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Equity and trusts > Fiduciary duty > Flashcards

Fiduciary duty Flashcards

1
Q

Two underlying principles

A
  1. no profit

2. no conflict of interest

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2
Q

Bray v Ford

A

Person in a fiduciary position.. is not unless expressly otherwise provided, entitled to make profit or allowed to put himself in a position where his interests and duty conflict

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3
Q

Role of a trustee?

A

Holding property for the benefit of another person

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4
Q

Law of Property Act 1925, s 20

A

under 18 cannot act as a trustee and any such appointment is void.

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5
Q

Re Vinogradoff

A

A child could hold personal property on resulting trust

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6
Q

Lay trustee

A

Someone who does not get paid for his/her services

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7
Q

Professional trustee

A

E.g. a solicitor, accountant or bank. Usually a higher standard of care would be expected. More likely to be liable for a breach of trust. Can charge for services.

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8
Q

Judicial trustee

A

The court may take over the functions of trustees where the administration of the trust has broken down.

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9
Q

Judicial trustees are appointed under?

A

Judicial Trustees Act 1896

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10
Q

Judicial trustee is subject to?

A

Control of the court and court can make directions about the administration of the trust.

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11
Q

Insolvency - Trustee in Bankruptcy

A

Official Receiver, receiver or liquidator. The job is to liquidate and distribute the assets, but are not true trusts.

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12
Q

Public Trustee

A

An officer appointed by Lord Chancellor. Residuary function to act as a trustee when there is nobody else available.

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13
Q

Corporate trustee

A

A company can be a trustee

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14
Q

Trust corporations

A

includes Public Trustee, Treasury Solicitor and Official Solicitor or corporations entitled to act as custodian trustee under Public Trustee Act 1906

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15
Q

How are trustees appointed?

A
  • Normally by settlor/testator

- Settlor can appoint themselves

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16
Q

Trust is properly constituted when?

A

Title to the trust property passes to the trustee

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17
Q

There is no limit on?

A

The number of trustees (except for private trusts that contain land where the maximum number is 4)

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18
Q

Once settlor appoints trustees they cannot?

A

Remove/appoint new trustees (unless expressly provided for in the trust instrument)

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19
Q

s 36 Trustee Act 1925

A

Statutory powers to appoint new trustees

20
Q

Trust instrument can?

A

Expressly specify that new trustees can be appointed or old trustees be removed

21
Q

How are further trustees appointed?

A

A new trustee can be appointed in the place of one who is

  • dead
  • out of the UK for 12mths+
  • wants to be discharged
  • unfit/incapable of acting
  • is an infant
  • has been removed
22
Q

Re Smirthwaite (1871)

A

The court appointed a new trustee because all the trustees named in the will had predeceased the testator

23
Q

Re Lemann’s Trusts (1883)

A

The existing trustee was incapable of acting because of old age

24
Q

Saunders v Vautier

A

Gives the beneficiaries who are absolutely beneficially entitled the power to compel the trustee to transfer the trust property to them. This will terminate the trust

25
Q

Re Brockbank (1948)

A

The Saunders power only applies to bringing the trust to an end. Does not give the beneficiaries the right to interfere with the running of the trust.

26
Q

s 31 Trustee act 2000

A

provides that trustee can be reimbursed from the trust fund for out of pocket expenses

27
Q

Re Duke of Norfolk’s Settlement Trust (1982)

A

Court can authorise payment to the trustee if in the interests of the beneficiaries (e.g. if it would improve the administration of the trust)

28
Q

Re Northcote (1949)

A

Where the trust property is situated abroad and the foreign jurisdiction permits payment to trustees, T can keep these

29
Q

Trustess can be?

A

Remunerate where the beneficiaries unanimously authorise payment to the trustee

30
Q

Self-dealing rule.

A

Cannot purchase the trust property- conflict of interest (even if the terms are fair).

31
Q

Self-dealing does not apply where?

A

The instrument permits it or where the beneficiaries acting together, authorise it or it is approved by court

32
Q

Wright v Morgan (1926)

A

T cannot evade the rule by retiring and then making the purchase
(self-dealing)

33
Q

Re Postelthwaite (1888)

A

T cannot evade by appointing a nominee to make the purchase

self-dealing

34
Q

Re Thompson (1930)

A

A director (owing fiduciary duties) ran a rival business. He was restrained from doing this.

35
Q

Nestle v Nestle v National Westminster Bank - duty to act fairly

A

Cannot favour one beneficiary over another. Should maintain fairness between them.

36
Q

Part 2 of TA 1925

A

Give trustees the powers to sell, partition and insure the trust property

37
Q

Powers under s 6(1) TOLATA 1996

A

In relation to land, the trustee has all the powers of an absolute owner. Sale of land- money to be paid to at least 2 trustees to overreach the trust

38
Q

Mothew v Bristol & West Building Society

A

Defines fiduciary duties as a relationship of trust and confidence, distinguished by an obligation of loyalty. The principal is entitled to single-minded loyalty of the agent.

  • No conflict rule (Self dealing rule, Fair dealing rule)
  • No profit rule
39
Q

Regal (Hastings) Ltd v Gulliver

A

Company direct and company: fiduciary must NOT exploit an opportunity to make a profit

40
Q

Boardman v Phipps

A

Fiduciaries cannot benefit personally, all the profit they made had to be accounted for and paid back to the trust as the profit came from the information they received as T

41
Q

Cowan v Scargill [1985]

A

Trustees must consider the best financial interests of the beneficiaries when choosing investments.

42
Q

Keech v Sandford (1726)

A

Trustees cannot retain any profits deriving from their connection with the trust.

43
Q

RE THOMPSON’S SETTLEMENT [1986]

A

upheld strict approach in Ex parte Lacey that all purchases of trust property by a trustee are voidable regardless of whether the price is fair and whether the trustee took advantage

44
Q

TURNER V CORNEY (1841)

A

‘Trustees who take on themselves the management of property for the benefit of others have no right to shift their duty on other persons

45
Q

Holder v Holder 1968

A

Trustees cannot buy trust property except in VERY EXCEPTIONAL circumstances

Equity and trusts (4 decks)

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