4024LAW - Equity And Trusts 2020 or Gail Smith Case Study - Law Assignment Help

Assignment Task -                 
 

Question:  

Pham Duong has come to you seeking advice about a letter drafted for him by his accountants proposed from him to his solicitors sorting out his affairs. He wants to know how the trust might be improved and why?  

The draft letter sets out, in part:  

“I declare a trust as follows: 

1. $20,000 or thereabouts to each of my friends in the Griffith University class of  2020.  

2. $40,000 to my good friend Sam Tran trusting that she will help the local family shelter with at least some of that money helping renovate their Labrador house. 3. $30,000 to the Labrador Cricket Association for the upkeep of emergency accommodation in the Gold Coast region. 

4. $40,000 to the Gold Coast Regional Botanic Gardens Charity. 

5. Any remaining monies in my bank account to go to the local family shelter.” 

Duong has a complicated life story that the accountants said he should share with his solicitor because it might have consequences for his financial affairs and the trust being proposed. 

Duong and his current partner Gail Smith live together with their two children Chinh and  Cam at 27 Central Street, Labrador in Queensland. Duong moved in about 10 years ago after his divorce. Gail owned the house with a small mortgage with the Commonwealth Bank that was finally paid off in December 2018. Gail paid the mortgage amounts while Duong pays the school fees and groceries out of the income from their jobs at the local hospitals. Duong also renovated the back of the house paying for this from his savings. Gail saves any extra money she has to invest in shares that are listed in both their names.  

In his current business at the hospital, Duong installs complex electrical devices for monitoring patients. The business is set up as a company, ATP Electronics Pty Ltd ACN 106  111 1AX, as trustees for the Centenary Baliroy Trust that trades as GC Electrical. Duong and his friend Seba are directors of the company with Duong doing all the financials. GC  Electrical banks with the XTC Bank and has an overdraft that is currently close to its maximum with the bank unwilling to extend credit further. To get some new installation equipment for a contract for Heart Big Data Trackers with the hospital, GC Electrical borrowed money from an investors syndicate. In settling the loan Duong promise in a letter to the investor's syndicate that he’d keep this money separate from the other accounts, only use the money for the Heart Big Data Trackers contract, and pay back the amounts from that contract paid by the hospital as milestone payments before any other payments were made from those monies.  

GC Electrical has had some recent problems sorting out their only other contract at another hospital – the Dialysis Flow contract. Time delays and cost overruns have meant that GC  Electrical has had to pay out money from their operating account at the XTC Bank to get expert assistance from consultant engineers. With a tight cash flow, Duong has juggled the cash requirements. He has put all the GC Electrical money into the operating account at the  XTC Bank and by using some of the milestone payment money coming in from the Heart Big  Data Trackers contract he has paid the consultant engineers anticipating that those costs can be recovered when the Dialysis Flow contract monies come in. Unfortunately, the accountants are saying that GC Electrical will probably need to go into voluntary liquidation because the Dialysis Flow contract payments are ending and GC Electrical has debts to the  XTC Bank and the Heart Big Data Trackers investors syndicate so that it will not be able to pay its debts when they come due. The only assets remaining for GC Electrical are the future milestone payments from the Heart Big Data Trackers contract. 

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