Equity & Trusts - 2024 Paper 2

Kate, a successful artist, wishes to make provision for her family. She writes a letter to her brother Leo stating: "I want you to look after my painting collection, worth around £300,000, and distribute the paintings to whichever of my children you think most deserves them." Kate also transfers £100,000 to her accountant Maria, telling her verbally: "Hold this for the purposes I have communicated to you previously." Maria recalls a conversation six months earlier where Kate said she wanted the money used for her children's education. Kate later tells her friend Nora: "I am confident you will use the £50,000 I am giving you to support local artists." Advise on the validity of each arrangement.

The constructive trust in English law serves multiple and sometimes contradictory functions. Critically evaluate the role of constructive trusts in the law of equity, considering their institutional and remedial forms, and their application in cases of unconscionability, common intention, and fraud.

Oliver is the trustee of a family trust holding a portfolio of investments worth £1.5 million. The trust fund includes shares in Phoenix Ltd. Oliver learns through his role as trustee that Phoenix Ltd is about to be acquired at a premium. He uses his personal funds to buy additional Phoenix shares and makes a profit of £200,000. He also arranges for his wife Patricia to be appointed as the trust's financial adviser, for which she receives fees of £30,000 per year. Oliver resigns as trustee and is replaced by Quinn. Quinn discovers Oliver's share dealing and Patricia's appointment. Advise Quinn on the claims that can be brought against Oliver and Patricia.

Non-charitable purpose trusts are generally void, yet the law recognises certain exceptions. Critically evaluate the rule against purpose trusts and its exceptions, and assess whether the rule serves a useful function or should be abolished.

Roger, a trustee, misappropriates £100,000 from the trust fund. He deposits £60,000 in his personal bank account (which previously contained £40,000 of his own money) and uses £40,000 to purchase a painting. Roger then withdraws £50,000 from the bank account and loses it gambling. The painting has increased in value to £80,000. Roger also transfers £20,000 from the bank account to his girlfriend Sophie as a birthday gift. Sophie uses the money to buy a car worth £25,000. The trust beneficiaries, Tom and Una, seek to recover the trust money. Advise Tom and Una on tracing and the proprietary remedies available.