Varying and enforcing Flashcards
who can vary a trust
T if doc allows, B if all consent, court, statute
Can a court vary a trust for management or administrative reasons
Yes even without consent of Bs. Court has inherent jurisdiction
Can a court vary the distributions/interests in a trust
Only under VTA, needs Bs to consent. Court can consent for Bs without capacity or unborn. Wouldn’t fully resettle.
3 situations when court can vary a trust
emergency (s intentions would be frustrated)
salvage( property will be destroyed)
compromise (disagreement between Bs)
Can T alter trust
Only if instrument allows and only for purpose conferred, not beyond reasonable contemplation of the settlor.
Rule in Sanders v Vautier
Bs can end trust and take property absolutely or re-settle on better terms if:
all Bs consent
All Bs are collectively and absolutely entitled to property
All Bs are sui juris
What is sui juris
adults, 18 years old, capacity
when can B enforce a trust / enforce T’s obligations
once trust is constituted
If trust is not constituted can B enforce it
No
Can B compel S to constitute trust
Not if B is a volunteer but yes if B provided valuable (not nominal) consideration
Who owns property if trust is not fully constituted
Settlor
what does it mean to constitute a trust
transfer property to T
What are B’s options / remedies when T breaches duties
if breach caused gain to trust B has no claim. Can accept investment or compel T to sell and reinvest properly.
If breach causes loss B can accept investment or cause T to sell and reinvest properly. In addition (regardless of whether B adopts investment) remedies:
restore property
surcharge account (compensation)
falsify account (put into state it would be in if it was properly managed - use Ts money)
set aside transaction
account for profits
can T set off any gains made against any losses
No
Right of adoption
if T makes an unauthorised investment B can adopted it and require T to make good the loss. If B doesn’t adopt it then T must sell it and reinvest properly
right of election
B must decide whether to require T to restore trust property or provide compensation
Who is jointly and severly liable and what does it mean.
Ts have joint and several liability. This means B can sue any T for all the money unless T was fraudulent or took money for own use
Defences for breach of trust by T
B consented
never accepted role as T
B can excuse T
Court can excuse T if T acted honestly and reasonably and ought to be excused
What are NOT defences for breach of trust by T
inactive T
ignorance
contributory negligence of B
is T liable for breaches that occured before they become a T
No but liable if they allow the breach to continue after they become T
Is T liable after retirement
Yes unless indemnity from other Ts
Limitation period for claims regarding breach of trust
6 years from breach, property vesting or majority age. Unless fraud then no limitation
Court can extent if delay is due to T
benefit of proprietary action over personal
B takes priority over creditors
time limits to bring claims (personal claim v proprietary claims)
personal - 6 years unless fraud
proprietary - no limits
defenses against personal claims
exemption in trust doc
consent of B - defense against that B only not others
court grants relief is honest and reasonable T
limitation period 6 years unless fraud
change of position
bona fide purchaser
are Ts liable for breaches before they become T or after they leave
not liable for breaches before they become T but liable if they allow breach to continue
liability continues after they leave unless other Ts indemnity them
remedies for breach of trust
common law provides damages as right for breach
specific performance when damages inadequate (obligation is unique) (not if it would cause hardship or if it is personal services contract)
injunctions
interim injunction criteria
American Cyanamid:
serious question to be tried
damages are inadequate
balance of convenience
when are damages inadequate (American Cyanamid)
would money be able to compensate? Could D pay? if it later appears that injunction was wrongly given is undertaking by C in damages enough protection? if no undertaking consider balance of convenience.
If balance of convenience is equal maintain status quo
