M XV

Question 1

A company prepares accounts to 31 December. On 1 January 2020, the company sold a freehold property for £550,000, realising a gain of £100,000. In the previous year, on 1 June 2019, the company bought a freehold property for £510,000. Both properties were used for trading purposes.
Assuming any beneficial claims are made, what is the company’s taxable gain (after any reliefs) for the year ended 31 December 2020?

£40,000

£100,000

£0

£60,000

£27,700

Answer 1

(A) £40,000. Replacement business asset relief is available to companies. When a person or company disposes of qualifying business assets (such as land, buildings, and plant and machinery) and reinvests the proceeds in other qualifying business assets within one year before or three years after the sale, relief from the gain is available to the extent the proceeds were reinvested. The gain that is chargeable at disposal is the sale proceeds not reinvested (£550,000 – £510,000) = £40,000. The rest of the gain will defer under a rollover relief claim (£100,000 – £40,000 = £60,000). It defers into the cost of the new replacement freehold property. The annual exemption is not available to companies

*ROLL OVER RELIEF = REPLACEMENT BUSINESS ASSET RELIEF. SURPLUS NOT REINVESTED = CHARGEABLE GAIN

Question 2

A solicitor speaks with the firm’s compliance officer for legal practice (COLP) and explains that he has received a caution for an alleged dishonesty offence. The COLP tells him not to worry about this because he was not charged with the offence. The solicitor feels that this is something which he ought to disclose to the SRA, but he is happy to rely on the COLP’s decision. The incident is reported in a local newspaper and comes to the SRA’s attention. The SRA demand to know why the solicitor did not self-report.
Which of the following statements best describes the solicitor’s position?

The COLP’s decision about whether to report is final and the SRA cannot take disciplinary action against the solicitor.

The solicitor’s duty was to report the matter to his employer, not to the SRA.

The solicitor satisfied his obligation to report to the SRA when he made the COLP aware of the caution.

The solicitor had an obligation to report the caution to the SRA because he knew that the COLP did not intend to make a report.

The SRA did not need to be informed of the caution because this is not a regulatory matter.

Answer 2

(D) A solicitor is under a personal duty to report, amongst other things, criminal convictions, charges, and cautions to the SRA. Any obligation to provide such information is satisfied if the information is provided to the firm’s COLP, but only on the understanding that the COLP will bring this to the SRA’s attention. Where there is a difference of opinion and the COLP decides not to report, the SRA would require the solicitor to report the matter themselves. (A) is incorrect because the solicitor’s duty is discharged only if the COLP makes the report, or there is at least an understanding that the COLP will make the report. (B) is incorrect because the SRA has a regulatory right to be informed of all serious matters, and a solicitor is specifically required to report any caution. (C) is incorrect because the regulatory duty is satisfied only when the SRA is made aware of the caution. (E) is incorrect because this is a regulatory matter. The SRA Code of Conduct requires solicitors to report these matters.

Question 3

A solicitor is acting for the buyer of a residential property. The seller has disclosed on the Property Information Form that they built a porch on the front of the property six months ago. The seller has produced a building regulation completion certificate but no other documents in this regard. The buyer’s solicitor has investigated the title and discovered that the seller bought the property as a new build from the original developer three years ago. The buyer’s solicitor notes that there is a provision in the transfer from the developer to the seller in the following terms:

‘Within five years of the date of this transfer, no alteration to the property shall be made without the previous written consent of the seller’.

What is the best way to address this defect in title?

The buyer’s solicitor should require the seller to meet the cost of breach of restrictive covenant indemnity insurance and should insert a special condition in the contract to this effect.

The buyer’s solicitor should require the seller to produce a planning permission regarding the construction of the porch.

The buyer’s solicitor should ignore the situation, as the developer has not taken action in the six months since the porch was built.

The buyer’s solicitor should require the seller to approach the original developer to seek their written consent to the construction of the porch.

The buyer’s solicitor should advise their client that the seller has constructed the porch in breach of covenant and so the client should not proceed with the purchase.

Answer 3

(D) The buyer’s solicitor should require the seller to approach the original developer to seek their written consent to the construction of the porch. The property is only three years old, so the consent of the original developer is still required because the covenant makes it clear that their consent is needed if any changes are made within five years of the date of the original purchase. Given the fact that the seller is the original contracting party, and the covenant is very recent, contacting the developer for their consent to the porch is the best solution. (A) is incorrect. Given the very recent date of the transfer containing the covenant and the fact that it is highly likely that the original developer is still in business and can be traced, a restrictive covenant indemnity policy is unlikely to be available for this breach. In any case, permission from the developer will prevent any further issues with respect to the porch; insurance will not prevent possible lawsuits but will merely cover the buyer’s losses if there are any. (B) is incorrect, as it is unlikely that a planning permission would be required for a small porch, and in any event, the query asks about the lack of consent. (C) is incorrect. Given the short time frame, there is no reason to believe the developer will not take action in the future. A prudent solicitor would therefore take curative steps. (E) would be effective, but it is not the best solution if the buyer wants the property. A better first step that would both serve the client’s wishes in buying the property and protect the client against possible future litigation arising from the porch is simply to ask the developer for permission.

Question 4

A defendant appears before Magistrates’ Court charged with battery. In conference prior to first appearance at court, the defendant admits to her solicitor that she committed the offence but nevertheless wants to plead not guilty.
Which of the following statements best describes the solicitor’s position on whether he can continue to represent her?

The solicitor can continue to act for the defendant and help her put forward her defence.

The solicitor has a duty to disclose the confession to the court.

The solicitor can continue to act if the defendant does not actively assert a defence.

The solicitor must withdraw from the case immediately.

The solicitor must seek to persuade the defendant to enter a guilty plea and must withdraw if the defendant refuses.

Answer 4

(C) The solicitor can continue to act if the defendant does not actively assert a defence. A solicitor has a duty not to mislead the court and must give the defendant careful advice on the strength of the evidence and credit for an early guilty plea (a reduction in sentence for pleading guilty and avoiding an unnecessary trial). If the defendant still intends to plead not guilty, the solicitor must warn her that the solicitor will not be able to mislead the court. This means that the solicitor can still act for the defendant and test the prosecution’s case, but the solicitor cannot advance an alternative account, as to do so would amount to professional misconduct. If the defendant does not accept this position, the solicitor will be obliged to withdraw from the case. (A) is incorrect as it would involve misleading the court. (B) is incorrect as it breaches client confidentiality. (D) and (E) are incorrect as the defendant should not seek to persuade a client to plead guilty (this is a matter for the client), and the solicitor need not withdraw as long as the defendant does not actively seek to assert an account the solicitor knows to be false.

Question 5

In 2017, a trust of concurrent interests was set up for a brother and sister, equally. The interests are contingent on the brother and sister reaching the age of 30. They each have a presumptive share of capital of £200,000. The brother is 27, and the sister is 24. The brother would like an advancement of £150,000 to start a business.

Can the trustees make this advancement of capital?

No, unless the trustees obtain the consent of the sister.

No, because the brother has not yet reached age 30.

Yes, because the trustees have the discretion to make this advancement of capital.

No, because the trustees cannot advance more than half of a beneficiary’s presumptive share of capital.

Yes, because starting a business is a proper purpose for trust capital.

Answer 5

(C) Trustees have the discretionary power to advance trust capital for a beneficiary’s advancement or benefit when the beneficiary has an interest in the capital. Therefore, the trustees have the discretion to advance £150,000 to the brother to start a business. (A) is incorrect because the sister’s consent is not needed. Beneficiaries with prior interests must consent to advancements of capital, but the sister and brother have concurrent interests. (B) is incorrect because the brother can receive an advance of capital before he reaches age 30. The power to advance capital applies to beneficiaries with contingent and vested interests. (D) is incorrect because the trustees can advance up to the amount of the beneficiary’s presumptive entitlement, which is £200,000 here. (E) is incorrect because the power of advancement is not limited to certain ‘proper’ purposes. The trustees can advance capital for a beneficiary’s advancement or benefit.

Question 6

A man executed a will five years ago. He always kept the will in a locked safe in his home. The man died two months ago. Although the personal representative found the will in the man’s safe, the personal representative nonetheless determines that the man died intestate.
Which of the following events would lead the personal representative to the conclusion that the man died intestate?

The man married his new partner after making the will.

The man divorced his wife after making the will.

The man wrote the word “revoked” across the front page of the will.

The residuary beneficiary died before the man die.

The man went bankrupt after making the will.

Answer 6

(A) The man will be deemed to have died intestate if he married after making the will. A marriage revokes a pre-existing will unless it is clear from the will that (1) the testator was expecting to marry a particular person and (2) the testator intended that the will should not be revoked by the marriage. Here, if the man got married after making the will and the will did not mention the marriage, the will is revoked. The man would therefore die intestate. (B) is incorrect. If a testator divorces after executing a will, gifts to the testator’s former spouse will fail, but the will is not automatically revoked by the divorce. (C) is incorrect. Although a testator can revoke a will by destroying it, writing “revoked” across the will is not sufficient to constitute destruction of the will. (D) is incorrect. The death of a key beneficiary does not invalidate the will, although the death of the residuary beneficiary may lead to a partial intestacy situation. (E) is incorrect. Bankruptcy has no effect on the validity of a will.

Question 7

An engineer operating as a sole trader has approached his solicitor seeking advice as to how much he will be required to pay when his first payment on account falls due for 2020/21. His income tax payable for 2019/20 was £75,000 and for 2020/21 £80,500.
What amount should the solicitor tell the engineer?

£25,000

£77,750

£37,500

£75,000

£80,500

Answer 7

(C) £37,500. Payments on account are always calculated using 50% of the prior year’s income tax payable figure. So, for 2020/21, the payments on account will be calculated using 50% of 2019/20 income tax payable. 50% of £75,000 = £37,500.

Question 8

A defendant is facing trial for theft. He has been remanded on bail, subject to a condition of daily reporting at his local police station. For the last week, the defendant has failed to report at the police station as required. Today, the defendant was due to attend court for a case management hearing, but he failed to attend.

Which of the following best describes the consequences of the defendant’s failure to comply with his bail conditions and his failure to attend court as required?

Breach of bail conditions constitutes a criminal offence. Failure to surrender means the defendant can be arrested and bail will be reconsidered.

Breach of bail means the defendant can be arrested and bail will be reconsidered. Failure to surrender constitutes a criminal offence.

Breach of bail conditions and failure to surrender both constitute criminal offences.

Breach of bail conditions and failure to surrender mean the defendant can be arrested and bail will be reconsidered.

Breach of bail conditions and failure to surrender both mean the defendant can be arrested and will be remanded in custody thereafter.

Answer 8

B) If a defendant breaches their bail conditions, they can be arrested without warrant. Their bail can be withdrawn or more stringent conditions imposed by the court. It does not constitute a criminal offence, but it does result in bail being reconsidered. If a defendant fails to surrender to bail, they commit a separate offence and also risk their bail being revoked. (A) is incorrect as it reverses the position for failing to surrender and breach of bail. (C) is incorrect as it states breach of bail is an offence. (D) is incorrect as it fails to identify that failure to surrender is a criminal offence. (E) is incorrect as there will not be an automatic remand in custody; bail will be reconsidered.

Question 9

A defendant is being tried for actual bodily harm (‘ABH’) in the Magistrates’ Court. The case is being heard by a panel of three lay magistrates. During his evidence, the defendant attacks the character of the victim of the alleged offence, saying the victim has a history of violence. As a result, the prosecution wants to apply to adduce the defendant’s previous convictions for ABH and assault.

Who will hear this application?

A different panel of lay magistrates.

A District Judge because the application deals with a point of law.

The lay panel’s legal advisor because the application concerns a point of law.

The lay panel.

No one will hear the application because the admission of bad character evidence cannot be considered on the day of trial.

Answer 9

D) The lay panel will hear the application. In the Magistrates’ Court, the lay panel or District Judge (‘DJ’) is the sole arbiter of matters of both fact and law. When matters of law have to be decided during the course of a trial, they will be heard by the lay panel or DJ. If the panel or DJ rules evidence inadmissible, they will simply put the evidence from their minds for the remainder of the trial. For this reason, (A), (B), (C), and (E) are incorrect. When a matter of law arises, it will simply be dealt with by the panel or DJ hearing the case.

Question 10

During the tax year 2020/21 a woman made the following disposals:

• Sold an antique painting, which she bought for £2,000 in February 2007, to a local gallery for £5,000.
• Gave a necklace worth £3,000 to a registered charity. The woman had bought it for £7,000 in January 2016.
• Gave some shares, worth £5,000, to her boyfriend. She had inherited the shares from her mother. They were worth £1,500 at her mother’s death.

What is the woman’s total chargeable gain for the tax year 2020/21?

£0

£10,500

£6,500

£3,500

£7,500

Answer 10

(D) £3,500. Only the gift of the shares created a chargeable gain. The gain from the sale of the antique painting is not chargeable because it was a sale of a non-wasting chattel for less than £6,000, which is exempt from capital gains tax. And gifts to charity are exempt and so do not create chargeable taxable gains. To calculate the gain on the gift of the shares, we subtract the value the shares had when inherited from the value they had on disposal: £5,000 - £1,500 = £3,500.

Question 11

A defendant is standing trial in the Crown Court on a charge of actual bodily harm (‘ABH’). Whilst giving evidence, the defendant accuses the investigating officers of lying. As a result, the prosecution seek to adduce the defendant’s previous convictions for theft and burglary, which the court accepts. The defence make a counter application that the evidence should be excluded.

How will the court decide whether to grant the defence application to exclude the previous convictions?

The court may exclude the previous convictions if it would be in the interests of justice.

The court must exclude the previous convictions if it would be in the interests of justice.

The court may exclude the previous convictions if their admission would have an adverse effect on the fairness of the proceedings.

The court must exclude the previous convictions if their admission would have such an adverse effect on the fairness of the proceedings that the court must not admit them.

The court may exclude the previous convictions if it would be reasonable in all the circumstances.

Answer 11

(D) When evidence is sought to be adduced under the gateways of ‘an important matter in issue between the prosecution and defence’ or ‘the defendant attacked another’s character’-which the defendant did here-the court must not admit the evidence if: (1) the defence make an application to exclude it, and (2) it appears to the court that the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court must not admit it. (A), (C), and (E) are incorrect as they use may instead of must. (A), (B), and (E) are further incorrect, as they misstate the test to be applied by the court.

Question 12

A charity is purchasing a property that it proposes to use as a village hall for public events. The charity had a survey carried out which has revealed the following:

‘The property has a single-story extension built on the rear. The seller has indicated that the building works were completed three years ago. From my inspection, the extension is not structurally sound and could be unsafe.’

The charity is keen to proceed with the purchase of the property because it is being offered for sale at a low price.

What advice should the solicitor for the charity give in relation to building regulations?

That the local authority can obtain an injunction to require unsafe work to be dealt with at any time, so the seller should be required to remedy the situation at their own cost.

That the charity should not proceed with the purchase of the property.

That the timeframe for enforcement is one year and as this has passed, so the local authority cannot take enforcement action.

That the timeframe for enforcement is four years and as this has not passed, the local authority can take enforcement action.

That the seller should be required to provide lack of building regulation indemnity insurance at their own expense and the clause be inserted in the contract to this effect.

Answer 12

(A) The solicitor should advise the charity that the local authority can obtain an injunction to require unsafe work to be dealt with at any time, so the seller should be required to remedy the situation at their own cost. The survey makes it clear that the work is unsafe. A local authority can obtain an injunction to force a property owner to bring property up to building standards at any time. Given that the facts make it clear that the property will be put to public use, such action seems likely. (B) is incorrect. If the seller refuses to comply with the request in (A), advising the charity to not proceed might be prudent (if it is unwilling to do the needed work), but it is too early to give this advice; at this point we would want to ask the seller to comply. (C) is incorrect. The timeframe for enforcement for lack of building regulations in an ordinary circumstance is one year; however, if the works are unsafe, an injunction can be sought at any time. (D) is incorrect. The timeframe for enforcement in relation to lack of planning permission is four years, but planning permission is not relevant to this question. (E) is incorrect because when a building is unsafe, indemnity insurance for lack of building regulation consent is not available; it is available only if the enforcement period has passed, and as discussed above, enforcement through injunction to make a building safe is not subject to a time limit.

Question 13

A woman orders some goods on 1 May. They are despatched on 8 May. On 4 June, the woman receives the respective invoice dated 2 June. Her payment arrives at the company on 7 June.
When is the tax point for the transaction?

1 May

8 May

2 June

7 June

4 June

Answer 13

(B) 8 May. The basic tax point is the time the goods are made available (that is, the DESPATCH/DELIVERY date), 8 May. However, if the goods are paid for before that date, the payment date will be used. And if a VAT invoice is issued within 14 days after the basic tax point, that date will be used. Here, payment was not made before the despatch date and the invoice was not issued within 14 days of 8 May, so the basic tax point will be used.

Question 14

A settlor transfers property to three trustees to hold on trust for her grandchildren provided they attain age 25. There are three grandchildren aged 21, 19, and 16. The trust deed contains no express powers dealing with the appointment of trustees. The trustees wish to appoint an additional trustee.
Which of the following most accurately describes the power to appoint an additional trustee?

The trustees may by writing appoint an additional trustee.

There is no power to appoint an additional trustee.

The settlor may by deed appoint an additional trustee.

The trustees may by writing appoint an additional trustee provided the adult beneficiaries consent.

The trustees may appoint an additional trustee but the appointment must be made by deed.

Answer 14

(A) The trustees may by writing appoint an additional trustee. In the absence of special powers in the trust instrument, statutory powers apply. Provided there are not more than three trustees, the existing trustees may by writing appoint an additional trustee. (B) is incorrect because there are at present no more than three trustees. (C) is incorrect because the settlor retains no power to appoint trustees unless express provision is made in the trust instrument. (D) is incorrect because there is no requirement for consent from the beneficiaries. (E) is incorrect because the statute does not require the appointment to be made by deed.

Question 15

A buyer has entered into a contract for the purchase of an office block. The legal title to the land is registered at Her Majesty’s Land Registry (‘HMLR’). The transaction is not due to complete for another six months.

Which of the following best describes how the buyer’s position should be protected?

By registration of a restriction on the seller’s proprietorship register.

By registration of a notice on the seller’s proprietorship register.

By registration of a restriction on the seller’s charges register.

By registration of a notice on the seller’s charges register.

No action is required – the existence of the contract created upon exchange is sufficient.

Answer 15

(D) The buyer’s position should be protected by registration of a notice on the seller’s charges register. A notice is an entry in the register in respect of a burden affecting a registered estate. The notice must appear on the seller’s charges register, which is where any burdens or encumbrances that affect the land – such as covenants, mortgages, or, as here, an estate contract – must be entered. (A) and (C) are incorrect because a restriction is used to prevent any dealing with the land otherwise than in accordance with the terms of that restriction, such as a restriction entered when the beneficial interest is held as tenants in common. It protects an interest under a trust and appears on the proprietorship register. (B) is incorrect because the notice of a burden must appear on the charges register. The proprietorship register denotes the class of title and who holds the legal estate. (E) is incorrect because registration of the estate contract must be carried out to protect the buyer’s position and to put the world on notice of the existence of the agreement.

Question 16

A mechanic is fired from his job at a car repair company. To wreak revenge on the company, the mechanic decides to damage some of the machinery they have for effecting repairs. The mechanic disconnects some wires on a machine, intending to break it completely. In fact, it simply causes the machine to malfunction. The next day, another employee uses the machine to repair a customer’s car, not realising it is not working properly.

Subsequently, the customer drives their car, and the faulty repair causes the car to crash. The customer dies.

What will need to be proved for the mechanic to be liable for unlawful act manslaughter?

That the act was intentional, unlawful, dangerous, and caused the death.

That the act was reckless, unlawful, dangerous, and caused the death.

That the act was intentional, unlawful, carried a risk of death, and caused the death.

That the act was reckless, unlawful, carried a risk of death, and caused the death.

That the act was grossly negligent, unlawful, carried a risk of death, and caused the death

Answer 16

(A) Unlawful act manslaughter (‘UAM’) requires a deliberate act which constitutes a criminal offence. The act must be intentional, unlawful, dangerous, and the cause of death. Here, the mechanic committed criminal damage, and this was a deliberate act. The mechanic’s interfering with a machine that is designed to repair cars seems to satisfy the requirement of dangerous, so as long as the other employee does not break the chain of causation, it seems a charge of UAM is made out here. (B) and (D) are incorrect, as the act must be intentional rather than reckless. (C) is incorrect, as the act must be dangerous, but it need not carry a risk of death. (E) is incorrect, as the act must be intentional rather than grossly negligent.

Question 17

A law firm sends its client a bill on completion of a transaction comprising £5,000 in profit costs, £1,000 VAT, and £250 for a disbursement the law firm has already paid from its business account. The client sends the law firm a payment of £6,250.

Which of the following entries would best describe the most expedient entries to record the receipt?

Credit Client ledger Business Side - Debit Cash Account Business Side

Credit Client ledger Client Side - Credit Cash Account Client Side

Credit Client ledger Client Side - Debit Cash Account Client Side

Debit Client ledger Client Side - Credit Cash Account Business Side

Debit Client ledger Business Side - Debit Cash Account Business Side

Answer 17

(A) The receipt is a credit transaction and because the law firm has sent the client a bill for this amount, the money belongs to the law firm and is credited to the business side of the client ledger. The corresponding entry is therefore a debit entry on the business cash account. (B) is incorrect because for every credit entry there must be a corresponding debit entry and vice versa. (C) is incorrect because the money is not a mixed receipt (it is business money) and so it should not be paid into the client account. When money is received from the client by the law firm it is a credit in the client account and therefore (D) and (E) are incorrect.

Question 18

A suspect took part in an identification parade. The suspect was unrepresented during the procedure. The suspect has a scar above his lip that was not covered, and only one of the other videos in the identification parade featured someone with a similar scar. The solicitor now representing the defendant is applying to have the identification evidence excluded.

What is the test the court should apply when deciding whether to exclude the identification evidence?

Whether it is more probative than prejudicial.

Whether it is in the interest of justice.

Whether it is admissible under one of the statutory gateways to the admission of evidence.

Whether its admission would undermine the rule of law.

Whether its admission would have such an adverse effect on the fairness of trial that it ought to be excluded.

Answer 18

(E) A court has discretion to exclude evidence offered by the prosecution if it appears to the court, considering all the circumstances, that admission of the evidence would have an adverse effect on the fairness of the proceeding. (A), (B), (C), and (D) are therefore all incorrect, as they do not correctly cite the test to be applied when deciding whether to exercise this discretion.

Question 19

Two friends own Blackacre jointly. They purchased it 20 years ago as joint tenants. One friend now wants to sell Blackacre and the other does not. They cannot come to an agreement as to what should be done.

What step can the owner who wants to sell take to break the deadlock?

There is nothing that the owner who wants to sell can do as the parties own the property jointly and they have to agree to the sale of the land.

The owner who wants to sell can apply to the court for an order for specific performance requiring his co-owner to transfer his interest in the land.

The owner who wants to sell can appoint a second trustee to overreach his co-owner’s beneficial interest in the property.

The owner who wants to sell can sue his co-owner for damages for any lost profit he may have incurred due to the refusal to sell.

The owner who wants to sell can apply to the court for an order to sell

Answer 19

(E) To break the deadlock, the owner who wants to sell can apply to the court for an order for sale. If co-owners cannot agree how or when to dispose of a property, a trustee or any other person with an interest in property subject to a trust (which includes co-owners) can apply to the courts for an order relating to the trustee’s duties, including an order to sell. (A) is incorrect. As explained above, the owner who wants to sell does have a course of action open to him to break the deadlock, which is to apply to the court for an order for sale. (B) is incorrect because it is not an appropriate remedy here. Specific performance is an equitable remedy which can be applied for to try to force one party to perform their obligations under a contract. Here, there is no contract between the co-owners to be enforced that would require the co-owner to transfer his interest in the land. (C) is incorrect because overreaching is not applicable here. Overreaching is a process by which a buyer may take free of a beneficiary’s interest under a trust. Here, there is no sale yet that would entail overreaching. (D) is incorrect because it is not an available remedy here. The co-owner is not required to agree with the other co-owner as to the sale. The co-owner who wishes to sell can then apply to the court for an order for sale to break the deadlock.

Question 20

A seller and buyer exchanged contracts for the sale and purchase of a property using the Contract Incorporating the Standard Conditions of Sale (5th edition – 2018 revision), unamended. Both solicitors failed to insert a completion date into their respective parts of the contract on exchange of contracts.
Which of the following statements best describes the position regarding completion when no date has been inserted?

The standard conditions of sale provide that completion will take place on a date that shall be mutually agreed by the parties.

The standard conditions of sale provide that completion will take place 20 working days after exchange of contracts.

The standard conditions of sale provide that completion will take place 10 working days after exchange of contracts.

The standard conditions of sale provide that completion will take place on a date that shall be chosen by the buyer.

The standard conditions of sale provide that completion will take place on a date that shall be chosen by the seller.

Answer 20

B) The standard conditions of sale provide that if the completion date is not inserted into the contract on exchange, completion will take place 20 working days after exchange. (A), (C), (D), and (E) are incorrect because they do not state the correct default position under the standard conditions of sale, which is that completion will take place 20 working days after exchange.

Question 21

A man, aged 19, decides to make a will. He consults a solicitor and provides full instructions on the gifts to be included in the will. Shortly afterwards, the man develops severe mental health difficulties and becomes very confused. He executes the will whilst still suffering from these difficulties.
Which of the following best describes the validity of the will?

The will is likely invalid as the man was aged less than 21.

The will is likely invalid as the man lacked capacity when he executed the will.

The will is likely valid as the man had capacity when he instructed the solicitor on preparing the will.

The will is likely invalid as the man lacked intention to make a will.

The will is likely valid as a solicitor acted for the man in preparing the will.

Answer 21

(C) The will is likely valid as the man had capacity when he instructed the solicitor on preparing the will. In order to make a valid will, a testator must have legal and mental capacity. Those aged over 18 have legal capacity. A testator has mental capacity if, at the material time, they understood the nature of their act of making a will, the extent of their property, and the claims to which they ought to give effect. The material time is usually when the will is signed. However, there may be a situation where a testator does not have adequate mental capacity at the date of executing the will but did have sufficient capacity when giving instructions to the will drafter. In cases such as this, where the will was prepared in accordance with those instructions and, at the time of execution, the testator understood that they were signing a will for which instructions had previously been given, the testator will be deemed to have acted with capacity. (A) is incorrect. Everyone aged at least 18 has legal capacity to make a will. (B) is incorrect. As previously explained, it is likely to be sufficient that the man had capacity when instructing the solicitor, even if he lacked capacity when he signed the will. (D) is incorrect. There is nothing on the facts to suggest that the man lacked intention to make the will. Instead, there appears to be an issue around his capacity to make a will. (E) is incorrect. A will prepared by a solicitor will still be invalid if the testator lacked capacity.

Question 22

A defendant was convicted of grievous bodily harm (‘GBH’) in the Crown Court and received a three year custodial sentence. The sentence falls within the sentencing guidelines and is commensurate with the seriousness of the offence. However, the defendant believes his sentence is too severe and wants to appeal it to the Court of Appeal.

On what basis can the defendant appeal his sentence?

The sentence is fundamentally unfair.

The sentence is against the interests of justice.

The sentence is significantly and substantially wrong in principle.

The sentence is wrong in law, wrong in principle, or manifestly excessive.

The sentence is manifestly unjust.

Answer 22

(D) A defendant can appeal from the Crown Court against sentence to the Court of Appeal. The appeal can be made on the basis that the sentence is wrong in law, wrong in principle, or manifestly excessive. Accordingly, (A), (B), (C), and (E) are incorrect because they do not state the correct bases for appeal.

Question 23

In her will, a woman gave £50,000 to trustees on trust to invest and use the income for the maintenance of the Newtown Food Bank. A few years after her death, the food bank closed.

Which of the following statements best describes the effect of the gift?

The trust fails, and the trustees hold on resulting trust for the woman’s estate.

The gift will be applied cy-pres if the court finds evidence of general charitable intention.

The trust fails because it is unenforceable.

The trustees have discretion to use the fund for a similar purpose.

The gift will be applied cy-pres for a similar purpose.

Answer 23

(E) The gift will be applied cy-pres for a similar purpose. When a trust for a charitable purpose has taken effect but subsequently fails because it is impossible or impractical to carry out, the funds will be applied cy-pres to a similar charitable purpose. The trust for the maintenance of the Newtown Food Bank is a charitable trust because it is for a charitable purpose, it is for the public benefit, and it is exclusively charitable. The gift vested at the date of the woman’s death, at which time the food bank was still in existence. This means that the gift for a charitable purpose was effective at the date of death, and the funds will be applied cy-pres. (A) is incorrect because the trust does not fail. (B) is incorrect because it is only necessary to find evidence of general charitable intention in a case of initial failure. (C) is incorrect because charitable trusts are enforced on behalf of the public by the Attorney General. (D) is incorrect because the application of the fund is not for the trustees to decide

Question 24

A thief decided to break into a jeweller’s home to steal valuables when the thief knew the jeweller would not be at home. The thief unlocked the front door to the jeweller’s home with a key that the jeweller had left under a rock for emergencies. When the thief stepped through the doorway, a security alarm sounded and the thief ran away.

What is the most serious crime for which the thief might be convicted?

Burglary.

Attempted burglary.

Theft.

Attempted theft.

No crime.

Answer 24

(A) The most serious crime for which the thief may be convicted is burglary. Burglary (9(1)(a) of the Theft Act) is entering a building or part of a building as a trespasser, knowing that they are a trespasser, with the intent to steal, commit grievous bodily harm, or commit criminal damage. Here, the thief entered the jeweller’s house without permission and so knowingly committed a trespass. It does not matter how far he went into the jeweller’s home so long as some part of his body entered. As soon as the thief trespassed with the intent to commit theft, he was guilty of burglary. (B) is incorrect. Although the thief could be convicted of attempted burglary, burglary is a more serious offence and the thief does not need to steal an item in fact to be guilty under section 9(1)(a). (C) is incorrect because theft requires the taking of property, and here the thief never had the opportunity to take any items. The thief could be found guilty of attempted theft because his intention was to steal. However, we are asked what the most serious crime is, and attempted theft is less serious than burglary. (E) is incorrect because, as discussed above, the thief’s actions make out the crime of burglary and attempted theft.

Question 25

A woman made a will several years ago, including the following provisions:
(1) I give my ABC plc shares to such of my children as survive me, and if more than one, in equal shares.
(2) I give the remainder of my estate to my husband.
There are no other relevant clauses. The woman died recently. The woman had a son and a daughter. The son died last year, survived by his wife and two children.

Which of the following best describes entitlement to the woman’s estate?

The husband will inherit the entire estate.

The woman’s daughter will inherit the ABC plc shares, and the husband will inherit the remainder of the estate.

The ABC plc shares will be divided equally between the woman’s daughter and the son’s two children. The woman’s husband will inherit the rest of the estate.

The ABC plc shares will be divided equally between the woman’s daughter and the son’s wife. The woman’s husband will inherit the rest of the estate.

The ABC plc shares will be divided equally between the woman’s daughter, the son’s wife, and the son’s children. The woman’s husband will inherit the rest of the estate.

Answer 25

(B) The woman’s daughter will inherit the ABC plc shares, and her husband will inherit the remainder of the estate. If a beneficiary has predeceased the testator, the gift to them will lapse. However, if a gift is made to the testator’s issue who die before the testator and who leave living issue, the living issue will receive the gift unless the will expresses a contrary intention. Here, the will expressly states that the gift of shares is only to the children who survive the woman. This expression of contrary intention prevents the rule applying, and the son’s children will have no entitlement to the shares. Instead, the shares pass only to the daughter as the woman’s surviving child. The husband will inherit the rest of the estate. (A) is incorrect because the daughter will receive the shares. (C), (D), and (E) are incorrect because the woman’s daughter only is entitled to inherit the shares, and the husband will not receive the shares as part of the residuary estate. Note that even if the gift of shares passed to the predeceased son’s issue, his wife would not receive any shares.

Question 26

A member of an activist group has been arrested on suspicion of criminal damage after a statue in a town square of a controversial figure was covered in graffiti. The investigating inspector has reasonable grounds to believe that, if permitted to inform someone of her arrest, the suspect will notify other activists of the investigation and thereby trigger the removal of evidence from her property.

Can the inspector prevent the suspect from informing someone of her arrest?

No, every person under arrest has the right to notify someone of their arrest.

No, only individuals suspected of terrorism can be prevented from informing someone of their arrest.

Yes, the right can be delayed for a maximum of 36 hours.

Yes, the right can be delayed for a maximum of 48 hours.

Yes, the right can be refused entirely.

Answer 26

(C) The inspector can prevent the suspect from informing someone of her arrest for a maximum of 36 hours. A suspect has a right to have a friend, relative, or other person informed of their arrest. Delay is only permitted when: (1) the suspect is arrested on an indictable only or either way offence; (2) a police officer of the rank of inspector or above has authorised the delay in writing; and (3) the officer has reasonable grounds to believe that exercise of the right will lead to interference with evidence, interference with others, alerting other suspects, or hindering the recovery of property related to the offence. The right can be delayed a maximum of 36 hours and should only be delayed as long as necessary. Here, the suspect was arrested for criminal damage, which is an either way offence. The officer believes the exercise of the right may lead to the interference with evidence. Therefore, the inspector can authorise the delay in writing for a maximum of 36 hours. (A) and (B) are incorrect as it is possible to delay the right to notify a person of arrest in certain circumstances. There is also no special rule for individuals suspected of terrorism. (D) and (E) are incorrect, as 36 hours is the maximum by which the right can be delayed.

Question 27

A woman died last year, leaving her estate to her husband in her valid will. Her husband also inherited the family home that he owned jointly with the woman. The woman’s sons have succeeded in a claim against the woman’s estate under the Inheritance (Provision for Family and Dependants) Act 1975 (‘the Act’).

Which of the following is correct with regard to orders the court can make under the Act?

The court can order the payment or transfer of property passing under the will only.

The court cannot order the transfer of the woman’s interest in the family home.

The court can order periodical payments to the sons.

The court can order the payment of a lump sum from the estate to the sons only.

The court cannot order the payment of income to the sons.

Answer 27

(C) The court can order periodical payments to the sons. Following a successful claim under the Inheritance (Provision for Family and Dependants) Act 1975, the court has very wide discretion in the orders it can make. It has the power to order the transfer of property, payment of a lump sum, periodical payments, payment of income, and settlement of property on trust. (A) and (B) are incorrect because the court can make an order in respect of both property passing under the will or intestacy and the deceased’s share of a joint tenancy. Therefore, the court can make an order in respect of both the estate passing under the woman’s will and also the woman’s interest in the family home. (D) is incorrect because the court has the power to make several types of orders besides the payment of a lump sum. (E) is incorrect because the court has the power to order the payment of income.

Question 28

A solicitor is acting for a first-time home buyer who will be financing her purchase with a mortgage. The conveyance is taking place under the Law Society Conveyancing Protocol (the ‘Protocol’). The buyer is anxious to see a copy of the contract and asks her solicitor when this will be ready.

In a Protocol transaction, who prepares the contract package?

The buyer’s lender.

The estate agent.

The seller’s solicitor.

The buyer’s solicitor.

Her Majesty’s Land Registry.

Answer 28

(C) In a Protocol transaction, the seller’s solicitor will draft the contract and send the contract package to the buyer’s solicitor. The contract package will comprise: the draft contract in duplicate; the Property Information Form and Fittings and Contents Form, both completed by the seller; a copy of the seller’s title (or epitome of title if the title is unregistered), any other relevant title documents, and title plan; and any guarantees or planning permissions. Therefore, all of the other answers are incorrect.

Question 29

A woman is arrested on suspicion of battery after she is involved in an altercation with her ex-partner at a nightclub. She arrives at the police station at 11pm on Saturday night. She is taken into custody and is kept there until 11pm on Sunday night. The investigating officer wants to keep the woman in custody for a further period before deciding whether to charge her, as his investigation is not yet concluded.

Is the investigating officer able to extend the woman’s detention until 11am on Monday morning?

No, it is not possible to keep the woman in custody for longer than 24 hours.

No, it is not possible to keep the woman in custody for longer than 12 hours.

Yes, if it is authorised by a police officer of the rank of superintendent or above.

Yes, if it is authorised by a police officer of the rank of inspector or above.

Yes, if it is authorised by the Magistrates’ Court.

Answer 29

(A) The investigating officer cannot extend the woman’s detention because she cannot be kept in custody for longer than 24 hours. As the woman is charged with a summary only offence, she can be detained for 24 hours only. A further extension of 12 hours can be granted by an officer of the rank of superintendent or above for indictable offences and either way offences, and a further 36 and 24 hours can thereafter be authorised by the Magistrates’ Court for indictable and either way offences. However, as battery is summary only, the woman can be kept for only 24 hours. (B) is incorrect because the custody time limit is 24 hours. (C), (D), and (E) are all incorrect because extensions cannot be authorised for summary only offences.

Question 30

Whilst in a cafe, a 15-year-old girl agreed with a man to provide him with sexual services in exchange for money. An off-duty police officer overheard the conversation and arrested both of them. The man was charged with conspiracy to have sex with a child under the age of 16.

Which of the following would be the man’s best defence at trial?

The girl was consenting.

The man did not ever have sexual intercourse with the girl.

The girl was not charged and therefore there could be no conspiracy.

The girl was a minor and therefore could not be part of a conspiracy.

The girl was the intended victim of the principal offence and therefore there was no conspiracy.

Answer 30

(E) The man’s best defence is that the girl was the intended victim. One cannot be guilty of conspiracy with someone who is the intended victim of the offence. (A) is incorrect as the fact that the girl consented is irrelevant because she is under age. (B) is not a defence because conspiracy is complete upon the agreement to do something illegal; the underlying crime need not actually be committed. (C) is incorrect because although there must be at least two parties to a conspiracy, both of them do not need to be charged. (D) is incorrect because a 15-year-old is legally capable of committing a crime even if she is below the age of consent.

Question 31

A defendant is standing trial for theft in the Crown Court presided over by a judge. At the start of the trial, the prosecution wish to make an application to adduce evidence of a confession. The prosecution allege that, on the day before the trial, the defendant admitted to his flatmate that he had committed the offence. The prosecution wish to adduce this evidence as proof of his guilt.

How will the court determine whether evidence of the confession can be admitted?

The judge will hold a voir dire in absence of the jury to determine the admissibility of the evidence.

The judge will determine the admissibility in presence of the jury.

The judge will hear the application to adduce the evidence and then recuse himself if the evidence is inadmissible.

The judge will hear the application to adduce the evidence and continue to decide the defendant’s guilt, even if the evidence is held to be inadmissible.

The judge will enlist the assistance of another judge to hear the application.

Answer 31

(A) The judge will hold a voir dire in absence of the jury to determine the admissibility of the evidence. In the Crown Court, judges decide matters of law in absence of the jury in a hearing called a voir dire. (B) is incorrect as matters of law are decided in absence of the jury. (C) is incorrect as the judge will not need to recuse himself if the evidence is inadmissible. (D) is incorrect as the judge does not decide the defendant’s guilt; all matters of fact are decided by the jury in the Crown Court. (E) is incorrect as no other judge will be called in to assist.

Question 32

An opera singer lost his place with the national opera company. Disgruntled, the opera singer decides to take revenge on the company by destroying the huge glass dome that sits above the theatre. The opera singer decides to wait until midway through an evening show, so that the glass from the dome will rain down upon the audience below. The opera singer foresees that the lives of audience members will thereby be endangered but decides to go ahead anyway. By chance, on the night that the opera singer destroys the dome, the evening show has been cancelled and so no one is in the theatre as the shards of glass fall down.

Is the opera singer guilty of aggravated criminal damage?

No, as the opera singer did not intend to endanger lives.

No, as no life was endangered.

Yes, as the opera singer foresaw that lives could be endangered by the criminal damage, and it was an unreasonable risk to take in the circumstances known to the opera singer.

Yes, as it was a virtual certainty that lives would be endangered by the criminal damage, and the opera singer foresaw that risk.

Yes, as it was a virtual certainty that lives would be endangered by the criminal damage, and it was an unreasonable risk to take in the circumstances known to the opera singer.

Answer 32

(C) The opera singer is guilty of aggravated criminal damage. The mens rea for aggravated criminal damage is that the defendant intends or is reckless as to the criminal damage and that the defendant intends or is reckless as to the endangerment of life by the damage caused to the property. (C) correctly sets out the test for recklessness in relation to the second limb of the mens rea. (A) is incorrect, as intention is not required; recklessness will also suffice. (B) is incorrect as lives need not actually be endangered; it is not an element of the actus reus. It is enough that the defendant was reckless as to the endangerment of life. (D) is incorrect as it describes the test for indirect intention. Indirect intention is not relevant to basic intent offences such as aggravated criminal damage because indirect intention only applies to specific intent offences. (E) is incorrect as it combines the test for indirect intention with the test for recklessness.

Question 33

A defendant is awaiting trial in the Crown Court for criminal damage. The prosecution case is that the defendant, with unnamed others, tore down a statue in a town square of a controversial figure. The defendant has not yet provided any details of her defence to the prosecution or the court, and she did not answer questions in interview. She would prefer not to provide details of her defence, as she is worried it may lead to further investigation of her associates.

Does the defendant have to provide any details of her defence in advance of trial?

No, the defendant does not have to provide any details of her defence in advance of trial.

No, the defendant cannot provide any details of her defence because there is no provision for the defence to make disclosure in advance of trial.

Yes, the defendant must serve a defence case statement on both the prosecution and the court.

Yes, the defendant must serve a defence case statement on the prosecution only.

Yes, the defendant must serve a defence case statement on the court only.

Answer 33

(C) The defendant must serve a defence case statement on both the prosecution and the court within 28 days of the prosecution making disclosure. This statement must set out the nature of the defence, including what facts of the prosecution case are disputed, what alternative facts the defence alleges, what points of law the defence wishes to raise, and details of any alibi witness. If the defence fail to serve an adequate defence case statement on time that reflects the defence put forward at trial, an adverse inference may be drawn. The defence case statement is deemed to be approved by the defendant. (A) and (B) are wrong, as the defendant is obliged to provide details of her defence. (D) and (E) are wrong, as the defence case statement must be served on both the prosecution and the court.

Question 34

The owners of eight parcels of land agree to build a private road over all eight parcels so the land can be developed into a residential neighborhood. All owners agree to a mutual covenant which requires all owners to pay an annual fee as a contribution to the cost of maintaining the road. The use of the road is conditional upon payment of the fee by the owners. Many years after the road is built and each parcel has been sold at least once, one of the landowners stops paying the road maintenance fee.

Can the other owners enforce the covenant against the non-paying owner?

No, because positive covenants are never enforceable against successors in title.

No, but the owners can prevent the non-paying owner from using the road.

No, and the owners cannot prevent the non-paying owner from using the road.

Yes, because the current owners are successors in title to the original covenantors.

Yes, because the benefit and the burden imposed by the covenant are related to each other.

Answer 34

(B) The other owners cannot enforce the covenant against the non-paying owner, but the owners can prevent the non-paying owner from using the road. Generally positive covenants bind only the original contracting parties. However, under the benefit and burden rule, a person cannot enjoy a benefit without accepting a burden that goes with it. For this rule to apply, the benefit and the burden must be relevant to each other. Where an obligation is unenforceable against a successor in title, the successor in title may be denied use of the benefit if it does not also accept the burden. Here, the positive covenant to pay for maintenance of the road is unenforceable against the non-paying owner, a successor in title. However, since the non-paying landowner is not accepting the burden of paying the fee, he may be prevented from enjoying the benefit of using the road. (A) is incorrect because it is too broad. Although positive covenants usually are not enforceable against successors in title, there are exceptions and circumstances in which they may be enforced (such as a chain of indemnity covenants) which are not present here. (C) is incorrect because, as explained above, the owners can prevent the non-paying owner from using the road due to the benefit and burden rule. (D) and (E) are incorrect because, as explained above, the covenant is not enforceable by the current owners against the non-paying owner. The fact that the benefit and the burden imposed by the covenant are related to each other is relevant to the benefit and burden rule, which allows the owners to prevent the non-paying owner from using the road even though the covenant is unenforceable against him.

Question 35

A defendant is standing trial for robbery. He is jointly charged with his friend. Both the prosecution and the defendant want his friend, the co-defendant, to give evidence. Afraid of saying something incriminating, the co-defendant does not want to give evidence.
Which of the following best describes whether the co-defendant will have to give evidence?

The co-defendant is competent and compellable for both the prosecution and the defendant.

The co-defendant is competent for both the prosecution and the defendant but compellable only for the defendant.

The co-defendant is neither competent nor compellable for the prosecution but both competent and compellable for the defendant.

The co-defendant is neither competent nor compellable for the prosecution but competent but not compellable for the defendant.

The co-defendant is competent but not compellable for both the prosecution and the defendant

Answer 35

(D) The co-defendant is neither competent nor compellable for the prosecution. He is competent for the defendant but not compellable. This means that the co-defendant cannot give evidence for the prosecution. He can give evidence for the defendant, but he cannot be forced to. (A), (B), and (E) are incorrect as the co-defendant is not competent for the prosecution. (C) is incorrect as the co-defendant is not compellable for the defendant.

Question 36

Four friends set up a partnership to operate a car repair business. Each of the four contributed £5,000 to the business and pledged to work at the business full time. Additionally, one of the friends already owned an expensive diagnostic computer because she had been repairing cars as a sole trader for some time. She offered to allow the partnership to use the diagnostic computer in its business. However, she insisted that the machine would remain hers.

Since the partnership began, the diagnostic computer has been upgraded several times and the partners used partnership funds to pay for the upgrades. After three years, the partner who owned the diagnostic computer decided to retire from the partnership and return to her work as a sole trader. When giving notice of her desire to leave, she also told her partners that she would be taking her diagnostic computer with her. As a new diagnostic computer would cost £12,000, the other three partners are keen to keep it.

Does the partner have a right to take back the diagnostic computer?

Yes, because the partnership failed to register the diagnostic computer as partnership property at Companies House.

No, because the diagnostic computer became partnership property when the partner allowed the partnership to use it.

Yes, because partners are entitled to a return of their contribution upon retirement.

Yes, because the partner never intended the diagnostic computer to become partnership property.

No, because the diagnostic computer became partnership property when the partner allowed the partnership to pay for repairs and maintenance on the computer.

Answer 36

(D) Property will be considered partnership property if it was brought into the partnership with the intention that it would be partnership property. Here, the partner made it clear at the beginning of the partnership that she wished her diagnostic computer to remain her property. (A) is incorrect as there is no requirement to register partnership property with Companies House. The fact that the partner allowed the partnership to use the diagnostic computer (B), and that the partnership paid for upgrades to the computer (E), does not affect the general rule: intent controls. (C) is incorrect as the partner did not contribute the diagnostic computer, as explained above. If it had been contributed, it would have become partnership property and she would not necessarily have had a right to its return in kind. On dissolution, partners have a right only to their share of partnership assets.

Question 37

A man borrowed a motorbike from a friend to use for a camping trip. The man stowed his backpack and tent on the back of the motorbike. At a service area en route, he briefly left the motorbike in a parking spot for cars in violation of the posted regulations. Whilst he was away, a car driver crashed into the motorbike. The motorbike was so badly damaged that it was unusable. The man had to hire a replacement motorbike for the remainder of his trip. Also, his backpack and tent, worth a total of £150, were destroyed, requiring him to replace them before he could proceed on his trip.

In a claim by the man against the car driver, which of the following statements is correct?

The man cannot recover any damages for either the motorbike or the backpack and tent because the motorbike was not legally parked.

The man cannot recover any damages for either the motorbike or the backpack and tent because the motorbike did not belong to him and the total cost of the backpack and tent was less than £275.

The man cannot recover any damages for the costs of hiring a replacement motorbike nor for the cost of replacing his backpack and tent because this is all pure economic loss.

The man cannot recover any damages for the motorbike and replacement motorbike hire, but he can recover for the cost of replacing his backpack and tent.

The man cannot recover any damages for the motorbike, but he can recover for the cost of the replacement motorbike hire and the cost of replacing the backpack and tent.

Answer 37

(D) The man can recover for the backpack and tent. Damage to property which did not belong to the claimant is classed as pure economic loss and cannot be recovered. Hence, the man cannot recover for the damage to the motorbike and hire of a replacement because the motorbike did not belong to him. However, he can recover for the cost of replacing the backpack and tent because this is property which did belong to him, so the cost of replacing it is not pure economic loss. (B) is not correct. It correctly notes that damage to the motorbike is not recoverable because it did not belong to the man, but it incorrectly asserts that he cannot recover for the cost of replacing the backpack and tent because it is less than £275. Unlike in a defective product action under the Consumer Protection Act 1987, there is no such restriction on property damage recovery in an ordinary negligence action. (C) is not correct because it incorrectly assumes that all of the losses are pure economic loss. (A) is not correct. It assumes that the defence of illegality would apply. The law of tort does not permit a claimant to base a claim on his own illegal act. However, the fact that the motorbike was not legally parked is only part of the background circumstances. The claim is not based on illegal conduct, so the defence of illegality will not apply. (E) is not correct. The man cannot recover for the cost of the replacement motorbike hire because it did not flow from damage to his own property; rather, it flowed from damage to a motorbike that did not belong to him

Question 38

A firm of solicitors is not authorised by the Financial Conduct Authority to carry on a ‘regulated activity’ as defined in the Financial Services and Markets Act 2000 (‘FSMA’) and related secondary legislation.
Which of the following activities would the firm be able to conduct in its business if no FSMA exclusion or exemption applies?

Safeguarding a client’s portfolio of shares.

Advising a client on payments into a pension scheme.

Arranging for a client to purchase Premium Bonds.

Managing a client’s debenture.

Contracting for a client to purchase a funeral plan.

Answer 38

(C) Under the general prohibition of FSMA, a firm of solicitors may not carry on regulated activity in the UK unless they are authorised or exempt from authorisation. A regulated activity is defined as an activity specified in the Regulated Activities Order relating to an investment specified in the Order, which is carried out in the course of business, and to which no exclusions apply. The specified activities and investments might be remembered with the mnemonic device ‘ADAMS F.M.DIPS’. Activities = Advising, Dealing as an agent, Arranging, Managing, and Safeguarding. The specified investments most relevant to a solicitor = Funeral plans, Mortgage contracts, Debentures, Insurance contracts, Pension schemes, and Shares in a company. The firm would be able to arrange for the client to purchase Premium Bonds because while arranging is a specified activity, Premium Bonds are not specified investments. (A), (B), and (D) each clearly involve specified activities (safeguarding, advising, and managing, respectively) and specified investments (shares, pension plans, and debentures). (E) clearly involves a specified investment as well (funeral plan) and contracting on behalf of someone is dealing as an agent (a specified activity).

Question 39

A business owner wished to stage an event on his premises. He engaged an independent contractor to build an outside pavilion for the event. Before engaging the contractor, the business owner carefully checked that the contractor had appropriate qualifications and experience. Once the pavilion was built, the business owner carried out a thorough safety inspection. However, on the first day of the event, the pavilion collapsed, injuring several of the customers. Evidence later showed that the contractor who erected the pavilion had carelessly failed to secure the roof struts and this had caused the collapse.

In a claim by the customers against the business owner, which of the following statements is correct?

The business owner will not be liable to the customers because they were owed a duty of care by the contractor rather than by the business owner.

The business owner will not be liable to his customers even though he owed a duty of care in respect of the safety of the premises, because he discharged that duty by acting reasonably to engage a competent contractor and checking the work.

The business owner will be liable to the customers because they were lawful visitors to his premises, and an occupier owes lawful visitors an absolute duty to ensure that the premises are in a safe condition.

The business owner will be liable to the customers because an occupier of premises owes a duty to lawful visitors which cannot be discharged by employing an independent contractor.

The business owner will not be liable to the customers because the independent contractor’s negligence was an intervening act that broke the chain of causation.

Answer 39

(B) The business owner will not be liable to the customers. Harm has been caused to the customers by the state of the premises, the business owner is the occupier of the premises, and the customers are his lawful visitors. So, liability is governed by the Occupiers’ Liability Act 1957. The occupier owes a duty of care in respect of the condition of the premises. That duty may be discharged by employing an independent contractor to carry out work of construction, maintenance, or repair, provided that the occupier acted reasonably in entrusting the work to an independent contractor and took reasonable steps to satisfy himself that the contractor was competent and the work properly done. So, on the facts, the business owner discharged the duty which he owed to his customers. (A) is not correct. The independent contractor did owe a duty of care to the customers, but the business owner also owed them a duty of care (as discussed above). (C) is not correct. The duty owed by an occupier to lawful visitors is not an absolute duty to see that premises are safe. It is a duty to take reasonable care to see that the visitor will be reasonably safe. (D) is not correct. The duty owed by an occupier to lawful visitors can be discharged by employing an independent contractor provided the conditions discussed above are satisfied. (E) is not correct. The fact that the independent contractor was at fault would not break the chain of causation or discharge the occupier’s duty. The further conditions discussed above must also be met.

Question 40

A motorcyclist is involved in a multi-vehicle accident on a country road and suffered severe injuries. The motorcyclist contends the accident was attributable to the negligence of the driver of a car travelling in the opposite direction.

After receiving a letter of claim from the motorcyclist, the car driver’s insurers instruct solicitors. The solicitors incur significant costs obtaining witness statements, a plan and photographs of the location, and a copy of the police report. It soon becomes clear to them that the accident was not caused by their insured, but rather by the negligence of a van driver who had pulled out in front of the insured’s car.
The motorcyclist accepted that the van driver was at fault. The van driver’s insurers accepted liability and ultimately settled the claim, so the motorcyclist never issued proceedings.

Can the car driver’s insurer recover any of their costs from the claimant or the responsible party?

Yes, the insurers can look to the claimant to pay their wasted costs in investigating the claim that he intimated against their insured.

No, the insurers cannot recover any of the cost from either of the other parties involved in the accident.

Yes, the insurers can recover the costs incurred from the negligent party responsible for the accident.

No, other than the cost of any disbursements incurred, for example, the police report fee or the cost of obtaining the plan and photographs.

Yes, the claimant can claim the costs associated with the investigation, but none of the cost relating to interaction between their nominated solicitors and the claimant’s representatives.

Answer 40

(B) It is unlikely that the insurers will be able to recover any cost incurred in the protocol period. Generally, if the parties comply with the appropriate protocols and fail to resolve their issues, but the claimant nevertheless decides not to continue with the claim, it is unlikely that the defendant will be able to recover any costs. (But note that if proceedings were issued and the claim stayed to allow the parties to comply with the protocols, an award to recover some of the wasted costs of complying with the protocols is more likely.)

Question 41

The owner of a top floor flat engaged a building contractor to renovate the flat by carrying out extensive structural works. The contractor warned the flat owner that the work would create substantial amounts of dust likely to affect his neighbour in the flat below. The contractor advised that, for an extra cost, precautions could be taken to minimise the spread of dust. However, the flat owner decided not to pay for this, so the work went ahead without it. The contractor carried out all of the work and at no time did the flat owner undertake any work himself. The work lasted for six months and, as predicted, caused a substantial interference by spread of dust to the neighbour’s flat below.

In an action in the tort of private nuisance by the neighbour against the flat owner to recover damages for the effects of the dust, which of the following best states the likely outcome?

The flat owner is not liable in nuisance for damages caused by the dust because he did not create the nuisance, having not done any of the work himself.

The flat owner is liable in nuisance for damages caused by the dust because he is the occupier of the land where the dust originated.

The flat owner is not liable in nuisance for damages caused by the dust because he has exercised reasonable care by choosing a competent independent contractor.

The flat owner is liable in nuisance for damages caused by the dust because the building work for which the contractor was engaged carried a special danger of causing a nuisance.

The flat owner is not liable in nuisance for damages caused by the dust because the dust spreading to the neighbour’s flat constituted a trespass to land.

Answer 41

(D) The flat owner is liable. The facts show that the dust has caused an interference with the neighbour’s use and enjoyment of his land which was substantial and unreasonable. Therefore, the contractor has created an actionable nuisance. The general rule is that a person is not liable for the torts of their independent contractor. However, as an exception to this, an occupier of land is liable for a nuisance created by an independent contractor where the work for which the contractor was engaged carried a special danger of creating a nuisance. Therefore, (A) is not correct. (B) is not correct. It is not sufficient for liability in private nuisance that the defendant was the occupier of the land from which the nuisance originated. On the facts, the flat owner is liable, but for the reasons discussed above. (C) is not correct. As a general rule, an occupier would not be liable for a nuisance created by a carefully chosen independent contractor. However, on the facts, the flat owner is liable because he employed a contractor to do work which carried a special danger of causing a nuisance, as explained above. (E) is not correct. Trespass to land deals with intentional and direct interference with the claimant’s possession of land. In contrast, the tort of nuisance covers damage which is indirect, such as the harm that occurred here.\

Question 42

On incorporation several years ago, a company issued 100 £1 ordinary shares. The company now wishes to issue 100 preference shares to a new investor. The company has Companies (Model Articles) Regulations 2008 (unamended) for private companies limited by shares as its articles of association.

Which of the following best describes the members’ resolutions which must be passed before the shares can be allotted?

A members’ ordinary resolution to give the directors the power to allot the shares only.

A members’ special resolution to disapply pre-emption rights only.

A members’ special resolution to change the articles to include the preference share rights.

A members’ special resolution to give the directors the power to disapply pre-emption rights and a members’ special resolution to change the articles to include the preference share rights.

A members’ ordinary resolution to give the directors the power to allot the shares, and a members’ special resolution to change the articles to include the preference share rights.

Answer 42

(E) The directors have the power to allot shares if the company has only one class of shares. Here the company is issuing a different class, so the directors need the members to pass an ordinary resolution to give them the power to allot the preference shares. Only equity shares are subject to the statutory preemption rights (and not preference shares) so there is no need to disapply preemption rights. The articles need to be changed by special resolution to include the rights enjoyed by the preference shares. None of the choices other than (E) has the correct combination.

Question 43

On 10 April, the owner of a farm posted a letter to a new resident of the area who had expressed an interest in buying the farm. In this letter, the farm owner offered to sell the farm to the resident for £100,000. The offer expressly stated that the offer would expire on 1st June, ‘if acceptance by the offeree has not been received by the offeror on or before that date.’ On 29 May, the resident sent a written acceptance to the farm owner by post. However, the acceptance was not delivered to the farm owner until 2 June. On 4 June, the farm owner entered into a contract to sell the farm to another buyer for more money but did not inform the resident of the transaction. When the resident followed up by phone on 10 June, the farm owner told him that he had sold the farm to another buyer.
Which of the following best describes the results of the above transaction?

No contract between the farm owner and the resident arose on 2 June.

An enforceable contract arose on 29 May.

An enforceable contract arose on 2 June because the farm owner’s silence constituted an acceptance of the resident’s message.

A voidable contract arose on 1 June.

No contract arose between the parties as post was not an acceptable method of communicating acceptance.

Answer 43

(A) No contract arose on 2 June because the farm owner’s offer expired on 1 June, when the farm owner had not received the resident’s acceptance. If a period of acceptance is stated in an offer, the offeree must accept within that period to create a contract. Failure to accept in time terminates the power of acceptance in the offeree (that is, a late acceptance will not be effective and will not create a contract). Under the postal rule, an acceptance is generally effective the moment it is posted in the post box. However, the postal rule does not apply where the offer states that acceptance will not be effective until received. In that case, acceptance is effective only upon receipt. Here, the farm owner opted out of the postal rule because the offer specifically stated that the acceptance must be received by 1 June to be effective. Thus, no contract was created by sending the acceptance on 29 May as there was no valid acceptance. (B) is incorrect because of the requirement that acceptance be received by 1 June. This requirement obviates the postal rule, so that the mere mailing of a letter does not operate as an effective acceptance. (C) is incorrect because the farm owner was not obligated to respond in any way to the message received on 2 June. Once the specified time passed without receipt of acceptance, the offer (as well as the resident’s power of acceptance) was terminated. Thus, receipt of the message on 2 June created neither a contract nor an obligation on the part of the farm owner to respond to the message. (D) is incorrect because no contract, voidable or otherwise, arose on 1 June. As explained above, there could be no contract because acceptance of the offer was not received as specified by the offer. Also, the facts do not indicate a ground under which a contract could be voidable. A voidable contract is a contract that one or both parties may elect to avoid or to ratify (for example, contracts of minors). The facts of this question provide no basis for concluding that any contract that might have arisen between these parties would be voidable. (E) is incorrect as there is no suggestion on the basis of the facts of the scenario that the parties had excluded post as an acceptable means of communication.

Question 44

Three youths agreed to take a taxi without paying the fare. In the taxi they travelled to the city centre, and when the taxi stopped at traffic lights, two of them jumped out and ran off without paying the fare. The third youth was unable to jump out quickly enough and remained in the taxi. When the taxi driver realised what was happening, he set off at speed in an attempt to make sure the remaining youth did not escape without paying. The youth then jumped from the taxi as it was moving and sustained serious injuries.

In an action in negligence by the youth against the taxi driver to recover damages for his injuries, which of the following best describes the likely outcome?

The taxi driver will not be liable to the youth because, in the circumstances, he did not owe the youth a duty of care.

The taxi driver will be liable to the youth, but the youth will suffer a reduction in the damages which he recovers.

The taxi driver will not be liable to the youth because the defence of illegality will apply.

The taxi driver will be liable to the youth because he intentionally set off at speed.

The taxi driver will not be liable to the youth because the youth failed to take reasonable care for his own safety.

Answer 44

(C) The taxi driver will not be liable because the defence of illegality will apply to defeat the youth’s claim entirely. The youth was engaged in criminal activity by acting pursuant to a plan to make off without paying the fare, which had already been partially carried out. The defence of illegality is a rule of public policy which prevents a claimant from recovering compensation for damage suffered as a result of their own illegal actions. So, the claimant cannot recover damages for harm suffered whilst he is taking part in criminal activity (jumping out of the taxi without paying the fare). The defence of illegality is a complete defence, defeating the claim entirely. (B) is not correct because it only suggests that damages would be reduced. (A) is not correct because the taxi driver did owe the youth a duty of care (established duty owed by driver to passengers). (D) is not correct. The fact that the taxi driver intentionally set off at speed may mean that he was in breach of his duty of care. However, he is likely to escape liability for such breach because the defence of illegality will apply. (E) is not correct. Where the claimant failed to take reasonable care for his own safety, and this contributed to the injuries suffered, the defence of contributory negligence is likely to apply. The effect of this defence is not to defeat the claim entirely, but only to result in a reduction in damages. One the facts here, the youth has failed to take reasonable care for his own safety. However, rather than the partial defence of contributory negligence, he is likely to be met with the complete defence of illegality, as explained above.

Question 45

A thief stole a car and sold it to a purchaser who acted in good faith without knowledge that the car was stolen. The purchaser had the car resprayed a different colour. The original owner of the car, from whom it was stolen, discovered what has happened and seeks damages from the purchaser.

In a claim by the original owner of the car against the purchaser, which of the following statements is correct?

The original owner will only have a claim for trespass to goods, based on the fact that the car has been resprayed a different colour.

The original owner will have no claim for trespass to goods because the purchaser acted in good faith.
The original owner will have a claim for conversion because, although the purchaser was mistaken, a mistake as to ownership is no defence.

The original owner will not have a claim for conversion because the purchaser’s mistake as to ownership provides a complete defence.

The original owner will not have a claim for conversion because of the mistake as to ownership,
but he will have a claim for trespass to goods because the purchaser has taken possession of the car.

Answer 45

(C) The purchaser has committed the tort of conversion by dealing with the car in a way which is seriously inconsistent with the rights of the owner. Conversion requires intent, but this refers to an intention to deal with the goods, not to an intention to commit conversion. So, a mistake as to ownership is no defence. Therefore, (D) is not correct. (A) is not correct because the owner can bring a claim in conversion as well. By itself, spraying paint onto the car could amount to trespass. Here the purchaser has gone beyond trespass and assumed ownership over the car, so also committing the tort of conversion. Trespass to goods and conversion can exist concurrently, although the owner will only be able to recover one award of damages to compensate for his loss. (B) is not correct because the fact that the purchaser acted in good faith would not be a defence to trespass to goods. (E) is not correct because, as discussed above, the original owner will have a claim for conversion.

Question 46

A property owner decided to turn the garage on her property into a gym. She entered into a written agreement with a contractor who agreed to do the job personally for £12,500. The contractor was to begin work by 14 May. On 15 May, he had not yet started. The property owner telephoned the contractor, who told her that he was hired for another big job and would not work on her garage. Over a period of several months, the property owner made many calls to other local contractors, but none of them would agree to do the job for the price agreed by the original contractor. On 3 June of the following year, the property owner sued the original contractor for specific performance.

Which of the following represents the contractor’s best argument in his defence against the property owner’s claim?

Specific performance is an equitable remedy, and because the property owner waited for over a year to sue, the equitable defence of laches (lapse of time) will apply.

Specific performance is inappropriate, because a contract for services is involved.

Specific performance is inappropriate, because nominal damages are available to the property owner.

Specific performance is inappropriate, because the property owner’s failure to obtain another contractor for the job is an indication that £12,500 was an unfair price.

Specific performance is inappropriate as equity requires the party who seeks to avail themselves of an equitable remedy to come to equity ‘with clean hands’, that is, not to have acted in an improper manner.

Answer 46

(B) The contractor’s best argument is that a contract to provide services is not specifically enforceable as you cannot compel someone to work for you. Thus, the property owner cannot obtain specific performance of the contractor’s agreement to perform personal work for her. One of the prerequisites to obtaining specific performance is that a plaintiff must show that the legal remedy is inadequate. Where the innocent party has contracted for something rare or unique, money damages are inadequate compensation for loss of the bargain. Generally, the services to be performed under a contract for services are not unique and money damages can remedy a breach. Thus, specific performance is not available in such cases. In addition, even in the case of unique services, a court will not order one party to work for another, in part because such an order is tantamount to unconstitutional involuntary servitude. Another requirement for specific performance is that enforcement must be feasible. Enforcing a services contract generally would create complicated and time-consuming supervision problems and courts are reluctant to undertake it. In this case, the contractor agreed to perform work for the property owner personally. Thus, this was a contract to provide services. However, the services to be performed by the contractor were not unique or capable of being performed solely by him. The property owner could obtain adequate compensation by receiving the amount, above her contract price with the contractor, that it will cost to have someone else perform the required work (plus reasonable compensation for the delay in performance). Thus, specific performance is inappropriate here. (A) is incorrect because circumstances that would permit the defence of laches do not appear to be present. Laches is available as an equitable defence if the innocent party has unreasonably delayed in bringing the action and the delay is prejudicial to the other party. Laches does not arise automatically just because there is a delay of one year before a claim is filed. Here, there is no evidence that the property owner’s delay in bringing a claim was unreasonable, given that she spent several months trying to find another contractor, or that the contractor has been prejudiced by the delay. Therefore, laches will not give the contractor a strong defence.

Question 47

In the year ended 30 June 2020, a company had a tax adjusted trading profit of £800,200 and property income of £45,000. It also realised a chargeable capital gain of £25,000 and a capital loss of £80,000.
In the prior year, the company made a tax adjusted trading profit of £520,000 and chargeable capital gains of £9,000.

How much, if any, of the capital loss arising in the year ended 30 June 2020 may be carried forward to the year ended 30 June 2021?

£67,300

£80,000

£0

£55,000

£46,000

Answer 47

(D) £55,000. Companies must offset their capital losses against their chargeable gains in the same year, and excess losses must be carried forward to be used against future chargeable gains. Capital losses cannot be carried back and cannot be used against any other type of income. Neither is the annual exemption against capital gains available to companies. Thus, we deduct the £80,000 capital loss from the 2020 tax year gain of £25,000, which leaves a negative £55,000 (loss) to be carried forward into the 2021 tax year. We ignore the trading profit (so (C) is incorrect), and the capital gain made in the year before (so (E) is incorrect).

Question 48

A teenager was a spectator at a motorbike race. He was standing next to the track when two of the bikes collided together just in front of him. Debris flew into the air and a piece hit the teenager on the arm, causing a minor injury. The teenager was so shocked that he has now begun to suffer from post-traumatic stress disorder (‘PTSD’). Evidence shows that the crash was caused by the negligence of the race organisers.

In an action by the teenager against the race organisers to recover damages for the harm he suffered, which of the following best states the likely outcome?

The teenager is likely to recover damages for both the cut to his arm and the PTSD because the PTSD was a consequence of his physical injury.

The teenager is likely to recover damages for the cut to his arm but not for the PTSD because psychiatric harm is not recoverable in the tort of negligence.

The teenager is likely to recover damages for both the cut to his arm and the PTSD because he witnessed the traumatic events with his own senses.

The teenager is likely to recover damages for both the cut to his arm and the PTSD because he was in the area of danger created by the organiser’s negligence.

The teenager is not likely to recover damages for his PTSD because it was not foreseeable that he would suffer psychiatric harm as a result of such a minor injury.

Answer 48

(A) The teenager will likely be able to recover all of his damages in a negligence action. The organiser owed the teenager a duty of care in respect of the personal injury which he suffered, and this duty extends to psychiatric harm which is consequential on physical injury. The facts show that the duty was breached and that this caused the teenager’s damage, both the physical injury and psychiatric harm. (B) is not correct. The teenager is likely to recover for all his injuries for the reasons set out above. Also, the statement in this choice is too broad because there are circumstances in which a duty of care is owed in respect of psychiatric harm. (C) is not correct because it does not explain the correct reason why the teenager’s claim is likely to be successful. The defendant owed him a duty of care in respect of his psychiatric harm because it was consequent on physical injury, not because he witnessed events with his own senses. (D) is not correct because it does not explain the correct reason why the teenager’s claim is likely to be successful. The defendant owed him a duty of care in respect of his psychiatric harm because it was consequent on physical injury, as discussed above, not because he was in the area of danger. If the claimant had been in the same place but had not suffered physical injury, then it would be correct to say that a duty was owed to him in respect of his psychiatric harm because he was in the area of danger, but that is not the case here.

Question 49

A solicitor is instructed by the driver of a vehicle, who was involved in a road traffic accident involving a coach driver and is taking action against the coach driver to recover the costs of repair to his vehicle.

The driver client’s passenger, who is the driver client’s cousin, was injured in the accident. The driver client and passenger want the same solicitor to act for them both and are willing to provide written consent. The coach driver disputes liability and alleges that the driver client was at fault, and there is some evidence to suggest that the driver client was at least partially responsible.

Do the rules of professional conduct allow the solicitor to act for both the driver client and the passenger?

No, but the solicitor may refer one of the parties to a different member of the solicitor’s firm.

No, because there is a significant risk of a conflict of interest.

Yes, because there cannot be a conflict of interest between family members.

Yes, because at this point there is no conflict of interest; however, should further evidence emerge to show that the driver client was at fault, the solicitor would need to cease acting for one of the parties.

Yes, because the driver client and the passenger have a substantially common interest.

Answer 49

(B) A solicitor must not act where there is a conflict of interest between clients, or a significant risk of conflict. There is a significant risk of a conflict here-there is some evidence that the driver client may be responsible for the passenger’s injuries-and the solicitor should not accept instructions from them both. (A) is incorrect because a conflict covers the entire firm, not just individual solicitors within the firm. (C) is incorrect because there can be a conflict between family members. (D) is incorrect because at this point there is a significant risk of a conflict of interest. (E) is incorrect. This is not a situation that would enable the solicitor to use the ‘substantially common interest’ exception to the conflicts of interest provisions of the SRA Code of Conduct.
A double glazing company agrees with a home owner to install new windows in the homeowner’s house on 15 August. On 12 August, the double glazing company telephones the homeowner and says that the windows will not be ready for installation until 22 August. The homeowner reluctantly says that they accept the delay.

Question 50

Can the home owner change their mind on 14 August and enforce the contract based on the original installation date?

No, there has been a binding variation of the contract.

No, the homeowner has expressly waived their right to insist on the original date.

No, the homeowner has impliedly waived their right to insist on the original date.

Yes, because the homeowner can give notice to reinstate the original date.

Yes, because there was no consideration for the homeowner’s agreement to vary the date.

Answer 50

(B) The homeowner will not be able to enforce the original date because they waived their right to insist on the original date. Generally, for a variation of a contract to be enforceable, it must be supported by consideration to be enforceable. However, equity provides a way around this. Where a party promises not to enforce the other party’s obligation, the courts may conclude that the agreement is at least temporarily effective through waiver. The waiving party can reinstate the original obligation. However, they must give reasonable notice. Here, the homeowner agreed that the company could delay installation, which would constitute a waiver. It is unlikely that the court would find giving notice of reinstate the day before performance was reasonable. (A) is not correct because there has not been a binding variation, because the double glazing company has not given any consideration for their agreement to accept the delay. (C) is incorrect because the waiver is express, not implied, as the homeowner expressly agreed to the delay. (D) is not correct for the reasons stated above: notice given on 14 August to insist on performance on 15 August is not reasonable. (E) is incorrect because, whilst it is right that there was no consideration and therefore no binding variation of the contract, the doctrine of waiver still prevents the homeowner from enforcing the original date.