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  1. 1. END-OF-SEMESTER EXAMINATION SEMESTER II, 2006/2007 SESSION AHMAD IBRAHIM KULLIYYAH OF LAWS Programme : Bachelor of Laws Level of : Third Study Reading Time : 2.30 p.m. – 2.45 p.m. Date : 4.4.2007 Duration : ( 15 minutes ) Answering Time : 2.45 p.m. – 5.45 p.m. Section(s) : All Sections Duration ( 3 hours ) Course Title : Equity & Trusts II Course Code : LAW 3711 This Question Paper Consists of 7 Printed Pages With 6 Questions. INSTRUCTIONS TO CANDIDATES DO NOT OPEN UNTIL YOU ARE ASKED TO DO SO. Answer FOUR (4) Questions Only. REFERENCE ALLOWED Selected Malaysian Statutes on Equity & Trust Any form of cheating or attempt to cheat is a serious offence which may lead to dismissal Statutes should be free from any form of annotation. APPROVED BY
  2. 2. 2 QUESTION 1 Jennifer returned home in July 2005 after she has served as medical officer with United Nation (UN) in Iraq for 5 years. She went to live with her old aged parents, Brad and Ally. Jennifer had made a promise to herself that if she returned home safely, she would spend the rest of her life taking care of her parents until the end of their life. Both her parents had orally agreed that the parental home and its contents should become hers on their deaths. No transfer was made during their life times. Her father, Brad died in January 2006. When her mother, Ally died 6 months later, Jennifer as the sole survivor took out letters of administration to Ally’s estates, which includes the parental home, cash and some jewelleries. As an administratrix, she would be entitled to her parent’s estates but her uncle, Toby, a lawyer opposed on the ground that she was an illegitimate child and since there was no effectual transfer, Jennifer was not entitled to the estates. a) Jennifer was devastated since she was sure that the house belonged to her. She seeks your advice on the above problem. (5 marks) b) Would your answer be different if the following incidents took place: i) Jennifer told you that she found a cheque of RM100,000 in a closet, written by Ally, in her favour. (5 marks) ii) Before Ally died, she handed over to Jennifer a steel box, which contained the title to the parental house. (5 marks)
  3. 3. 3 QUESTION 2 a) Natalie made a will and appointed Nathan as her executor and trustee. She made a few bequests and when she died her children argued on the validity of the following bequest: 'I leave a bulk of my residue in trust for the employees or ex-employees of my company, Extremely Special Sdn. Bhd. or their relatives or dependants as my trustee shall in their absolute discretion think fit'. Advise Nathan as to the validity of the above bequest. (6 marks) b) Where a voluntary conveyance is made to the wife or child of the donor or to a person to whom he stands in loco parentis, the presumption is that the gift was intended. Explain the above statement and support your answer with relevant cases. (9 marks)
  4. 4. 4 QUESTION 3 a) Bowen LJ in Soar v Ashwell (1893) 2 QB 390 said: “A person not nominated as trustee may be bound to liability as if he were a nominated trustee, namely where he has knowingly assisted a nominated trustee in fraudulent/dishonest disposition of trust.” Explain the above statement with reference to decided cases. (7 marks) b) Write short notes on any two of the followings; i) Labuan Offshore Trust ii) Protective trust. iii) Advancement of Education iv) Evidential Difficulties (8 marks)
  5. 5. 5 QUESTION 4 a) Bernard’s father died in March 2006. He left in his will RM10,000 to Forever Peace Society and another RM10,000 to the Riverpeace Society in Sungai Siput. Forever Peace Society was established in 1956 but in February 2006, it merged with another society by the name of Aman Global Peace Society. No evidence that the Riverpeace Society had ever existed. Advise Bernard as to the enforcement of the above trust based on decided cases. (7 marks) b) Determine the nature of the following trusts: i) Suffian Mays left RM1000 for the maintenance of blind and deaf people in the District of Tuaran. (2 marks) ii) RM1.5 million to be applied for the benefit of flood victims in Johor and Melaka. (2 marks) iii) All my residuary to all pet centres in Tawau and to my favourite cat at my mother’s house. (2 marks) iv) RM450,000 to Nobelief Society to be used for the annual celebration of Malaysian Atheism in Port Dickson. (2 marks)
  6. 6. 6 QUESTION 5 a) Jenkins J in Re Harari’s Settlement Trust [1949] 1 All ER 430 said, “ …I see no justification for implying any restriction. I think trustees have powers . . . to invest in any investments which, . . . they honestly think are desirable investments.” Based on the above observation, discuss the principles with regard to the duty of trustee to invest trust funds. (10 marks) b) Any appointed trustee needs to strike a balance between the provision of income for the life tenant and preservation of capital for the remainderman. Illustrate the above statement in your own words. (5 marks) QUESTION 6 a) A trustee who has committed a breach of trust may be able to escape personal liability by bringing the case within a few defences in the case of Re Pauling’s Settlement Trust (1964) Ch 303. Discuss. (7 marks)
  7. 7. 7 b) Two beneficiaries from two trusts come and seek your opinion on how a proprietary remedy may be exercised in the following situations; i) Robert had deposited part of his client’s money into his account which also comprised money from his marriage settlement. He made various payments from and into the account and also incurred debts. At his death, the account was sufficient to meet claims from the trustees in the marriage settlement and the client but not his personal debts. (4 marks) ii) Taylor used trust funds to pay some of the premium on a life policy which had been executed in favour of his wife and children. A year later, due to stress, Taylor committed suicide. (4 marks)