The Wilkie Family Trust has two trustees: Tim and Tom. The trust property consists of a lease on ten acres of profitable farmland and the trust also owns a minority shareholding in Yummy Scrummy, a company which manufactures chocolate. Denise is the current life beneficiary with the remainder held for her daughter Emma.
The lease has come up for renewal, but the landlord refuses to renew it for the benefit of Denise and Emma. The Landlord though is willing to let Tim renew the lease personally and so Tim takes the lease for himself.
Sarah is a solicitor who looks after the legal affairs of both the family trust and of Yummy Scrummy. She has concerns over the way that Yummy Scrummy is being run. It is barely making a profit and Sarah believes that her plans would see the company make a bigger profit. Sarah tries to persuade the trustees to buy more shares in the company, so that they acquire a majority shareholding in the company. Whilst Tim is in favour, Tom is not. So Sarah and Tim buy sufficient shares in their personal capacities until together they own 51% of the company’s shares.
As majority shareholders, Sarah and Tim begin to take an active role in the running of the company and after one year, the profits have increased by 50%. The Wilkie Family Trust makes a profit of £1 million and Sarah and Tim each make profits of £200,000.
Sarah discovers that the Managing Director of Yummy Scrummy, Gavin, has been accepting bribes from several large supermarkets in return for supplying them with confectionary at well below cost price. Gavin is dismissed from his job. Sarah has also found out that Gavin used £30,000 of the bribes money to buy three paintings by the artist Cranksy. Cranksy has recently died and the value of the his work has soared. The paintings that Gavin bought are now estimated to be worth £60,000. Gavin though has fallen on hard times and has unsecured debts of £100,000.
Last Christmas, Denise filled out a share transfer form in relation to her shares in Yummy Scrummy, in favour of her sister Francine. She handed the form and the share certificates to Tom. Tom advised Denise that they would inform Francine of the gift and that there was nothing more that Denise needed to do. Denise suffered a heart attack and died last week and Francine is claiming ownership of the shares, but Tom has not passed the paperwork on to the company.
Advise Emma, the remaining beneficiary, as to the trust issues that arise in relation to all of the factual scenarios described above. Please ensure that you illustrate your answer by reference to the relevant case law and statute law.