UNIVERSITY OF WARWICK

LEVEL 6 (Intermediate and Final Years)

Open Book Assessment 24 hours

School of Law

Summer Examinations 2019/20

LA3070 LAW OF TRUSTS

Instructions

1. Read all instructions carefully – and read through the entire paper at least once before
you start writing.

2. Candidates should attempt THREE questions.

Candidates will be supplied with extracts from relevant materials.

You should spend 3 hours writing your answers.

3. You should not submit answers to more than the required number of questions.

4. All questions will carry the same number of marks unless otherwise stated.

5. Candidates must type their answers into a Word file/ .pdf and upload this to the AEP.

All answers should be doubled-spaced.

6. TOTAL word limit: 3,750 words.

This word limit applies to the aggregate number of words used to answer all
questions, and reflects the specified time set for the exam within the 24-hour period.
It excludes footnotes/references, but footnotes/references will not be marked, and
you will not be given credit for them.

The limit is an upper bound on your wordcount and not a target. In answering all
required questions, you may write less if you wish.

7. You are allowed to access module materials, notes, resources, references and the

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 internet during the assessment.

For the avoidance of doubt, students may use a relevant statute book or online
legislation resource, and where English is not their first language, an English
dictionary.

8. IN UNDERTAKING THIS ASSESSMENT, YOU AGREE TO COMPLY WITH

THE UNIVERSITY REGULATIONS ON CHEATING AND THE LAW SCHOOL
POLICY ON ACADEMIC INTEGRITY AND CHEATING.

You should not try to communicate with any other person during the assessment
period (ending with submission of your assessment), unless expressly instructed to do
so as part of the assessment requirements.

All assessments will be checked for plagiarism and poor academic practice using
Turnitin. Where plagiarism and/or poor academic practice is suspected, the School
will apply its cheating policy and reserves the right, in particular, to interview any
student regarding their performance in this assessment.

9. By starting this assessment you are declaring yourself fit to undertake it. You are
expected to make a reasonable attempt at the assessment by answering the questions
in the paper.

10. You have 24 hours to complete the assessment, upload and submit your work. You
should upload your assignment to the AEP within the required timeframe.

Please note that:

- You must have completed and uploaded your assessment before the 24-hour
assessment window closes.

- IF YOU FAIL TO UPLOAD YOUR ASSESSMENT WITHIN THE 24-HOUR

PERIOD, WE WILL APPLY THE NORMAL PENALTY FOR NON-
SUBMISSION OF AN EXAM SCRIPT: YOUR MARK WILL BE ZERO.

Use the AEP to seek advice immediately if during the assessment period:
• you cannot access the online assessment;
• you believe you have been given access to the wrong online assessment;

Write to your module convenor immediately if you cannot complete your assessment
because:
• you lose your internet connection;
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• you are affected by circumstances beyond your control (e.g. fire alarm).

Please note that:

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  invigilators and convenors will only be available within the first 3 hours of release of
this exam; and
 technical support will only be available between 9AM and 5PM (BST).

Your assessment starts below.

ENTER HERE YOUR QUESTIONS, CLEARLY NUMBERED

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LA3070

All four of the essay-type questions below were intended to be self-explanatory starting
points for discussion: open-ended enough that students could score well either by taking us
through the key issues covered in the relevant classes or by focusing on a relevant area of
particular interest to them. In general terms, and as always, we were looking for depth of
analysis rather than breadth, and for students to justify any chosen focus and ensure that the
bigger picture was not lost. We generously rewarded those scripts that actually answered the
question directly, rather than simply wrote around it, and especially those that answered in a
novel way while remaining relevant.

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1. ‘The three-cornered relation of settlor, trustee, and [beneficiary is] easily explained in
the modern law in terms of a contract for the benefit of a third party.’ (FH Lawson,
1953)

Discuss.

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2. ‘The requirement that certain trusts can only be constituted by the completion of
particular formalities causes more problems than it solves. Evidence of the three
certainties ought always to be enough to create a trust, whatever form that evidence
may take.’

Discuss.

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3. ‘One persistent question … has worked its way into the fabric of our general law: Why
should there be any restraints on the alienation of property?’ (Richard Epstein, 1985)

Discuss. Your answer should include reference, but need not be limited, to (a)
restricted gifts and (b) the perpetuity rules.

___________________________________________________________________________

4. ‘The fiduciary duty of loyalty is in some respects too narrow and in other respects too
wide.’

Discuss.

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LA3070 Continued

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LA3070
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5. Arlo, a successful businessman, has decided to write a new will and would like to make
the following gifts:

The key with this question was for students not to take the wording of any of these gifts
as set in stone; rather, they should (where appropriate) suggest possible ways of
amending them to ensure they are valid and take effect as Arlo intends.

(a) £100,000 to be shared between the regular golfers of Glenbudgie, the private golf
club of which he is a member;

We need to know how Arlo envisages the sharing will take place – is it an equal split
between beneficiaries or does he want trustees to decide? If he doesn’t specify one way
or the other then an intention to create a fixed trust would be presumed on the basis that
‘equity is equality’. In either case, though, we have a problem with the ‘regular’
golfers as a class of beneficiaries – this would fail both the Broadway Cottages
complete list test and the McPhail v Doulton test for conceptual certainty. It is hard to
argue that ‘regulars’ could be saved even by applying Megaw LJ ‘substantial number’
approach in Baden (No 2), and even if a student tried to argue otherwise their advice to
Arlo ought to have acknowledged that leaving the class of beneficiaries risks a future
court declaring it void. Far better to suggest that Arlo comes up with an alternative that
is conceptually certain. Students may reference the Re Coxen line of authority but we
couldn’t simply leave the definition of ‘regular’ to the trustees or a golfing expert (e.g.
the club secretary) as they would not have a monopoly on the meaning of ‘regular’.

It reads to me as though Arlo wants to benefit the golfers individually (‘to be shared
between…’) rather than give a lump sum to be used for the benefit of the club, but
some students reasonably considered whether the club is an unincorporated association
(private golf clubs usually are) and if so whether he might want simply to make this a
Re Recher-style gift to be treated as an accretion to the club funds.

(b) £40,000 to each of his children to enable them either to attend university or to set
up their own business. Arlo is keen to ensure that they do not spend the money on
any other purposes;

If Arlo wants to ensure that each child has a right to the £40,000 then he can’t insist that
the money is used solely for one of these purposes – a gift phrased like this would be
valid but it would take effect simply as an outright gift or gift on trust (amounting to the
same thing if they are sui juris) for the children, as per Re Osoba et al – we can’t have
non-charitable purpose trusts, but the purposes here would be read down as just the
motives behind the gifts. Better answers considered alternative devices such as
conditional gifts, though none offers a perfect solution (and given the limited word
count and exam time we didn’t expect consideration of every possibility). Gifts
conditional upon completing university, for example, might encourage the children to
get their degrees but the money would be a reward for completion rather than the means
used to fund the degrees, and Arlo clearly intends the latter. Gifts until graduation (i.e.
subject to a condition subsequent gifts of determinable interests) are also a possibility.

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 But conditions (whether subsequent or precedent) based on ‘setting up their own
business’ would surely be too vague and fail, leaving outright gifts.

(c) his collection of first edition superhero comics to his three grandchildren, though
he would like his old friends to be able each to take at least one comic of their
choice to remember him by; and

If left as worded the reference to ‘old friends’ is of course reminiscent of Re Barlow,

where ‘friends’ was held not to be conceptually uncertain for the purpose of a series of
gifts subject to a condition precedent. Problem here is that unlike in that case the
quantum of the gifts here is not fixed (‘at least one comic’). Re Barlow also left open
whether or not ‘old friends’ rather than just ‘friends’ would also be conceptually
certain. Most answers also referenced Boyce v Boyce re the uncertainty of the
conditional gifts rendering the subject matter of the rest of the collection too uncertain
to go to the grandchildren. Probably best simply to ask Arlo to identify his old friends
and have them choose specific comics in advance, then make testamentary gifts of
these, and set up a separate fixed or discretionary trust of the rest of the collection for
his grandchildren.

(d) enough money to his ex-wife, Jemima, so that she will be able to live comfortably
for the rest of her life.

Could perhaps draw an analogy with Re Golay holding that a ‘reasonable income’ was
sufficiently precise, so Ts could take Jemina’s previous standard of living into account
in determining the subject matter, but the case is an anomaly and so this would be very
risky. Better to specify a fixed amount for Jemima. If the aim is to provide a sum for
the rest of her life then students ought to have the ken to suggest a life interest rather
than a capital gift.

He would like the remainder of his assets to be used to create a suitable monument to
his life and achievements in his home town.

Could be done as an exception to the rule against purpose trusts (Mussett v Bingle), but
would have to be limited explicitly to the common law perpetuity period (Re Hooper)
otherwise it will fail ab initio. As a trust of imperfect obligation, though, Arlo couldn’t
compel his trustee to carry it out.

Advise Arlo how his wishes might best be achieved, and what compromises, if any, he
might have to make.

Lastly, there is no mention of who Arlo might name as trustees, and some answers
advised him to remedy this: this is sensible advice, but extra kudos went to those who
mention that, even if he doesn’t, a trust will not fail for want of a trustee.

___________________________________________________________________________

LA3070 Continued

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6. Beth has just died and in her valid will makes the following gifts:

(a) £500,000 to maintain, and make available for supervised viewing by interested
members of the public, Beth’s collection of printed ephemera including 1,000 bus
tickets, 2,000 back copies of Heat magazine, and 3,000 sweet wrappers;

Potentially charitable as being for the advancement of education (CA 2011, s 1(1)(b))
or the advancement of the arts, culture, heritage or science (s 1(1)(f)), both of which
previously fell under the second head of Pemsel, but the issue here is whether there is
any genuine educational / artistic / cultural merit in the collection – merely increasing
the sum of knowledge pointlessly isn’t enough (Re Shaw). If unclear, the court can
hear expert testimony as in Re Pinion. If we can overcome this hurdle, there are no
issues re the public benefit (public galleries / museums can be charitable: White v
British Museum). The rubric asks for advice as to the validity and effect of the gifts, so
it wasn’t irrelevant for answers to discuss briefly how the museum would have to be
run – e.g. it can charge an entry fee and even make a profit, but this profit must not be
distributed to private hands (Re Resch); if it does charge a fee there must be some more
than de minimis provision to ensure the poor aren’t excluded from benefiting (ISC case)
– but no specific issues are raised on the facts.

(b) £500,000 to provide a home for elderly members of the Welsh National Party
living in Cardiff;

The relief of those in need by reason of age is a charitable purpose under CA 2011, s
1(1)(j). It’s not enough simply to target the elderly: the endeavour has to target some
need associated with age, but providing accommodation would do that (Joseph
Rowntree). Issue is whether the public benefit test is met. First issue is which PB test
applies, i.e. which head of Pemsel would this previously have fallen under? Students
should be well aware of the issue here as it came up in the mock exam problem
question: Joseph Rowntree says that the Preamble reference to the relief of the aged,
impotent and poor should be read disjunctively and these are separate charitable
purposes; this is reinforced by the separation of the relief of poverty and relief of those
in need in the CA 2011 – the relief of the aged fell under the fourth not the first head of
charity. Which means the strict Baddeley approach to PB applies: either the rule
against a ‘class within a class’ or the requirement that there must be some ‘rational
connection’ between the nature of the gift and any restriction on who can benefit the
class of beneficiaries (depending on which HL speech you prefer). Either way,
restricting to the members of a political party in a particular locality would fail. Credit
went to students who also pointed out that a trust limited to members of a political party
would always fall foul of the prohibition on political trusts.

(c) £500,000 to maintain a wildlife sanctuary in the centre of Coventry from which
members of the public are absolutely excluded;

Potentially charitable under CA 2011, s 1(1)(i) as being for the advancement of

environmental protection or improvement. Issue is whether the PB test is met by the

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absolute exclusion of the public: older authority suggests that the preservation of
habitat is not charitable unless combined with further activities such as maintaining the
land for public access (Re Grove-Grady), but the Charity Commission’s position has
long been that the acquisition of land solely to preserve an endangered species of flora
or fauna can be charitable, provided that the Ts inform the public about the charity’s
activities. In the lecture I also mentioned that, in Australia, wildlife sanctuaries which
restrict public access can be charitable even without such dissemination of information,
on the ground that there is a public benefit simply in preventing the destruction of the
species under protection (Re Sawtell).

(d) £20,000 to advance the teachings of the Church of Zarquat, which teaches that the
universe was created by Zarquat, a wizard from a parallel dimension. Its
members believe that if they lead good and productive lives they will be born
again in Zarquat’s parallel dimension when they die. It is a tenet of the religion
that people should not rely on social security but should instead actively seek to
better themselves; accordingly, membership is restricted to those in full-time
employment; and

Potentially the advancement of religion, but the issue is whether the belief system
meets the definition of religion: issue here seems to be that while there is a supreme
being there is no reference to worship or veneration, which would have been a problem
under the old South Place Ethical Society test, imported from ex parte Sedergal. Now
the CA 2011 s (3)(2) tells us that there is no need for belief in a god. But does this
mean that those belief systems that do believe in a god do not have to venerate it? It’s
unclear. On top of this, the SC in Hodkin tells us that Sedergal is no longer good law,
preferring a definition of religion as a spiritual belief system which explains man’s
place in the universe and teaches its adherent how to live their lives. On the one hand,
although Sedergal and Hodkin are not charity law cases, the overruling of the former
surely undermines South Place Ethical Society. On the other, Lord Toulson in Hodkin
was at pains to say there shouldn’t be a single definition of religion all legal purposes.
So things are somewhat up in the air, but the Charity Commission’s guidance aligns
with Hodkin, and the Church of Zarquat looks to meet the Hodkin definition.

As for public benefit, there is no inherent problem in restricting to those in full-time

employment as it isn’t a class linked by personal or contractual nexus. Good answers
considered whether this has the effect of unduly excluding the poor (ISC) but even
better answers recognized that the meaning of poverty is very loose (e.g. those who
sometimes ‘go short’ (Re Segelman) and that one could easily be in full-time
employment and still be poor.

(e) £10,000 to the Peterborough Pedalers cycling club, an unincorporated

association, to be used solely to purchase club jerseys for new members.

The advancement of amateur sport is a charitable purpose under s (1)(1)(g) but we are
not told the specifics of the club. Cycling clearly promotes physical fitness so would
class as a sport, and so if the club’s membership is open to the public regardless of
ability then it would be charitable (strictly speaking there’s more to it, but it’s beyond
what we covered in the course). But if it just operates for the benefit of private
members then it will be a non-charitable unincorporated association. If it is a charity

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 then a trust to provide sports clothing or equipment will be fine. If it isn’t a charity then
it looks like this is a non-charitable purpose trust that would fail, but better answers
should consider whether it could be saved, despite the apparent specificity of the
purpose, by using Re Lipinski and Re Recher to turn it into a gift to the current
members as an accretion to club funds – the problem here being it looks to benefit only
future members rather than existing members.

Advise Beth’s executors as to the validity and effect of these gifts.

___________________________________________________________________________

LA3070 Continued

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LA3070
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7. Florence and Milo are the trustees of a large trust fund held for the benefit of James for
life and James’s adult son Pete in remainder. Initially the trust fund comprised shares in
a public company specializing in arms manufacture; shares in a number of private
technology companies; gold; an oil painting; and cash in a current account. Florence
agreed to become a trustee as a favour to the settlor, an old friend of hers, but she is not
particularly interested in financial matters and tends to defer to Milo’s wishes. When
he became a trustee, Milo objected to what he perceived to be the high-risk nature of
the current portfolio of investments, and he also considered it morally inappropriate to
hold any investments in the arms industry. Accordingly, several years ago the entire
portfolio apart from the cash was sold and reinvested in government bonds with an
annual income yield of 1%. James never objected to this, as he had a highly-paid job,
but he was recently made redundant and now feels that he should be getting a better
income from the trust.

The original trust assets have had varying fortunes in the intervening period. The shares
in the public company are today worth twice what they were originally, whereas the
shares in the private companies have fallen by half their original value. The gold and
the oil painting have both trebled in value, though at one point last year the gold was
worth four times its original value.

James and Pete now seek advice as to whether they have any claims against Florence
and Milo. Florence would also like to know whether she may have any redress against
Milo.

Advise the parties.

Although this looks at first glance to be about the beneficiaries’ potential reparations
claims following possible breach of trust in relation to the management of the
investments, we should of course first ask what, if anything, the trust instrument says
about the trustees’ investment powers. If these have been limited in some way, e.g. if
any of the original investments were to be preserved (perhaps the oil painting is an
heirloom?), then switching the portfolio would amount to a misapplication of trust
assets. The Bs could request falsification of the trust accounts so as to strike out the
unauthorised sales of the original assets, and hold the Ts to their continuing duty to
deliver them, i.e. bring a substitutive performance claim. Ts would be required to hand
over the value of the assets at the date of judgment (Target Holdings). Most of the lost
assets are worth significantly more at the date of judgment: that is the Ts problem. In
the case of the shares in the private companies, which we are told are now worth half
what they were originally, it might be better to adopt a slightly more sophisticated
approach: assuming they were sold for more than they are now worth, the Bs could
elect to adopt the unauthorised sales then falsify the subsequent reinvestment in the
bonds, meaning the Ts would be now required to hand over cash equivalent to the sale
proceeds. Credit went to answers that noted that this approach avoids any problems re
breach, causation or limitation which may affect the analysis below. We didn’t want to
see anyone get side-tracked considering whether Target Holdings and Mark Redler
prevent the use of substitutive performance, given we are talking about a traditional
trust here and not a bare trust in a client account.

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In fact, the majority of answers didn’t think to consider substitutive performance and
focused simply on the possible reparation claims (see below). That was fine – answers
that just covered reparation could still score highly – but special credit was given to
those that covered both analyses.

If there is nothing in the trust instrument then by default the Ts have the power to invest
as though they were the absolute owners of the trust assets (TA 2000, s 3). If the Bs
wish to challenge the sale and reinvestment in government bonds then we need to
identify a breach and a causal link. There are several apparent breaches here:
(a) Ts have failed to have regard to the need to maintain a diversified portfolio, as
required under TA s 4(3)(b);
(b) Ts have failed to act impartially by balancing the competing needs of the income
and capital beneficiaries (Re Mulligan);
(c) Ts have invested on the basis of personal ethical beliefs rather than in the best
financial interests of the beneficiaries (Cowan v Scargill).
(There may also be other breaches the facts are silent about: e.g. Milo and Florence
should have sought proper financial advice, unless they reasonably considered it
unnecessary or inappropriate (TA 2000, s 5).)

Can we make out a causal link between the breaches and the loss to the trust fund?
Some students repeated the line from all the textbooks asserting how hard it is to make
the connection in practice, as the effect of Nestle is that Bs need to show that no
reasonable trustee could have made the same investment decisions. But in this case I
think that, given the apparent size of this trust fund, deliberately putting all eggs in one
basket contrary to the TA standard investment criteria is a step that no reasonable
trustee would have taken, so the causal link is probably made out.

As with the substitutive performance analysis above, equitable compensation would be

calculated at the date of judgment (Target Holdings). The fact that the gold was at one
point worth 4x its original value, whereas it is worth 3x today, is a red herring. (The
very best answers pointed out that the only way of getting that extra value would be to
prove that no reasonable trustee would have done anything except hold onto the gold
until the point it was worth 4x its original value and then sold it: an extremely tall
order.) A consolation for the Ts is that they may be able to persuade the court that the
losses should at least be offset against the gains they made by jettisoning the private
company shares, since they were all part of the same investment policy (Bartlett v
Barclays Bank).

Better answers spotted that we are told this all happened ‘several years ago’ and under
the Limitation Act 1980, s 21(1) an action for breach of trust is statute-barred after six
years. Depending when bonds were bought, James may be too late. Really, really good
answers tried to get round this by querying whether there might be a new breach every
time the Ts fail to put right their original breach given that they are under a clear duty
under TA 2000, s 4(2) periodically to review their investments. There is a weak
argument that James has acquiesced in the breach (Holder v Holder) but Bs are not
required to monitor their Ts.

Even if James’s claim were statute-barred, Pete, with his remainder interest, can still
claim for breach of trust: s 21(3) of the Limitation Act says the clock doesn’t start
ticking until his interest falls into possession.

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 Re Florence’s query: Ts are jointly and severally liable, but the court can decide how to
apportion the liabilities between them. Florence may be able to argue that Milo should
pay a greater share, or even that she should be indemnified, if he has effectively
controlled the trust (Re Partington).
___________________________________________________________________________

LA3070 Continued

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LA3070
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8. Amma is the sole trustee of the Hanbury family trust and the Martin family trust. In
March 2017, she withdrew £100,000 from the Hanbury trust account and paid it into
her personal current account, which was overdrawn by £50,000. No money was paid in
or out of that account until the following month, when Amma transferred £100,000
from the Martin trust account into the same account. Over the course of 2017, she
made the following withdrawals from the account, in order:

(a) £30,000, which she used to buy a bottle of vintage champagne, which she drank
at her fortieth birthday party last month;

(b) £20,000, which she used to purchase shares in a private hospitality and
entertainment company, which are now worth £50,000; and

(c) £100, which she gave to her sister, Susan, as a birthday present. Susan used the
money to buy lottery scratch cards, which she was regularly in the habit of doing,
and won £100,000 with one of the cards. Afterwards, Susan gave £100 from her
winnings back to Amma as a token of thanks, and Amma paid it into her personal
current account.

Amma is also the trustee of the Moffat family trust, and in 2018 she withdrew £50,000
from that trust’s account and paid it into her personal current account. She then made
one final withdrawal:

(d) £150,000, which she used to pay off the mortgage on her house, which she co-
owns with her girlfriend Holly.

Amma has just been declared bankrupt and there is no money left in her personal
current account.

Advise the beneficiaries of the three trusts.

A relatively straightforward tracing question. No sense considering personal breach of

trust claims given that Amma is bankrupt. And no need for students to consider any
personal liability of Susan as dishonest assistance and knowing receipt were removed
from the syllabus due to the strike (the question is in any case phrased so as not to
prompt any suggestion that she might be at fault). Also straightforward because unlike
many past questions (a) we don’t have any of the trustee’s money mixed in as well and
(b) we know what sort of bank account it is.

Mixings in the current account – starting point is Clayton’s Case and FIFO:

£100,000 paid in to the overdrawn account from Hanbury - £50,000 dissipated, leaving
£50,000 of Hanbury money. £100,000 then added from Martin. So first £50,000 of
withdrawals come from Hanbury: £30,000 on the wine and then £20,000 on the shares.
On this analysis, Hanbury’s Bs will trace into the shares and claim outright ownership,
rather than a lien, in order to enjoy the increase in value.

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£100 given to Susan to buy the scratch cards, including one that wins £100,000. On
orthodox principles, since Martin money is used to buy the tickets, the Martin Bs can
claim outright ownership of those tickets, and the subsequent winnings, as per Re
Montagu’s ST and Foskett v McKeown. But good answers considered whether this is
fair: what is Susan can show that she would have bought the scratch cards from her
own money in any case? Why should winnings go to the Bs and not her? Hayton and
Mitchell suggest that in such a case an equitable lien to enable the Bs to recover the
cost of the scratch cards would be a fairer outcome, though there are no cases for this
approach.

£100 from the winnings given back to Amma. Many answers identified this as
triggering the rule in Roscoe v Winder, whereby money paid into the current account
after spending trust money was held to be Ts money not Bs. But of course our situation
is distinguishable: as the £100 comes from the scratch card winnings it was surely
always Martin money and not Amma’s own. The question is then whether this simply
negates the need for a lien under the Hayton & Mitchell analysis above, or whether the
Bs can still claim ownership of the rest of the winnings.

£100,000 from Hanbury Martin trust then mixed with £50,000 from the Moffat trust.
Both are apparently dissipated paying off the mortgage, but of course we have the
possibility of subrogation. Holly’s presence as an innocent co-owner doesn’t prohibit
this (Primlake). Good answers queried how the subrogation claim would work if it had
to be shared between the two sets of Bs – if they both had separate claims for their
respective sums owed, which would take priority? Foskett, albeit on quite different
facts, suggests that innocent contributors must be treated equally; Andrew Burrows has
argued that there is no reason in principle why one set of Bs could not be subrogated to
the extinguished charge but hold their rights thereunder on trust for themselves and the
other set of Bs.

Some answers suggested backwards tracing as an alternative, following Brazil v

Durant, but we don’t know that there is any transactional link between the mortgage
being obtained and the pilfering from the trust funds. If the mortgage was taken out
with the intention of paying it off with the trust money then probably a link is made.
Really good answers would spot that we don’t know whether it is an acquisition
mortgage – backwards tracing, if available, might not lead the Bs to the house but to
some other asset instead.

At the end of all this we should consider whether FIFO should be disapplied given it is
arbitrary. My view is no – all the cases from Barlow Clowes onwards are quick to
disapply it but (a) they still state Clayton’s Case is the starting point and (b) they all
involved investment funds or other trusts where Bs expected their moneys would be
mixed with that of others, so it made sense that proportionate splits / sharing losses
rateably would be seen as more appropriate. Here we are dealing with family trusts
which were presumably never intended to be mixed; I’m not convinced Clayton’s Case
could be disapplied so easily. But students were certainly free to argue the opposite (as
indeed does Gary Watt).

If we do go for a proportionate split of the remaining assets between all three sets of Bs,
good answers noted that this would see some of the Moffat trust money going into the

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 earlier withdrawals which we know didn’t happen – should those Bs really have a claim
over e.g. the £100,000 scratch card winnings, given that their money wasn’t pilfered
until later on? The rolling charge approach deals with this but has thus far been
rejected in English courts.
___________________________________________________________________________

LA3070 End

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