Breach of Trust Flashcards
Division of breach of trust.
Intra vires - within powers, acted negligently
Ultra vires - beyond powers, no authorisation
Fiduciary duty - auctor in rem suam
Lamonds Trs v Croom
If all reasonable steps taken to know facts, trustee will not be liable.
When can trustee escape liability (ultra vires breach)?
T(S)A 1921, s29A
- unaware of existence/non-existence of a person
- reasonable enquiries
- acted in good faith
- court order
Liability of trustees (ultra vires breach)?
Almost strict liability created by:
T(S)A 1961, s2
- trustee transactions are unchallengeable by party
Assessment of intra vires breach.
Millar’s Trs v Polson
- appropriate standard of care
- objective standard
- man in management of own affairs
Liability of a fiduciary duty. Defence?
- trustees are held personally liable
- no defence that transaction was fair, good faith, no loss occured
Cherry’s Trs v Patrick.
- any gain is treated as a trust gain
- regardless of whether trust-estate has suffered loss
Profits gained under fiduciary breach?
- profits disgorged
- trustee must pay gains to trust patrimony
Liability of co-trustees?
Jointly and severally liable for loss caused to trust patrimony.
T(S)A 1921, s3(d)
- trustee liable for only their own acts and intromissions
Can a trustee avoid liability for a breach?
T(S)A 1921: court may discharge liability if:
- s31 (breach due to beneficiaries request)
- s32 (trustee acted honestly and reasonably)
What is an immunity clause?
Restricts or removes liability by outlining in trust deed where trustee will not be liable. No protection for: - personal liability - bad faith - gross negligence
Knox v Mackinnon.
Liability of trustees extends to gross negligence and bad faith
Clarke v Clarke Trs.
- retained investment clause was ineffective
- trustees were held liable for failing to monitor investments
