Property Law - Trustee Duties Flashcards
VC Nicholls in Harries v Church Commissioners
Two circumstances to fetter discretion - (1) business runs directly contrary to charity purpose OR (2) likely to lose donors. balancing exercise
When there is a breach of fiduciary duty, what can T not rely on?
A clause which excludes his responsibility for such a breach - would allow T to take personal advantage of S’s confidence
Schmidt v Rosewood general
Late father, object of PoA
Re Arnott judgment
Where there is a second ‘sleeping T’ for the purposes of formalities, no liability if they act in good faith and follow direction of the ‘proper’ T
Downes v Graysbrook general
Selling
Breakspear v Ackland
Briggs J held letters of wishes are generally subject to Londonderry principle - predominant purpose is to help decisions, so should be confidential
Jeffrey v Gretton
when assets include real estate, s.4 TA2000 requires Ts to consider if property should be sold
Millett LJ in Armitage v Nurse
‘irreducible core of obligations’, showing a right is meaningless unless B is aware of their rights
Section 3 TA2000
T can make any investment as if he were absolutely entitled to the property
What two cass are examples of Bs using injunctions to prevent T from acting in an unauthorised way?
Fox v Fox; Buttle v Saunders
What case rejected the proprietary analysis from Re Londonderry’s?
Schmidt v Rosewood
Re Whiteley
Higher standard of DoC in investment sphere - ordinary prudent man minded to make investment for the benefit of other people
Saif-Ali v Sydney Mitchell
Court treats Ts same as professionals when considering duty of skill and care - needs to be something no member of the profession would reasonable have done
What case shows the right to be provided with trust accounts is regardless of possession of trust property?
Armitage v Nurse
Bartlett v Barclays Bank judgment
If trust property involves a controlling interest in a private company, should use power to improve running of the company
What are the three main duties of a T?
Comply with the terms of the trust instrument and general law; act exclusively in Bs interest, and; take reasonable care
Fox v Fox
Payment to a non-B prevented through injunction
Failure to render trust property financially productive = BoD
Byrnes v Kendle
Schmidt v Rosewood judgment
Rejected proprietary analysis - right is incidence of court’s inherent supervisory jurisdiction over administration of trusts. They relied on an enforcement idea linked with supervisory action, AND likely intention of S that his son was to benefit
Tierney v King judgment
Court may allow settlor-B to forego right to information nevertheless in cases where, e.g., S holds a sensitive public office
Harries v Church Commissioners judgment
Two circumstances to fetter discretion - (1) business runs directly contrary to charity purpose OR (2) likely to lose donors. balancing exercise
Speight v Gaunt
Ts held to standard of ordinary business person dealing with their company for DoC
Section 4 TA2000
Requirement to review investments and economic portfolio theory (Langbein)
Section 1 Trustee Act 2000
T needs to exercise care and skill, with regard to special knowledge he holds himself as having (subjective) and what is reasonable to expect him to know in the course of his business (objective)
Brittlebank v Goodwin
Sui juris B needs to be told he is a B, and T owes a concomitant duty to tell B
‘Perhaps the most important duty of a T’ is the duty to comply with the trust instrument
Youyang Pty Ltd v Minter Ellison
How can Bs stop Ts acting in an unauthorised way?
Injunction
Nestle v Natwest judgment
Remarkable inactivity was not enough for BoD - needs to be a decision no reasonable T would have made
Companies Act 2006
Clearly distinguishes between duty to act within powers and duty based on loyalty without reference to fiduciary duties at all
Part 4 Charities Act 2011
Registration requirements for charitable purpose can be seen as a duty to inform AG and CC in enforcer capacity of existence of the trust
What case is said to have caused the ‘tortification’ of equitable rules?
Donoghue
What distinction does Hayton point to under duty of care?
Between gross negligence and recklessness - only liability for the former can be excluded due to positive disregard for the trust in the case of recklessness
Armitage v Nurse on provision of trust accounts
The right exists regardless of possession of the property
Baxendale-Walker v Middleton general
Lending
If the core duties are excluded from a trust, what happens?
Conceptually, S cannot have created a trust
Part 8 Charities Act 2011
Similar function by Charity Ts filing accounts with CC as Bs having access to trust accounts
Kemp v Burn
B can exercise right to inspect Ts accounts on whereabouts of trust property at reasonable intervals
what case shows there may be exceptions to the right of Bs to information?
Tierney v King
Hayton on Armitage v Nurse
Jacob J went too far - T needs to at least be under a duty to act conscious of the terms of the trust
Economic portfolio theorist
Langbein
Bank of Nova Scotia Trust v Ricart de Barletta
Give regard to letter of wishes before ANY discretionary decision
What are two issues with the proprietary analysis from Re Londonderry?
Hard to explain why any should be confidential, and suggests objects should not be entitled to disclosure
When lending, Ts must secure commercial rate of interest
Baxendale-Walker v Middleton
Cowan v Scargill general
Miners, energy products, investment policy
ordinary prudent man minded to make investment for the benefit of other people
Re Whiteley
What does Hayton argue the greater the reduction in T duties?
Greater the need for full and frank disclosure to beneficiaries
Hayton on notification with Bs AND objects of PoA
If there are both, objects have no right to info as existence of Bs means the objects rights are not crucial to the trust
Who said S cannot reserve an overriding power to release Ts from liability as it makes T only accountable to S, repugnant to the trust concept?
Hayton
What did Hayton argue about S reserving certain powers?
S cannot reserve an overriding power to release Ts from liability as it makes T only accountable to S
What judge and in what case thought letters of wishes are generally subject to Londonderry principle?
Breakspear v Ackland
Baxendale-Walker v Middleton judgment
When lending, Ts must secure commercial rate of interest
Re Manisty’s Settlement on several objects of PoA
If there are several objects, it may be that only the primary needs to be informed of his potential benefit
Buttle v Saunders judgment
Prevented T from following through with the morally obligated but legally void agreement
Re Arnott general
‘Sleeping’ T
What section of what Act gives both an objective and subjective element to determine DoC of T?
Section 1 Trustee Act 2000
Re Jeffrey
All duties of care can be excluded in relation to investment, except the duty of good faith
Mismanagement and T inaction
Bartlett v Barclays Bank
what Act clearly distinguished between a duty to act intra vires and a duty based on loyalty without reference to ‘fiduciary’?
Companies Act 2006
What two cases show no BoD unless something no reasonable T/professional would have done?
Said-Ali v Sydney Mitchell; Nestle v Natwest
How can we see the notification of Bs reflected in statute?
Part 4 CA2011
Miners, energy products, investment policy
Cowan v Scargill
Who and in what case allowed exemption of T from liability unless damage caused by ‘actual fraud’?
Armitage v Nurse, Jacob J
Who wrote extra-judicially that the prohibition in Cowan v Scargill on investment policies might be defeated by professional advice confirming equal financial benefit of other investments?
Lord Nicholls
What section of what Act gives a requirement to review investments and economic portfolio theory (Langbein)
Section 4 TA2000
Buttle v Saunders general
Gazump
Mowbray and Hayton on protectors and supply of information
They hold the right to obtain information solely as a fiduciary - the power cannot be purely personal to him
Re Londonderry’s Settlement judgment
Material that is not either trust accounts or another trust document (e.g. correspondence) need not be disclosed - proprietary analysis of trust documents such that B equitably owns them
Nestle v Natwest general
Failing to review investment suitability, 10x more if Tracker Fund
Byrnes v Kendle
Failure to render trust property financially productive = BoD
Who believes T’s duty should not be described as a fiduciary duty, as causes confusion with other fiduciary duties?
Mitchell
What case gives the standard individuals are held to under DoC?
Speight v Gaunt
Cowan v Scargill judgment
Illegitimate policy and no interest of Bs anyway in prolongation of mining because they’re retired
what part of statute reflects common law requirement to provide trust accounts?
Part 8 CA2011
B can exercise right to inspect Ts accounts on whereabouts of trust property at reasonable intervals
Kemp v Burn
What type of measure is the fiduciary duty to act in Bs exclusive interests?
A prophylactic measure
How does Hayton characterise gross negligence?
A positive disregard for the terms of the trust
What have courts recently begun to say in the context of a fiduciary duty to act in Bs exclusive interests
Breach of the fiduciary duty not only results in invalidation of the agreement/contract/transfer, but also the incurrence of liability to pay compensation, following inequitable primary/secondary obligation distinction from contract
What section of what Act allows section 1 TA2000 to be excluded by an express term?
Schedule 1, paragraph 7 TA2000
How does Mitchell argue the term fiduciary duty causes confusion?
In a solicitor/client relationship, it suggests a duty of undivided loyalty, not just of care; it suggests acting ultra vires is itself dishonest for a T, which is not true unless solicitor/client relationship; and Companies Act 2006
‘Unethical’, Bishop of Oxford
Harries v Church Commissioners
What three things can a T do if he goes against the terms of the trust (he must do one)?
Return misapplied assets in specie, obtain and deliver replacement property or pay in current monetary value the missing property
Lord Nicholls extra-judicially on Cowan v Scargill
If Ts gain professional advice that other investments are equally satisfactory from a financial point of view, they can choose these investments instead
Who gave the two circumstances to allow fetter of discretion in investment of trust property, and in what case?
VC Nicholls in Harries v Church Commissioners
What cases exemplify the adoption of an illegitimate investment policy by Ts?
Cowan v Scargill; Harris v Church Commissioners
What was the common law position for settlors prior to TA2000?
Had to exclude restrictive common law limitations on Ts
what does Mitchell argue about T’s duty being fiduciary?
Causes confusion with other fiduciary duties, e.g. solicitor and client
What case gave a proprietary analysis of trust documents?
Re Londonderry’s Settlement
What is the economic portfolio theory?
Whether or not high-risk investment is negligent depends on the proportion put into it, which is crucial to achieving purposes of the fund - 40:60 ratio for equity and property is ideal. THE NEED TO BALANCE OUT RISK.
Failing to review investment suitability, 10x more if Tracker Fund
Nestle v Natwest
Youyang Pty Ltd v Minter Ellison
‘Perhaps the most important duty of a T’ is the duty to comply with the trust instrument
Who applauded the Companies Act 2006 for avoiding the fiduciary duty confusion?
Mitchell
Tierney v King general
settlor-B, public office
What section of what Act gives situations when a DoC applies to T?
Section 2 Trustee Act 2000
If a T acts against a wish in a latter of wishes, what could this mean?
Although they are not legally binding, and thus T COULD ignore it, Ts exercise may be seen as capricious as he should act in accordance with S’s wishes
Chase Manhattan Equities v Goodman
A letter of wishes can override trust deed exceptionally if S intends the letter to be legally binding
How can a beneficiary use trust property to benefit B in a non-financial way?
Let them live in the house
What case gives the basic rule that a B must be notified they are a B?
Brittlebank v Goodwin
All duties of care can be excluded in relation to investment, except the duty of good faith
Re Jeffrey
What are restrictions on the exercise of a Ts powers known as?
A disability - no primary/secondary obligation distinction, as in contract
How is Schmidt different from Londonderry?
In Schmidt, the son was an object of a PoA, not a B already
What case gave a higher standard of DoC in the investment sphere than given in Speight v Gaunt?
Re Whiteley
What happens to T duty if the trust property only has financial value?
T must prioritise financial considerations of the property
Armitage v Nurse per Jacob J
Allowed exemption of T from liability unless damage caused by ‘actual fraud’, which didn’t include recklessly disregarding the terms of the trust if done honestly
what case made it clear that the decision needs to have been one no reasonable T would have made for breach of duty of care?
Nestle v Natwest
When selling property, Ts must get best price possible
Downes v Graysbrook
A letter of wishes can override trust deed exceptionally if S intends the letter to be legally binding
Chase Manhattan Equities v Goodman
What do Ts not have to do when exercising their discretion?
Explain themselves
What case show that Where there is a second ‘sleeping T’ for the purposes of formalities, no liability if they act in good faith and follow direction of the ‘proper’ T?
Re Arnott
Give regard to letter of wishes before ANY discretionary decision
Bank of Nova Scotia Trust v Ricart de Barletta
Harries v Church Commissioners general’
‘Unethical’, Bishop of Oxford
Bartlett v Barclays Bank general
Mismanagement and T inaction
What does Hayton believe about notification?
Is a core, non-excludable duty, as well as supplying Bs with enough info that they can actually enforce their rights
When is T not liable for loss?
When actions are authorised and she performs managerial/administrative functions with skill and care
what happens to a letter of wishes if it is made legally binding?
It is able to be disclosed to Bs
What case shows Court treats Ts same as professionals when considering duty of skill and care?
Saif-Ali v Sydney Mitchell
Downes v Graysbrook judgment
When selling property, Ts must get best price possible
What section of what Act enforces that T can make any investment as if he were absolutely entitled to the property?
Section 3 TA2000
what is the proprietary analysis of trust documents?
Any trust docs created by expenditure of trust property is equitably owned by B
How does Hayton characterise recklessness?
A negative state of lack of attention
Re Londonderry’s Settlement general
B wanted to challenge small sums proposed to be distributed to her
What specific duty of care does Hayton say cannot be excluded?
Duty to act in good faith
What case stated that if assets include real estate, s.4 TA2000 requires Ts to consider sale of property?
Jeffrey v Gretton
Who said Jacob J in Armitage v Nurse went too far?
Hayton
Section 2 Trustee Act 2000
Schedule 1 highlights when DoC applies to T - e.g. investing/buying land
what does a lack of a duty to explain on the behalf of Ts mean in practice?
Ts may sometimes do things for a reason inconsistent with S’s desire, but lack of transparency may be what S intended to avoid disputes over desires of S told to T
Gazump
Buttle v Saunders
Why do H&M believe the courts have started to adopt a primary/secondary obligations distinction?
Due to Donoghue - ‘tortification’ of equitable rules so that judges believe that breach of a duty in private law automatically leads to compensation
Schedule 1, paragraph 7 TA2000
Section 1 TA2000 can be excluded by an express term in the trust deed
