25 terms

Breach of Trust: Lack of Care

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Raes v Meek (1889)
"The law... requires of a trustee the same degree of diligence that a man of ordinary prudence would excercise in the management of his own affairs".
Tibbert v McColl (1994)
Where there is a breach, but the loss suffered is not caused by the breach, then he will not be personally liable. However, the onus is on the trustee to show this.
Knox v Mackinnon (1888)
There was discussion of a subjective standard, based on the degree of prudence a trustee exercises in his own affairs. This would be inconvenient.
Clark v Clark's Trs (1925)
It is difficult to imagine any clause of indemnity coud be capable of being construed to mean that the trustees might with impunity neglect to exercise their duty as trustees. "In other words, that they were licesnsed to perform their duties carelessly".
South Africa (Trust Property Control Act 1988, s9)
"A trustee shall in the performance of his duties and the excercise of his powers act with the care, diligence and skill which can be reasonably expected of a person who manages the affairs of another".
Trusts, s31
Where a breach is at the request of the beneficiary there can be indemnity.
Trusts, s32
The court has the ability to grant relief to trustees who acted "honestly and reasonably".
Re Evans decd [1999]
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Govenors of Dollar Academy v Lord Advocate (1995)
The courts can be fairly sympathetic to allow insurance costs, in particul in the event of public trusts where trustees are not renumerated.

Insurance is a far greater protection than anything in the Act and where a wide variety of trustees is desirable insurance might be necessary in order to secure this.
Charities and Trustee Investment (Scotland) Act 2005, s68A
Charity trustees have the power to take out insurance for the trustees at the cost of the charity.
Seton v Dawson (1841)
The immunity clause was held not to protect the trustees from liability.

The trustees are guilty of culpa lata (gross negligence), not even a protecting clause can excuse gross negligence.
Lueta Trustees Ltd v Orbis Trustees Guernsey Ltd (1998)
There was nothing in the terms of the trust deed to exclude liability. It is not possible to avoid liability for culpa lata.
Armitage v Nurse [1998]
There was suggestion in England that the case law in Scotland surrounding immunity clauses was subject to interpretation of the individual language construction and can cover anything.

The position in Scotland seems to be that negligence can be excused but not gross negligence.
England (Trustee Act 2000, s1)
The previous standard was an "ordinary prudent man of business".

Now "such care and skill as is reasonable in the circumstances". This includes regard for any special knowledge of professionals.
Stair I.12.10
"Ought to be but liable for such diligence as they use in their own affairs". Historically, there was suggestion of a subjective test.
Re Waterman's Will Trusts [1952]
A paid trustee should be expected to exercise a higher stnadard of diligence and knowledge than an unpaid trustee. There is a special duty where special skill is advertised.
Bartlett v Barclays Bank Trust Co Ltd [1980]
"A higher duty of care is plainly due from someone like a trust corporation which carries on specialised business of trust management".
Town and County Bank Ltd v Walker (1904)
The result is simply to create a liability by the trustee to make good to the trust estate the loss which he has caused. This is enforceable like any other debt to the estate.
Millar's Trs v Polson (1897)
The burden of proof is on the defender to show that the loss would still have occurred without the breach.
Trusts, s3(d)
Gratuitous Trustees: Each trustee shall be liable only for his own acts and intromissions and shall not be liable for the acts and intromissions of co-trustees.
Ferguson v Paterson (2000)
Ignorance is not an excuse. "People who undertake a duty are bound to know what their duty requires".
Bell
Where trustees resist the execution of their duty or are guilty of culpa lata they will be personally liable to the beneficiaries so injured.
Hellespont Ardent [1977]
Gross negligence is clearly intended to represent something more fundamental than failure to exercise proper skill/care constituting negligence.
Purves v Landell
Gross negligence in agency was "considerable mismanagment, considerable ignorance and the absence of attentive conduct in general".
culpa lata dolo aequiparatur
Gross negligence is equivalent to fraud or lack of good faith and is not excuseable.