Download PGDL Equity and Trusts Exam 2025: Questions and Answers and more Exams Insurance Economics in PDF only on Docsity!
PGDL EQUITY AND TRUSTS EXAM 2025 | ALL QUESTIONS
AND CORRECT ANSWERS (GRADED A+) | VERIFIED
ANSWERS | LATEST EXAM | JUST RELEASED
Can you create a trust over a specific number of items from a larger quantity without specifying? ---------CORRECT ANSWER----------------- ONLY if they are intangible fungible items like shares (Re London Wine Company; Re Goldcorp; Hunter and Moss; Re Lehman Brothers) What is beneficial entitlement requirement? ---------CORRECT ANSWER---- -------------Must be possible to ascertain nature and extent of beneficiary interest in trust property Consider a trust under which trustees are to hold two cars on trust for A and B, with C determining which car should be held for A and B. Initially no problem as mechanism for beneficial entitlement. What happens if C dies without making a selection? ---------CORRECT ANSWER-----------------Trust will fail and cars held on resulting trust for settlors estate (Boyce v Boyce
Will a trust over X amount which requires trustee to pay "reasonable income" to beneficiary satisfy beneficial entitlement requirement? --------- CORRECT ANSWER-----------------Suprisingly, yes (Re Golay's Trust 1965 held reasonable income to be an "objective yardstick") What happens if trust fails for uncertainty of subject matter? --------- CORRECT ANSWER-----------------Goes on automatic resulting trust to settlor/estate
Test for certainty of objects for a fixed trust where distribution between class ---------CORRECT ANSWER-----------------Complete list test (IRC v Broadway Cottages Trust 1955) Does a fixed trust need evidential and conceptual clarity for its objects? ----- ----CORRECT ANSWER-----------------Yes What is the rule in Saunders v Vautier? ---------CORRECT ANSWER--------- --------A sole adult beneficiary of sound mind with a vested interest in trust property is entitled to direct the trustee to transfer legal title to them (since extended to include multiple beneficiaries, whether vested or contingent, who together are all potential beneficiaries; OR to sole beneficiary where interest is severable) What is test for certainty of objects in a discretionary trust? --------- CORRECT ANSWER-----------------The is/is not test (aka postulant test, from McPhail v Doulton 1971) Do discretionary trusts need conceptual certainty? ---------CORRECT ANSWER-----------------Yes (so employees of company and children of individual are okay, BUT friends not okay) Are "relatives of an individual" conceptually certain? ---------CORRECT ANSWER-----------------Yes (per Re Baden's No.2, although decision on its meaning was not found unanimously). Do discretionary trusts need evidential clarity? ---------CORRECT ANSWER-----------------Unclear; CoA in Re Baden unable to reach
negligible in number and what distinguishes them from other members of community must not be relationship to individual) What are Endacott exceptions ---------CORRECT ANSWER----------------- trusts for- maintenance of particular animal, private monuments/graves and saying of private masses How are non-charitable purpose trusts enforced ---------CORRECT ANSWER-----------------Pettingall order Are non-charitable purpose trusts technically enforceable? --------- CORRECT ANSWER-----------------No Where is first place to look for trustee duties ---------CORRECT ANSWER--- --------------trust instrument Where is statutory duty of care ---------CORRECT ANSWER-----------------s TA 2000 What is statutory duty of care ---------CORRECT ANSWER-----------------to exercise "such care and skill as is reasonable in circumstances" Statutory duty of care professional trustees ---------CORRECT ANSWER---- -------------s1(1)(b) says it is higher for professional trustees as s1(1)(a) allows specialist skill/experience to be taken into account
What governs the application of the statutory duty of care --------- CORRECT ANSWER-----------------Schedule 1 TA 2000 Where are standard investment criteria found ---------CORRECT ANSWER- ----------------s4 TA 2000 What are standard investment criteria that need to be considered when exercising power of investment, howsoever conferred ---------CORRECT ANSWER-----------------Suitability under s4(3)(a) and (general and specific) and diversification under s4(3)(b) (think of modern portfolio theory) What case discusses the suitability etc of investments in relation to s4 TA 2000 standard investment criteria ---------CORRECT ANSWER----------------- Cowan v Scargill What statutory provision governs the duty to take advice ---------CORRECT ANSWER-----------------s5 TA 2000 What section defines proper advice ---------CORRECT ANSWER-------------- ---s5(4) TA 2000 as a "person who is reasonably believed by the trustee to be qualified to give it" What is exception to take proper advice ---------CORRECT ANSWER--------- --------s5(3) if trustee reasonably believes not needed
What are sub-sets of the no conflict rule ---------CORRECT ANSWER-------- ---------Self-dealing and fair-dealing What case gave rise to terms self-dealing and fair-dealing --------- CORRECT ANSWER-----------------Tito v Waddell No.2 1977 what is consequence if self-dealing ---------CORRECT ANSWER--------------- --transaction voidable How might self-dealing be okay? ---------CORRECT ANSWER----------------- If can demonstrate that transaction conducted fairly What is exemption/exclusion clause defence too? ---------CORRECT ANSWER-----------------Any sort of breach other than a fraudulent one (Armitage v Nurse 1998) If there is no exemption clause what might trustees seek to rely on to avoid liability for a breach? ---------CORRECT ANSWER-----------------s61 TA 1925 which lets court excuse trustee if think "acted honestly reasonably and ought fairly to be excused for the breach of trust" (NOT used lightly) What is limitation for breach of trust? ---------CORRECT ANSWER------------ -----6 years from breach, although if interest not yet vested in possession clock only starts to run from moment it does and it DOES NOT apply to fraudulent breaches
What provisions deals with limitation for breach of trust? ---------CORRECT ANSWER-----------------s21(1)(a) Limitation Act 1980 What provision says fully informed consent of adult beneficiaries can excuse liability for breach? ---------CORRECT ANSWER-----------------s36(2) Limitation Act 1980 What cases govern tracing in wrongful mixtures? ---------CORRECT ANSWER-----------------Hallett, Oatway and Shalson (cherry picking) In wrongful mixtures when is cherry picking not available? --------- CORRECT ANSWER-----------------When competing with other secured creditors, in which case the basic rule applies (can attribute dissipations to trustee but cannot cherry-pick) Where innocent mixture and multiple assets not in current account how are withdrawals attributed? ---------CORRECT ANSWER-----------------Rateably to contributors (Diplock) Where innocent mixture in bank account what is preferred method, second choice and least preferred ---------CORRECT ANSWER-----------------Rolling Charge, pari passu ex post facto and first in first out from Clayton's Case What provision contains the general power of investment? (can be excluded) ---------CORRECT ANSWER-----------------s3 TA 2000
express a hope or desire, while imperative words create a binding obligation. How is the meaning of words in a written document determined when creating an express trust? ---------CORRECT ANSWER-----------------By natural and ordinary meaning, relevant contextual features, facts known to or assumed by authors, common sense, and implied terms in formal documents. Is the characterization of something as a trust in a formal document conclusive? ---------CORRECT ANSWER-----------------No, it is not (Modelboard v Outer Box Ltd; Don King v Warren) Lord Millet quote from Twinsectra v Yardley about intention --------- CORRECT ANSWER-----------------"a settlor must, of course, possess the necessary intention to create a trust, but his subjective intentions are irrelevant. If he enters into an agreement which have the effect o creating a trust, it is not necessary that he should appreciate that they do so: it is sufficient that he intends to enter into them". Can implied terms be taken into account in documents when looking at intention for express trusts? ---------CORRECT ANSWER-----------------YEs (Lehman Brothers) Is use of word trust determinative of whether there is a trust? --------- CORRECT ANSWER-----------------No, nature of relationship is determined by substantive rights NOT label (Re Kayford)
Cases on segregation of assets showing intention to create trust --------- CORRECT ANSWER-----------------Re Kayford; Mac-Jordan Construction v Brookmont Erostin; Lyell v Kennedy (Earl of Shelbourne said seperate account "indicative of some sort of trust) In which case was freedom to use sums credited to customer account fatal to certainty of intention for express trust? ---------CORRECT ANSWER------- ----------Customs and Excise Commissioners v Richmond Theatre Management Which case shows that people do not even need to know what a trust is to intend to create one? ---------CORRECT ANSWER-----------------Paul v Constance (words "this money is as much yours as mine" enough) Cases where treating sole bank account as joint was indicative of intention to create trust? ---------CORRECT ANSWER-----------------Paul v Constance; Henry v Hammond (person "bound to keep money separate" is "a trustee of the money" per Channell J) What is a Quistclose trust? ---------CORRECT ANSWER-----------------Trust combining a debt and a trust for a specific purpose (commonly in debtor- creditor relationship, eg Foley v Hill) Lord Mustill quote on certainty of subject matter from Re Goldcorp Exchange Ltd 1995 ---------CORRECT ANSWER-----------------"It is impossible to have a title to a property when nobody knows to which property the title relates" (confirmed in Westdeutsche Landesbank)
Where is rule against remoteness of vesting from ---------CORRECT ANSWER-----------------5(1) Perpetuities and Accumulations Act 2009 What is the 'wait and see rule' ---------CORRECT ANSWER----------------- means trust can exist until becomes apparent that interest cannot vest in perpetuity period (ONLY APPLIES TO STATUTORY PERIOD, so thus not to non-charitable purpose trusts) to what type of trust does rule against remoteness of vesting not apply ------ ---CORRECT ANSWER-----------------non-charitable purpose trusts What is rule against inalienability? ---------CORRECT ANSWER----------------
- Rule that assets cannot be tied up for longer than common law perperuity period of a life + 21 years (can be extended by reference to another life eg Royal Lives Clause but NO WAIT AND SEE RULE) Where do we need to consider rule against inalienability? --------- CORRECT ANSWER-----------------non-charitable purpose trusts How to constitute testamentary trusts? ---------CORRECT ANSWER---------- -------Constitution happens via will How to transfer land for an inter-vivos trust? ---------CORRECT ANSWER--- --------------transfer made by deed per s52(1) LPA 1925 and registered per s27 LRA 2002 (title passes on registration)
How to transfer shares for an inter-vivos trust? ---------CORRECT ANSWER-----------------Sign stock transfer form and send to company (title passes when transferee registered in internal register of members) How to transfer choses in action for an inter-vivos trust? ---------CORRECT ANSWER-----------------Either Deed of gift OR delivery of chattel with evidence of intention to transfer it (Re Cole 1964) How to transfer cheques for an inter-vivos trust? ---------CORRECT ANSWER-----------------Endorsed by transferor by signing name on back (per Bills of Exchange Act 1882) Basic rule around imperfect constitution ---------CORRECT ANSWER--------- --------"equity will not perfect an imperfect gift" (Milroy v Lord 1862, applied in Jones v Lock for instance where cheque not endorsed) What does Virgo textbook say about imperfect constitution --------- CORRECT ANSWER-----------------'Although the principles that Equity will not assist a volunteer and will not perfect an imperfect gift are fundamental, Equity recognises a further qualifying principle, namely that 'Equity will not strive officiously to defeat a gift'. What is principle in Re Rose about imperfect constitution? --------- CORRECT ANSWER-----------------transfer effective in equity once transferor done "everything in his power" (here applied to shares, extended in Mascall v Mascall)
What provision contains formalities relating to trust of land? --------- CORRECT ANSWER-----------------s53(1)(b) LPA 1925 What does s53(1)(b) LPA 1925 require for a trust over land? --------- CORRECT ANSWER-----------------declaration manifested and proved, in some writing, signed by some person who is able to declare such trust OR in a will What are two types of resulting trust? ---------CORRECT ANSWER------------ -----Automatic and presumed Which types of failure to create express trust will NOT result in automatic resulting trust? ---------CORRECT ANSWER-----------------self-declaration or testamentary trust which fails for uncertainty of objects, property in will and no certainty of intention then result is simple gift, fails for constitution (nothing to have trust over as legal title never moved) Where do presumed resulting trusts arise? ---------CORRECT ANSWER----- ------------where person makes gratuitous transfer as "equity is cynical" so a trust is presumed common scenario leading to presumed resulting trusts? ---------CORRECT ANSWER-----------------A and B contribute to land but A becomes only legal owners-- legal title held by one person (or up to four) but equity presumes that held on trust and equitable interest reflects trust ownership (NOT in family home)
what are three types of constructive trusts ---------CORRECT ANSWER------ -----------institutional, as remedy and Common intention constructive trusts Hale quote from Stack v Dowden about context - --------CORRECT ANSWER-----------------"in law context is everything and the domestic context is very different from the commercial world" Can a CICT be express or implied? ---------CORRECT ANSWER-------------- ---Both What is effect of an express trust of family home where no marriage/civil partnership? ---------CORRECT ANSWER-----------------Is there is trust satisfying s53(1)(b) LPA 1925 this settles beneficial ownership (Pettitt v Pettitt 1970, TR1 form is such a form) What is starting point for CCITs if no marriage/CP or express trust? --------- CORRECT ANSWER-----------------"Equity mirrors the law", which can then be rebutted In CCIT cases where presumption that equity mirrors the law is rebutted, what is final step? ---------CORRECT ANSWER-----------------Quantification of interests In sole legal ownership scenarios what words do indicate ownership by non-legal owner? ---------CORRECT ANSWER-----------------"half yours", "50;50" (Hammond v Mitchell, Clough v Killer)
What is the cy pres doctrine? ---------CORRECT ANSWER-----------------if original charitable trust purpose impossible now, allows surplus funds to be applied for another charitable purpose but only if general charitable intent
