Application of Maxims of Equityby Fiverr Tutors
Ezekiel Blaster, a Labour MP, made a will in 2012 in clause (a) of which he left “Cloudy Mansions”, a block of flats worth £6.7m, which he owned, “to George Simpkins and Eric McNulty [two fellow MPs] to hold the property upon the terms which I have communicated or shall communicate to them”. There were also three other legacies in the will as follows:
(b) All my landed estates in Lancashire and the property thereon and contents
thereof for such order of nuns, monks and teaching orders of the Roman Catholic
Church as my executors and trustees in their sole and absolute discretion shall
(c) I give the sum of £750,000 to the ‘Old Lunecasters’ Club’, London, to be utilised as the Committee of the Club should think best in the interests of the club.
(the club is an unincorporated association)
(d) £5 million for the upkeep of my horses for their lives and any of their offspring
until such time as a good home is found for them.
The residue of his estate was left to Jenny and David, his (adult) children by his second wife Katherine (now deceased), who were also made the executors and trustees of his estate.
In January 2013, Ezekiel told George that he wanted him to hold the property on trust for Mistress Xena, a professional dominatrix whose services Ezekiel had regularly used for the past ten years. George agreed, but in March 2013, after hearing a speech on family virtues by the leader of the opposition in Parliament, he wrote to Ezekiel and told him that he was now converted to the importance of the family, and would be prepared to act as trustee for a widow, but not for a mistress. In July 2013 Ezekiel secretly married Xena, and then remade his will in identical terms; Xena was one of three witnesses to the will. In September 2013, Ezekiel for the first time told Eric of his desire that Eric should hold “Cloudy Mansions” for Xena. Eric immediately responded that he believed Xena to be immoral and would never do anything to benefit her. On hearing this Ezekiel had a stroke and immediately died. Following Ezekiel’s death, George was informed of the marriage between Ezekiel and Xena.
In June 2013 Ezekiel had also:
(i) Given Xena authority to draw on his bank and building society accounts and wrote a memorandum for her telling her that from now on these “belonged to both of them equally, so that when he died they would belong to her”.
(ii) Executed a share transfer of 2500 of his shares in Blaster Imperial Ltd., a private family company, to Xena, and a transfer of the title to his house (title to which is registered) into joint names with Xena. He handed both of these to his solicitor Bill Sleepy for transmission to the company secretary in the case of the shares and the Land Registry in the case of the house.
(iii) He also wrote to the Gigantica Assurance Co. plc. requesting them to change the nominated beneficiary on his life insurance from Jenny and David to Xena.
Bill Sleepy misfiled and forgot about the share and land transfers. Gigantica Assurance filed Ezekiel’s letter, but owing to a clerical error did not amend the policy schedule or return to Ezekiel the form which, under their rules, was required to change the nominee.
Advise the executors and trustees (Jenny and David) as to the validity of the clauses in (b)-(d) inclusive.
And Advise Xena whether she can enforce the trust against George and Eric and the executors, and as to her rights, if any, in relation to the assets in (i) to (iii) above.
Angus, Bernard and Christine (A,B, and C) are the executors of John Langley’s will and trustees of the Langley family trust all of whom were resident in the Channel Islands. Under the trust one half of the capital is held on trust for John’s widow Elizabeth for life remainder equally to John’s children David (aged 25), Katherine (aged 22) and Mary (aged 17). The property in this half of the trust capital comprises first of shares in three private family companies founded by John’s grandfather and which John successfully built up into very successful businesses. The rest of the trust assets under this part of the trust consisted of shares in public listed companies and cash. The total value of this half of the trust was circa £22.95 million at the time of John’s death.
John created the Langley family trust in his will. Prior to John’s death in 2007 each company had a turnover of several million pounds and profits in the region of 10-25% pa. After the grant of probate of John’s will A, B and C appointed themselves directors of the companies and the companies paid them directors’ fees of £25,000 p.a. each from each company giving each trustee director an annual income from their directorships of £75,000.
The other half of the capital in the family trust is held on trust for David, Katherine and Mary in equal shares absolutely at the age of 28. Until then the income from the mostly public listed shares and bonds in this half of the trust was to be accumulated. There were also some shareholdings in private companies. A as one of the trustees of the Langley Family Trust, a major shareholder in these companies gained access to their account books and saw that several assets were undervalued. He tried to persuade the other trustees to purchase more shares in those private companies on behalf of the trust but they refused. A therefore purchased shares in the companies and was registered as a member having built up good relationships with the existing shareholders and boards of directors. He appointed himself director sold off the assets of the companies at a huge profit to the companies and helped make them more profitable. A made a total personal profit of £9.5 million from these activities.
The Langley trust also made considerable gains on their shares in those companies and the dividends received.
After approaches by David and Katherine and the retirement of Christine from her trusteeship, A and B decided to make an advance of capital to both David and
Katherine. They advanced £3 million of assets to David from the first half of the
trust (without consulting Elizabeth) to set up a small trust to help him maintain himself and his family. A further £1 million was advanced to Katherine from the second half of the trust to help her and her new husband in his business venture. Mary has also requested help towards her maintenance for university. A and B have also appointed a third trustee resident in the UK.
The private family companies in the first half of the trust now are suffering financially because of poor decisions made by A and B and the effects of the recession being exacerbated by their directors’ fees. In addition A and C received secret payments which they did not disclose to the boards of directors of the family companies in
return for persuading the companies to enter into contracts which were not in the companies’ best interests. The secret commissions amount to £497,000. The tax authorities have sent the trustees a huge tax bill because of their decisions to advance capital and appoint a UK resident trustee.
Advise the beneficiaries of the trust whether:
- They have any potential remedy against the trustees including whether or not the private companies have remedies against the A, B and C as directors.
- Whether the rule in Re Hastings-Bass  Ch 25 (as restated in Futter vCMCR and Pitt v CMCR  UKSC 26) may help to rectify the situation
- Whether the beneficiaries may bring the trusts to an end and claim the property for themselves (Mary will be 18 years old on 30 July 2014)
Compare and contrast the nature of a mere expectation or ‘spes’ in terms of transferring property to trustees with a contract to transfer or sell property which the seller does not yet own. In doing so also explain the extent to which, if any, the benefits of a contract may be the subject matter of a trust.
Examine the application of the maxims of equity in the context of trusts.
Examine the relationship between contracts and trusts in three of the following:
- Unincorporated associations,
- The rule in Fletcher v Fletcher,
- Commercial loans for a specific purpose,
- Contracts (Rights of Third Parties) Act 1999,
- Customer Trust Accounts,
- Gifts in contemplation of marriage.
You are required on the front-sheets to certify the number of words used. If penalties were not applied, students who used excess words would gain an unfair academic advantage. A rough prima facie guide to length penalties on this course is as follows:
up to 10% over length: no penalty
10-50% over length 2-15 marks penalty
Above 50% over length 15- 25 marks or above penalty
This is a “rough prima facie guide” because discretion will be exercised at the borderlines of these classes. You may also escape penalties, though I hope none of you will be in this situation, if what you write is such nonsense that no academic advantage can have been gained by the excess words.
Footnote references are not included in the word count, nor are bibliographies (including Tables of Cases). For the sake of brevity in relation to footnotes you are therefore advised to use the “Harvard Citation system” of putting full details in the Bibliography and using only a short-form reference in the text. Alternatively you may use the law school’s recommended footnoting style or a consistent style like that in the Conveyancer and Property Lawyer or similar journal
Presentation of CWAs
(1) All CWAs must be either typed or word-processed. You must submit two copies of each and an electronic submission.
Pages: 8, double Spaced