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  1. 1. INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA END-OF-SEMESTER EXAMINATION SEMESTER II, 2011/2012 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 : 9.6.2012 Duration : ( 15 minutes ) Answering Time : 2.45 p.m. – 5.45 p.m. Section(s) : All Sections Duration ( 3 hours ) Course Title : Equity & Trust 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. ONE (1) FROM EACH PART AND ONE (1) FROM ANY OF THE PARTS. REFERENCES ALLOWED TRUSTEE ACT 1949 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 PART A QUESTION 1 a) Decide whether valid trusts have been created in the following instances: i) Clarice told his lawyer to transfer two of her apartments at Sunway Kinrara to her husband in the hope that he will use these houses to accumulate some income to pay his medical bills after he attains the age of 60 and after his death they are to be given to their two sons Adan and Allen. (4 marks) ii) Ted creates a trust from which some money will be allocated to hold yearly prayers in Sin Chew Temple for the soul of his deceased relatives and the bulk of the remainder to be applied for the benefit of attendees. He appoints himself as the sole trustee of the trust fund worth RM 2million. (4 marks) b) Peh Swee Chin SCJ in Yeong Ah Chee v Lee Choong Hai & Ors[1994] 2 MLJ 614 at 625 said; “A volunteer is a beneficiary who has not given any valuable consideration (in the usual sense of the ordinary law of contract), for the creation of a settlement or trust. It is a settled rule of equity that a court of equity would not render assistance to a volunteer in the case of an incompletely constituted trust.” Discuss the importance of the above quotation and explain briefly the exceptions applicable to the settled rule of equity. (7 marks)
  3. 3. 3 QUESTION 2 a) Presumption of advancement works in opposite direction to presumed resulting trust. Explain and support your answer with decided cases. (4 marks) b) Maya’s husband worked at SD Estate and lived rent- free in a cottage owned by the estate for more than 20 years. When her husband died early this year, the trustee of the SD Estate entered into an agreement with Maya that she could continue to live in the cottage during her life time, rent-free in return for undertaking to keep the cottage in good condition. In March 2012, SD Estate sold the cottage to Aresha who is seeking to eject Maya from the cottage. Advise Maya. (4 marks) c) Aman is a managing director and principal shareholder of a travel company, Tic Tic Ket Malaysia Sdn. Bhd. (TTK). Between March 2010 and July 2011 TTK was an agent of Malaya Airlines and under the agency agreement money from the sale of tickets was required to be kept in a separate account. Nonetheless the proceeds from sale of tickets was deposited both into Aman’ personal account and TTK’s normal account. TTK fell into arrears in respect of its arrangement with the Malaya Airlines. With reference to decided cases advise Malaya Airlines on the possible liability of Aman in his capacity as the managing director of TTK. (7 marks)
  4. 4. 4 PART B QUESTION 3 (a) Sir Bryan, a wealthy and well known businessman, wished to leave a large sum of money to the ‘Full Moon Orphanage Home’ but did not want his family to know. He therefore asked his best friend, John if he would hold $100,000 which he intended to leave to him in his will, on trust for the Home. John agreed. Sir Bryan made a will the following week leaving $100,000 to John. Based on the above facts decide what type of trust if any has been created. (8 marks) (b) Last year, the residents of the village Blackmore decided to raise funds to build a cottage hospital. Money was raised for this purpose by means of street collections and the sale of tables for dinner with Taylor Swift. The appeal fund trustees also received a large number of cheques for various amounts. Unfortunately, the total sum raised proved insufficient to enable the hospital to be built. Advise the trustees how they should deal with the fund raised. (7 marks)
  5. 5. 5 QUESTION 4 a) In 2010 Maniam made a will by which he gave his entire estate to his trustees upon trust to build a hostel for the working people of Sentul Baru. Maniam died last year. The value of his estate is insufficient to enable the hostel to be built. Maniam’s wife is claiming his estate. Advise the wife. (9 marks) b) Consider the legal differences between a charitable trust and a private trust and comment on the special advantages attached to charitable trusts. (6 marks)
  6. 6. 6 PART C QUESTION 5 “Of all legal institutions designed to hold, create or transmit wealth, the trust is one of the most flexible” Paul Matthews & Terry Sowden, The Jersey Law of Trusts, (1993), Key Haven Publications plc at 1. To what extent does the Labuan Trusts Act 1996 comply with the above statement? (15 marks) QUESTION 6 a) Section 45 (1) (a) of the Trustee Act 1949 provides as follows: “The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult or impracticable so to do without the assistance of the Court, make an order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.” With reference to case law comment on the scope of this provision. (6 marks)
  7. 7. 7 b) Jack and Jill, qualified accountants are appointed as the trustees of Chong Family trust which consists of a bungalow, a flat and RM 20m cash in a bank account. Chong’s eldest son Deng has just returned from Australia after qualifying as a cardiologist. The trustees have allowed Deng to occupy the bungalow rent free. The flat worth RM 1m is in Fraser’s Hill. The trustees have engaged Holidaycom Sdn. Bhd. as agent to rent the flat to visitors. The agency fee is fixed at RM 5,000 annually. Over the past two years the income from the flat barely covers the agency fees. The trustees decided to loan RM 1m to Jim, Chong’s youngest son who wanted to raise capital for his computer retail business. The security for the loan was Jim’s condominium valued at RM1.2 m by Dan, a qualified surveyor appointed by Jim. Dan attended the same business management degree course as Jim at University College of Knowledge. Chong is not happy with the management of the trust. Advise him. (9 marks)