Soton Equity and Trusts - alastairhudson.com

£200,000 on Static plc shares which have not changed in value. On 8 th April he invested the remaining
£1.9 million with conmen who absconded with the money and cannot now be found.
Tariq paid his £20,000 into his personal bank account and mixed it with £10,000 of his own money.
He then spent £10,000 on a round-the-world cruise and the remaining money was invested on his
behalf by Profit Bank. These investments have increased in value by 5%.
Advise the directors of Cake Ltd.
3. Dishonest assistance and unconscionable receipt
Arthur was the trustee of the Davis family trust. The trust fund contained a valuable sculpture by
Claudin. The terms of the trust provided that the trustees ‘must continue to hold the sculpture on trust
throughout the life of the trust’.
Arthur sought an up-to-date valuation of the sculpture from Bernard. Bernard was employed by
Shelley’s Ltd, a company which specialised in dealing in artworks. Bernard was one of five dealers
retained by the company, although he was not on the board of directors.
Arthur told Bernard that he expected that the sculpture was worth about £50,000. Bernard knew that
the sculpture was worth much more than that. However, Bernard refused to give Arthur a valuation on
the basis, Bernard said, that Bernard might want to buy the sculpture and therefore did not think it was
ethical to give Arthur a valuation himself. Instead Bernard directed Arthur to his friend Colin, who
worked as a self-employed art dealer, so that Colin could give Arthur an independent valuation.
In the time it took for Arthur to walk to Colin’s shop, Bernard telephoned Colin to tell him that he had
sent Arthur round with a sculpture which Bernard believed to be ‘a Claudin sculpture worth about
£50,000.’ Colin was puzzled: ‘surely, Bernard, a Claudin should be worth at least £100,000.’ Bernard
answered: ‘well, yes, Colin, that may be true but I want to buy the sculpture off him and make a good
profit for Shelley’s Ltd. So, I’m sure you’ll agree with my valuation when you see the sculpture – I
will even give you double your ordinary fee for valuing the sculpture for us.’
Colin told Arthur that the sculpture was not a particularly interesting Claudin which would only
receive £50,000 on the open market. Shortly afterwards, Bernard telephoned Arthur and said that he
would pay Arthur £55,000 for the sculpture. Arthur was sure that this was a good deal for the trust and
so agreed to the sale.
Shelley’s Ltd has a business motto of which the dealers are reminded every morning: ‘Your only duty
is to the shareholders of Shelley’s Ltd. Your only duty is to make them as much money as possible.’
Bernard will claim that this is his principal business ethic.
Bernard paid Colin his fee and subsequently sold the sculpture for £100,000. Bernard made a personal
commission from his employer of £10,000 on this sale. Arthur has been declared personally bankrupt.
Advise the beneficiaries of the Davis family trust.
4. Tracing
Trevor was trustee and also one of the beneficiaries of the Brand family trust. The trust was created by
the successful playwright Squirrel Brand who died in 2005 settling £20 million on the terms of this
trust. The beneficiaries were ten members of the Brand family. The terms of the trust provided that the
trustee was not permitted in any circumstances to take any capital from the trust, nor was the trustee
permitted to advance any amount of capital to any of the beneficiaries. Instead income was to be
accumulated from stock market investments and divided equally between the beneficiaries.
Trevor decided that he was tired of always working for the benefit of the other beneficiaries.
Therefore, on 20 th July 2007, Trevor took £2 million from the trust fund, which he considered to be his
share of the capital.
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