Question:

John Smith:

• died in 2010, leaving his residue (valued at that time at2 million) on trust.The residue consisted of 1 million of shares in twenty public companies and 1 million left on deposit at Berkeleys Bank.
• The property was to be held on trust for the benefit of his son, Simon, for life, remainder to Simon's daughter Rowena.He appointed his sister Betty as trustee together with his solicitor, Archie.Rowena is now aged 20.

Additionally: - The trust instrument contained a clause exemption the trustees from all liability except for actual fraud in the management of the trust.

Betty: (sister of John Smith)

• was appointed as a director of a company, Equalit Ltd, in 2010.
• The company promotes equal opportunities by manufacturing badges, T-shirts, posters, etc. and offering advice to other companies.
• Betty received a director's fee each year of 15,000.
• In 2011, Betty withdrew 20,000 from the trust deposit account and purchased shares in the company.
• In 2013, Simon told her that, given her enthusiasm for the company, he was surprised that she had not invested more trust money in the company.
• Prompted by this conversation, Betty withdrew a further 180,000 of trust money from the deposit account and invested it in the company.

2014: Betty (is a keen supporter of women's rights) suggested to Rowena (Simon's daughter) that she could, if she wished, agree to advance some of her share of the fund to the local Women's Refuge.

Rowena agreed and Betty wrote to Archie (John Smith's solicitor) informing him that she had transferred 80,000 to the Refuge with Rowena's consent.Archie did not reply to her letter - what does this mean for the transferal of the trust fund? and for the money in the trust fund?

Simon and Rowena have learnt that the trust fund is now only worth in total approximately 1 million. - was initially valued at 2 million - decrease in value - look at factors leading to this?

Reasons for reduction: at Berkeleys Bank

• (i)a withdrawal of a total of 200,000 (as stated above) for the purchase of shares in Equalit which are now only worth half their purchase price (a loss of 100,000);

• (ii)the donation to the Women's Refuge of 80,000;

• (iii)a loss of 20,000 on investments in silver, which were purchased for 60,000 in January 2013, and which have depreciated and are now worth 40,000;
• (iv)a loss of 200,000 on the purchase of a holiday cottage in Cornwall in January 2014, for 300,000 for everyone to enjoy but which is currently worth only 100,000 due to cracking caused by subsidence;

• (v)a loss of 250,000 when, in July 2015, this sum was withdrawn and transferred to Rupert, who was a stockbroker friend of Archie's.Rupert was instructed by Archie and Betty to buy shares in good reputable companies and Archie and Betty had assumed that the purchases had been made.Archie and Betty learnt recently, after repeated enquiries, that Rupert is insolvent and has lost all of the trust money investing in bad investments;

• (vi)With the agreement of Betty, Archie has taken 10,000 per year from 2010 in payment for his professional services.

The shares in 20 companies which formed part of the original fund were never changed.Originally they rose in value but, following a series of stock market crashes, they are only worth 750,000. - decrease in value also

IMPORTANT NOTE TO FOLLOW: Rowena complains that she was pressurised into making the donation to the Women's Refuge:Betty says that Rowena has always been a keen supporter of women's rights and she thought it was what she wanted.Both Simon and Rowena are concerned about the reduction in value of the fund.

WHAT TO DO FOR THE QUESTION

• consider what remedies ROWENA wants and the basis of the claim.
• Representing the trustees: consider what information they can put forward to resist a claim and what defences are available.