Property Law - Compensatory Liability of Trustees for Breach of Duty Flashcards
At what stage in AIB did court calculate liability by loss caused by breach?
CoA
What case shows the disapplication of basic rules on substitutive performance?
Target Holdings v Redferns
Declaration setting out Ts duties and powers is binding
Cowan v Scargill
what case made it clear a substitutive performance claim is not dependent on T committing a breach?
Eaves v Hickson
What are the three types of accounting order a court can make?
Order for account in common form, order for account on wilful default and order for account of profits
What judge in what case said Ts can even be exempted from liability from gross negligence and recklessness unless P change it
Millett LJ in Armitage v Nurse
What did Staughton J say it was not wrong to pay attention to in Nestle v Nattiest?
Relationship and circumstances of life tenant and remainder man to ascertain appropriate actions
What was the ‘cause of action’ test?
Required a previous action to rely on before it could be invoked before court
Santander UK v RA Legal Solicitors judgment
If Ts negligence caused loss, T cannot be excused if it would have been carried out despite them being reasonable
What case suggests no more stringent test for fiduciaries than contract breakers?
Martin v Goldfarb
What case shows prohibitory injunctions can be a remedy for breach of duty?
Fox v Fox
Name at least three cases on exemption clauses for compensatory liability
Re Wynn; Re Coxen; Adams v Adams; Armitage v Nurse; Seton v Dawson
Hong Kong elderly brother and sister
Hayim v Citibank
What two cases on negligent failure to review and diversify trust instruments should be contrasted?
Re Mulligan; Nestle v Natwest
What was the ratio in Re Brogden previously thought to be due to?
‘Cause of action test’ pre-1964
Re Brogden
No punitive award
Youyang Pty Ltd v Minter Ellison judgment
Distinguished Target by reference to Millett - pay WHOLE amount, even what would have been lost had T complied with obligation
What three cases show relevant considerations if breach occurs due to T taking erroneous legal advice?
Re Allsop; Cherny v Neuman; Wills v Cooke
AIB Group (UK) v Mark Redler judgment of Supreme Court
Lord Toulson gave special significance to ‘commercial trust’
Brudenell-Bruce v Moure general
Disrepair of property
Martin v Goldfarb
No reason to treat fiduciaries more stringently than contract-breakers - no higher damage merely because claim is for breach of duty
armitage v Nurse on exemption clauses
Ts can be exempted from liability for BoT as long as S knew and approved, including gross negligence unless P change it (Millett LJ)
What case did Brudenell-Bruce v Moure follow?
Barlett v Barclays Bank
In what jurisdiction was Youyang v Minter Ellison?
Hight Court of Australia
In what year and what document did Law Com suggest distinction between lay and professional Ts?
Law Com 2003 Consultation Paper
Exemption clauses can be binding on matters of fact as long as conceptually certain
Re Coxen
How do Mitchell and Millett believe AIB should have been argued?
Like CoA - apply Target
Clause excluding responsibility/duty until death ‘understandable and explicable’
Hayim v Citibank
Snell’s Equity
Bs carries burden of proving surcharges and T burden of proving discharge
If court finds T has personal liability to B and trust is absolute, what form of order is made?
No need to reconstitute fund - T can transfer assets or pay straight to B
T held liable for unauthorised distribution prompted by forged DoC - not dependent on T committing a breach
Eaves v Hickson
In what case and what judge said strong microscope needed to distinguish reparation claim from common law damage claim?
Bartlett v Barclays Bank per LJ Bingham
What case explains calculating award for reparation claims?
Sanders v Parry
If court finds T has personal liability to B and trust is still on foot, what form of order is made?
Reconstitute fund
What is surcharging?
Act authorised, but negligent, so it remains on the accounts but T pays Bs compensation
Re Mulligan general
Ts did not diversify equities, in order to favour life tenant
When can a B push for substitutive performance and how is it remedied?
Unauthorised distribution, remedied by falsifying the documents
Adams v Adams
Cannot oust jurisdiction of court by preventing Bs from applying to court in trust document
Hagan v Waterhouse
Proprietary tracing claim against 3rd w/o exhausting T remedies allowed
What two cases/academic sources suggest more stringent test for fiduciaries than contract breakers?
Conson Enterprises v Boughton; H&M
Law Com 2003 Consultation Paper
Lay Ts can rely on exemption clauses, not professional Ts when conduct is so unreasonable, irresponsible and incompetence that it would be unfair to B
H&M on stringent test for fiduciaries compared to contract breakers
Can be appropriate to treat different Ts differently, e.g. more equality in family trust between T and B than commercial
Wills v Cooke
If advice was for Ts personal protection, B can only sue T, but if on behalf of trust Bs, then B can sue for themselves by joining Ts as codefendant if they refuse to sue
Millett on Re Patten, adopting
Should be called ‘right to decide whether to complain or not’
Jones v Lewis
allowing unauthorised disbursement when insisting on performance would be inequitable - if a ‘T is robbed’
What judge in Nestle v Natwest said a Misunderstanding of trust terms and failure to conduct review insufficient to lead to reparation
Staughton J
Norberg v Wynrib
Allowed exemplary damages in Canada
What judge and in what case highlighted how substitutive performance is a restitutionary, personal obligation
Street J in Re Dawson
What is an order for account on wilful default?
Account of what Ts have received and what would have got without their breach
If court finds T has personal liability to B and there are new trustees, what form of order is made?
Old Ts need to transfer assets/pay money to new Ts
Eaves v Hickson
T held liable for unauthorised distribution prompted by forged DoC - not dependent on T committing a breach
What case gives a ‘but-for’ causation test for reparation claims?
Target Holdings v Redferns
How did Lord Browne-Wilkinson characterise the trust in Target Holdings?
A bare trust inside a commercial trust
Cowan v Scargill on remedies for breach
Declaration setting out Ts duties and powers is binding
what is an order for account on wilful default for?
Reparation claims
What is the issue with the judgment in Target Holdings?
Relies on causation, but claim is not founded on breach of duty - it is based on continuing obligations
If Ts negligence caused loss, T cannot be excused if it would have been carried out despite them being reasonable
Santander UK v RA Legal Solicitors
When is T discharged from duty to provide entire property to B?
When exercise of the power of appointment is authorised
No ousting of jurisdiction of courts on pure matters of law
Re Wynn
Bartlett v Barclays Bank general
Controlling share - 99.8%, property speculation
Bs don’t need to prove act/omission caused loss as not a breach claim
Cocker v Quayle
Scots law doesn’t allow ousting of gross negligence liability
Seton v Dawson
What are Canadian reparation claims subject to, and according to what case?
Novus actus - Hodgkinson v Simms
Armitage v Nurse on ousting duties
Not all can be ousted - ‘irreducible core of obligations’
Cherny v Neuman
Need to consider if adviser was given full and accurate info when Ts breach was due to erroneous legal advice
What case shows difference between Ts seeking legal advice for personal protection and on behalf of trust Bs?
Wills v Cooke
What case says the special relationship of T means more stringent test than for contract breakers?
Conson Enterprises v Boughton
When did Law Com suggest a professional T could not rely on an exemption clause?
when conduct is so unreasonable, irresponsible and incompetent that it would be unfair to B
Target Holdings v Redferns judgment
HoL decided that C has to show that if D had acted with authorisation, it would have made a difference
Millett on AIB
Could have been reached through orthodox principles - discharge of duty by producing authorised substitute
What report of Law Com rejected Seton v Dawson - Scots law on gross negligence liability
Report 2006
what case shows a reparation claim is dependent on assertion that T has committed a wrong?
Partington v Reynolds
Who questions traditional/commercial trust distinction drawn by Lord B-W in Target Holdings?
Millett extra-judicially
Fox v Fox
Prohibitory injunctions are a remedy
What case showed HoL characterising a bare trust inside a commercial trust as falling outside basic rules on substitutive performance claims?
Target Holdings v Redferns
AIB Group (UK) v Mark Redler general
Re-financing, first charge £300,000
What section of what Act allows courts to excuse breaches in trust management and unauthorised distributions?
Section 61 Trustee Act 1925
Why can Millett’s opinion on AIB not be accepted, and according to who?
Hayton and Mitchell - both CoA and SC rejected orthodox principles used by trial judge
Beever
Punitive damages should never be awarded as looks to policy goals of deterrence
What is an account surcharged on the basis of?
‘Wilful default’
Street J in Re Dawson
substitutive performance is a restitutionary, personal obligation
Target Holdings v Redferns on reparation claims
‘But-for’ causation test
No ‘cure’, unlike Target Holdings
Youyang Pty Ltd v Minter Ellison
Youyang Pty Ltd v Minter Ellison general
No ‘cure’, unlike Target Holdings
What did Street J in Re Dawson say a substitutive performance claim is not limited by?
Remoteness
Libertarian Investments Ltd v Hall general
Two-step process to accountability of Ts
Seton v Dawson
Scots law doesn’t allow ousting of gross negligence liability
what is an order for account in common form for?
Substitutive performance claims, but maybe also reparation
What case says No reason to treat fiduciaries more stringently than contract-breakers
Martin v Goldfarb
AIB Group (UK) v Mark Redler judgment of CoA
Agree on trial judge’s result, but not analysis - all unauthorised, but liability calculated by loss caused by breach
allowing unauthorised disbursement when insisting on performance would be inequitable - if a ‘T is robbed’
Jones v Lewis
If Ts cause same damage to B by respective breaches, what happens?
Both jointly and severally liable
Who said a breach of trust is not an ‘equitable counterpart of breach of contract at common law’ and where?
Lord Millett extra-judicially
What case makes it clear a calculation for reparation includes loss of chance?
Sanders v Parry
Who highlighted incoherence of causal link requirement in Target Holdings?
Millett, extra-judicially
What case does Re Patten tie in with and how?
Saunders - both let Bs act inconsistently with Ts wishes
Bs can adopt Ts actions and treat them as authorised
Re Patten
What is falsifying the documents?
Cancelling out entries of unauthorised distributions
Nestle v Natwest per Staughton J
Misunderstanding of trust terms and failure to conduct review insufficient to lead to reparation
Law Commission 2006 Report
rejected scots law prohibition on ousting gross negligence liability from exemption clauses
Hayim v Citibank general
Hong Kong elderly brother and sister
Bartlett v Barclays Bank on substitutive performance
No deduction for tax that would have been payable but for Ts unauthorised distribution
Cannot oust jurisdiction of court by preventing Bs from applying to court in trust document
Adams v Adams
Ts who cause same damage to B by respective breaches are both jointly and severally liable
Charitable Corp v Sutton
Re Coxen
Exemption clauses can be binding on matters of fact as long as conceptually certain
Cocker v Quayle
Bs don’t need to prove act/omission caused loss as not a breach claim
What did Law Com 2006 Report suggest on exemption clauses?
Paid T needs to make S aware of meaning and effect of clause, but no further
what is an order for account in common form?
Submit accounts on property, costs, distribution and what is left
Penner on AIB
Judges didn’t consider falsification, and commercial/traditional trust distinction is wrong - doesn’t matter to right to falsify if trust continues/has failed/been completed
What judge in Libertarian Investments Ltd v Hall gave a two-step process to accountability of Ts?
Lord Millett
what was the two-step process given in Libertarian Investments Ltd v Hall?
Account is RIGHT of B, and is first step to identifying and quantifying trust fund deficit, not remedy in itself
What judge and in what case highlighted how accountability of Ts to B is not a remedy in itself?
Lord Millett in Libertarian Investments Ltd v Hall
Hodgkinson v Simms
Canadian claims are subject to nous actus
What is an order for account of profits for?
Claim to hand over gains
What two things are needed for a reparation claim?
Remoteness cap and causal link
At what stage in AIB did the court apply orthodox substitutive performance rules?
Trial judge
Millett extra-judicially on Target Holdings
Problem was cured. Highlighted incoherence of causal link requirement. Questioned distinction between ‘traditional’ trusts and commercial ones
Nestle v Natwest general
Tracker fund
Section 61 Trustee Act 1925
Courts can excuse breaches in trust management and unauthorised distributions - three stage test of fairness, honesty and reasonableness, with burden on T
Re Allsop
need to consider standing of legal advice and value of property affected when breach occurred due to T taking erroneous legal advice
What two cases show a duty can be ousted completely in a trust?
Hayim v Citibank; Armitage v Nurse
Ts can be exempted from liability for BoT as long as S knew and approved, including gross negligence unless P change it
Armitage v Nurse
Who highlighted how judges in AIB didn’t consider falsification, and found commercial/traditional trust distinction wrong?
Penner
What case allows proprietary tracing claim against 3rd without needing to exhaust T remedies?
Hagan v Waterhouse
Give two cases which show unauthorised disbursements are allowed in some cases, exonerating T
Re Patten; Jones v Lewis
What case shows Bs carry burden of proving surcharges and T burden of proving discharge
Snell’s Equity
No deduction for tax that would have been payable but for Ts unauthorised distribution
Bartlett v Barclays Bank
Why is it explained no punitive damages for breach of duty?
Closer to breach of contract, where exemplary damages are not given: Johnson v UNISYS
Law Commission 2006 Report on 2003 Consultation Paper
Rejected due to costs and tendency to defensive trusteeship
What happens if T appoints to an unauthorised object?
T cannot rely on discharge of duty and must make reparation in some way - either sue object, substitutively perform or reparation
Need to consider if adviser was given full and accurate info when Ts breach was due to erroneous legal advice
Cherny v Neuman
Partington v Reynolds
Depending on assertion that T has committed a wrong
Name two cases on a negligent failure to review and diversify trust instruments
nestle v Natwest; Re Mulligan
How is an unauthorised distribution remedies?
Falsifying the documents
Conson Enterprises v Boughton
special relationship of T means balance should favour person wronged by breach, unlike contract breakers
Hayim v Citibank judgment
Clause excluding responsibility/duty until death ‘understandable and explicable’
What is an order for account of profits?
T has to account for specific gains
What case confirmed no need to prove act/omission for substitutive performance claim?
Cocker v Quayle
Re Mulligan judgment
Court ordered T to pay difference between current value and would-be value if had performed duty
Re Wynn
No ousting of jurisdiction of courts on pure matters of law
AIB Group (UK) v Mark Redler judgment of trial judge
BoT, so payment only to extent action was unauthorised, e.g. only £300,000
What jurisdiction allows exemplary damages for compensation, and according to what case?
Canada, Norberg v Wynrib
Re Patten
Bs can adopt Ts actions and treat them as authorised
Why did Law Com 2006 Report reject prohibition on ousting gross negligence liability from exemption clauses?
No clear distinction in English law between gross and ordinary negligence
What is substitutively performing Ts duty?
Paying current market value of trust property to substitute obligation
If an individual has no beneficial interest, what is their status for compensation for breach of duty?
No locus standi to bring a claim
Who said Punitive damages should never be awarded as looks to policy goals of deterrence?
Beever
Charitable Corp v Sutton
Ts who cause same damage to B by respective breaches are both jointly and severally liable
Target Holdings v Redferns general
Fraud - docs later but money early
Johnson v UNISYS
Exemplary damages not given for breach of contract
Sanders v Parry
Calculate award for reparation by loss suffered by Bs, including loss of chance
Bartlett v Barclays Bank per LJ Bingham
Strong microscope to distinguish reparation claim from common law damage claim
How is a reparation claim similar to BoC?
Asking if a reasonable T could have done it
Court ordered T to pay difference between current value and would-be value if had performed duty
Re Mulligan
How does a substitutive performance claim show a striking contrast with BoC claim?
Can take account of increases in market value
Who can sue for compensation for breach of duty?
B, T against co-T/former Ts and T of a sub-trust against main trust T
Who said it can be appropriate to treat different Ts differently?
H&M
Brudenell-Bruce v Moure judgment
T not liable for reinstatement of disrepair of property when greater than enhancement of property value
When is a reparation claim brought, and how is it remedied?
Loss claimed by B, translated into accounting item by ‘surcharging’
need to consider standing of legal advice and value of property affected when breach occurred due to T taking erroneous legal advice
Re Allsop
HoL decided that C has to show that if D had acted with authorisation, it would have made a difference for substitutive performance claim
Target Holdings v Redferns
