Trustees Liabilities

Question 1

Definition of breach of trust

Answer 1

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

Question 2

Personal liability

Answer 2

• 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

Question 3

Joint and several liability

Answer 3

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

Question 4

Options open to a trustee sued individually

Answer 4

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

Question 5

Exclusion of trustees liabilities

Answer 5

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

Question 6

Exemption clauses

Answer 6

• 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

Question 7

Relief from liability by the court

Answer 7

• 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

Question 8

Consent

Answer 8

• 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

Question 9

Limitation act 1980

Answer 9

• 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)

Question 10

Latches and Acquiescence

Answer 10

• 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