Duties of Express Trustees Flashcards
What info can beneficiaries obtain?
- The fact that they are beneficiaries
- Trust accounts, trust instrument
However some things may be withheld such as correspondence, meeting minutes, letters of wishes
Should disclosure also be available for those who have only a hope of benefitting? Objects of powers
Schmidt - Mere object of power wanted disclosure of accounts in relation to trusts set up by his father.
Held: A beneficiary’s right to disclosure does not require a proprietary interest in trust property. However nature of interest is relevant in exercise of court’s discretion.
Breakspear v Ackland
Ordered that a letter of wishes should be disclosed, however in ordinary circumstances they should be confidential.
Rule for trustees: Power must not be exercised for improper purposes
Grand View Private Trust Co Ltd v Wong:
Trust set up to benefit generations of Wong family.
Trustees exercised powers to deprive family members of benefit, tying up assets in a purpose trust.
Held: This was an exercise of powers for an improper purpose. Improper purposes are those which are not exercised in accordance with the reason the power was granted.
Pitt v Holt: Inadequate Deliberation
Trust had to pay more tax due to bad legal advice.
Held: The rule in Re Hastings Bass which allowed such decisions to be winded back where a tax evader receives incorrect advice, was a ‘seriously wrong turn’, and should only be applied where the trustee breached their fiduciary duty, which she hadn’t as she had taken expert advice and acted within her powers.
Bartlett v Barclays Bank
Authority for the duty to take care - a bank have a higher duty of care which was not discharged when they failed to advise.
Trustees are not insurers of the trust fund but they can be liable where they breach their duties and cause loss
Trustee Act 2000
Wide power of investment, duty to use standard investment criteria, duty to obtain and consider advice.
S1 TA
Duty when investing or acquiring land:
Trustee ‘must exercise such care and skill as is reasonable in the circumstances’, regard to skill and profession
S3 and S8 TA
Can invest in land anywhere in UK (s8)
Other than land, any kind of investment he could make if he were absolutely entitled to the assets of the trust.
Settlor may restrict/exclude these powers.
Investment criteria and expert advice - s4 and 5
Duty to use standard investment criteria:
Review investments from time to time
- Diversification – diversifying your investments so all your eggs aren’t in one basket
- Suitabiliity – investing in reasonably safe assets
Duty to obtain and consider proper advice:
- Advice from person reasonably believed to be qualified, taking into account ability and experience.
EXCEPTION s5 - Where trustee reasonably concludes it unnecessary/inappropriate to take such advice.
Ethical Investment: Cowan v Scargill
Best interests of BFs are their financial interests
Trustees must put aside own social/political views and prioritise financially superior investments
Ethical Investment: Exception 1 from Law Com
Test from Law Com report, adopted in R (Palestine Solidarity Campaign Ltd):
- The trustees have good reason to think the members share the concern
- The decision does not risk significant financial detriment to the fund
Exception 2: Charities Act 2011 s292A-292C
Charity trustees may make ‘social investment’
Carried out with a view to both directly furthering the charity’s purposes, and achieving a financial return ffor the charity.
Excludable by settlor
Other provisions exist in there.
Harries - Some investments may involve conflict with objects of charity, and trustees here would not be in breach for not pursuing them.
Eg cancer research charities investing in tobacco shares etc.
Armitage v Nurse - Exemption clauses
Was an exemption clause purporting to exclude all liability except for fraud void for being repugnant to the law or against public policy?
There is an irreducible core of obligations owed by trustees. However, these core obligations do not include the duties of skill and care, prudence and diligence - aka they can be excluded.
TA Sch 1
When the duty of care applies (eg when exercising power of investment, buying land)
