Running a trust Flashcards
(22 cards)
Wight v Olswang
A trustee is not liable for an investment decision unless it is one no reasonable trustee would have made
Nestlé v Natwest
The beneficiaries can only recover compensation for loss if the gain made by the trust fund was less than the gain a reasonable man would have made. The standard is higher if the trustees have particular skills
Klug v Klug
Trustees are not obliged to provide beneficiaries with reasons explaining why they exercised a power or discretion in the way they did.
If they do, however, the court will enquire into their adequacy.
Schmidt v Rosewood
Beneficiaries are allowed to see trust documents (subject to confidentiality). Courts have a discretion to order disclosure of confidential documents.
Re Londonderry
Beneficiaries can request all documents apart from documents revealing the reasons of choices under a power or discretion
Saunders v Vautier
A beneficiary can require the trustee to transfer the trust property to him or to other trustees, if:
1) he is Sui juris
2) he is the sole beneficiary under the trust
3) he has a. Syed interest
Alternatively, use Variation of Trusts Act 1958
Bray v Ford
A person in a fiduciary position is not entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict
Ex p Lacey
Self-dealing rule is applied strictly, without consideration as to the circumstances and whether the trustee gained an advantage
Re Thompson
Where the trust includes a business and a trustee set up his own business in competition, the trustee is accountable for any profits made out of the competing business.
The trustee may also be restricted by an injunction from setting up his business
Re Gee
T becomes company director independent of the trust shareholding –> he can keep his salary as director
Re Macadam
T becomes company director only through the trust shareholding –> T cannot keep his salary and must account to the trust fund, unless the trust instrument or the court authorise him to retain director’s remuneration
Boardman v Phipps
non-trustees got sensitive informations about a 3rd company through representing to be themselves trustees. Held that they were accountable to the trust fund for their profit
Sinclair investments
Available remedies for breach of fiduciary duties are:
- a proprietary claim where profit was gained out of trust property
- a personal claim only in all other cases
Re Pauling
Knowledge and consent of beneficiaries as defence against a personal claim against trustees for breach of trust.
The beneficiary need not to know that what he is concurring in is a breach of trust, provided he understands fully what he is concurring in
Re Hallett
Equitable proprietary claim - no mixing
A beneficiary can elect to take the property purchased or to have a charge over it to secure the amount due (equitable lien)
In the event of mixed bank accounts, a trustee is deemed to spend his own money first
Foskett
The beneficiary’s proprietary claims to the trust property or its traceable proceeds can maintained against the wrongdoer and anyone who derives title from him except a bona fide purchaser for value without notice of the breach of trust
Re Oatway
dissipated money is trustee’s own money
Roscoe v Winder
lowest balance rule
Clayton’s case
Mixing of two trust funds
First in, first out
Barlow Clowes
Clayton’s case will not apply where (a) it would be impractical (b) it would result in injustice or (c) it would be contrary to the parties’ intention (as in Barlow Clowes itself)
Accessory liability: it suffices for the stranger to know he is assisting some illegal scheme
Royal Brunei Airlines
A stranger is liable if he dishonestly assist a breach of trust or fiduciary duty. The test for dishonesty is objective: did the defendant act as a honest person would have acted in the circumstances?
BCCI v Akindele
For recipient liability it is necessary to show that the defendant’s knowledge made it unconscionable for him to retain the property.
Unconscionability is wider than dishonesty but it does not include constructive notice or negligence
