Equity and Trusts - Personal Claims against Trustees

Question 1

What Breaches can a secondary trustee be pursued for?

Answer 1

1- Name: trust property must be held in the name of all trustees
2- Care: S.1 Trustee Act 2000 duty of care
3- Care: Duty of care under Speight v Gaunt: duty to act as a reasonably prudent man of business
4- Breach: Duty to act to prevent a breach of had knowledge of it
5- Watch over: duty to watch over and, if necessary, correct behaviour of other trustees (Styles v Guy)
6- Joint control (unless s.11/ 12 TA 2000)

Question 2

What must be shown in order for a beneficiary to be able to sue?

Answer 2

There must have been a breach of trust- this may be as little as not getting as much profit as a reasonably prudent man of business would have (Nestle v Nat west)

Question 3

What is the rule of there has been both profit and loss from the breach?

Answer 3

Beneficiaries can keep the profit and sue for the loss. however, if the profit and loss came out of the same breach then the profit may offset the loss (Bartlett v Barclays)

Question 4

What defences are available to a trustee in breach?

Answer 4

1- They had the knowledge and consent of the beneficiaries (if from all, being sui juris and with full knowledge) (Re Pauling’s Settlement
2- Express exclusion clause (for innocent/ negligent breaches, not fraudulent ones)
3- S. 61 TA 1925- if they acted honestly and reasonably
4- Limitation period of 6 years exceeded (s.25 LA 1980) or laches applies

Question 5

If there are no defences, how else may a trustee seek relief?

Answer 5

Either contribution or indemnity

Question 6

Under what 3 circumstances may a trustee seek an indemnity?

Answer 6

1- if another trustee fraudulently obtained a benefit
2- If another trustee is holding the trust property for their own benefit
3- if a trustee acted as instructed by another trustee who is a solicitor, if that trustee had such a degree of control as to the defendant not exercising their own judgement