The liability of the trustee

Abstract

'To say that trustees are liable for breach of trust is not all that meaningful unless we can also say what they are liable to do. ' In the light of the current financial crisis, and trusts increasingly becoming a means of enhancing funds, it is paramount to understand what the trustee would be liable to, and the legal responses to this wrongdoing. This thesis attempts to analyse the issues surrounding a breach of trust, starting from what a breach of trust really consists of, to a comparison of the remedies available at law. The legislator offers a range of remedies in order to enable the beneficiaries to claim that which seeks the best rectification, except for certain situations when the Court is likely to prefer specific performance, where possible, rather than damages. Moreover, the trustee is not held personally liable even where a breach of trust is proved, unless there are two requirements: fault of the trustee and loss caused by the breach. Examination of the problems in quantifying this loss, particularly in the case of breaches of investment decisions, is also carried out. Furthermore, a study of preventing future claims of breach of trust was necessitated, particularly in the light of today's financial market problems. The heart of the thesis also focuses on distinguishing the different levels of liability between types of trustees, arriving at the conclusion that the discretionary trustee is not less at risk than a fixed trustee may be; more so, in real fact. Besides this comparison between different trustees, analysis is also made on the apportionment of liability between trustees themselves, as well as certain lacunae in the law in relation to liability of the trustees on delegation of duties. This study concludes with a focus on the relief from liability that the trustee may seek from the Court or by the beneficiary, and the practicality of these provisions in litigation.