The University of the South Pacific	Examinations Semester 1 2003
Emalus Campus

SCHOOL OF LAW

COURSE NAME: Equity and Trusts

COURSE NO: LA302

TIME ALLOWED: Three (3) hours

READING TIME: Ten (10) minutes

NUMBER OF PAGES: Three (2) excluding this page

NUMBER OF QUESTIONS ON PAPER: Seven (7)

NUMBER OF QUESTIONS TO BE ANSWERED: Four (4) and no more.

MARK ALLOCATED FOR EACH QUESTION: Equal marks.

Where two parts of a question must be completed each of those parts relative to the whole question are worth equal marks.

TOTAL MARKS: Fifty percent (50%) of result.

MATERIALS PERMITTED IN EXAMINATION ROOM:

None

SPECIAL INSTRUCTIONS

1. Complete at least four (4) question from the paper, but no more than four (4).

2. The examination is worth 50 marks.

3. You need to obtain at least 20 marks in the examination to pass the course.

Equity and Trusts Examination Paper 2003

Page 1 of 3 pages

Question 1

A resulting trust arises in situations where equity make a presumption of fact to the effect that a person who has received property was not intended to be able to retain it beneficially. That presumption is a factual presumption only.

Explain this statement and each part of it fully. In doing so, you must provide at least three factual examples which would adequately illustrate the operation of a resulting trust.

Question 2 – Answer Part A or Part B – NOT BOTH

A. Suppose that a person wants to create a trust over property. There are certain basic criteria to which a court will have regard in deciding whether the facts in any given situation actually show that a trust was created, rather than, say, some kind of gift of the relevant property.

What are these criteria? Explain what each of them means and how they apply.

OR

B. When considering questions of priorities between competing equitable interests in property the main rule is that “where the equities are equal, the first in time prevails”.

Illustrate as far as possible the meaning and application of this rule. Use examples where you can to illustrate what you mean.

Question 3

If a gift is to be made of something which is characterised as legal (i.e. not equitable) property, then normally the legal rules have to be followed. However, when the validity of the gift of that kind of property is considered from the point of view of equity, there are other rules to be considered.

What is/are the relevant equitable rule or rules which are to be applied in cases such as this? Explain their operation and illustrate how it applies, or they apply, using factual examples.

Equity and Trusts Examination Paper 2003

Page 2 of 3 pages

Question 4 Answer BOTH parts of this question

A. One of the main duties of a trustee is the duty to preserve trust property. This means that the trustee, in carrying out the trust, must have regard to the interests of preserving the trust property rather than making the highest profit possible by engaging in high risk investment strategies or carrying on a business.

Critically examine this statement. Is it entirely appropriate to the modern law of trusts?

AND

B. Briefly explain the types of remedies which are available to the beneficiaries of an express trust in the event that a trustee has paid over trust funds to a third party or stranger to the trust in breach of the terms of the trust.

Question 5 Answer Part A OR Part B - NOT BOTH

A. What is a discretionary trust and what special principles apply in order to determine both its validity and the nature of the interests of the potential beneficiaries under it.

OR

B. A charitable trust is a purpose trust. The concept of a charitable purpose has a very distinctive legal sense. What are the requirements for the creation of a properly charitable trust?

Question 6

Trustees are personally liable in respect of debts and liabilities incurred in the carrying out of the trust. Trustees are, however, given certain indemnity rights to allow them to recover what they must pay out to meet these liabilities.

Explain the nature of these indemnity rights. Under what circumstances can a creditor of the trustee, who is unable to recover from the trustee, gain the benefit of these rights?

Equity and Trusts Examination Paper 2003

Page 3 of 3 pages

Question 7

Equitable fraud is something quite different from common law fraud.

What are the principles on which equitable fraud is based and how does it differ from common law fraud? What kinds of equitable fraud are there?

Give appropriate factual examples to illustrate your explanation.

END OF EXAMINATION PAPER