Introduction In accordance with the requirements of the following specifications, write the report in respect of the issues raised in trusts by the assignment assumed facts and questions specified below. The report is to take the form of a review and analysis of, including your opinion and guidance on, all issues raised in trusts. In so doing provide a legally supportable explanation of your views citing and referencing any authority on which you rely. Where possible, specify and clarify the nature, content and public policy objectives (if any) of the trusts principles which you consider to be determinative (or persuasive in respect) of those issues and give your critical observations on those principles. Take care to craft the report in accordance with the requirements and spirit of the assignment terms of reference specified below. Assignment Specifications Marking Value This assignment is eligible for the award of up to a maximum of forty (40) assessment marks (40% of total unit assessment marks).
It is anticipated that the program will give you warning if you have inadvertently made such an error. You must not assume that you have effectively submitted your assignment after having uploaded your it to the DRAFT SafeAssign Link. That link is not a legitimate point for the submission of your final assignment. It is merely there for you to check a DRAFT of your assignment for plagiarism if you wish to have the opportunity to review the state of your submission before final upload. The DRAFT SafeAssign Link will be available until the end of the semester. If you are late with the submission of the final form of your assignment, do not attempt to achieve submission by leaving your assignment in the DRAFT SafeAssign Link. Assignment Terms of Reference Your report must be crafted on the hypothetical basis of the following assumptions: You are employed as a legal practitioner in a particular legal firm. It is the firm which has been approached for advice by the client referred to in the assignment assumed facts (“the problem facts”). Your role in the firm is as a member of a team of lawyers who work together on contentious cases. You are regarded by the team leader as the teammember who is most proficient in the field of trusts. For that reason, the team leader has asked you to write a report for his or her information on the trusts aspects of the client’s inquiries to assist the team leader to formulate the necessary advice. Your advice is also to be reviewed by all of the other members of the team as part of the process of assembling an agreed advice for the client. Your report is intended to exclusively concentrate on how the principles of trusts apply in relation to the matters that arise from the respective assumed problem facts. You have been asked for a trusts analysis partly because of your expertise and also for the reason that other lawyers in the team have been assigned to consider the implications of other components of law. The objective is to cover all elements of applicable law by harmonising a range of specialist reports including yours. Also your report must take into account that the team leader does not practise in the trusts field (nor do the other team members). For that reason, none of them are currently familiar with the principles of trusts. The team leader has specifically instructed you not to assume any background knowledge on their part and to give definitive authority for any propositions that you assert in case they may wish to verify what you say. In formulating your report, try not to venture into other fields such as the Corporations Act, employment law, the laws of contract, property, partnership and similar unless to do so involves the application of principles and doctrines that have been directly or incidentally examined in your study of the trusts unit at Charles Darwin University. In particular definitely avoid any consideration
law of tort, consumer law, criminal law, family law and similar fields. Other members of the legal team have been assigned to consider how those components of law apply to the case. If you wish to make observations in relation to matters that may possibly involve a foreign jurisdiction, you may assume that Australia and that foreign country have in place a convention or treaty that makes it possible to enforce the judgements of Australian courts in that foreign jurisdiction. PROBLEM FACTS Concluding Trent’s Affairs Trent Hillier was an effective businessman. In the several years before he died he was able to enjoy the fruits of a productive and successful career. Some significant things happened in those last few years. The following is an outline of the circumstances and events that are relevant to Trent’s affairs at the time at which we must review the issues raised in these assumed problems facts. Outline of Assets Trent had a large piece of development land at Palmerston. He had applied for, and been given, approval for a subdivisional development of the land. There were to be 6 commercial sites and 22 residential sites. The anticipated value of the residential sites was an average of $250,000 each and the likely value of the commercial sites ranged between $600,000 and $1 million. The Palmerston land venture was merely one of Trent’s numerous involvements in real estate. By the time relevant to this review, he had a very significant portfolio of houses and apartments, 3 retail shops in suburban locations and 2 warehouses. All of these were occupied by paying tenants or, in some way or another, generating significant income. Trent also had accumulated a very significant share portfolio. The market value of his shares varied from day to day with the ups and downs of the market. However it would be safe to assume that in normal circumstances the portfolio would have sold for approximately $2 million. One element of the portfolio was a parcel of 5,000 shares in BHP Limited. Those particular shares were worth approximately $35 each. Trent had liquid assets, in the form of bank balances, amounting to almost $8 million. One of Trent’s less significant assets was a collection of Australian indigenous art. The value of those items was unknown but could be expected to be of something well above a basic 6 figure amount (he had paid more than $100,000 for it over a significant period of years). Trent had a residence which he personally occupied, with his wife and family, of a value of around $1,750,000. He also had the usual domestic assets such as motor vehicles, furniture and similar. General Events
– The subdivisional project was approved to be done in stages. At the time relevant to this review, the actual developmental work (road, drains, electricity reticulation and similar) was well advanced. Trent had finished 2 stages which completed 4 of the commercial sites and 12 of the residential sites. The completed sites were lawfully capable of being sold or assigned. None of these properties had actually been sold, contracted for sale nor promised to any particular purchaser. Trent’s policy was to hold his land until the market was at its peak. Foundation Gift – About one half years prior to the time of our review, Trent had donated $350,000 to the Muse Foundation Pty Ltd (“the foundation”). By its constitution, the foundation was established for the sole purpose of providing support to the arts. It solicited donations from philanthropically motivated donors and devoted that money to benefiting artistic activities and entities. The donations given by supporters qualified them for a tax deduction because the foundation was accredited with the Australian Taxation Office in a way that made donations tax-deductible provided they were voluntary and unconditional. Trent had made his donation under the cover of a letter in which he stated that he would prefer the foundation to use the money to assist the Darwin Chorale to purchase sheet music, repair instruments, underwrite the expenses of visiting conductors and meet the cost of venue and piano hire where relevant. Darwin Chorale was a voluntary association of choral enthusiasts. It had no written constitution. The organisation only kept very basic records. To the extent there was any mission statement or theme in those records, they suggested that the basic purpose and objective of Darwin Chorale was to provide an outlet for singers and musicians to meet together and enjoy the uplifting experience of group singing. Some of the choir sessions were conducted in private (with visitors welcome if interested) whilst other sessions were presented for public appreciation at the Darwin Entertainment Centre on a fee for ticket basis. The proceeds of ticket sales were usually devoted to the sort of general purposes that Trent had in mind when he made his donation. Trent duly claimed and received a tax deduction for his $350,000 donation. Otherwise things did not go otherwise exactly how Trent had intended. The foundation did not pass the money on to the Darwin Chorale. It is conceivable (but there is no proof) that the foundation gave the money to some other beneficiary. The foundation did not keep separate accounts in respect of each particular donation, but rather kept all donations in the same general fund. At the time relevant to our review, the general fund amounted to $1,723,000 but that sum was quite insufficient to meet the financial obligations of the foundation. That was the reason why the foundation went into liquidation approximately 4 months after the tax deduction for Trent’s donation was accepted by the Australian Taxation Office. That deduction was processed and accepted before liquidation was activated. The reason for the liquidation was that the foundation was unable to pay its debts and otherwise meet its obligations. At Assignment LWZ211 S216 Page 6 of 9 the time of our review no investigation had been completed which would give any reliable basis for speculating as to where the foundation’s money had gone. It may have been defalcations but perhaps it was simply incompetence and bad management. Art Collection – Approximately 12 months prior to our review, Trent formulated a plan to sell his collection of indigenous art. To achieve that purpose he placed the collection with Origins Gallery Pty Ltd (“the gallery”) for sale. His understanding with the gallery was that it would display the collection, for sale, at one of its impending major art fairs to be staged in Melbourne. The gallery’s general plan for the art fair was to display a substantial range of indigenous art from many other sources. Trent asked the gallery to feature his collection adjacent to its other stock in a way that made clear that it was a separate collection. Trent’s motive for that request was that he considered the collection to be uniquely interconnected and therefore more valuable, if sold as a whole, than it would be if sold in parts. At the time of our review the gallery was in liquidation for reasons related to insolvency. A Liquidator’s report, that was available to people with a relevant financial interest, made clear that the gallery had sold Trent’s collection for $348,000. That sum of money had been credited to its own account shortly after the relevant sale. However the gallery had not accounted to Trent in any way. The liquidator’s report indicated that assets of the gallery (principally its own bank account) were not adequate to satisfy the claims of financially aggrieved persons. Nonetheless the gallery’s accounts were in credit to the extent of $972,000. Death of Trent Somewhat unexpectedly, Trent died of an aneurysm of the brain which manifested itself without any prior warning and with no opportunity to administer any relevant medical aid. Fortunately, Trent had made prudent arrangements about the possibility of such an eventuality. He had made an appropriate will the relevant content of which is as follows. Trent’s Will LAST WILL AND TESTAMENT 1 THIS WILL is made by me Trent John Hillier of 18 Cullen Bay Crescent LARRAKEYAH in the Northern Territory of Australia, business proprietor, as follows. 2 I HEREBY REVOKE all former wills and testamentary dispositions heretofore made by me AND DECLARE this to be my last will and testament. 3 CONDITIONAL UPON the contingencies expressed, I APPOINT the following successive persons to be my Executor:
1 my wife Alana Florence Hillier if she shall survive me and if not, or if she shall renounce or resign, or die during, office; 3.2 Arafura Trustees Ltd (ACN 102 207 903) a corporation that conducts business throughout Australia including in the Northern Territory; AND WHERE in this my will I use the expression “my trustee” that expression shall be taken to include such person or entity as by the operation of this my will is the executor thereof. 4 I DIRECT MY TRUSTEE to trace, demand and take any necessary legal proceedings to get in the whole of my tangible entitlements to and in respect of any matter of value whatsoever including (but not limited to) any existing identifiable real and personal property (including, without being limited to, any chose in action by force of which it may be possible to realize any tangible asset or benefit) and convert into money such sufficient part thereof (that does not then consist of money at the date of my death) as may be necessary to enable my trustee to pay all of my just debts, funeral and testamentary expenses, and any succession estate or other death duties which may become payable in respect of my estate, out of my estate (if possible in a manner which shall not require any adjustment or apportionment between any of the beneficiaries under this my will or any codicil hereto) and, subject to any specific bequest, legacy, devise or direction contained herein, to stand possessed of all remaining money, real and personal property that comprises my net estate on trust to be distributed in accordance with the following contents of this my will. 5. I GIVE DEVISE AND BEQUEATH all my real and personal property unto my trustee in trust to make the following dispositions: 5.1 The sum of One Hundred Thousand Dollars ($100,000)1 to my friend Eleanor Harrison noting however that it is my expectation that she will share some of that fund with her son Jonathan; 5.2 To Arafura Trustees Ltd, 1,000 shares in BHP Limited in trust for Eleanor’s daughter Diana; 5.3 As to five (5) of the residential allotments in my Palmerston development, in trust for such five (5) diligent, and humane, Charles Darwin University Law School students as may be selected by my trustee according to that criteria (respectively 1 separate allotment each); 1 Underlined Amendment made by AG James 10 Aug 2016
As to 5% of my net estate, in trust to be devoted to the search for reconciliation between the competing codes of civilization that now confront the Australian public. By that expression I am referring to the likely increasing social tension, and a possible overt conflict, between members of Australian society on the basis of, on the one hand, their adherence to principle of government by secular democracy and, on the other hand, those Australians who adhere to religious faiths which subscribe to the principle of theocratic government. My trustee may execute this trust through the agency of whatsoever entity or entities as may be chosen, or established, by my trustee or, in the discretion of my trustee, by my trustee alone; and 5.5 As to the residue of my net estate, in trust for my said wife Alana Hillier; [—-end of relevant provisions of the will—-] Trustee Seeks Legal Advice The trustee (and executor) of the will has come to your legal firm to express concern about not fully understanding how to implement the provisions of the will (other than in respect of subparagraph 5.5). The trustee is also unsure as to the validity of some parts of the will. Moreover the trustee is concerned to more clearly identify what should be legitimately treated as part of the net estate of Trent Hillier. To illustrate the trustee’s uncertainties these questions were postulated by the trustee: 1. Are any of the gifts made in the will invalid or otherwise deficient? 2. If so, which gifts are invalid or deficient? 3. What is the basis of invalidity or deficiency if any? 4. What, if anything, follows from the possibility of any invalidity or deficiency in respect of any particular gift? 5. Can the $350,000 donation to the Muse Foundation Pty Ltd be questioned? 6. If so, is there any basis on which that money could be recovered from the foundation? 7. Apart from possible criminal proceedings against the management of the gallery, is there a basis on which the $348,000 received by the gallery for Trent’s indigenous art collection might be recovered from the Liquidator? Your Task – In accordance with the terms of reference given previously, write the necessary report for the guidance of your team leader, both in general