7. Fiduciaries

Question 1

What types of duties do trustees owe?

Answer 1

Trustee duties (e.g. comply with trust terms, reasonable care and skill)
Fiduciary duties

Question 2

What are the 2 fiduciary duties trustees owe?

Answer 2

• No Conflict
• No Profit

Question 3

What is the no-profit rule and remedies for breach?

Answer 3

Won’t be able to retain profit: either
- account for profits (personal claim) or
- constructive trust imposed (proprietary claim)

Question 4

What is self-dealing and its effect?

Answer 4

Trustees shouldn’t purchase trust property from trust or sell assets to trust as it’s breach of no-conflict rule
Transaction = voidable
For company in which they hold shares, if they have a controlling shareholding, can be seen as self-dealing, if not, not self-dealing but still breach of no conflict

Question 5

how can a trustee avoid liability for fair-dealing?

Answer 5

Fair-Dealing = trustee buying beneficial interest off beneficiary
Voidable unless
- full disclosure
- acted honestly and fairly
- did not take advantage of B
- get fully informed consent from principals (settlor)

Question 6

What are the consequences if breach of no-conflict rule?

Answer 6

Transaction = voidable
If it causes loss, can be sued personally
If principal profits from breach, can’t obtain a remedy, but if fiduciary also profits, they can recover this

Question 7

Can a fiduciary use an opportunity that they encounter in the course of their fiduciary duty?

Answer 7

No, this is interpreted strictly.

Question 8

Can a trustee receive renumeration (re from a directorship incidental to their trusteeship) in the course of their duties?

Answer 8

No, because the trustee takes on the directorship in their capacity as trustee, they receive the remuneration in this capacity too and must therefore pay it into the trust fund instead of accepting it personally