Remedies Against Trustees: Personal Claim

Question 1

When should the beneficiaries consider making personal claims?

Answer 1

1. In personal claim, trustee will be required to satisfy the claim from their own property or funds.
2. Beneficiaries should assess the financial standing of trustee, if the trustee pocket deep enough to pay any compensation.

Question 4

When a personal claim may not be appropriate or advantegeous?

Answer 4

1. If the trustee is insolvent: beneficiary will rank as unsecured credity in any bankruptcy.
2. The trustee may have used trust property to by themselves sth increased in value (e.g. share)
3. The trustee’s wrong doing may have happened more than 6 years ago (personal claims are sometimes time barred 6 years from date of breach whereas proprietary claims are not subject to statutory limitation period).

Question 5

Which trustee can be subject to personal claim?

Answer 5

A trustee in breach of trust and such breach cause loss to the trust.
When more than one in breach, their liability are joint and several.
Beneficiaries may decide to claim for full loss against the wealthies or professional trustee (backed by insurance) or against all of them.

Question 6

Why it is sometimes difficult to bring a personal claim against trustees in relation to investment decision they have taken?

Answer 6

The beneficiaries must establish that the trustee’s breach of trust caused the loss sufferred.
Nestle v National Westminster Bank:
When it came to investment decisions, claim against trustees may not succeed unless the beneficiaries can establish that the decision was one that no reasonable trustee could have made.

Question 7

The value of personal claim

Answer 7

Loss + interest from date of breach. Rate of interest is at discretion of the court but ussually rate allowed on the court’s short term investment account

Question 8

Defences against personal claims

Answer 8

1. an exemption clause in trust deed: may relieve trustees from liability for negligent or innocent breach. Professional trustees must take reasonable step to ensure that settlor is aware of the meaning and effect of the clause.
2. knowledge and consent of beneficiaries (whether before or after action), the consent must be fully informed and freely given, beneficiary must be adult.
3. s61 of TA 1925: the court has discretion to relieve if they acted honestly and reasonably and ought fairly to be excused. Courts reluctant to excuse passive trustees based on this grount.
4. limitation and laches

Question 9

Limitation and laches in personal claim

Answer 9

1.A personal claim for breach of trust is subject to 6 year limitation period from breach/ against a minor: time starts when they reach 18, as against remainder beneficiaries, time only start to run when life tenant dies.
2.6 year period not applicable in case trustee have committed fraudulent breach
3.Where no statutory limitation period, court might still regard to laches, which prevent claimant from asserting personal claim where:
(a) claimant knows the facts that give rise to the breach;
(b) claimant delay in taking action; and
(c) this delay either deemed as constituted asquiescence in or waiver of breach, or cause detriment or prejudice the trustee.

Question 10

How trustees share the burden of paying monetary compensation?

Answer 10

1. Indemnity: the defending trustee may be able to claim full amount of compensation from co-trustee under equitable indemnity (pass 100% loss of); or
2. Contribution: claim a contribution toward compensation from co- trustee under Civil Liability Contribution Act