8/24/2023 0 Comments Breach of trust consequencesThey may be examined as follows: Liabilityįirst off, the liability of trustees is personal, not vicarious. There are many components of this personal remedy though. In this wise, his liability may extend to reimbursing the beneficiaries for unauthorized dealing with the trust property or even to imprisonment for fraud and indiscretion. In deserving situations, a trustee would be personally liable for breaches of trust occasioned by his action or inaction. Also, in RIGALL v SHIPWAY, the court restrained an unauthorized mortgage. 902, the court restrained an improvident sale of property. In the case of MILLIGAN v MITCHELL (1833) 1 My & K 446, an injunction was granted to restrain an election of an unqualified person as minister by the trustees of a church. If the beneficiary anticipates that it’s likely there’d be unauthorized dealing with the trust property, he can apply to the court for an injunction to prevent such dealing or, in appropriate cases, apply for an injunction to compel the trustee to act in accordance with the terms of the trust. InjunctionĪn injunction would lie to prevent a breach of trust by a trustee. In line with the appropriate rules of Equity, beneficiaries of a trust will not be left without remedy in the event of an anticipated or completed breach of trust. When a trustee has been found to be in breach of a trust, remedies would ordinarily lie to correct the breach and restore the beneficiaries and the trust, as nearly as possible, to the position they were in before the breach. And the consequences are not pretty either. Perhaps unfairly, even innocent or well-intentioned missteps by the trustee can and have been held to amount to breach of trust. In light of the above, there are several acts that may amount to breach of trust. Although, the court in that same case was of the opinion that it is more prudent overall to seek approval where the circumstances permit. As such, he should commit technical breaches of trust when it favours the beneficiaries. 369, the trustee will not be held liable for an unauthorized act that would have been authorized by the court eventually. As held by the court in LEE v BROWN (1798) 4 Ves. Thus, the trustee may even be held liable for failing to commit a judicious breach of trust by doing some thing that, though unauthorized, is for the overall benefit of the trust or beneficiaries. 797, ‘the great use of a trustee is to commit judicious breaches of trust’. As facetiously put by Lindley M.R in PERRINS v BELLAMY (1889) 1 Ch. Thus, where he neglects, fails or refuses to do what he ought to do or does what he is not instructed to do, he would be liable for a breach of trust.Ī trustee may even be held in breach of trust for failing to act in the overall interest of the trust or the beneficiaries even where such act may not strictly be within the terms of the trust. A breach of trust occurs when a trustee acts contrary to the dictates of the trust instrument or where he fails to act as instructed by the terms of the trust.
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