Maladministration of Trust Flashcards
When does an ultra vires breach occur?
An ultra vires breach occurs when trustees perform some act which is not authorised by the trust deed or the rules of trust law. An example of such a breach is making over trust property (income or capital) to a person who is not entitled to it in terms of the trust, ie paying the wrong “beneficiary”. (Armour v Glasgow Royal Infirmary 1909 SC 916; Grant v Grant’s Exrs 1994 SLT 163) Investing in types of property outwith their powers of investment is another way in which trustees may commit an ultra vires breach.Ritchie v Ritchie’s Trs (1888) 15 R 1086, putting money into a partnership was not an “investment”.
When does an intra vires delictual breach occur?
Trustees may commit an intra vires delictual breach when they carry out an authorised action carelessly, or fail to take appropriate steps which they have power to take, and thereby cause loss to the beneficiaries. They may, for example, have invested trust funds in a rash speculation without proper consideration of the risks,(Raes v Meek (1887) 16 R (HL) 31) or failed to dispose of a poorly performing investment left by the truster,Clarke v Clarke’s Trs 1925 SC 693, or failed to supervise an agent or co-trustee appointed to manage some part of the trust business.Seton v Dawson (1841) 4 D 310.
When does “auctor in rem suam “ or breach of fiduciary duty occur?
Examples of acting as auctor in rem suam are: buying trust assets or doing business with the trust, trustees contracting in conflict with trust interests and setting up a business in competition with that of the trust.
