SQE1 sample questions

Question 61

A man is the trustee of a fund of £500,000. In breach of trust, he transfers £200,000 of trust money to his girlfriend to enable her to buy a house. The man does this because he wants to impress her.

The man’s girlfriend knows that the man is not wealthy enough to be able to afford to transfer £200,000 to her. She knows that he owes several creditors amounts totalling over £200,000. The man had said to her on many previous occasions that he is a trustee and that he would be prepared to take money unlawfully from the trust to use for his own purposes.

The man’s girlfriend did not enquire about the source of the £200,000, because she felt sorry for the man and did not want to hurt his feelings. In addition, she was keen to receive the money to use for her own purposes. Instead of buying a house, she spent all the money on parties and expensive holidays.

The man has now disappeared, still in debt to his creditors. The beneficiaries of the trust now wish to make a personal claim of £200,000 against the girlfriend.

Is a personal claim against the girlfriend likely to succeed?

A. Yes, because she dishonestly assisted in the breach of trust by the man.

B. Yes, because her knowledge made her suspicious but she decided not to enquire about the money.

C. No, because she used the money for purposes other than the purpose intended by the man.

D. No, because she did not have actual knowledge of the breach of trust by the man.

E. No, because she has dissipated the money that the man gave her.