EQUITY & TRUSTS II : C5 BREACH OF
TRUST
. TT commits a BOT when he fails to carry
out his duties properly, or exceed them.
. A TT can only be made liable for BOT if
t h a t b re a c h h a s re s u l t e d i n a n
unauthorised gain to the TT or has caused
T to suffer a loss.
Situations which BOT may occur
- Investment of T monies in authorised
investment
- Taking a profit from the T unauthorised
by T instrument or ct
- Manipulating investments to benefit one
bene. at expense of others
- Negligently allowing T prop. To remain
under ctl. Of one TT
- Paying the T prop. To the wrong person
1. LIABILITIES
I. Liability of TT is personal and not
vicarious
. TT will only be liable for what he is
responsible for, and not for his co-TT
. Townley v Sherborne; TT nly liable for
their own breaches of trust and not for the
breaches of their co trustees, unless there
has been willful default on his part
. Re Charpman; An agent is liable to make
restitution to the third party because he
knew that his principal was no more
entitled to the money than he was himself
II. Liability of TT is compensatory
. TT fails to comply with his duties is liable
to make good the loss to the T estate and
even if there is no loss, TT is accountable
for any profit made in breach.
. Target Holding Ltd; compensation is to
put bene. In a position as he would have
been if there was no breach done by TT
III. Liability between TTs
. Where there are two or more TT are liable
for BOT, their liability is joint and several.
. It may be addressed by looking into 1)
contribution and 2) indemnity
. Bahin v Hughes; all TTs liable for the loss
had to bear loss equally
. Re Partington; if the active TT was also a
solicitor whom has exercised such
controlling influence that the other TT has
been unable to exercise an independent
judgment
. S. 35 | 64 | 66 TA 1949
IV. Liability for breaches before
appointment
. A TT is not liable for BOT before
appointments in the absence of evidence
indicating a BOT
V. Liability for breach after retirement
. A TT remains liable after retirement for
breaches committed by him during office
. Head v Gould; In order to make a retiring
TT liable for a trust committed by his
successor you must show and show
clearly that the very BOT was in fact
committed was not merely the outcome of
the retirement and appointment took place
VI. Criminal liability of a TT
. Brought within the general law of theft
2. BREACH OF TRUST
I. P u r c h a s e o f u n a u t h o r i s e d
investment
. Knot v Coltee; ct held that the TT were
liable for original sum invested less the
amount received as proceeds of sale
II. Improper retention of investment
. Fray v Fray;
III. Improper sale of unauthorised
investment
. Re Massingberd’s Settlement 1890;
where the TT retain a discretion to invest
in a specified range of investments and
they fail to invest, they are chargeable with
the T fund itself and not with the amount
of one or other of the investments which
might have been purchased.

3. DEFENCES FOR TT
I. Consent from bene, conditional on
the bene. Being in possession of full
knowledge of all the material facts.
. Spellson v George; The right to seek and
obtain information from the TT concerning
management of the T fund extends to the
objects of a discretionary power of
appointment and does not depend on an
allegation of fraud or other breach of trust
being made against a trustee
. Re Deane;
. Fletcher v Collis;A beneficiary (the
Fletchers) had consented to a breach of
trust, then (for his own benefit) called
upon the trustee to make good the loss. If
a beneficiary has consented to a breach of
trust, the beneficiary cannot make the
trustee personally liable to recoup the loss
suffered. Collis's estate was entitled to the
trust income in priority to the bankrupt
estate of the life tenant.
II. Release
. After breach, bene whether formally or
informally showed their approval through
release.
III. Expiration of 6 years
. Limitation Act 1953
. Re Pauling Settlement; Where a limitation
period applies then it it is not open to the
court to consider the question of laches
IV. Statutory relief
. S. 63 of TA
. Raja Ena Jainab Abideen; three
requirements to be fairly excused; a TT
had acted honestly, TT had acted
reasonably, and ct will take into account
conduct of parties.
V. Advice of solicitor
. Need to prove TT in breach had acted on
the advice of solicitor
VI. Breach done by single TT alone
. Bahin v Hughes; (repeat)
VII. Exemption clause in T instrument
. If provided in T that TT would be
excluded from liability of BOT.