Explain key historical events leading to the development of Equity. (AC1.1)
Unit: Equity and Trusts
Level 5 30 Credits
Write an essay on the flexible and continually developing nature of equity. Your essay should:
- Explain key historical events leading to the development of Equity. (AC1.1)
- Examine the relationship between law and equity. (AC1.2)
- Explain the meaning of equitable maxims. (AC1.3)
- Analyse the features of constructive trusts. (AC2.1)
On finding out he was terminally ill in January 2019, James decided to distribute some of his wealth before his death.
- James tells his brother, Martin, that he is giving him the shares that he holds in Neptune Limited to provide an income for him to set up his own business. Martin resigns from his job to set up the business.
- On a visit to his nephew, Peter (aged 12), James hands over his grandfather’s medals saying that Peter should have them. On leaving James took the medals with him.
- James wrote a letter to his niece Helen, saying that he was giving her his late wife’s jewellery. Helen never got in touch about collecting the jewellery.
- James wrote to his sister, Gail, telling her he was transferring his holiday cottage in Scotland to her to hold in trust for James’ 16 year old daughter, Melanie, when she attained the age of 21. He enclosed an executed trust deed transferring the house to Gail.
James died in May 2019 having made a will in March 2019 with his niece, Helen as the executor. The will left his cottage in Scotland and his late wife’s jewellery to Alisha, his new partner. The will also left £25,000 to the Bentown Bird Watching club which is an unincorporated, non-charitable association. The residue of his estate was left half to his son, Harry and half to his daughter Melanie in trust until she reaches the age of 18 with Harry as trustee. The Neptune limited share certificate and a signed transfer document in favour of Martin were found amongst James’ belongings on his death as were his medals.
You are required to:
a) Advise who is entitled to:
- The Neptune Limited Shares
- The Jewellery
- The cottage in Scotland
b) Explain the three certainties and the difference between a trust and a gift in relation to the medals.
c) Explain the effects of the legacy to the Bentown Bird Watching Club
d) Explain whether there are any circumstances in which Melanie could receive monies from her trust before attaining the age of 18 and the impact this would have on the trust funds.
e) Analyse Harry’s duties and responsibilities as a trustee and the potential defences for breach of this duty.
In your answers you must:
- Analyse the features of different types of trusts. (AC2.1)
- Apply statutory rules and their case law interpretations in appropriate scenarios. (AC2.2)
- Examine the need for a human beneficiary in private express trusts. (AC3.1)
- Illustrate established exceptions to the beneficiary principle. (AC3.2)
- Describe the various methods by which gifts to unincorporated associations may be effected. (AC3.3)
- Explain when power of advancement and maintenance can be utilised by the trustees. (AC5.1)
- Differentiate correctly between administrative duties and fiduciary duties. (AC5.2)
- Evaluate trustees’ defences for breach of administrative duties. (AC5.3) For a Merit grade you must:
- Assess the advantages and disadvantages of adherence to strict requirements of constitutions versus the Re Rose’s approach. (ACM2.1)
- Explain various constructions of the application of the beneficiary principle. (ACM3.1) For a Distinction grade you must:
- Discuss flaws and inconsistencies in judicial reasonings. (ACD 2.1)
- Evaluate socio-legal and political reasons for the policy choice to adhere to the beneficiary principle. (ACD 3.1)
- Critique the appropriateness of acceptance of limitation of liability clauses. (ACD5.1)
Kasper is a trustee of the Lantry Charitable Trust. In February 2019, he draws £10,000 of the trust’s money (in breach of the trust) and pays it into his own bank account in which he already has £10,000 of his own money. A month later, he bought shares for £7,000 using money from his account. A week later he withdrew £7,000 and bought a car. The next month, he withdraws £5,000 which he gives to his son Ben to use as a deposit on an apartment he is buying.
Realising he is about to be declared bankrupt, Kasper transfers the shares to his daughter, Julia. They are now worth £8,000. On the day he is declared bankrupt, Kasper writes off his car in an accident.
You are required to:
- Advise the beneficiaries of the Lantry Charitable Trust on their position.
- Advise the son and daughter on the gifts made to them.
In your answers you must:
- Analyse the impact of illegality on legal presumptions. (AC2.3)
- Evaluate conditions for tracing in law and in equity. (AC4.1)
- Appraise the application of the change of position defence. (AC4.2) For a Merit grade you must also:
- Evaluate the rationale for the fiduciary relationship in equitable tracing. (ACM4.1)
Aziz works for Mobapps Limited, producing apps for mobile telephones. He is on a three year contract to develop new apps, which requires him not to work for any other app or software development companies during his contract and for six months after the end of his contract. One year into his contract, Aziz accepts a job with Comp Software co. who develop bespoke computer software for businesses. When Aziz leaves, Mobapps find that all the material relating to the app Aziz was developing have disappeared and they fear that he will finish and sell the app himself.
You are required to advise Mobapps Limited on any equitable remedies it may have. In your answer, you must:
- Assess when specific performance or injunction can be granted. (AC4.3)
Guidelines for assessors
The assignments submitted by learners must achieve the learning outcomes and meet the standards specified by the assessment criteria for the unit. To achieve a merit or distinction grade, the learners must demonstrate that they have achieved all the criteria set for these grades. Where work for the pass standard is marginal, assessors can take account of any extension work completed by the learners. The suggested evidence listed below is how learners can demonstrate that they have met the required standards.
Learners must ensure their answers are organised and comprehensive with relevant references to case law and statutory provisions. In their work learners must take account of each command verb listed in the assessment criteria. They should explain any legal terminology used.
LO1 AC 1.1, 1.2, 1.3
LO1 AC 2.1
Introduction to equity and key historical events leading to equity and common law; Discussion of the flexible nature of equity; Earl of Oxford’s case; distinction between law, equity and statutory rules; The Judicature Acts; Meaning, use and misuse of equitable maxims; Development of equitable remedies; Trusts and new constructive trusts; Proprietary estoppel. Cases may include: Cowcher v Cowcher 1972; Hussey v Palmer 1972; Stack v Dowden 2007; Jones v kernott 2011; Binion v Evans 1972; Gillet v Holt 2001.
LO2 AC 2.1, 2.2,
LO3 AC3.1, 3.2, 3.3, M3.1, D3.1
LO5 5.1, 5.2, 5.3, D5.1
For all scenarios learners should analyse the features of trusts and apply statutory rules an case law.
a) Legal title to shares did not pass as Martin was not registered at the company. (Milroy v Lord 1862, Re Rose 1952). Also consider Pennington v Waine (2002) and Curtis and Pulbrook (2011).
Jewellery does not pass to Helen – consider Jaffa v Taylor House Gallery (1990); requirements for a valid deed; Strong v Bird (1874) and James’ change of mind.
Cottage – valid trust in favour of Melanie so cannot pass to Alisha; Evidenced in writing as per LPA 1925; Mascall v Mascall 1984.
b) Consider whether a trust has been created or the gift perfected; Consider three certainties. (Milroy v Lord 1862, Jones v Lock 1865)
c) Bentown Birdwatching club – consider need for Human beneficiary; exceptions to beneficiary principle; and ways to gift to unincorporated associations. (Re Recher’s WT 1972, Re Grant’s WT 1980)
d) Consider powers of advancement and maintenance and the conditions and rules governing their application.
e) Duties: duty of care, duty to invest; Administrative and fiduciary duties; defences for breach of duties; limited liability.
LO1 AC 2.3
LO4 AC 4.1, 4.2, M4.1
Learners should apply rules in law and equity of tracing. Because money has been mixed it cannot be traced at common law therefore equity tracing rules apply. (Re; Diplock 1948) Need to trace due to bankruptcy. Shares may be deemed to belong to Kasper and now Julia (Re Hallet’s Estate and consider Quistclose); however consider Re Oatway 1903; Shalson and Rosso 2005 and increase in value ( Re Tilley’s Will trusts 1967). Re: Ben’s deposit consider Re Diplock – can Ben be compelled to sell the property (Defence of change of position); Possibility of giving Lantry an equitavle charge over the house which is deferred (Sinclair v Brougham 1914). Difference if he has knowledge of origins of money.
LO4 AC 4.3
Aziz in breach but specific performance not appropriate for employee contracts (Trade Union and Labour Relations (Consolidation) Act 1992); May be able to claim damages but likelihood is that Aziz can easily be replaced. Possible injunction if Aziz is going to a company producing Apps (Lumley v Wagner 1852) but unlikely to be able to stop him working for any software company. (Whitwood Chemical co. v Hardman 1891; Rely-A-Bell Burglar and Fire Alarm Co. Ltd v Eisler 1926); may seek injunction to prevent Aziz taking app development materials and information about the company unless already used (Robb v Green 1985) though damages might be claimed if a profit made. (Seager v Copydex (no 2) 1969)
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