’s estate to a registered charity.

2. Advise Sabrina on the following:

1. Do provisions a) to c) of her will create enforceable trusts? For each provision, consider any necessary drafting changes you would recommend to Sabrina to make it more likely that it will be enforceable.
2. Has she declared an enforceable trust over Greenacre in favour of Thomas? If not, what needs to be done to make it enforceable?
   Sabrina is a wealthy lady who lives in the village of Shrewton. Many of the residents of Shrewton are employed by Shrewton Milliners, a company based in the village which produces and sells hand-made hats.
   Sabrina’s solicitor has advised her to make a will; Sabrina has decided to draft the will herself. It currently contains the following provisions:

• £10,000 to care for my beloved parrot Goldbridge for the rest of his life;
• £50,000 to Father Hunting of the L Street Church in Shrewton, for the saying of private masses for my soul for as long as the law allows and to maintain the plaque attached to the wall of the church which commemorates my family;
• My land in Shrewton known as ‘Vole Valley’ to the directors of Shrewton Milliners, for use as an outdoor recreation site by the employees of Shrewton Milliners; and
• My residue to my sister, Cassie.
• br> After drafting her will, Sabrina decides to dispose of ‘Greenacre’, another piece of land which she owns. She telephones her brother Thomas and tells him that she is holding Greenacre on trust for him.

  Section B:

  1. Matilda appointed her ex-husband Dawson as trustee of her testamentary trust. Advise Syed and Nellie as to their claims in equity.

  Matilda died in January 2022, leaving her estate worth £200,000 on testamentary trust for her partner, Syed. Matilda does not leave anything for two of her children, Lauren and Conrad.

  Dawson has never liked Syed and believes that this is all very unfair on Lauren and Conrad.

  On 1 February, Dawson withdrew £120,000 from Matilda’s estate and deposited it into his current bank account (‘the account’), which already contained £25,000 of his own money.

  On 3 February, Dawson transferred £50,000 from the account to Conrad. Conrad had previously been told that Matilda would give everything to Syed and Nellie and so was surprised by this. Conrad decided not to ask any questions and simply accepted the money. Conrad used £10,000 on a big night out. He then used the remaining £40,000 to discharge his mortgage.

  On 5 February, Dawson transferred £50,000 from the account to Lauren. Lauren knew nothing of Matilda’s plans to leave her estate to Syed and therefore accepted the money without question. Lauren decided to donate the money to a local charity. The charity used the money to pay utility bills and make improvements to their buildings.

  On 15 February, Dawson asked his friend Jennifer for advice about a good investment. When she questioned him about the source of the money, Dawson mumbled an excuse that Jennifer found implausible. Nevertheless, she advised him to buy a painting, so Dawson used £15,000 from the account to buy one. Unfortunately, it is now only worth £5,000.

  Dawson is also the trustee of an inter vivos trust, set up by Matilda, to benefit her youngest (and favourite) daughter, Nellie.

  On 5 March, Dawson withdrew £10,000 from Nellie’s trust fund and put the money into the account. The following week, Dawson decided to invest £20,000 in shares in a company that have now doubled in value.

  On 27 March, Dawson used the remaining money in his account to pay off his credit card bills. The following day his salary was paid into his account.

  Last month, Dawson was declared bankrupt.

  2. Ben and Jordan are trustees of a family trust. Ben is the family solicitor and Jordan is a close family friend. Until last year the trust fund amounted to £500,000 which was held in a savings account and producing an interest rate of 3% per annum. The trust fund is held for Cansu, the settlor’s widow, for life with the remainder to his adult children Paolo and Ferran equally. Advise Ben and Jordan of any liability they may have, together with relevant defences.

  In February, the trustees decided that it would be a good idea to invest part of the trust fund in shares and approached an independent financial adviser, Luca, for advice. Luca advised them about a company with good prospects and the trustees invested £200,000 in shares. Luca, who is a business contact of Ben, paid Ben a commission of £2,000 for introducing this business to him. Ben is a keen collector of retro technology and spent the money on a rare Apple II computer. This is currently worth £5,000. Unfortunately, the shares have not done well and the shareholding is currently worth £150,000.

  Cansu is very fond of holidays in Turkey. In March she suggested to Ben and Jordan that as property prices in Turkey were low, she would like them to spend some of the trust fund on a holiday home which could be rented out when Cansu was not using it. Cansu chose an apartment that was suitable for her needs and Ben and Jordan spent £100,000 of the trust fund on it. Unfortunately, property prices then plummeted, and the apartment is currently worth 85,000. In addition, bookings and income have been disappointing.

  Jordan runs a small arthouse cinema, which was in need of renovation. In April he decided to borrow £50,000 from the trust fund on the basis that he would pay 7% interest on the loan; banks were charging an average of 12% on similar loans. He has now repaid the £50,000 to the trust together with the interest. Since the refurbishment, the restaurant has featured in the local press as a result of which Christmas bookings and profits have dramatically increased.

  The remaining £150,000 is still held in the savings account. The bank has just advised Ben and Jordan that the interest rate payable on the account is to be reduced to 0.1%.

  Knowledge and Understanding

  Assessed intended learning outcomes

  On successful completion of this assessment, you will be able to:

  1. Critically review encounters with principles of equity and trusts in earlier modules, and in particular, to reflect upon trusts of land and their relationship to classical rules of equity and trusts;
  2. Demonstrate a detailed knowledge and understanding of the law of Equity and Trusts;
  3. Use and apply appropriately the complex terminology of the subject in a range of contexts;
  4. Recognise and justify the occurrence of equitable doctrines and remedies throughout the legal system;
  5. Apply the principles of the Law of Trusts to a range of current and significant transactions, and recognise the significance and limitations of such applications;

  Practical, Professional or Subject Specific Skills

  Develop further competence in the use of a range of legal (and sometimes non-legal) research sources, in both paper and electronic format;

  1. Develop further independent learning skills;
  2. Marshal facts and analyse legal concepts across traditional subject boundaries;
  3. Propose solutions to complex problems by the application of equitable principles.

  Module Aims

  1. To examine the main principles of Equity and Trusts law in the English legal system;
  2. To explore the process whereby equitable rights and interests are created and to critically evaluate the way the law regulates the relationship between trustees and beneficiaries;
  3. To review the law’s strengths and weaknesses in the light of recent, current and proposed reforms.

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