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LW/APR 2009/LAW556/283

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

ADMINISTRATION OF TRUSTS / EQUITY AND TRUST II LAW556/283 APRIL 2009 3 HOURS

INSTRUCTIONS TO CANDIDATES 1. This question paper consists of three (3) parts : PART A (5 Questions) PART B (2 Questions) PART C (1 Question)

2. 3.

Answer ALL questions in the Answer Booklet. Start each answer on a new page. Candidates are strongly advised to allocate not more than 60 minutes for answering questions in PART A. Do not bring any material into the examination room unless permission is given by the invigilator. Candidates are allowed to bring in the following statutes (unannotated). (i) Trustee Act 1949 (ii) Wills Act 1959 (iii) Distribution Act 1958 Please check to make sure that this examination pack consists of: (i) the Question Paper (ii) an Answer Booklet - provided by the Faculty

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DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages
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LW/APR 2009/LAW556/283

PART A QUESTION 1 Discuss the liability of a trustee for the defaults of an agent appointed by him. (6 marks) QUESTION 2 Minnie died in a car crash recently. Her will reads as follows:"RM50,000 to my sister, Alicia". There is a line through the figure RM50,000 and another figure of RM80.000 was written above it in ink. Advise the executor of Minnie's estate as to the validity of the disposition. (6 marks)

QUESTION 3 Discuss the various reasons for the discontinuance of a trustee from his post and the methods of appointment of a new trustee in substitution, with particular reference to the provisions of section 40(1) of the Trustee Act 1949. (6 marks) QUESTION 4 The classic test on animus testandi is the one enunciated by Cockbum CJ in Banks v Goodfellow (1870) LR 5 QB 549. Briefly explain the test laid down in this case. (6 marks) QUESTION 5 Aziz, a Muslim, died recently. In his will, he directed that all his properties be given to his adopted son, Razak. Nothing was left to his wife, Wani. Advise Wani as to the validity of the will under the Islamic law of succession. (6 marks)

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LW/APR 2009/LAW556/283

PARTB QUESTION 1 Answer both questions: a) The executors of Ridge's estate decide to sell his house Pine Villa. They take independent expert advice, and it is agreed that Pine Villa should be sold by public auction. A reserve price of RM3,000,000 is fixed and the auctioneers say that they expect the property to realise RM5,000,000. One of the executors, David, subsequently becomes engaged to be married. His fiance decides that Pine Villa will make an ideal matrimonial home. He consults some of the beneficiaries, who do not object, and he bids at the auction. Pine Villa is knocked down to him for RM 3,500,000 after vigorous bidding. Advise the executors. (10 marks) b) A trustee mixed RM50,000 of trust monies with an equivalent amount belonging to him and deposited the whole sum of RM100,000 into his personal bank account. Subsequently, he made several withdrawals for his personal use and for payment to his creditors. Soon after, he died. At the time of his death, the balance in the bank account was RM25,000. His creditors claimed RM20,000. Determine the rights of the beneficiaries in a claim for the trust monies. (10 marks)

QUESTION 2 Kevin and Alan were trustees of a will trust which gave them power to invest the trust funds in such investments as they, in their absolute discretion, think fit. Kevin and Alan decided to lend money on the security of a painting by a reasonably well known painter, without first getting an independent valuation, as they wanted to save cost to the trust. After sound advice from the deceased testator's stockbrockers, the trustees also purchased shares of a public company listed on the Stock Exchange, which the deceased testator had often invested in. Based on that, Kevin and Alan did not think it necessary to consult anyone else. They also bought a piece of palm estate land. They had heard that a foreign company was interested in developing it into a golf course. Alan is a surveyor whereas Kevin is a retired bank officer. The public listed company has now gone into liquidation and the painting is worth less than a third of the value of the loan. The foreign company has shelved its plans for developing the golf course and refused to purchase the land from Kevin and Alan when they offered it to the company. Discuss whether Kevin and Alan are liable for breach of trust and why. Would they be entitled to protection from liability, if there is any? (20 marks)

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LW/APR 2009/LAW556/283

PARTC QUESTION 1 In May 2007, Don wrote a letter addressed to his son, Michael, saying that he wished to put his affairs in order. The letter contained various good wishes to friends, together with the following dispositions:a) b) c) d) My Honda car, bearing the registration number WJL 20 to Kim RM 50,000 to Tony A Proton Saga to Rina The residue of my estate to Wong

Don signed at the bottom of the letter in the presence of his servants, Mimi and Seng. When Mimi was about to sign the letter as a witness, Seng left the room to attend to a phone call. When Seng returned, Mimi told Seng in the presence of Don, "This is my signature, and now you can sign". Seng nodded and signed the letter in front of Don and Mimi. It was discovered later that Don, who died of cancer in Febuary 2008, had in fact sold his car in August 2007. He had never owned a Proton Saga. Tony too had died in a road accident in October 2007. Michael who is the only son, challenges the validity of the letter made by his father. He strongly believes that he should rightfully inherit all the properties of his late father. In fact he alleges that the letter cannot be considered as a will at all. Advise Michael as to the validity of the letter and the dispositions contained therein. (30 marks)

END OF QUESTION PAPER

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