Trustee Duties Flashcards
T’s (4) duties to B
- duty of obedience
- duty to account
- duty of care
- fiduciary duty
Duty of obedience
= obey the trust settlement, avoid unauthorised investments and disbursals
Duty to account
= give information as to what has happened to trust assets
Duty of care
= duty to take due care in managing the trust property (investments etc)
Fiduciary duty
= no profits & no conflicts of interest & no self-dealing (unless B consents)
T’s 2 types of powers
- Dispositive powers = vary entitlements under the trust
- administrative powers = deal w/ trust assets (investments, changing what the fund is made of etc)
DO - Fraud on a power
= idea that not only must you only make decisions within the scope of your powers, you must also exercise your (authorised) powers for the right reason
/!\ ‘fraud’ doesn’t have to be dishonest, just exercising power for the wrong reason
DO - AP : Cowan v Scargill
Main point : when considering what investments to make, T must consider only the best interest of Bs, and disregard their personal / political / ethical views
Summary : Ts of the Mineworker’s Pension Scheme disagreed abt overseas investments (Ts who were members of National Union of Mineworkers (Ds) disapproved bcs investing in overseas energy bad for national mining)
=> court held that D’s concern relevant to interest of union but not of Bs of trust fund (only thing in their interest = making money for the fund) => union trustees were in breach
DO - AP Harries v Church Commissioners
summary: Ps sought declaration that D trustees managing assets for C of E were obliged to have regard to object of the trust = promoting the Christian faith
=> Court refused the declaration
DO - AP Butler-Sloss v Charity Commission (2022) (MP)
Main point : possible to make investment decisions that somewhat compromise your financial interest bcs directly related to the purpose of the (charitable) trust
DO - AP Butler-Sloss v Charity Commission (2022) (summary)
Cs = trustees of two evmt protection charities, proposed new investment policy excluding any investment in ventures not aligned w/ Paris Climate Ag, despite risk of financial detriment to the charities => sought declaration that they were permitted to adopt proposed investment policy
=> Court said that they were : Ts are allowed to make such decisions provided that they can show they have reasonable ground to believe the investments they choose to exclude are detrimental to purpose of trust (and that is the only reason they made the decision)
DO - DP Saunders v Vautier
Main point = S v V power : B absolutely entitled and of full capacity can compel Ts to transfer trust property to him/her (or them if gp acting together)
DO - DP Re Lofthouse
- B (infant girl) entitled to trust fund when she attained 21 or married
- Ts had power to ‘apply all or any part’ of income to her maintenance and education – dispute abt T’s exercise of power,
=> CA held that court didn’t have jurisdiction to interfere w/ T’s discretion, since T was exercising power for the right purpose = within scope of his powers
DO - DP Vatcher v Paul
‘fraud’ in ‘fraud of a power’ doesn’t mean CL fraud / dishonesty, just exercising a power for the wrong reason
=> “It merely means that the power has been exercised for a purpose, or with an intention, beyond the scope of or not justified by the instrument creating the power” (Lord Parker)
DO - DP Klug v Klug
mother (one of 2 Ts) refused to exercise power to give some trust money to daughter (B) who needed it bcs didn’t like her husband
=> Court held that this was a breach of trust bcs power related to need of daughter (so refusing to exercise it for the wrong reason)
A points out ≠ admin powers: mother could perhaps have ag ‘I don’t think it’s in my daughter’s best interest to get the trust money bcs her husband will take it and that is not the purpose of the trust (meant for family / direct descendants)
DA - admin powers
Duty to maintain and produce on request an account of what they are doing with the fund
=> exercise of administrative powers cannot be kept secret from Bs [find authority]
DA - distributive powers
- no automatic duty to disclose trust documents (other than what B needs to know what is happening to trust property) = Schmidt v Rosewood
- duty to consider disclosure = breakspear v Auckland