Breach of Trusts/Tracing Flashcards
(188 cards)
what is a breach of trust?
A breach of trust occurs where a trustee fails to perform any of his duties or improperly exercises any of his powers.
what must the beneficiares do?
The beneficiaries may proceed against a trustee who commits a breach even where the trustee believed what he was doing was in the best interests of the trust: Re Brogden [1888
-if theres a breach of trust theres a breach of trust
what if breach was mere techincal?
unless the breach was a mere technical breach which the court would have in any event sanctioned, Lee v Brown [1798]; Brown v Smith [1878].
what will ct do in regard to technical?
the ct will police trust generally if doubt always ask ct then technically its a none breach
Injunctions- what is injunction for?
if ther eis an anticipated brach of trust so if ben claim obvs prove this, that a cours eof actom the turste wants to udnetake breach of terms of turst or its terms then the ebenfic can go to ct and in ct if equity, this disrec aticle order against trustee to stop him prusing certain coruse of conduct for e.g unauth title of trust assets which would potut rustee in breach of perhaps terms of trust
cases for injunctions?
This remedy is available to prevent anticipated breaches of trust:
Dance v Goldingham [1873] – to restrain an unauthorised sale.
Riggal v Foster [1853] To restrain unnecessary mortgage.
Fox v Fox [1870] – To prevent improper distribution.
what happened in dance v goldingham?
Dance v gold- r..a.wtruste want to enter into mrotgage trnas to brro money secured on trut assets using as security for loan, trustee have abuse lgal poswer over prop. But if ben feel that put truste in b.o.t ocoudl give injuction to retsrin that. Or if trustee eking to distribute trust prop in wy ben gthink in contrary to terfms of trust giving prop or income or money to people whoa re enitled theremay be acause a debate over the construction, terms of trust instr some1 should get this money or not but obvs if ct resolves that q of con, ct can resolve any issues relating ot trust they than may issue injuction to rsstain would be rbeach there.
Personal Remedy against Trustees?
Personal rem obvs if trustee mismanaged rust prop, committed breach with trust, enter into perhaps reckless investments of turst fund whichc auses huge lost of fund, or investing trust assets high risk shares or by their conduct created a loss ot be, ben can sue them perosnallh for breach of trust fo comp. trustee is then personaly loiable
when is trustee personally liable?
Trustee is personally liable to beneficiaries for any benefit which he receives as a result of his office as well as for any loss suffered by the trust.
what did we look at last week in reference to this?
now that we looked at last week- trusteeship is very onerous, very strict. If you make investments that cause loss u can put hand in pocket and pay compo to ben, if u recieev a personal gain as a result of ur fid duty, make unayuth gain e.,g reciev bribes, fhr case..u can hold those on a c.t. weird type an account to beneficaires. So if u enrich urself personally as result of foficers trustee u can be held account for those gaisn to ben. Ur first and fundamental duty of duty to ebneficary- LAST WEEK
when will a trustee not be vic liable?
A trustee will not be vicariously liable for the breaches of co-trustees or the dishonesty or neglect of agents who act for the trust, unless there is default on the trustee’s part: Townley v Sherborne [1634].
Liability of Incoming and Retired Trustees - what is liability here?
Re Strahan [1856]
An incoming trustee is not liable for breaches committed by his predecessors, but if he becomes aware of such a breach after assuming office, he must take immediate steps to remedy it.
what happened in head v gould?
Head v Gould [1895]
A retired trustee will be liable for breaches he committed while in office, but not for breaches committed by other trustees after his departure, unless his retirement was intended to pave the way for the commission of the breach.
what does this illustrate?
Again illustrates – rule to shed start and end date of liabuktiy is whilst u I office, not before and when u ;leave not liable after
Ur time period of ptoenial laib for dec u made whilst u were trustee during lifetime of ur office- THAT THE GENRAL RULE
time period potential for liability
Joint Liability- what about joint liability?
interesting 1
joint liability?
Where two or more trustees are involved in committing a breach their liability is joint and several and the beneficiaries may sue all or any of them.
e.g of this
If 2 trustees e.g ab and b managing million pound trust fund some screw up and fund reduce in valude bad or reckless investment decisions.. Where 2 or more truste involved in commiting breach, gerneal rule is their liability join in several ben may sue all or any 1 of them
So if a and b screw up amnage of turts prop ad cause loss of trust fund ben could sue and ab togev or b or a. if that ahappens person who sued a is personal laible to repair loss of fund, through his mismanagement, person sued can claim contribution
what if one trustee sued?
If one trustee sued, he can claim a contribution from any other trustees under the Civil Liability (Contribution) Act 1978. The court sets the level of each trustee’s liability according to their culpability.
so judge may sue do what?
so judge may say a sued shoudltn by himself a claim contrib form b who trustee office at time and b should pay 50% of this equally his dec. or could say a primarily repsosnible and b ahd much liable role. Judge will set portion of laibiltiy according to blaine, cpulabiltiy of breach
But in theory if 1 is sued any other trustee who trustee who trustee at material time can be a contrib can be claimed from them.
what happens where 2 trustee sued?
Where two trustees sued one may be able to claim an indemnity from the other, especially against a solicitor-trustee by his co-trustee who has placed complete reliance on the solicitor regarding trust affairs: Chillingworth v Chillinghworth [1896]; Re Linsley [1904].
example of this sueing?
Trust adiars, bc of his export knowledge
So if 2 sued a and b , a could say well I want full indemnity from b cos actually b he was solic he made all dec and I want him to pay pout my laibilty cos basically his fault- that’s a common law principle
what is an indemnity?
An indemnity can also be claimed by a trustee against his co-trustee where the co-trustee has acted fraudulently in initiating the breach Re Smith [1896].
so whoever is to blame what?
So whoever most to balme u can pin more liability on them
Measure of Trustee’s Liability?
Once breach of trust established, it is necessary to work out extent of trustee’s liability.