Compensatory Liability of T for Breach of Duty

Question 1

WHAT IS A BREACH OF TRUST

Answer 1

act/omission by T contrary to the duties imposed one er by law (can be “deliberate and inadvertent… failure to carry out obligation, or merely want of skill” - Millet LJ)

Question 2

Lewis v Nobbs

Answer 2

If T leaves trust property in co-T’s sole control, T can be liable (usually T is only liable for her own breaches)

Question 3

Booth v Booth

Answer 3

If T stands by with knowledge that Co-T is breaching, T can be liable

Question 4

Head v Gould

Answer 4

If T retires from being a T w/ object to facilitate breach with new T, T can be liable

Question 5

Re Brogden

Answer 5

NO EXEMPLARY DAMAGES even if outrageous misconduct

Question 6

Substitutive performance claims

Answer 6

Claims for money as a substitute for performance of T’s core duty/obligation to hold/deliver trust assets on demand

• no assertion of breach
• falsify account, act as if it was always there
• so if £500 taken out for something unauthorised, T has to put £500 back

Question 7

Reperation Claims

Answer 7

Claim to make good damage caused by breach of trust

• assertion of breach
• amount paid is measured by reference to loss sustained by B
• used where T causes loss to B or carelessly mismanages property
• loss claims by B is translated into accounting item by “surcharging” (T is surcharged with amount of loss as if T already received this amount for B)
• so if £500 taken back out for something now worth £600, T has to put £600 back in

Question 8

Shepard v Mouls

Answer 8

If property is not money, T has to pay market value of property at the date of misapplication and interest (or date of judgement if that is higher)

• if income could have been generated, that is also due

Question 9

Target Holdings v Redferns

Answer 9

EXCEPTION TO THE BASIC RULE - if it is a bare trust in a commercial situation, normal rules do not apply
- need to show causation even though its a substitutive performance claim

Question 10

AIB v Mark Redler

Answer 10

Confirmed Target Holdings
- when Lord BW said “completion” he meant the commercial situation not getting what you’re supposed to
(weird because they didn’t get what they bargained for)

Question 11

Re Alsop

Answer 11

Courts can excuse breaches of trust re: management of trust property and payments to wrong persons

consider:

1. Did T act reasonably
2. honestly
3. and ought T be fairly excused (is it fair to deny compensation to B)

Question 12

Cheney v Neuman

Answer 12

courts consider legal advice - if legal advice is followed but advice is erroneous

Question 13

Re Wynn

Answer 13

general courts do now allow their jurisdiction to be ousted by provisions in the trust instrument that gives T power to determine all Q arising in execution of trust instrument

Question 14

Adams v Adams

Answer 14

S cannot oust jurisdiction of court by including a clause preventing B relying on protection of rights
- that renders B’s rights unenforceable; wouldn’t be a trust

• EXCEPTION: if T can prove S knew of and approved trust deed exempting T from liability
• and upon fair, non-restrictive construction, T can escape liability
• not for if T is dishonest though