Trustees Flashcards
Target holdings v Redferns (1996)
Basic right of a Ben is to have the trust duly administered in accordance with the provisions of the trust instrument and the general law
Nature of trusteeship
T holds legal title to property
Equity operates on the conscience of the trustee
Trustee has obligations to the beneficiary who can enforce the trust against the trustee
Knight v Earl of Plymouth (1747)
Office of T is an act of great kindness in anyone to accept it - L Harwicke
Luke v South Kensington hotel (1879)
-T’s must act unanimously
Fiduciary position of Trustees
Aims to :
- restrain and deter unconscionable use of power / position
- encourage good behaviour
- person acting on behalf of another
Ward v ward (1843)
No breach of duty if trustee has not voluntarily accepted appointment
- once T accepts position he is subject to obligation whether or not he subjectively wished to assume them
Number of Trustees
No minimum – non charitable trusts of land has effective minimum of two trustees - sole trustee cannot give valid receipt to purchase of land
- no maximum – but non charitable trust of land has max of 4 ( s.34 trustees act 1925)
Re Goldcorp Exchange (1995)
First importance not to impose fiduciary obligations on parties to a purely commercial relationship (Millett LJ)
No conflict rule
Trustee must not allow a conflict between his own interests and those of the person he is bound to protect
No conflict - self dealing rule
Trustee may not purchase trust property/sell own property to the trust (Re Thompsons Settlement (1986)
- rule applies regardless of fairness
DOES NOT APPLY– if trustee purchasing equitable interest from the beneficiary (or selling to the beneficiary)
Campbell v Walker (1800)
Purchase property at a public auction is breach of duty
Holder v holder (1968)
Land purchased after trustee renounced his role can do this after renouncing provided that he didn’t retire with the intention of purchase
Re Boles (1902)
Trustee can purchase trust property after he has retired provided no plans for sale at time of retirement
No breach of duty of the Trustee if:
Authorization given in trust instrument
All beneficiaries consent (provided fully informed)
Court sanctions purchase (farmer v dean (1863)
No conflict - fair dealing rule
Trustee can make purchase with proof that he did not take advantage of position and beneficiary was made aware (more flexible)
- burden of proof in trustee to establish that he took no advantage of his position, made full disclosure to beneficiary and transaction was fair and honest.
Re Thompson (1930)
Competing business is a conflict of interest
Hilton v Barker, Booth & Eastwood (2005)
If fiduciary acts for more than one principal then may be conflict between his duty to one principle and his duty to the other
No Profit Rule
Trustee must not obtain an unauthorized benefit from their position -
benefit needs to be authorized:
- by provision in trust instrument
- by beneficiaries after full disclosure
No profit v No conflict rule
- Boardman v Phipps (1967): argued that no profit is simply a subset of no conflict
- clarity to consider them separately
- -there are cases where there is breach if one rule but not the other
- -if trustee makes unauthorized profit from position then in breach of duty; do not need to establish conflict of interest
S. 1 Trustee act 2000
Statutory level of care - skill and care as is reasonable in the circumstances having regard to
a) particular / special knowledge / experience
b) acts as trustee in course of business / profession
S 3(1) trustee act 2000
Trustee (subject to provisions) can make any kind of investment that he could make if he were absolutely entitled to assets of the trust
S4(3) Trustee act 2000
Standard investment criteria include
A) suitability of investment given the circumstances
B) diversification of investments is important
Nestlé v National Westminster bank
- trustees have a wide discretion
- entitled to take account of income needs of tenant for life - primary object of trust
- remainder is remote relative/ stranger
As well…
-case argued that trusts did not generate income like they could have and there was a breach of duty but onus on Nestle to prove that loss however impossible to prove how much loss claimant endured
Law commission 260 (balanced portfolio)
Balanced portfolio can also be non financial investments … Concept of investment is evolving through the interpretation of the courts
Re waterman’s will trust
Professional trustee has a higher standard of care than unpaid trustee
Solicitor as a trustee
Higher degree of skill expected because special knowledge and training in regards to legal work performed for trust
Speight v Gaunt – Re Whiteley
Classic statement of duty of care as standard when dealing with the trust property of an ordinary man of business
Cowan v Scargill
Megarry VC – trustees have an overriding duty to invest solely in the financial interests of beneficiaries (whatever can make them the most money) unless trust instrument lays out otherwise
Buttle v Saunders
There was a house on trust for beneficiaries and offer to renew lease; trustees accepted fair offer but then someone else made a higher offer and trustees argued that they couldn’t go back on their agreement with first bidder
Court said– must take higher offer even if it contradicts morals and makes them dishonourable
S. 5 Trustee Act 2000
Trustees need to obtain proper advice about the way in which trust property should be invested
Wilson v Turner
Maintenance can be paid to parents and they must ensure the money is properly applied on behalf of infant
Re Paulings Settlement Trust
Where money advanced to beneficiaries, trustee must seek to sure that it is applied to a designated purpose
Pilkington v IRC
Any use of money that will improve material situation of beneficiary
Re Mary England
The court has inherent jurisdiction to order payments by way of advancement or maintenance out of trust capital
Conditions of advancement
1) consent must be in writing if for a minor or non minor who is receiving money from trust with prior interest
2) sum advanced will be taken into account as part of his share
3) sum advanced can only me maximum 1/2 of the vested presumptive share or interest of benefit in propery
