Breach of Trust

Question 1

What are the questions that you ask when there is a supposed breach?

Answer 1

1) Has there been a breach?; 2) who can claim for that breach?; 3) what remedies may the claimant be entitled to?; 4) are there any defenses for the defendants?

Question 2

What are the possible ways a breach could happen?

Answer 2

1) Failure to obey; 2) failure to account; 3) lack of care; and 4) conflicting interests or duties.

Question 3

What are the categories of possible claimants?

Answer 3

1) beneficiaries; 2) objects of powers; 3) fellow trustees; 4) charity commission; and 5) enforcers and protectors.

Question 4

What are the remedies for breach of trust? Mention the categories before the remedies.

Answer 4

1) Achieve performance of duty through a) declaration, b) direction, and c) removal of trustees. 2) Substitute for performance through a) adjust account, and b) equitable compensation. and 3) deter non-performance through a) restitution of gain.

Question 5

What are the steps taken to adjust an account?

Answer 5

1) Compel trustees to provide account, 2) falsify the account through court, 3) surcharge the account ie add missing receipts, and 4) compel trustees to pay the short fall.

Question 6

For the purposes of breach of trust, is a trustee liable for another trustee?

Answer 6

No.

Question 7

If two or more trustees are liable how do they split liability?

Answer 7

Equally ie if there’s two then 50/50 no contributory negligence involved.

Question 8

When is a trustee in breach entitled to a full indemnity ? From whom?

Answer 8

A trustee could be entitled to a full indemnity from another trustee if the other trustee 1) caused the breach by their own fraud, 2) is also a solicitor advising the trustee, or 3) is also a beneficiary of the trust.

Question 9

What if the beneficiaries consented to the breach knowing that it is a breach?

Answer 9

Then no liability for trustees.

Question 10

What are the effects of exemption clauses for breach? Which cases illustrate these?

Answer 10

1) relieve trustees off duty (Hayim v Citibank NA), 2) relive from liability of breach (Armitage v Nurse).

Question 11

Does an order of an account necessarily mean that there will be a remedy?

Answer 11

No.

Question 12

What are the two things that the plaintiff may do when there is a deficit on the account?

Answer 12

Either falsify it or surcharge it.

Question 13

When can an account be falsified?

Answer 13

If the account discloses an unauthorised disbursement.

Question 14

Case that shows that for the purposes of contribution trustees divide liability in equal shares.

Answer 14

Bahin v Hughes.

Question 15

for the purposes of the defence of exemption clause what case illustrates the clauses that exempt trustees from duty?

Answer 15

Hayim v Citibank NA.

Question 16

for the purposes of the defence of exemption clause what case illustrates the clauses that exempt trustees from breach? What can’t be exempted?

Answer 16

Armitage v Nurse. Fraud can’t be exempted.

Question 17

For the purposes of defences for the trustees. Which act and section govern the ‘be excused’ defence?

Answer 17

Trustee Act 1925, s61.

Question 18

When can a trustee be excused by the court? What case illustrates these requirements?

Answer 18

When they have acted 1) honestly, 2) reasonably, and 3) ought fairly to be excused. Santander v RAL Solicitors.

Question 19

What statute governs the limitation period for suing the trustee for breach of trust? What section?

Answer 19

Limitation Act 1980 s21(3).

Question 20

What is the limitation period for breach of trust?

Answer 20

6 years.

Question 21

When does the limitation period for breach of trust start running? What are the exceptions?

Answer 21

Right away unless beneficiary is an infant so until he becomes adult or until the future interest (assets for example) fall into the beneficiaries possession.

Question 22

Where does the limitation period for breach of trust not apply?

Answer 22

1) fraud to which the trustee was a party, and 2) to recover trust assets or their proceeds in trustee’s possession or converted to trustee’s own use.

Question 23

This case has two limbs. What are they and what is the case?

Answer 23

Barnes v Addy. First limb: knowing receipt; second limb: dishonest assistance.

Question 24

What are the requirements for knowing receipt?

Answer 24

1) claimant must show a disposal of his assets in breach of a fiduciary duty.
2) the beneficial receipt by the defendant of the assets.
3) knowledge on the part of the defendant.

Question 25

What are the requirements of dishonest assistance? elaborate on each.

Answer 25

Dishonesty which relates to the actual knowledge of the defendant.
and assistance which could be actions before or after the breach and must have assisted in a significant way.

Question 26

What case illustrates that actions before or after the breach could help a case of dishonest assistance?

Answer 26

Agib (Africa) Ltd v Jackson.

Question 27

What are the remedies available for the claimant in case of dishonest assistance? Who from?

Answer 27

account of profits from trustee and dishonest assistant.

Question 28

Can you claim some of the profits made by the dishonest assistant? Which case illustrates this?

Answer 28

Yes you can. (Novoship (UK) v Nikitin).