Chapter 13 Scenario Questions

Felicity is a vegetarian and she is a trustee of a large fund. Her investment adviser recommends investing in a farm which specializes in producing beef as it could produce a high return for the fund. Felicity refuses on ethical grounds.
Has Felicity breached her duty of care?

Felicity is entitled to consider ethical considerations and so she has not breached her duty of care in refusing to invest.

Felicity is not entitled to consider ethical considerations, but she has not breached the statutory duty of care.

Felicity is not entitled to consider ethical considerations and so she has breached the statutory duty of care.

Felicity is entitled to ignore the advice of the adviser and it is reasonable for her to do so.

Luciana is a trustee of shares in a company. She knows little about the company and so appoints a nominee, Kayla. Luciana transfers the legal title to the shares to Kayla. Luciana has complied with the statutory duty of care. Kayla then breaches the trust by selling the shares.
What is the consequence?

Luciana is liable for Kayla's acts, so Luciana is liable for the breach of trust.

Luciana should not have appointed a nominee and so is liable for Kayla's acts.

Luciana is not liable for Kayla's acts as she complied with the statutory duty of care.

It is for the beneficiaries to decide whether Luciana should be liable for Kayla's acts.

Barbara is a trustee of a very valuable fund. She is not particularly knowledgeable about investments but makes an effort to invest the trust property in a diverse array of investment opportunities. Barbara was reading a magazine about cars and decided to invest £50,000 in a car company.
Has Barbara met her investment duties?

Barbara has met her investment duties as she has diversified investments.

Barbara has not met her investment duties as she failed to obtain advice.

Barbara has met her investment duties as it was reasonable for her to conclude that she did not need to obtain advice.

Barbara has not met her investment duties as she did not get the approval of the beneficiaries before investing.

In his will, Roger gives shares to Edgar to hold on trust for Elaine for life with remainder to Brian. It is highly likely that the shares will significantly decrease in value and be worth very little by the time Brian will become entitled.
What can Edgar do?

Edgar should convert the shares into authorized investments which would benefit both Brian and Elaine.

Elaine currently holds the beneficial interest and so her position should be prioritized. As long as she receives dividends from the shares there is no issue.

Brian is prioritized as he is a capital beneficiary. Accordingly, Edgar should sell the shares in exchange for something that will more greatly benefit Brian.

Edgar has a discretion as to whether to sell the shares or not.

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