Trustees Liabilities Flashcards
Definition of breach of trust
‘The violation of any duty which the trustee owes a trustee to the beneficiaries’- Tito v Waddell
Personal liability
- a trustees liability to compensate a beneficiary for the loss suffered from a breach is a personal liability- they will bear the liability in their personal capacity- townley v Sherborne
- even the case if they didnt commit the breach- bahin v hughes
- professional trustee- VL
Joint and several liability
- trustees act jointly so beneficiaries can choose to choose all (jointly) or separately (severally)
- can choose to sue any one trustee
Options open to a trustee sued individually
Contribution or indemnity
Contribution: civil liability act 1978 s1- a person sued individually can apply to the court to require the other third parties to be joined in the action and make contributions towards the liability
Indemnity: trustee is requesting the court to order the other trustee to fully reimburse him due to not causing or benefiting from the breach- re partington
- common law remedy
Exclusion of trustees liabilities
- Exemption clauses
- Relief from court
- Consent
- Limitation of action
- Latches and acquiescence
Exemption clauses
- where trust instrument provides the trustees wont be liable
- effect is to shield trustees even if they acted grossly negligent- armitage v nurse
- sch 1 para 7 TA 2000- can even exempt duty to act with care and skill
- exceptions: irreducible core- act in good faith and honestly and fraud or dishonest acts
Relief from liability by the court
- s61 TA 1925 court can grant relief of liability if they believe the trustee acted honourably and reasonably - walker v stones
- professional trustees held to a higher standard
Consent
- trustee wont be liable for a breach of trust to a beneficiary who consents- walker v symonds
- consent of 1 beneficiary wont shield the trustee from liability to other beneficiaries- re paulings settlement trusts
- consenting beneficiaries must be of full age and sound mind and can only arise from informed consent
Impounding a beneficiaries interest- consent from a beneficiary may cause them to lose their beneficial interest which will be used to reimburse the liable trustee
Rule in Re Dacre- only applies where beneficiary is also a trustee. Where a trustee misappropriates trust, they are deemed to have utilised his share of the property and not entitled to anymore
Limitation act 1980
- provides time limits for which the claims can be brought against wrongdoings
- s21 LA 1980- 6 years
- fraud- time begins once fraud is discovered
- future beneficial interest- time begins once the person is entitled to asset (life interest dies)
Latches and Acquiescence
- can even bar claims brought within 6 years
- latches= improper delay
- acquiescence= conduct that shows claimant has waived his right to bring a claim
- fisher v brooker