Trustees Liabilities Flashcards

1
Q

Definition of breach of trust

A

‘The violation of any duty which the trustee owes a trustee to the beneficiaries’- Tito v Waddell

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2
Q

Personal liability

A
  • 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
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3
Q

Joint and several liability

A
  • trustees act jointly so beneficiaries can choose to choose all (jointly) or separately (severally)
  • can choose to sue any one trustee
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4
Q

Options open to a trustee sued individually

A

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

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5
Q

Exclusion of trustees liabilities

A
  1. Exemption clauses
  2. Relief from court
  3. Consent
  4. Limitation of action
  5. Latches and acquiescence
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6
Q

Exemption clauses

A
  • 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
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7
Q

Relief from liability by the court

A
  • 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
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8
Q

Consent

A
  • 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

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9
Q

Limitation act 1980

A
  • 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)
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10
Q

Latches and Acquiescence

A
  • 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
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