Fiduciary Duties

Question 1

In what event do employees own a fiduciary duty to their employer?

Answer 1

When they are senior and with access to confidential information

Question 2

What are the two rules relevant for preventing trustees prioritising their own interests?

Answer 2

1. No conflict rule
2. No profit rule

Question 3

Can beneficiaries consent to a trustee making a personal profit?

Answer 3

Yes - if they are aged 18 or over, and know the full facts of the situation and consent on this basis

Question 4

What is “self-dealing” in relation to trustees?

Answer 4

When a trustee sells property to / or purchases property from themselves on behalf of the trust

Question 5

What resolution do beneficiaries have for self-dealing?

Answer 5

They can set the transaction aside at a later date for any reason, as long as this is within a reasonable period of time

Question 6

What kind of liability offence is self-dealing?

Answer 6

Strict liability

I.e. the judge will not consider whether the trustee was acting honestly or paid fair value for the property

Question 7

If a trust includes a business, and a trustee sets up their own business in competition, what would be the outcome?

Answer 7

Trustee will be liable to account for any profits made by the competing business to the trust

Question 8

What can beneficiaries do if they find out a trustee is intending to set up a business in competition with a business contained within the trust?

Answer 8

Obtain an injunction

Question 9

Can beneficiaries consent to a trustee being paid for their services?

Answer 9

Yes, if they are all 18+ and as long as all facts have been disclosed to them - otherwise, they can set aside this decision at a later date

Question 10

In what event can a professional be paid as a trustee?

Answer 10

If it is a trust corporation or a trustee acting in the course of a profession or business that consists of / includes provision of services in connection with the management or administration of trusts

Question 11

If a trustee obtains an appointment on the board of directors for a company for which the trust owns a substantial shareholding, can they be paid?

Answer 11

If position was attained solely on virtue of them being a trustee, then payment must be given to the trust

Question 12

What remedies do beneficiaries have entitlement to if a trustee breaches their fiduciary duty and have not obtained authorisation to keep any personal profit?

Answer 12

Personal claim - trustee pay the profit over
Proprietary claim