Breach Of Trust: Auctor In Rem Suam Flashcards
What is the nature of the relationship between a trustee and beneficiary
Fiduciary in nature
Grounded in good faith
Must implement the purposes of the trust
No conflict of interests under auctor in Rem suam principle
3 Consequences of
Auctor in Rem suam
Trustee may not transact with the trust estate
- (Aberdeen University v Town Council of Aberdeen)
- (Cherry’s Trs v Patrick)
Must not obtain personal advantage or profit
- (Inglis v Inglis)
- (Clark’s Exx)
Must not charge fees
- (Elliot v Mackie & Sons)
- (Lewis’s Trs v Pirie)
Statute provisions which admit the possibility of implied sanction of conflict of interest
Successions (S) Act 1964:
Where a party dies intestate and the surviving spouse or CP’s prior rights exhaust all of the estate of the deceased the spouse or cp is entitled to be appointed as executor.
Example of where a beneficiary is also a trustee.
Johnston
V
Macfarlane
Acts of a trustee which would otherwise be invalid because of a conflict of interest may be sanctioned where the trustee foresees the possibility of a conflict of interest and expressly authorises a trust deed.
Provisions which sanction and conflict of interest are strictly construed
Conflicting cases on implied sanction for conflict of interest
Johnston v Macfarlane
Cannot be sanctioned by implication.
Power to sell to any beneficiary did not include power to sell to beneficiary who was also trustee.
Coats, Trs, Ptrs
Can be implied,
Power to sell to any beneficiary did include power to sell to one who was also trustee.
Sarris
V
Clark
Possibility of implied sanction of conflict where the trustee is put in the position of conflict by the truster.
Farmer appointed wife as executrix. Also we’re partners. Died, partnership entered negotiations with executors.
Wife was on both sides, held not breach of trust as truster himself put her in that position.
Corsar
V
Mathers
Where there is not authority by the truster, it is possible for the trustees to obtain sanction from all beneficiaries and potential beneficiaries.
As long as consent freely given and fully informed,
Transaction will not be avoided on the grounds of auctor in rem suam.
Taylor
V
Hillhouse’s Trs
Onus will fall on the trustee to show that all beneficiaries acted freely and were suitably informed.
Claiming validity of transactions.
Coats’ Trs Ptrs
Where consent cannot be obtained from the truster and all the beneficiaries, trustee cannot petition the court to sanction the offending transaction.
Court is session has no power to authorise a transaction which would otherwise render the trustee auctor in rem suam.
Martin
V
City of Edinburgh
Trustees took policy to sell all trust funds invested in South Africa because of own political views against them.
Transaction held in breach of trust as motivated by their own political views which do not relate to trust purposes.
Trustees must exercise fair and rational judgment and take into matters relevant to trust only, not personal views.
Flint
V
Glasgow corporation
Council installed phones in councillors houses to benefit Glasgow community by increasing communication. Paid for by trust for common good.
Transaction which benefit trustees in a small way can be upheld as long as objective is for benefit of beneficiaries and their personal benefit is incidental to that aim.
Even if trustee is motivated by his own personal beliefs in a way which would otherwise render him auctor in rem suam…
May be upheld if all beneficiaries have expressly consented to transaction in the knowledge that they have applied their own personal beliefs and values
