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THE UNIVERSITY OF NEW SOUTH WALES

SEMESTER 1 2014 EXAMINATIONS

LAWS2385/JURD7285: Equity and Trusts

1. TIME ALLOWED 2 hours

2. READING TIME 10 minutes

3. THIS EXAMINATION PAPER HAS 3 PAGES

4. TOTAL NUMBER OF QUESTIONS 2 . YOU MUST ANSWER BOTH QUESTIONS

5. TOTAL MARKS AVAILABLE 100

6. MARKS AVAILABLE FOR EACH QUESTION ARE SHOWN IN THE EXAMINATION PAPER

7. ALL ANSWERS MUST BE WRITTEN IN INK. EXCEPT WHERE THEY ARE EXPRESSLY REQUIRED, PENCILS MAY BE
USED ONLY FOR DRAWING, SKETCHING OR GRAPHICAL WORK

8. THIS PAPER MAY NOT BE RETAINED BY CANDIDATE

9. CANDIDATES MAY BRING TO THE EXAMINATION any printed or handwritten materials

1
QUESTION 1 (worth 40% of the marks for this exam)

Choose ONE of the essay topics below. Please answer this question in a separate answer booklet to question
2.

1(a) All trusts are ultimately based on intention. Discuss.

OR

1(b) To what extent are courts consistent in their willingness to award equitable proprietary remedies?
Should the same factors be relevant in both commercial and non-commercial contexts?

AND

2
QUESTION 2 (worth 60% of the marks for this exam)

Please answer this question in a separate booklet to Question 1.

Tanya is divorced with two children, Brian (18 years) and Belinda (21 years). Over coffee one Sunday morning
in March 2013, Tanya tells her best friend Frieda: I want to do the best for my children; I dont need anything,
as I was well provided for in the divorce settlement with their father. In reality, I hold my property for the
benefit of my children Brian and Belinda. I regard myself as trustee of my assets. When Frieda asks her: do
you mean everything - even your Mercedes car?, Tanya replies that she is referring to her assets or property
including her Mercedes car (which is her only vehicle, licence plate OMG 123), a diamond necklace, $100,000
cash held in her bank account and a small parcel of land. The land is unencumbered.

Tanya does not execute any document at the time, but later on 1 April 2013 executes a document entitled
Deed of Trust in relation to the $100,000 cash held in her bank account, her car (identified as Mercedes Car
C Class 2012 model, licence plate OMG 123) and the diamond necklace. The deed names Brian and Belinda
as beneficiaries with equal half shares in the trust property. Tanya is named as the trustee and the Deed of
Trust specifies that Tanya has all powers necessary including the power to buy and sell.

On 1 May 2013 Tanya sells the diamond necklace to Peter for $50,000. Tanya deals with the proceeds of sale
as follows:

(a) she pays $5000 into a second bank account in her name in which she has already deposited $3000. She
withdraws $2000 and uses this money to purchase shares registered in her name which are now worth $4000.
She then withdraws the remaining $6000 and uses this money to buy a Ming vase;

(b) she pays $20,000 into a third bank account she holds jointly with her new partner William. This account
was actually overdrawn by $20,000 which had been used the previous week to buy a boat;

(c) she gives $20,000 to her friend Margaret. Margaret uses $15,000 of this to pay off the outstanding loan
(secured by a mortgage) on Margarets house and uses the remaining $5000 to purchase materials for
maintenance work on the house, which Margaret carried out herself;

(d) she gives $5000 to her neighbour Zora which Zora paid into a bank account in which she already had $5000.
Zora was quite surprised to receive the money as she had asked Tanya for financial assistance only a few days
before but was told by Tanya: Im sorry but I cant help you I have no money all my funds are for my
children!

On 1 June 2013 Friedas car is written off in an accident. Frieda cannot afford to replace her car but needs a
vehicle to drive to work as her daily commute by public transport is long and unreliable. Tanya steps in and
gives Frieda her Mercedes Car with licence plate OMG 123. It is clear this is not intended to be a loan but an
out and out gift.

Tanya has since been experiencing business difficulties and her creditors are becoming impatient for payment.
She is on the verge of bankruptcy. On the 1 July 2013 bankruptcy proceedings are commenced.

Tanyas trustee in bankruptcy wishes to realise the value in the parcel of land to meet her business debts.
Brian and Belinda state: she cant do that! That is our land isnt it? In the course of investigating their
mothers business affairs, Brian and Belinda discover that Tanya has sold the diamond necklace and given the
Mercedes Car licence plate OMG 123 to Frieda.

Consider the availability to Brian and Belinda of any equitable personal or proprietary remedies.

END OF PAPER