CILEx L6 Equity & Trusts Advanced 2

Question 1

What is the rule in Re Denley's Trust Deed [1969] regarding purpose trusts?

Accepted Answer

A purpose trust is valid if it can be enforced by identifiable human beneficiaries who can come to court to enforce the trust, even if expressed as a purpose

Answer

In Re Denley [1969] 1 Ch 373, Goff J held that a purpose trust for the benefit of employees of a company was valid because there were identifiable persons who could enforce it. This creates an exception to the rule that non-charitable purpose trusts are void.

Question 2

What are the 'anomalous' exceptions to the rule against non-charitable purpose trusts?

Accepted Answer

Trusts for the maintenance of graves and tombs, trusts for the care of specific animals, trusts for the saying of private masses, and trusts for the erection and maintenance of monuments — all are valid but conceded exceptions

Answer

English courts have accepted a small group of anomalous exceptions to the rule that pure purpose trusts are void: (1) trusts for specific graves and tombs (Musset v Bingle), (2) trusts for specific animals (Pettingall v Pettingall), (3) trusts for private masses (Bourne v Keane), (4) trusts for monuments. These are conceded exceptions without clear theoretical justification.

Question 3

What is the 'public benefit' requirement for charitable purposes under the Charities Act 2011?

Accepted Answer

Every charitable purpose must benefit the public or a sufficient section of it, and the benefits must not be outweighed by detriments — the Charity Commission has issued guidance

Answer

Under s.4 Charities Act 2011, the public benefit requirement applies to all charitable purposes — the presumption of public benefit was abolished. The Charity Commission issues public benefit guidance. For certain charities (e.g., fee-paying schools), the benefit must extend sufficiently beyond fee-paying members.

Question 4

What is 'knowing receipt' following Bank of Credit and Commerce International (Overseas) Ltd v Akindele [2001]?

Accepted Answer

Liability in knowing receipt requires that the recipient's state of knowledge make it unconscionable for them to retain the benefit of the receipt

Answer

In BCCI v Akindele [2001] Ch 437, the Court of Appeal held that the single touchstone for knowing receipt is whether the defendant's state of knowledge was such as to make it unconscionable for them to retain the benefit of the property.

Question 5

What is a 'constructive trust following a specifically enforceable contract for the sale of land'?

Accepted Answer

As soon as a specifically enforceable contract for sale of land is entered into, the seller holds the property on constructive trust for the buyer (Lysaght v Edwards [1876])

Answer

The principle from Lysaght v Edwards [1876] and Walsh v Lonsdale [1882] is that equity treats as done that which ought to be done — once a specifically enforceable contract for the sale of land is concluded, equity treats the seller as holding the property on constructive trust for the buyer.

CILEx Level 6 Practice Test

CILEx Level 6 Practice Test

CILEx L6 Equity & Trusts Advanced 2