Breach of Trust Flashcards
What are the questions that you ask when there is a supposed breach?
1) Has there been a breach?; 2) who can claim for that breach?; 3) what remedies may the claimant be entitled to?; 4) are there any defenses for the defendants?
What are the possible ways a breach could happen?
1) Failure to obey; 2) failure to account; 3) lack of care; and 4) conflicting interests or duties.
What are the categories of possible claimants?
1) beneficiaries; 2) objects of powers; 3) fellow trustees; 4) charity commission; and 5) enforcers and protectors.
What are the remedies for breach of trust? Mention the categories before the remedies.
1) Achieve performance of duty through a) declaration, b) direction, and c) removal of trustees. 2) Substitute for performance through a) adjust account, and b) equitable compensation. and 3) deter non-performance through a) restitution of gain.
What are the steps taken to adjust an account?
1) Compel trustees to provide account, 2) falsify the account through court, 3) surcharge the account ie add missing receipts, and 4) compel trustees to pay the short fall.
For the purposes of breach of trust, is a trustee liable for another trustee?
No.
If two or more trustees are liable how do they split liability?
Equally ie if there’s two then 50/50 no contributory negligence involved.
When is a trustee in breach entitled to a full indemnity ? From whom?
A trustee could be entitled to a full indemnity from another trustee if the other trustee 1) caused the breach by their own fraud, 2) is also a solicitor advising the trustee, or 3) is also a beneficiary of the trust.
What if the beneficiaries consented to the breach knowing that it is a breach?
Then no liability for trustees.
What are the effects of exemption clauses for breach? Which cases illustrate these?
1) relieve trustees off duty (Hayim v Citibank NA), 2) relive from liability of breach (Armitage v Nurse).
Does an order of an account necessarily mean that there will be a remedy?
No.
What are the two things that the plaintiff may do when there is a deficit on the account?
Either falsify it or surcharge it.
When can an account be falsified?
If the account discloses an unauthorised disbursement.
Case that shows that for the purposes of contribution trustees divide liability in equal shares.
Bahin v Hughes.
for the purposes of the defence of exemption clause what case illustrates the clauses that exempt trustees from duty?
Hayim v Citibank NA.
for the purposes of the defence of exemption clause what case illustrates the clauses that exempt trustees from breach? What can’t be exempted?
Armitage v Nurse. Fraud can’t be exempted.
For the purposes of defences for the trustees. Which act and section govern the ‘be excused’ defence?
Trustee Act 1925, s61.
When can a trustee be excused by the court? What case illustrates these requirements?
When they have acted 1) honestly, 2) reasonably, and 3) ought fairly to be excused. Santander v RAL Solicitors.
What statute governs the limitation period for suing the trustee for breach of trust? What section?
Limitation Act 1980 s21(3).
What is the limitation period for breach of trust?
6 years.
When does the limitation period for breach of trust start running? What are the exceptions?
Right away unless beneficiary is an infant so until he becomes adult or until the future interest (assets for example) fall into the beneficiaries possession.
Where does the limitation period for breach of trust not apply?
1) fraud to which the trustee was a party, and 2) to recover trust assets or their proceeds in trustee’s possession or converted to trustee’s own use.
This case has two limbs. What are they and what is the case?
Barnes v Addy. First limb: knowing receipt; second limb: dishonest assistance.
What are the requirements for knowing receipt?
1) claimant must show a disposal of his assets in breach of a fiduciary duty.
2) the beneficial receipt by the defendant of the assets.
3) knowledge on the part of the defendant.
