Exam 22: Tracing

Fred, a corrupt trustee, dishonestly withdraws £10,000 of trust funds. He pays the funds into a joint current bank account which he operates with his wife, Gladys. At the time the £10,000 was paid in, the account was £3.000 overdrawn. Two days later, Gladys's salary of £2,000 is paid into the account, so that it now stands £9,000 in credit. Fred and Gladys have just been declared bankrupt. Which of the following statements about the rights of the beneficiaries to any money in the account is true?

Which of the following is not a requirement for imposing personal liability where a person has received trust property in breach of trust.

Which of the following is unlikely to be considered a trustee de son tort?

What is the key holding in BCCI v Akindele [2000] 4 All ER 221 in relation to liability for knowing receipt of trust property in breach of trust?

Malignant decided to commit a breach of trust by selling shares in a company owned by the trust for £80,000. Malignant enlisted the help of his personal agent, Trusting, to make the sale. Malignant told Trusting that the sale was to raise money for investment and the proceeds should be paid to him to speed up any subsequent investment. Trusting did as instructed and gave the proceeds to Malignant, saying 'This is not normal procedure, but I'd rather not know what you are up to'. Malignant has now spent the £80,000 on a weekend trip to Las Vegas. Hopeful, the beneficiary, wants to know if he may have an action against Trustingt

In which of the following situations is it least likely that property of the original trust could be traced by the beneficiaries? (Think carefully before answering).

A corrupt trustee dishonestly withdraws some of the trust funds and pays them into his own bank account. He use some to make gifts to members of his family who do not know the source of the money. Which of the following statements are true (more than one applies)?

Karl, a dishonest financial adviser, took deposits from clients as part of a Ponzi scheme. He told 'investors' that they were investing in high yield securities, but in fact he was using the money to fund his high living lifestyle. He kept very poor records. Having taken £5million from investors, he was declared insolvent. Karl's only remaining asset is a house which has just been sold for £500,000 and which had been purchased with investors' funds. Which of the following statements most accurately describes the rights of investors?

Which of the following is not a requirement to establish liability for dishonest assistance in breach of trust.

Howard, a trustee, bought a brand new car costing £20,000. He paid the deposit of £5,000 in January using his credit card. He paid this credit card debt in full using his own money. He paid the balance of £15,000 in March, again using his credit card, which at the time had a debit balance of £6,000. In April Howard repaid the whole of the credit card debt of £21,000 using money wrongly withdrawn from the trust. Which of the following statements most accurately describes the rights of the beneficiaries?