Remedies Against Trustees Flashcards
What are personal claims?
Seek compensation for the trust. Claim against the trustee personally, from their own property or funds.
This is only good if the trustee is SOLVENT.
What are the DISADVANTAGES of a personal claim?
If insolvent, a personal claim will be useless. Beneficiary will rank as unsecured creditor.
Trustee may have used trust property to buy themselves something. Eg, bought shares that have now doubled in price - can ask for shares.
Trustees wrongdoing is barred at 6 years after date of breach. At that time, beneficiary can no longer bring personal claim. However, proprietary claims have no limitations.
What is the statute bar for personal claim?
6 years.
When may trustees be subject-matter of a personal claim?
Trustees must themselves be in breach of trustee.
Trustees are not vicariously or automatically liable for defaults of thei co-trustees
However, if a trustee has breached trust that trustee can be named as a defendant to a personal claim.
If MORE THAN ONE trustee has breached, their liabiity is joint and several.
What must be shown to meet compensation for breach?
CAUSATION, but for their breach, the trust would not have lost.
What are the 4 exemptions for a personal claim for breach of trust?
An exemption clause in trust deed
Knowledge and consent of beneficiaires
S 61 of TA
Limitations and laches
How can an exemption clause be a defence for personal claim?
Settlor could have included one, exempting trustees from liability for breach of trust. Can relieve for negligent or innocent breaches.
How can an knowledge and consent of beneficairies be a defence for personal claim?
If beneficiaries have ALL consented to course of action, then cannot bring a claim agaisnt them.
Consent must be fully informed and freely given.
Must be adults with full capacity.
If ONE beneficiary consents, that beneficial cannot claim, but others can
How can an s61 be a defence for personal claim?
Court has a discretion to relieve trustees from liability, if they acted HONESTLY and REASONABLY, and OUGHT FAIRLY to be excused.
How can limitation and laches be a defence for personal claim?
A personal claim is subject to 6 year limitation period. This starts from date of breach.
As a minor, this starts to run from age of 1, and for remainder, only runs wehn ther interest fails into possession.
Laches: prevent claimant from asserting personal claim wehre the C knows the facts that gave rise to a breach, delays taking action, and this caused the breach.
What is equitable indemnity whcih may ensure the trustee can share the burden of paying monetary compensation?
Defending trustee may be ablet o claim the full amount of compensation from a co-trustee under an equitable indemnity
Trustee who is sued for breach of trust can recover a FULL INDEMNITY from a co-trustee who:
- acted fraudulently when others acted in good faith
- is a solicitor who excised controlling influence
- has benefitted personally from breach
- is also a beneficiary and benefited from breach
What is contribution whcih could be claimed by trustee to share the burden of paying monetary compensation of breach?
Court can order a co-trustee to make a contribution that is JUST and EQUITABLE having regard to the extent of that co-trustees responsibility for the loss.
