Questions:
Part A
1. Consider the effect of all the following:
- A few months ago, Martha, an accomplished architect, wrote to her good friend Camilla to explain her wish to give her holiday home, Fawlty Towers, to her to hold on trust for Camilla’s two grandchildren, Erica and Samuel.
Several days after sending the letter, Martha visited one of her client’s building sites. Whilst inspecting the site, structural framework from part of the building collapsed; the accident caused Martha to suffer severe injuries, injuries which she died from the following day. Unfortunately, Martha never managed to convey Fawlty Towers to Camilla before her death.
Martha’s will appointed her brother, Andrew, as executor of her estate. However, it has come to light that sadly Andrew passed away on the day of Martha’s accident. The court has subsequently appointed Camilla to act as administratrix of Martha’s estate.
- Ravinder, an avid investor, recently bought 100 shares in Trust Me I’m A Lawyer Ltd. She planned to transfer those shares to her brother, Chetan, to hold on trust for Aruna, Ravinder’s niece. Aruna’s brother, Ishaan, found out about their auntie’s plan to give Aruna an interest in the company shares. Desperate to show off to his colleagues at work and make it look like he had great business acumen, Ishaan asked Aruna to transfer the shares to him. Aruna, taking pity on her brother, said she would transfer an interest only in return for £2,000. Ishaan, thinking it a fair deal, agreed. Several days later, Aruna phoned Chetan to ask for Ishaan to receive an interest in the shares.
- Earlier this year, to celebrate his 60th birthday, David organised a skydive. Prior to the skydive, his friend Keith claims that David said to him “I must be mad to do this. I shouldn’t be doing this at my age – or at any age! Should anything go wrong, I want you to have my house, Parks Priory.” Keith claims that David then gave him a set of keys to the house. Later on, during the skydive, David’s parachute became tangled, leading him to crash-land and suffer significant injuries; he died the next day. David’s will states that all his property is to go to his brother, Lee.
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2. In 2016, Wendy told her friend, Richard, she wished him to hold £250,000 for her lover, Trevor, with whom she was having an affair. The following year, Wendy executed her will which stated: “£250,000 to Richard for reasons which I will make known to him”. Wendy’s will stated that her residuary estate is to go to her sister, Sandra.
Several months later, Wendy wrote a letter to Richard to explain she and Trevor were no longer lovers and that she had consequently changed her mind about giving Trevor anything; she told Richard he was to now hold the money for her new lover, one whose identity was to be found in a small envelope attached to the letter. However, Wendy made it clear that Richard was not permitted to open that smaller envelope until after her death. A further disposition in Wendy’s will stated “£100,000 to Bill and Ben equally”. In 2018, Wendy contacted Bill and informed him that she wanted him and Ben to hold the money on secret trust for someone and that, though she had not yet decided who the beneficiary would be, she would let him know soon. Bill happily agreed to the arrangement.
In 2019, Wendy spoke to Ben and asked him to hold the £100,000 for the controversial political organisation, Stand Up for Freedom. Ben, a close friend of Wendy’s and possessing relatively modest political views, was shocked by her request to leave money to such an organisation. Earlier this year, Wendy died. After her death, the smaller envelope was opened and – much to the surprise of Richard – the intended beneficiary’s name was revealed as being Richard’s brother, Mark. Bill, however, never did find out the identity of the secret beneficiary before Wendy’s death, whilst Ben claims he can keep his share of the £100,000 for himself.
- Advise the parties on whether any secret trusts have been created; AND
- Would your answer be any different had the disposition in Wendy’s will, regarding Bill and Ben, stated “£100,000 to Bill and Ben”?
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3. Gerald is considering making the following dispositions in his will:
- To Philip and Saskia, I leave my property known as “Green Pastures” so that they shall preserve and maintain the property as a useful memorial to me;
- £300,000 I give to my best friend Aaron to care for my horse, Red Rum, and any of its offspring;
- My sports field “The Grove Pitch” to Bucks Amateur Football Club.
Gerald is a campaigner for wildlife conservation.
Bucks Amateur Football Club has 100 active members who pay a monthly membership fee of £15. The Club currently uses The Grove Pitch for their weekly training sessions and the occasional football match against other local teams.
Advise Gerald as to the validity of these dispositions. If any of the provisions are not valid, what changes would you recommend in the drafting/language to ensure that they are valid/effective?
- Answer both parts:
- “The law treats the first three charitable purposes (prevention and relief of poverty; advancement of education; advancement of religion) equally with regard to the public benefit requirement.” Critically discuss.
AND
- In light of the exclusively charitable requirement, discuss the extent to which a non-charitable purpose may be permissible.
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PART B
- “The justification underlying all resulting trusts is that of giving effect to the intention of the parties.” Critically discuss.
- Margaret and Cynthia are the trustees of the Hadrington Trust under which Sophie, Naomi, and Freya, who are all minors, have equal interests in the Trust fund after the death of their mother Anna, who has a life interest. Margaret, because of her legal training, has taken responsibility for running the Trust; Cynthia has been content for her to do so, having no involvement beyond signing documents when required to do so by Margaret. Margaret, under pressure from Anna to increase her income from the Trust, approached the Trust accountant, Roger, to recommend a suitable investment portfolio. Roger, purporting to act on behalf of the Trust, invested 50 per cent of the Trust fund in high return stocks and a further 35 per cent in interests in land in the UK and abroad. As a result of the COVID-19 pandemic, the value of the stocks plummeted, which Roger managed to offset in part by selling the stocks and then reinvesting the proceeds in safe investment trusts. Margaret, in response to Sophie’s wishes, invested the remaining 15 per cent of the funds in socially responsible businesses of which she felt Sophie would approve. They have produced poor income returns.
Advise Sophie, Naomi, and Freya on any rights and remedies they may have.
- “Following FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, the Supreme Court has now ended the long-standing debate as to the appropriate remedy to be awarded where fiduciaries receive unauthorised profits in breach of duty.”
Critically discuss.
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- Yannick died last year and appointed his friend Pamela as his executrix. Yannick never married nor had any immediate family, so he left his entire estate to his next-door neighbour, George. When Yannick died his estate was worth £400,000. Pamela did not fully appreciate the importance of being executrix of Yannick’s estate, thinking it was merely an honorary role given to her because of their friendship, and that any money she received from his estate was for her to use as she wished.
Pamela died herself last month, and George has recently discovered he is beneficiary under Yannick’s will. Before Pamela died, she purchased a painting by the up-and-coming Buckingham artist, Wallsy, for £20,000 for the Buckingham Art Collectors’ Club. The painting is now worth £100,000. Pamela gambled £100,000 at the Big Money Casino Bicester, losing all the £100,000 on single night. Pamela’s niece, Jessica, recently told Pamela of her plans to move near to Buckingham. With this news in mind, Pamela transferred £200,000 to her niece Jessica as a deposit for a house in Towcester. Jessica put a further £300,000 of her own money towards the purchase. Unfortunately, when Jessica moved into the house, the central-heating system immediately broke down, requiring her to put a further £25,000 of her own money towards the cost of repairing it. The house is now worth £600,000. Three months before she died, Pamela gave her longsuffering butler, Harrison, £80,000. He was somewhat surprised by Pamela’s generosity and he paid this into his current account which was already £500 in credit. He immediately spent £40,000 on a three-week once-in-a-lifetime holiday in the Seychelles. When he returned from the holiday, he bought a lottery ticket for the first time and won £80,000 as a result. Advise George whether he can make any claims against the Buckingham Art Collectors’ Club, Big Money Casino Bicester, Jessica, and Harrison in light of the misapplied funds. -END-
