Breach Of Trust Flashcards
Raes v Meek
Set out standard of care - initially subjective ➡️ no more prudence than the trustee actually possesses
Now - reasonable care which a man of ordinary prudence shows in the conduct of his own affairs
Three categories of breach - what are they?
Intra vires (something you are allowed to do but do it poorly)
Breach of fiduciary duty
Ultra vires - something prohibited
What is a breach of trust?
Any kind of bad management or neglect or dilatory carrying out of the trust purposes which a reasonable percent trustee would have avoided
SLC recommend changing standard of care to
South African approach - trustee to use same level of care and diligence as an ordinary prudent person would use in managing the affairs of others - Taps into fiduciary duty - managing others protecting = higher standard!
Why impose a higher standard on professional trustees?
Higher standard for professionals in negligence and contract (Hunter v Hanley, Bolam)
Generally expect more from someone paid to do something
Often skills & training
Chosen for their expertise (Mangan)
But Norrie and Scobbie - wholly fortuitous whether or not trustee paid, still ought to be reasonable
England & Wales
Initially said that same standard ought to apply regardless of whether trustees were paid or acted gratuitously but now paid trustee expected to exercise higher standard
Higher standard where you hold yourself out as such
SLC recommendations for professionals
Minimum standard for all trustees and different for professionals - standard expected by someone of that profession
Also trustee who is a professional but is not acting in professional capacity cannot be held to this standard
What is the statutory protection available in case of breach?
S31 & 32
Acted on instigation or with consent of beneficiary
Or acted honestly and reasonably (reasonableness much more likely to come up as why would you bring action if knew you had acted dishonestly
Should trustees be allowed to purchase insurance?
Yeah but depends on circumstances e.g. Allowed for trustees of dollar academy where came from variety of backgrounds
BUT potential conflict of interest
Not personal liability
Takes away from standard of care if can get away with it
S32 is enough???
Reform whether trustees can purchase insurance?
Only really an issue for lay trustees, professionals can get insurance
S32 not adequate
SLC recommendations where breach of trust
Near absolute liability is too heavy a burden, harsh if trustees personally liable for prudent investment which happens to be crap
Need less strict rule - only liable where bad faith
What actions can beneficiaries bring against trustees?
Interdict
Damages
Count, reckoning and payment
Whyte v Burt
Trust property exposed for sale. 2 bidders, one was trustee. Sale never implemented. Tried to sue trustee because he had bidded against othe guy. Lost out on what he bidded? No actual loss
Miller’s Trs v Polson
Trustee didn’t lodge money co-trustee asked him what deal was. Didn’t make enough of an effort. No actual loss as couldn’t get money back
Tibbert v McColl
M received cheque from insurance company and paid into account. Issued cheque to T who never cashed cheque. M had been in breach since they were using the first cheque to reduce C’s overdraft
