breach of trust

The following are the principles of the liability of a trustee:

• a. A trustee is personally liable for any breach of trust committed by him. A breach by a trustee does not necessarily make others liable. Bahin v. Hughes (1886) 31 Ch.D. 390.
• b. A co-trustee will however be liable where the negligence of his duties facilitates the breach committed by the other trustee. Lewis v. Nobles (1878) 8 Ch.D. 591.
• c. Where a breach has been committed before a trustee was appointed, he is not liable. Re Strahan (1856) De G.M. & G. 291.
• d. Trustee’s liabilities are joint and several but in an action concerning the liability of trustees, the beneficiary must joint all the trustees. In cases of breach of trust, the trustees and the third parties who committed the breach are all liable. Cowper v. Stoneham (1893) 68 L.T. 18.
• e. Where a trustee has been made liable for a breach of trust which was not due to his fault, he can make a claim for reimbursement from the other trustees. A trustee in some cases can claim indemnity for damages sustained by him from the co-trustees but such damage must not be due to his fault.
• f. Where a beneficiary has successfully sued a trustee liable for a breach of trust, he is entitled to contribution from his co-trustees.
• g. A trustee/beneficiary who has committed a breach of trust is not entitled to his beneficiary interest until he has remedied such breach. Re Dacre (1916) 1Ch. 344.

Several remedies are available against the trustee and third parties for breach of trust. They are outlined as follows:

• a. Injunction and receivership: the court can make an order of injunction to restrain a trustee from performing his duties in respect of the trust property, if the trust property is endangered and a receiver may be appointed in respect of the same. Fletcher v. Fletcher (1844) 4 Hare 67.
• b. Tracing of Trust Property: In appropriate cases, the remedies of tracing the trust property into the hands of the trustee and third parties may be available to a beneficiary. This remedy is appropriate where the trustee although personally liable for the breach has no means to make good the loss. Essentially, the conditions are that there must be fiduciary relationship involved and the fund or property must be identifiable or in a form that it can be traced. The right to trace may be lost where the trust property has ceased to exist, where the equitable owner cannot identify the property and where the property has lost its distinct quality. Taylor v. Blakelock (1886) 32 Ch.D. 560.