Trusteeship
Rule Prohibiting delegation of functions
Duty to not profit from the trust
Remuneration
Profit
Self-dealing rule
Craddock v Piper if solicitor acting as a trustee entitled to be paid legal fees for your work on the trust concerning some litigious matter in court
Hayton - dont want trustees swayed by personal interest
no automatic right to remuneration (Default position no pay) can contract to pay - s24 1893 Trustees Act
fair-dealing rule
Basic Rule
Keech v Stanford established rule
Holder v Holder farmed died and made son executor of will, son wanted to purchase main asset of will and wanted to renounce executorship, unable to do so - asked beneficiary any problem with him purchasing farm - bought farm - 7 years later 1 beneficiary tried to have it set aside on self-dealing rule - no special knowledge from position as trustee as came by knowledge working and living on farm - made it clear throughout intended to purchase farm
Tito v Waddell
if trustee purchase beneficial interest of property - transaction can be set aside unless trustee can show taken no advantage of his position, full disclosure to beneficiary, transaction fair and honest
if power delegated trustee, trustee can't delegate that power to someone else
O'flanagan and Ryan appointed wife as trustee, she wanted to apoint someone else - can't do that
s17 Trustees Act 1893 - can entrust funds to professionals such as Solicitors and Barristers
duty to distribute in accordance with trust instrument
s49 Succession Act 1965 - if make distribution under will, publish intended distribution notice and don't distribute for 6 weeks
Duty to invest
prudent care
authorised investments
Rule in Hastings v Bass
Sieff v Fox advisers to trustees wrongly advised about tax conseqeunces, tax liability arose- when trustee acts under discretion given to them by terms of trust and free to decide discretion, but effect of act is different from what was intended - court intervenes if clear had they not taken into account wrong considerations
duty to properly exercise discretion
Green v Cobham purpose to avoid tax implications
Pit v Holt only applies where breach of trust, mere misunderstandings of effect of an action not sufficient (UK SC) - major limitation
Greene v Coady pension plan in deficit, decision to wind it up, options to wind up now and employer contribute or wait till deficit gone - trustees voted to take contribution now, court - look through vision of trustee and not with benefit of hindsight (Irish HC) - not liable acted honestly, reasonably and in good faith for best interests of the beneficiaries
trustee powers
Power to compromise actions
power of maintenance for minors
Trust for Sale
power to insure property
Power of sale
Trustee
Appointment
termination
resignation
removal
remedies
defences
not a power - obligation to invest
a number of acts of statute that sets authorised investments
Stacey v Branch act honestly as a prudent man, in selecting investments take as much care as a prudent business man - duty to avoid investments potentially hazards
*Learoyd v Whitely - standard of care - invest in authorised investments - behave as an *ordinary prudent man of business - acting for those morally obliged to provide for
Spencer v Kinsella trustee given absolute discretion in how to deal with trust property - held - even with absolute discretion still need to carry out care with reasonable care and prudence
investments separate - if make 2 investments 1 a big success the other a loss, can take benefit and sue for the loss - Dimes V Scott
Bartlett v Barclays Bank used trust mone to build 2 unauthorised construction projects, 1 made money other lost, successfully argued connection between both
Knott v Coffee can be personally liable as a trustee for lossess
when performing duties or exercise power consider everything that is relavent and exclude everything that is irrelevent - if actions has unintended consequences can reverse it
Hastings v Bass
s50 Succession Act 1965 - can sell property for purpose of paying debts of deceased person
Howe v Dartmouth - power to sell may become duty to sell - preserving trust property not always practical - for example if assets of wasting nature like stable of race horses
s14 1893 act empowers trustee to sell any property he holds under trust which is subject to depreciation
s21 - trustees power to compound liabilities (settle them) provided acting in good faith
ensure mainteance payments to minors till they reach age
s18 Trustees Act 1893 entitled to insure 3/4 of property - take it from trust income
assets can't be substantially diminished by taking it from trust property
may give power to appoint to a truste or another party nominated in trust document
s10 Trustees act 1893 - trustee may be appointed in writing - exercised by person nominated for purpose appointing new trustees
can be provided for by trust instrument
court has inherent jurisdiction to remove trustees
Arnott v Arnott could be removed by plaintiff if trustee uncooperative and making trust basically inopperable - persistent non-cooperation , - can also apply to situations of dishonesty, incompetancy - could remove if welfare of the beneficiaries demanded it
personal liability when act in breach of trust
can be sued for breach of trust and beneficiary can claim any profit gained from breach of trust
consent
honest mistake
statute of limitations
trustee fiduciary - owes fiduciary duties to beneficiaries under the trust
no automatic right - Hutton v West Cork Railway
can be authorised in a few ways
trust instrument
statute
direction of court
contract with beneficiary
1893 s24 can be reimbursed for reasonable expenses incurred / Courtney v Rumley
in practice professional trustee will ensure express provision made for remuneration
Protheroe husband legal owner of lease, he and wife beneficial owners - used legal title to buy freehold reversion - sold property - held - constructive trust arisen - not entitled to profit from office - not able to profit from position
absolute rule, prevents trustees from purchasing trust property - purchase voidable - intention not important
onus of proof on trustee to show did not breach fair dealing rule Thompsons Settlement
Delany - not inflexible rule can delegate in situations of legal or moral necessity
s24 trusteess act 1893 - trustee indemnified for any acts or ommissions by fellow trustees or bankers or bankers unless guilty of wilful default
Duty to Distribute
Delany - trustee obligation to identify those entitled under trust and take necessary steps to ensure trust distributed in accordance with terms
s49 -succession act 1965 - immune from liability if he public notice of intended distribution 6 weeks prior to distribution
Re Benjamin testators son disappeared, entitled to share in fathers estate - court held - son presumed dead and gave trustees liberty to distrbiute share- allowed after 7 years
invest in authorised securities only and exercise ordinary prudence
first thing to look at is terms of trust instrument
if no express investment clause may invest in accordance with Trustees 1893
Minister may vary list
Trustee Authorised Investments Acts 1958k 1998, 2002
Delany even within authorised investments has to observe certain standards
Bartlett higher duty of care expected of a professional trustee
Hudson - Rule acted as a kind of magic eraser
make decision based on what trustees knew or ought to have known, trustees exclude irrelevant matters
no inherent power to sell trust property but to preserve trust
exceptions
trust instrument confers power
court orders sale
power to sell pursuant to statute
s20 - can issue receipts for purchasers which exonerates purchaser from acting in breach of trust
s43 conveyancing act 1881- absolute discretion to pay minors - parent or guardiance income for benefit of maintenance, education or other benefit
settlor appoint trustee when creating the trust
s25 1893 act - court power to appoint trustee when expedient to do so
inherent power in all beneficiaries to appoint trustee where they are all sui juris
Re Wheeler doesn't apply if person deemed unfit to act doesn't mean incapable
beneficiaries off age give unanimous agreements
s10 or 25 applicable
may disclaim appoint and refuse to take office at outset - preferable expressed by deed
if accepted office and failed to disclaim only retire in limited circumstances
if provided for in trust instrument
if all beneficiaries sui juris and agree
s11 1893 - if at least 2 co-trustees left and agree
if s10 or s25 applies
Moore v McGlynn defendant discharged from performacne where set up rival business in competition to what he was a trustee of - personal interests and and duty to trust may conflict (conflict of interest)
LRC recommendations from 2005
general statutory duty of care - objective reasonable care and skill - take into account special knowledge or expertise trustee may have
modifications for charitable trustees- must act in interests of charity
certain persons not elgible - minor, ward of court, bankrupt person, corporate trustee of trust in liquidation or wound up, person convicted of indictable offence or sent to prison, person disqualified or restriction
recommends expansion of trustees powerss of delegation
remove restriction on insurance to 3/4 of value
no changes to authorised securities - and no statutory provision for payment of trustees
Wyle - position of trustee extremely exacting one and frequently a thankless one
Ormsby not an automatic entitlement
*Boardman v phipps* solicitor for family trust, bought shares, made personal profit - not allowed - acting in fiduciary capacity
Speight v Gaunt duty to act like an ordinary man of business
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