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Instructions

Answers to the two (2) questions cannot exceed a total of 2,500 words. This is an upper word limit and a student need not write 2,500 words if he or she can answer the questions in less than 2,500 words. Footnotes are not required, but authority must be stated for legal principles. A bibliography is not required.

Answers to the examination questions should contain appropriate analysis and argument supported by relevant authority. When citing a case for the first time, the full name of the case must be set out. However, the report citation is unnecessary. For example, for the decision in Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265, it is sufficient to cite it as Latec Investments Ltd v Hotel Terrigal Pty Ltd. For subsequent references to that case an abbreviated name is sufficient, for example, Latec Invetsments.

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If any student does email their answers they must also submit the answers through iLearn once the malfunction has been resolved. 

Question 1 

Melania and Donald are business partners and own BeBest Buggies. BeBest sells golf equipment and offers personal golf tuition. They established their large and ostentatious shop in Double Bay, Sydney ten years ago. Donald takes care of the sales part of the business. Melania just doesn’t really care about golf equipment but provides individualised coaching and nutritional advice to wealthy retired women who compete in local golf tournaments. In the window of the shop, there is a large sign that reads, “we buy second hand golf buggies!” Donald, in his spare time, reconditions used golf buggies and sells them at a profit.

BeBest initially employed Eric as a junior shop assistant when the business was first established. However having nearly completed an online management degree at Covfefe University, he has been given more responsibility and undertakes the day-to-day running of the business, including updating client information.

In January this year, Barron came into the shop wanting to sell a used golf buggy, the ElectriK Mar-a-Lago 2000. Donald haggled with Barron on the price, and Donald eventually paid Barron $500. That evening, Donald’s very wealthy girlfriend Gale Spaniels visited him, and immediately recognised the ElectriK Mar-a-Lago 2000 as a collector’s piece. She suggested to Donald that he keep the purchase a secret from Melania, recondition the buggy and sell if for a huge profit. Gale said she could arrange a buyer. Donald took Gale’s advice, and eventually sold the buggy for $8,000 to the buyer Gale provided.  With the proceeds, he bought Gale a beautiful sapphire ring for $5000. The remaining $3000 he deposited into his personal account, which was $3000 overdrawn.

Eric in the meantime has been busy at BeBest. Several months ago he was tasked with negotiating, on behalf of BeBest, a lease for new premises in the CBD. During one meeting, an agent of Pencefield Mall passed Eric a brown envelope containing $20,000 saying “this is the best deal you’ll get”. Eric accepted the envelope and agreed on behalf of BeBest to lease the retail space at Pencefield Mall. The lease was in fact at market value. Eric quickly invested the money on the stock market.

Buoyed by his success Eric, suggested to his sister Ivanka, they create an online business selling nutritional supplements. With his access to BeBest’s client records, he was able to download the personal information Melania kept concerning her clients training regimes. Eric explained to Ivanka they would use the information to target specific clients with their marketing.

Melania, long suspecting Donald and Eric were not entirely honest with her, has had a private detective investigate their business dealings, and now knows everything. Gale broke up with Donald and sold the ring on ebay for $6000.  The stock market is booming and Eric’s share portfolio is worth $50,000.  Eric and Ivanka are about to begin their targeted marketing for the nutritional supplement business.

After learning of the above events, Melania decided to go on a long holiday, and wants to draft her will before she leaves. In her will she proposes to allow trustees absolute discretion to distribute $100,000 to any of her relatives or friends, provided they have never married into Donald’s family, or have been involved in any business dealings with him. The residue of her estate is to be used for the purpose of promoting the game of golf in schools in the Eastern suburbs of Sydney.

Melania seeks your advice as to any rights or claim she has in equity against Donald, Eric, Gale and Ivanka, and to the validity of her will.  

*Students are only to apply law covered in Equity and Trusts, and not to consider other areas, such as Australian Consumer law. *

Question 2 

Intention is a crucial elemt in many areas of equity and trusts. In Trident General Insurance Co Ltd v McNiece Brothers Pty Ltd [1988] HCA 44, Mason CJ and Wilson J stated:

[t]he courts will recognize the existence of a trust when it appears from the language of the parties, construed in its context, including the matrix of circumstances, that the parties so intended. We are speaking of express trusts, the existence of which depends on intention.

Critically discuss the role intention plays in equity and/or trusts.

In your answer, you may refer to one or any number of areas you have studied, including if you wish, but not confined to express trusts.   

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