Personal Remedies Against Trustees/Fiduciaries

Question 1

Structure - Personal Claims

Answer 1

1. Identify the Breach of Trust (case law + TA 2000)
2. Establish that the Breach of Trust has Caused a Loss (Nestle)
3. Consider Defences
4. Consider Contributions and Indemnity

Question 2

Breach - Duty actively to watch over and correct behaviour of fellow trustees

Answer 2

STYLES v GUY

Question 3

Breach - Keep trust property in joint control unless delegated

Answer 3

ss.11 and 12 TA 2000

Question 4

Breach - Duty of care (investment and delegation) – to exercise such care and skill as is reasonable having regard to any special knowledge trustee has or holds themselves out to have

Answer 4

S.1 TA 2000

Question 5

Breach - Duty to act as the reasonably prudent man of business in relation to your trust

Answer 5

SPEIGHT v GAUNT

Question 6

Loss - The loss exists if the D trustee made less than the reasonable T would have, doing their duties

Answer 6

Nestle

Question 7

Loss - Exception: if profit and loss from same breach, they can offset each other

Answer 7

Bartlett v Barclays

Question 8

Defence - Courts may relieve Ts of some or all liability if they acted honestly and reasonably (unless Ts are professional and/or took advice)

Answer 8

s.61 TA 1925 + BARTLETT v BARCLAYS + NATIONAL TRUSTEE CO

Question 9

Defence - Express Exclusion Clause for innocent or negligent breaches - Fraudulent breaches cannot be excluded in the trust instrument

Answer 9

ARMITAGE v NURSE

Question 10

Defence - Limitation (6 years) and Laches (inequitable)

Answer 10

s.21(3) Limitation Act 1980

Question 11

Defence - Consent - A Beneficiary can’t sue on a breach he consented to if:

Answer 11

RE PAULING’S SETTLEMENT TRUST

a. He’s an adult / sui juris
b. He gave free consent
c. He knew the relevant facts (does not need to know it’s a Breach of Trust)

Question 12

Contribution - The court may order such contribution as just and equitable with regard to levels of blame/responsibility

Answer 12

s.2 Civil Liability (Contribution) Act 1978

Question 13

Indemnity - Up to 100% can be sought as indemnity where the co-trustee received trust property and used for own benefit

Answer 13

BAHIN v HUGHES

Question 14

Indemnity - Where a T blindly followed the advice of a co-trustee who is a solicitor, he can recover full indemnity

Answer 14

RE PARTINGTON - Can only use Re Partington if co-trustee exerted such a controlling influence T did not use own judgement - HEAD v GOULD