Personal V Proprietary Claims

Question 1

Personal claims

Answer 1

• brought against the trustee to claim reliefs which do not involve asserting an interest in a property but focus on the court directing the trustee to do/not do something to correct the breach
• Cowan v Scargill

1. Compensation for loss
2. Taking an account
3. Restitution of gain
4. Rescission of contract/transaction
5. Injunction
6. Payment of interests

Question 2

Compensation for loss

Answer 2

• trustees liable to compensate the beneficiaries for any loss suffered by the trust as a result of their breach
• breach must be the cause of the loss suffered- target holdings v redferns
  ‘ but for test’ used here
• no duty on the beneficiaries to mitigate their loss arising from a trustees breach of duty- canson enterprises v boughton

Question 3

Taking of an account

Answer 3

• assessment by the court of the state of the trust fund and usually a prerequisite to compensation and restitution
• trustees are called to court to account for all the receipts so court can identity if a breach has occurred

Question 4

Restitution of gain/account of profit

Answer 4

• applies where trustee has personally benefitted from the breach and the court orders the trustee to restitute that gain to the trust
• doesn’t require loss to be suffered

Question 5

Rescission of contract/transactions

Answer 5

• allows beneficiaries to void wrongful transactions entered into by the trustees in breach of trust
• court declares it void and non-binding
• not available where there is a bonafide purchaser

Question 6

Injunction

Answer 6

• compels the trustee to do an act in accordance with their trust duty e. Distribute property or prohibits the trustee from doing something e.g not to carry out certain investments

Question 7

Interest

Answer 7

• trustee can be ordered to pay interest on top of monetary awards made by the court- AG v Alford
• s35A Supreme Court act 1981- interest charged at ordinary simple rate
• where fraud or an unauthorised gain or made the courts can award compound interest- president of India v la pintada compania navigacion S

Question 8

2 types of remedies available in proprietary claims

Answer 8

Proprietary remedy: beneficiaries seek an interest in the property acquired by the trustee or wrongfully transferred by the trustee. They seek to recover the property itself or the equivalent share

Personal remedy: beneficiaries seek payment by the trustee of the monetary value of the property wrongfully acquired by the trustee

Question 9

2 types of proprietary remedies

Answer 9

Recover the property itself: trustee transfers the property- achieved by using a constructive trust
- advantage: entitled to an increase in the value
- disadvantage: not immune to plummet

Exercise a right of lien/charge over the property: to the value of the trust fund
- advantage: immune to plummet
- disadvantage: immune to increase

Question 10

Defences to proprietary claims

Answer 10

Bonafide purchase
Criteria:
- third party acquired property for value
- in good faith
- didnt have knowledge of the wrongdoing