SEMESTER I, 2006/2007 SESSION
AHMAD IBRAHIM KULLIYYAH OF LAWS
Programme : Bachelor of Laws Level of : Third
Reading Time : 9.00 a.m. – 9.15 a.m. Date : 1.11.2006
Duration : ( 15 minutes )
Answering Time : 9.15 a.m. – 12.15 p.m. Section(s) : All Sections
Duration ( 3 hours )
Course Title : Equity & Trusts II Course Code : LAW 3711
This Question Paper Consists of 8 Printed Pages With 6 Questions.
INSTRUCTIONS TO CANDIDATES
DO NOT OPEN UNTIL YOU ARE ASKED TO DO SO.
There are three parts. Answer FOUR (4) Questions Only.
Answer at least ONE (1) Question From Each Parts.
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.
a) Mohan in his will made some bequests. He appointed Ashok as his trustee. When
Mohan died, his eldest son, Rahul challenged these bequests. Ashok seeks your
advise to determine the validity of such bequests.
i) It is my hope and desire that RM500,000 will be given to my longtime
companion and girlfriend Serena Kaur for her maintainence during her
lifetime as she is always there for me whenever I need her. ( 2 marks)
ii) RM 1million to be used for the usage of all my single female employees, their
close relatives and all the single mothers who are not above 40 years old,
residing nearby my warehouse. ( 2 marks)
iii) A handsome sum from my life insurance policy to be distributed to all the
war victims in Lubnan. (2 marks)
b) The rules in Milroy v Lord (1862) 45 ER 1185 relating to the constitution of
property in the hand of trustee has been adopted in Malaysia. Turner LJ said:
“ I take the law of this court to be well settled, that, in order to render a
voluntary settlement valid and effectual, the settlor must have done
everything which, according to the nature of the property comprised in
the settlement, was necessary to be done in order to transfer the
property and to render the settlement binding upon him.
Evershed MR in RE ROSE, ROSE v I.R.C (1952) Ch 499. on the other hand states;
“And for my part I do not think that Milroy v Lord is an authority
which compels this court to hold that in this case, where, in terms of
Turner LJ’s judgment, the settlor did everything which, according to
the nature of the property comprised in the settlement, was necessary
to be done by him in order to transfer the property, the result
necessarily negatives the conclusion that, pending registration, the
settlor was a trustee of the legal interest for the transferee.”
Explain the above two judgments to Mohan as he is very confused. Explain also the
advantage or disadvantage, between these two judgments, in relation to the
constitution of trust with reference to both English and Malaysian cases, if any.
a) Sharmeela, Mohan’s sister stayed with her only son, Abraham for almost 10 years
after the death of her husband. Last two years, she decided to buy a house in
Sunway Kinrara, jointly with Abraham. Abraham contributed 40% of the total
purchase price of RM400k. Nevertheless considering the fact that Abraham is her
only son, Sharmeela requested the house to be put under Abraham’s name.
Abraham got married end of last year to Anuja, a beautiful lady who happened to be
the daughther of Sharmeela’s late husband’s best friend, Mokana. It had been
mutually agreed that Sharmeela will occupy 2 rooms in the house and Abraham and
Anuja occupy the rest of the house. Six months after the marriage, differences arose
between Sharmeela and Anuja. Anuja threatened to leave Abraham if Abraham
refused to ask Sharmeela to move out. Abraham brings an action against Sharmeela
for the possession of the house.
Sharmeela is very upset. She comes to seek for your advice on her right over the
b) The liability of a stranger as a constructive trustee is divided to two categories. This
is based on the dictum of Lord Selbourne in Barnes v Addy  LR 9 CH App
244. He states;
“Strangers are not to be made constructive trustees merely because they act
as agents of trustees in transactions within their legal powers, transactions,
perhaps, of which a court of equity may disapprove, unless those agents
receive and become chargeable with some part of the trust property they
assist with knowledge in a dishonest or fraudulent design on part of trustee.”
Explain to Mohan the position of a stranger as a constructive trustee with reference
to decided cases.
Mohan made a declaration of a private trust in favour of his wife Priyanka and his
children and upon their death, trust properties to be given to his next of kin. Mohan in his
trust deed named his good friend Ashok as the trustee. It is stated in the trust deed that,
one of the major duties of the trustee is to make investment of the trust properties. It is
also stated that, every investment made must be subjected to the provisions of the Trustee
Act 1949. Ashok, in breach of his duty, invested in unauthorized investment, which later
increased in value.
Advise all parties (15 marks)
Ashok, a trustee, visited China for three months. He borrowed the sum of RM 30,000
from the trust fund that consists of RM 70,000, for his visit to China. Before returning to
Malaysia, he bought one Chinese vase worth RM 5,000 for beneficiary number one, a
dinner set for trustee number two which worth RM 15,000 and pure China silk worth RM
2,000 for beneficiary number three. On returning to Malaysia, Ashok told the
beneficiaries that he would like to claim for the money spent on the Chinese vase, dinner
set and pure China silk. The beneficiaries reject his claim and plan to take action against
a) Advise the beneficiaries.
b) Discuss the various defences available for Ashok to defend himself against the
claim by the beneficiaries.
a) Ashok told Mohan to create a trust in offshore. Presuming Mohan is only a resident
in Malaysia, advise him what are the advantages of creating such a trust in Labuan
and on the procedure and types of trust to be created offshore.
b) Mohan came across a few alien words such as Unit Trust and Real Estate
Investment Trusts (REIT). Explain to him in detail on such trusts and compare to
Mohan found a platinum sapphire bracelet while jogging at the Seremban Lake Garden.
He is not keen to report to the police as he has a strong belief that the police might not be
able to search for the person who has lost the item. He was advised by Ashok to advertise
in the newspapers. Meanwhile Priyanka fell in love with the bracelet and wanted to wear
it. Advise Mohan on the rule of lost and found and luqatah.