Aisha is a wealthy businesswoman and property developer. She has been married to her husband Jamal, a
Question:
Aisha is a wealthy businesswoman and property developer. She has been married to her husband Jamal, a solicitor, for over 30 years. They have a close relationship and have a joint bank account, but Aisha also has an account in her own name only with Northpac Bank. In January 2020 Aisha bought a rundown property in Glebe, which she registered in her own name. Aisha provided 90% of the purchase price, and her sister Bea provided 10%. Prior to purchasing the property, Aisha had persuaded her sister Bea to lend her this 10% of the purchase price, but as Aisha has not repaid the money, Bea has been agitating for the property to be transferred into both their names as tenants in common. Aisha told Bea: 'We don't need to spend more money on legal fees and stamp duty to make things formal, you know the house is yours too, and when we sell it, of course you will get your money back.' Meanwhile, in February 2020 Aisha's husband Jamal persuaded one of his clients, Xi, to invest in a property recommended by Jamal. On 2 February, Xi transferred $1,000,000 to Jamal, with the instruction that the money should be held in Jamal's solicitor's trust account, until needed to complete property purchases. On 1 March, Aisha answered a phone call from Xi, when Jamal was away from home. Xi was very upset and told her that Jamal had failed to attend the settlement for the property purchase, and had therefore not paid the sum required to secure this property for Xi. On 2 March, Aisha asked Jamal about the phone call from Xi, and Jamal said: 'I am having some financial difficulties at the moment. But I want to make sure you are okay, so how about I transfer some money to you. How about I buy your car from you, for $500,000?' Aisha's car was a second-hand Porsche, worth about $100,000. Aisha agreed to this arrangement, so long as she could continue to drive the car. Later that day, Jamal transferred $500,000 into Aisha's Northpac bank account, and Aisha signed over the registration papers for the Porsche to Jamal. On 3 March, Aisha used all of this $500,000 to invest in the Hi Yield Unit Trust. In April 2020 Aisha received an inheritance after the death of her Aunt Patty. The inheritance included the sum of $600,000, and a house in Beecroft. Aisha decided to transfer this money and the house to be managed by 'Trustees R Us', a business operated by Frank. She signed a trust deed which allowed Frank to invest the funds and rent out the Beecroft house, but specifically prohibited the sale of the Beecroft house. Despite his assurances to Aisha, Frank is not a successful investor. In a pub one evening Frank had a conversation with his stockbroker friend Barry, and Barry advised Frank to invest in the float of a new company called Bluetech Ltd, because
3 Barry said the share price would quickly triple. Frank subsequently invested the $600,000 from Aisha's trust fund in Bluetech Ltd. Barry also told Frank that house prices were falling rapidly, and he should sell the house in Beecroft, so Frank listed the house, and it was sold for $1,000,000. The purchaser settled on 1 October. In April, Aisha decided to draft her own will. Her will included the following clauses: a. Frank, my executor and trustee, is to hold half of my jewellery on trust for my daughter Nila, to be given to her on her 21st birthday. The remainder of my jewellery is to be held on trust for sale, with the proceeds being distributed, in my trustee's absolute discretion, to such of my colleagues who have helped and supported me through difficult times. b. The residue of my estate is to go to my loving husband Jamal. Life is not going well for Aisha. She has also fallen out with her sister Bea. Bea has commenced proceedings in the Equity Division of the Supreme Court, claiming a half share in the Glebe house. Aisha's husband Jamal has been declared bankrupt, and he no longer has any money in his solicitors' trust account to repay Xi. Bluetech Ltd has gone into liquidation, so Bluetech shares are now worthless. Aisha has also had an independent agent give advice on the price obtained for the Beecroft property, and they have advised it was sold for at least $500,000 below market value. The only good thing to happen to Aisha is that her investment in the Hi Yield Unit Trust has risen in value, and her unit holding is now worth $600,000. Aisha seeks your advice on the following issues: 1. What claim, if any, does Bea have to the Glebe property? 2. What claim, if any, can Xi make against Aisha or any of her property? 3. What claim, if any, does Aisha have against Frank? 4. Will Aisha's will be effective to bequeath any property to her daughter Nila and her colleagues?
Reference: NSW Australia Law
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson