Equity and Trusts - Fidiciary Trusteeship (bit unclear so might not do) Flashcards

Question

Fiduciary Nature of Trusteeship- what about remuneration?

Answer 1

that remuneration Remunartion used to be accpetion but nowadays norm. and isntnt future eof trusteeship. Being trustee repsonsbility.

Answer 2

Not like 200 yrs ago ladies managing prop for mate who died its now become profesisnal isnittuin which requires proper remuneration fo thos involved in amangement in propert.y under these stiect rules have to selfless manage prop for benefit of others. Very ltitle [personalgian e.eg boadman Phipps and fhr case.

Answer 3

Craddock v Piper (1850) A solicitor trustee may charge costs if he acted for a co-trustee as well himself in relation to trust business in court, provided that his activities have not increased the expenses.

Answer 4

Craddock – r,a.w , so rem persisits trustee always been allowed. Costs have to be reasonable of course. Ct has to inherent jursidc to alow that

Answer 5

Bristol and West Building Society v Mothew Millet LJ described the fidiciary relationship in the following terms

Answer 6

A fid is someone who has undertaken to act for or or on behalf of another in a particular matter in circumstance which give rise to a relationship of trust and confidence. The distinguishing obligation of a fid is the obligation of loyalty

Answer 7

Number of duties designed to prevent any conflict arising btw the interests of the trustee and those of the beneficiaries- these duties strictly enforced by courts

Answer 8

Although this can sometimes be said to lead to the unfair treatment of innocent fid, the exacting nature of these duties discouraged them from undertaking any action which might be said to conflict with their paramount duty of loyalty to beneficiaries

Answer 9

Fidiciares cannot retain any unauthorized profits generated by their connection to the trust

Answer 10

Bray v ford

Answer 11

Any profits will be held on constructive trust for the benefirces

Answer 12

Keech v Sanford

Answer 13

It will not make a difference if the fiduciary generates a profit for both himself and the trust

Answer 14

Boardman v Phipps

Answer 15

His or her share of the profit will be subject to a constructive trust for the beneficiary - Williams v Barton

Answer 16

A fid who receives a bribe from a 3rd party is clearly in breach of his or her fid duty not to make an unauthorized profit

Answer 17

The extent of the remedy available to the beneficiary against a fid who takes a bribe has been questioned

Answer 18

Lister v co v Stubbs - the court of appeal held that the c could not establish proprietary interest in bribes recieved by their fid as those monies had never belonged to the company

Answer 19

Attorney general for Hong Kong v Reid - privy council held that the c was able to establish a proprietary interest in the bribe monies received by Reid on the basis of the equitable maxim

Answer 20

Equity sees as done that which ought to be done

Answer 21

This meant d held prop purchase with bribe money which had increase in value on constructive trust for the c

Answer 22

Both can be seen controversial Lister - reduces the extent to which fid can be held accountable by the beneficiaries and seems to run contrary to the principle that fid should not be balled to profit from their position Attorney- clearly seeks to send a strong message that any explotation of a fid relation will not be tolerated, but did so through the creative use of an equitable maxim which trampled upon 100 yrs of established legal principle

Answer 23

Sinclair investments uk Ltd v Versailles trade finance Ltd in administration - when the court of appeal declined to follow att general - and reasserted that beneficiary will only have a personal claim against a fid in respect of prop which neither belonged to the benefi nor was acquired by taking advantage of an opportunity that rightfully belonged to the beneficiary

Answer 24

Later in fhr European ventures llp v attorney- in a careful and thordough review of the authorized

Answer 25

argues that the importance of ensuring fid loyalty is the key to understanding the rules in this area and not the question of whether the bribe money belonged to the principle

Answer 26

As such accepting a bribe should be considered to fall within the general principle that an agent who acquires a benefit through their fid psosition to be treated as having acquired it in behalf of their principal

Answer 27

Provides the principal with both propertiAry and personal remedies from which to chose and means that the value of bribes and any subsequent additional profit can now be potentially recovered

Answer 28

By courts in relation to the duties of fid is illustrated by the following decision

Answer 29

O donnell v shanahan

Answer 30

(A) Purchase of Trust Property

Answer 31

Trustees must not place themselves in a position where their role and personal interests conflict.

Answer 32

trustees who sell trust property have an overriding duty to obtain the best price

Answer 33

case buttle v saunders- an injunction was awarded preventing trustee from accepting an offer to purchase property for reasons of morality when a higher offer had been recieved

Answer 34

Trustees must not become owners of the Trust Property. Campbell v Walker (1800); Ex p Lacey (1802); Movitex v Bulfield [1988]

Answer 35

Sub rule truse must not purchse trust prop

Answer 36

The sale of trust property to a trustee is voidable by a beneficiary

Answer 37

Here the nature of fid rels operates to prevent the risk of trustee putting his or her own commercial interests before the fid obligation to obtain the best price for the trust

Answer 38

The rule is strictly enforced and in general it does matter if the property is processed in good faith and for full value Ex p james or even after the trustee retires - wright b Morgan unless a significant period of time has since elapsed - re boles and British land company company’s contract

Answer 39

Holder v holder case

Answer 40

Sit oddly with the CT’s generally strict approach to fid duties , and it is often questioned whether these rules need to be relaxed

Answer 41

The court of appeals approach in this case might be said to be more typically equitable in character as it pays much closer attention to the whole circumstances of the case and broader questions of fairness than the more usual strict application of rules would allow

Answer 42

Holder b holder has much in common with the minority approach taken in boardman v phipps in which lord upjohn argues that a real conflict of duty and interest must be identified before the rule is applied

Answer 43

Such a contract can rescinded irrespective of fairness of price etc.

Answer 44

Holder v Holder [1968] After some minor acts as Executor (trustee), X renounced his executorships and took no other part in the administration of the will. He later purchased at auction for fair price a farm belonging to the estate. He was previously tenant. CA let contract stand. X had not interfered with administration of the will;

Answer 45

had taken no part in the organisation of the auction; there was no conflict at time of purchase; any special knowledge about the farm was acquired by X as former tenant not executor. Further, beneficiaries had acquiesced in the sale.

Answer 46

a trustees purchase of a benfeciaries equit int in property will not be voidable as long as the trustee acts honestly , makes full disclosure to the beneficiares and pays a fair price coles v trecothick

Answer 47

Generally a trustee purchase of trust property is voidable at option of beneficiary. Burrell v Burrell Trustees [1915] A sale to a trustee’s spouse will be looked upon with suspicion (sale upheld on facts however). Re Thompson’s Settlement [1986] Sale by trustee to a company in which he has a substantial interest/majority shareholder will be set aside.

Answer 48

Kane v. Radley-Kane [1999] Widow was sole administratrix appropriated £50,000 of unquoted shares to herself in satisfaction of the statutory legacy to which she was entitled on her husband’s intestacy, but without the consent of her stepsons, who were also entitled, subject to her rights. The estate at the time was worth only £93,000. -Kane – no will less admisntrastrion-s he takes out lets admin becomes appointed by ct of administrator of her husband estate. R.a.w Late t time worth 93,000 sdidnt se

Answer 49

Widow seemed entitled to it all. She sold shares 2 years later for over £1 million. Held: appropriation of the shares breached the self-dealing rule, was a purchase of trust property by trustee. Share proceeds held for the estate on constructive trust.

Answer 50

A trust instrument can permit trust property to be purchased by a trustee/court may permit.

Answer 51

Equity takes less stringent view of trustee s purchasing beneficial interests. Onus is on trustee to show he gave full value and beneficiary gave informed consent/arms length transaction: Thompson v Eastwood (1877) Coles v Trecothick (1804) Williams v Scott [1900].

Answer 52

1st rule said trustee cannot purchase trust prop if they do, good or bad set aside 2nd rule- red line in terms of defing default posit-was this call which in theory prevent trustee from buying not trust prop but beneficial equ inte. Here equ takes slightlty less strict view and here the trustee purachseas a ben inte.

Answer 53

E.g mill pouns trust a for life b for lfie reaminder c and x is trustee, x wants to buy c’s ll.. In that trust fund .. Carry out actuarl evaluation obvs if a and b die capital goes to c. by tiem a and b alive interest fund, b dies dries out whole cpa goes to c. trustee wants to buy c’s remainder itn.

Answer 54

Do that remainder int , how much is it worth? But if a and b 18 5th then c’s int gap .. Is solely mil pounds future.. Gonna … much… market value now. So now ened to have… actuarl evaluation has to take palce to work out what the market val now is, rik if a and b died etc, try fix value of the rest int capital for c. talk about risks etc… actuarial evaluation

Answer 55

What happens if that purchase goes ahead? Trustee expires c’s. how much pay mil punds?...how much worth now? Buy tht lump sum. How much think worth. So buys it but obvs tied up with c’s… so work out.. What positon there? Not as strict as 1st. General rule is truste can buy and equit int in trust prop, money shares land ming vaset etc, but the ownwers understand if trustee can show further proof on him. Get trecision unless trustee can show a full value, beneficiary gave informed consent, no undue influence or duress or misrep.

Answer 56

So its in trustees itn to get settled actual eval.. Bearing in mind…so firmly on trustee to show general consent , beneficiary etc, show market value, discretion that eval. Erm then the contract will stabnd. Similarly barn..evaluation how much that worth. Kick in and b dies , barn accepts equit interest in land trustee land becomes .. Money. Then seeps remainder interest… so transaction finally equit stabnd also logn..

Answer 57

Trustee con c find b slight interest..?? How much b;s life itnerst worth – again u need actual evalu- how old a how logn got to live what risk from dying? If go seen then itn right o income.. Whats interest rates. Whats 1% mill quid a year 10,000 duration bs life , if trustee buys that he egts that int. becomes interest ultra vine. Howlong actual eval then work out prie. Ammunity. So trustees combine ben interest ionce show= actual eval. Life interest income u recieev int eveyr year rest of ur life. How much that worth of the market. So deponds. So if beneficiary or a benef then change mind, can recing Thompson Coles

Answer 58

U can buy benfical int but if ur challned trustee has b.op form geneuine consent given and a fair markwr value paid. Obvs if ur buying something way below actual market estimated value.. Ct think what going on here an dtrial decision.

Answer 59

``` Generally, see Lecture 8: ‘Renewal of Leases and Purchase of Reversions’:- Keech v Sandford (1726) Re Biss Protheroe v Protheroe [1968] ```

Answer 60

Ide if trustee benefits profits personally, as jogs informational opportunites whichc ureently sway during trusteeship, steward ship. And he gains personally all this infof rom b=… account for beenficairs poritt mad, any proit has made

Answer 61

Keech v Stanford- right tor eciev lciense fees, lease ran out land lord didn’t want to renew to minor who benefit. Lease held on trust under trust of these profits for minor. When that run out. Trustee claimed new leas ein own right so keep profits. But bc opp come into his kwnoldhe and presented itself as result him being truste.. New lease was renewed to him personally, whos held that must account profits received to the beenficary. Minor ben under the old trusts. So basically held renewed lease on c.t for the former beneficairs. So clear red line in san dover naturw of self gaining for ur own ben as rreuslt exploting opp come ur way which u received in capcit fo trustee

Answer 62

Re bliss Prother- last weke Incidental profits wil be held on c.t for beneficaires

Answer 63

Can trustees who obtain directorships by virtue of their office keep their director’s remuneration?

Answer 64

Trustees as company directors Trustee buy shares in company , that bring sint scenario. Shares u see, … but obvs decl .. Ben but the shares themselves … when shares whites of comapn where shares trustee who can control their…. So can trustees obtain company diretprshis by virtue of their office as a trustee of .. Shars keep their directors .. Where directors emunretaion… if the trustee lose the ploss of shars which they hold trustee/benefic- los voting rights hars appointed onto companies dirctos, salaries or rrmun.. Keep money personally or …??bc ur exposing rights agains torop shardes…onc ehold that rem on c..y … this is q question about identifying causal link Re macadam… r.a.w Perosaml prop come thie way but only come as capacity as trustee

Answer 65

Re Macadam [1946] Trustees had power by the articles of a company to appoint two directors. They appointed themselves and were remunerated. Held: They had to account to the trust for their remuneration, acquired because of their office.

Answer 66

Re Dover Coalfield Extension Ltd [1908] | Remuneration paid as directors to trustees could be kept if trustees became directors before they had become trustees.

Answer 67

Re Gee [1948] Remuneration as directors who were also trustees, could be retained if trustees were appointed independently of the votes of the shares of the trust owned by the trust.

Answer 68

look a , see how many if turst only few shares of company. And u excersie those rights trustee dpo..the company says u ned x … cnat hear So small not in causual link of .. Director.. Remunerated – soq looka t is there enough show evidential cuase link btw trust and shareholder… nd appointment trustee and directorship??

Answer 69

``` Re Lewis (1910) Remuneration to directors who were also trustees could be kept if the trustee did not obtain that remuneration by use of his position as a trustee but by an independent bargain with the firm employing him. ```

Answer 70

it’s the gernal point NEED CAUSAL EVIDENTALM LINK- DID U GET PERSONAL REMU OF DIRECTOR – cos of ur trust and shares trust cintroled, voting right trust to be controlel, thas theat contributed to u in dirction rec rem. Answer yes cnat keep have to keep on c..t for ben. Answer is no the turst int and voting rights u can keep the money personally.

Answer 71

``` Re Macadam (above) Cohen J : ‘The root of the matter really is: Did the trustee acquire the position in respect of which he drew the remuneration by virtue of his position of trustee? ```

Answer 72

Re Llewellin’s WT [1949] Trustees may be expressly authorised by the trust instrument permits them to self appoint themselves as directors and receive remuneration.

Answer 73

Re Keeler’s ST [1981] Court may sanction appointing trustees as directors and their fee retention.

Answer 74

Re keelers- settlement rust said – r.aw – could give green light fi that happens??? So if in doubt,apply to ct an dmake them sort it out

Answer 75

Default rules which defin red ines helfd define antgur eof trusteeshiup Other prif tr..a.w

Answer 76

Williams v Barton [1927] A trustee who introduced business of the trust to a firm of which he was a member was compelled to account for the profit.

Answer 77

Sugden v Crossland (1856) | A trustee who received a sum of £75 to induce him to retire had to account to the trust for this sum.

Answer 78

Williams- r.a.w – so very strict illustration of the no profit all tjere Sudden- r.a.w – again by virtue of this office of trustee he obtained personal gain and a c.t will be imposed to make trustee account for that sum of money to eh beenficairs. Very strict appl to rule there

Answer 79

Brown v IRC [1965] | A trustee who used trust funds in his own business was required to account for the profits received.

Answer 80

obvs borrowed money from trusy and that created a return and that coukdn be allowe to stand

Answer 81

Re Thompson [1930] Executors of a will were directed to carry on the business of the T who had been a yacht broker. One of the executors was intending to set up on his own account as a yacht broker in competition. Held: He must not set up in a competing business.

Answer 82

the fid obligations of trustees towards beneficaires entail that they should not compete with the trust

Answer 83

the q of how strictly fid duties should be enforced raises many q's about the nature of teh fid relationship, and the courts attitude towards them. impress exam wwith good knowledge of these issues- read jones unjust enrichment fid loyalt- the natur of fid loyalty and collins the no onflcit rule : the acceptance of traditional equtiable values

Answer 84

Conf info r,a.w –interesting area.. Agin touched ont his abit gorden Phipps but other cases more spec in relation to this isusue

Answer 85

A fiduciary who makes use of confidential information belonging to his principal will be liable for any profit that he makes. - and truste canot exploit of fid confidential info which hes acquired in his capa s fid or trustee an dif personal gai made, that money hel d on c.t and account has to be made to ben for pinciuple of ..

Answer 86

AG v. Guardian Newspapers No.2 [1990] 1 AC 109 HL HL held that the Sunday Times was liable to account for the profits made by its publication of extracts of ‘Spycatcher’ a book written by a former member of the British Security Services, who stood in a fiduciary relationship to the Crown and which contained confidential information.

Answer 87

held couldn’t cos former meebr of britsh meebr of secuite service, he stod as fid in a fid rels with the crown who was his pricmnipe he was affectively fid agent if the crown and he had breached his fid duty by oublshjing book and this case advance book coming out selling extratcs if iut , he reciev comm and helf he ahd o account to crown fro that moenyr eveivd, why he was secreta gen he ahd fid loyalty trust and conf to crown and couldn’t profit personaly exploiting rels. So secret agents are fid and cannot profit form reaching oblig. Secreacy to cronw.. So any prof he gained had to hold on c..t and pau to crown

Answer 88

Peter Pan Manufacturing Corp. v Corsets Silhouette Ltd [1964] 1 WLR 96 The defendant company’s designer was shown a sample copy of the design of a new brassiere in confidence by the plaintiff company. When the defendants subsequently manufactured it Pennycuick J irdered that they account for their profits.

Answer 89

Peter pan r.a.w in comerical context- held judge had to acoit for profits made conf relationship here. Fid rels kicked in on back fo cofn rles btw 2 companies. Compamnu which abuse that tirsy conf, advantage manufacturing bra on profits made form those sales on c.t .. Of that desing. So conf info in commeicalcontx t, fid rels which abuse so profit made on indiviall. Fid rels co.t kick sin. Gai has to hold mone in equity or company will suffer iss Also a liabity r,a,w Establish in lack mineral r.a.w

Answer 90

Liability on the basis of the exploitation of confidential information was also estbalished in: LAC Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR 14. Here LAC received confidential information from Corona during the course of negotiations with a view to establishing a

Answer 91

joint venture to exploit minerals from land owned by Corona, which indicated that adjacent land was also likely to contain mineral deposits. LAC subsequently purchased the adjacent land in their own right and exploited the minerals themselves. The Supreme Court held that there was a fiduciary relationship between the parties and that LAC should the land on constructive trust for Corona because of their breach of confidence.

Answer 92

See also on exploitation of confidential information and the imposition of constructive trusts: Boardman v Phipps [1967] 2 AC 46 HL; Regal v Gulliver [1967] 2 AC 134; AG v Blake [1998] 1 AER 833; Satnam v Dunlop Heywood [1999] 3 AER 652.

Answer 93

Remedy for Breach of Fiduciary Duty: Account of Unauthorised Profits, Bray v Ford [1896] AC 44; Regal v Gulliver [1967] 2 AC134; subject to reasonable allowances see,Boardman v Phipps [1967] 2 AC 46 & O Sullivan v Management agency [1985] QB 428.

Answer 94

r.a.w So cts are I when conf rels btw 2 parties crown or crown srvants btw 2 companies comer neg, the cts can bc of the conf rels . Cts can engraft ontot hat rels that fid rels to person who bene repose din relation int in conf, treated as fid and this exploits that conf abusies it self gain and be hel dacoutn for any proftis made, c.t will ?? Fid which creates and protects conf rels. And in that sens protect conf situ. That dec has faced some criticism ** might be potential exam q and if been enrich based on that conf rel engraft that c.t to make person reach ac So where conf begin…?? Think dec..so what exten should law get invovledd ot gthat extent Duty reme for breach fid utyc sse- duty esstentialy is to acocutn for unauth prifits made form abusg t hat decl, that fid duty that trust and conf , impose injury, duty to account some people duty to account rofits made.

Answer 95

while trustees are expefcted to act in interests of beneficiaries , it is th ebenefciiares who will hold the trustees to account. to do this, they clearly require some access to info about the trust , but what is the extent of trustess duty to keep beneficiaires informed about the trust.

Answer 96

trustees frequently have toe xcercise their discretion in carryign out their duties.

Answer 97

trustess may have a duty to take advice before making an investment , but it is they who ultimately defcide whether or not to follow the advice

Answer 98

trustees discretion to choose which memebrs of a class to benefit in a discretionary trust

Answer 99

case of re beloved wilkes charity, estbalished that trustees do not have to give reasons for the use of their discretion,. while this deciision limitis trustees accoutnaibility , it also allows trustees to fulfil their role as fid:

Answer 100

1. for trustess to act impartially they ,ust be free of pressure from bene 2. in the context of family trusts, protecting trustees from hsving to explain their decision may prevent family conflict

Answer 101

lord truro added tat teh cour can supervise and possible inteverne where

Answer 102

1. there is evidence if bad faith or fishonesty or | 2. the trustees provide reasons for their actions - in these cirucm the court can consider their concl

Answer 103

if trustess are not required to give reasons for the use of their discrion to what information are ben entitled

Answer 104

all trustess mut keep accoutnd and make them avail to the ben for inspection - pearse v green. thisd invlufrd ben under a discretionary trust, although this right may be limited whete they are part of a large class- murphy v murphy

Answer 105

in or rouke v darbshire- the house of lords states that the ben right to info ewas based on their properiaryt interest in hte trust. this entitled ben to access all trust docs

Answer 106

salmon lj attempted to define trust docs

Answer 107

1. they are docs in the possession of trustess as trusteess 2. they contain info about the trust , which ben are entitled to nnow 3. the ben have a propr inter in the docs and acccordignly are entitle to see them . if any parts of a doccontain info which the ben are entieled to know, i doubt whether such part s can truly said to be integreal parts of the doc

Answer 108

hw this dif does little to clarify the scope of the term- trust doc addition, the court stressed that the bene right to see trust docs did not include

Answer 109

doc which might revela how the trusteess had excercised their discretion confidential info, including the agendas of trustee mettings correspondence among trustees or ben

Answer 110

privy council in schmidt v rosewood trust

Answer 111

looki in book

Answer 112

benficiares no longer have an automatic right to demand info. this could also be said to permit trustess to eb secretuve as the cost of lit may discourage benficr from complainign

Answer 113

the privy council apprach means that tge court could potentially order the disclosure of any documentation it deems rel, thus enhancing the accoutn of trustees

Answer 114

the ct flecibity to respond to diff cirumstance by allowing the ct to balacne the interest of trustees benefic and any third parties.

Answer 115

breakspear v acklnad- where briggs j accepted the trustees argumnet that disclousre of teh settlors LETTERS OF EWISHE wwould cause family conglict and refust order disclosure

Answer 116

briggs j empahises that conf issue identified in re londe settlemet shuld be seen as improtant but not decisievie factore in resolving questions of disclosure.

Answer 117

is a privy council decision, and therefore, striclty ppersuasive only it is arguable that lord walkers reasoning provides a more wotrableable conceptually satifying approach to the quesiton ben right to inf

Answer 118

the unsettled nature of law in this are make it prime subject for AN ESSAY Q ON ACCIOUNT TRUSTEEA- improve ur marks by demon knowledge of both current law and calls for greater account. kirby p argues for greater account in his minority judgment in aurstrialian case haritngan nominess property ltd v rydge . a good discussion of the debate can also be found in sir gavin lightmans article- the trustees duty to provide indo to beenficiar

Equity and Trusts - Fidiciary Trusteeship (bit unclear so might not do) Flashcards

(143 cards)