Breach and Tracing

Fletcher v. Green

When there are two transactions there can be different elections for each but if they are composite there can only be one

Dimes v. Scott

Beneficiaries have a right to elect and can accept or reject the transaction

Re Chapman

only liable if breach caused loss not for general decline in market value.

Head v. Gould

Trustee may claim indemnity from co-trustee if they had controlling influence.

Bahin v. Hughes

There is no concept of a sleeping trustee

Bristol and West Building

Breach requires causation, remoteness and measure of damages

Re Pauling’s ST

purely discretionary application of s.61 of TA 1925

Holder v. Holder

For limiting trustees liability; must be fair and equitable to sue Trustees

Chillingsworth v. Chambers

Beneficiaries interest can be impounded if consented to benefit from breach himself

Armitage v. Nurse

Negligent liability can be relieved by an exemption clause

Walker v. Stones

Application for the use of exemption clause was questioned where perception of interests was extremely unreasonable

Dubai Aluminium v. Salaam

De facto trusteeship

Eaves v. Hickson

liability for procuring a breach of trust

Lee v. Sankey

knowing reciept can be later, even if ignorant of breach at the time of transaction

Baden v. Societe

5 categories of knowledge for knowing reciept

Re Montagu’s ST

standard of knowledge as actual knowledge, wilful blindness or reckless failure to inquire.

Agip

standard for knowledge is that an honest and reasonable person would realise

In secondary liability, failure to make inquires is also dishonest.

Houghton v. Fayers

standard of constructive knowledge

BCCI v. Akindele

for knowing reciept it must be unconscionable to retain benefit

Clough v. Bond

Trustees are responsible for all risks, including unexpected ones

Watts v. Girdlestone

restore trust as if invested in the best possible investment

Shephard v. Mouls

trustees wrongly allowed one trustee to take funds with interest. trustees had discretion and were not liable to highest returns.

Nestle

Courts should assess reasonable potential earnings form proper investments

Dimes v. Scott

trustees had to pay back difference in interest for calculation of falsifying accounts

Target Holdings v. Redfern

No net loss by the breach so no compensation owed

AIB Group

If B suffered a loss he would have even if breach had not occurred, trustees are not liable to compensate

Royal Brunei v. Tan

Secondary liability depends on third party’s dishonesty, such should be judged objectively but court will take into account actual knowledge, experience, and intelligence.

Twincestra v. Yardley

Introduced a combined objective/subjective test for dishonesty

Clayton’s case

First In First Out Rule

Pennel v. Deffell

FIFO applied to Beneficiary’s disadvantage

Re Hallet’s Estate

In tracing through mixtures for wrongdoers, there was a presumption of honesty

Re Oatway

In tracing through mixtures for wrongdoers, the Beneficiary can claim first assets purchased if subsequent sum has dissipated

James Roscoe v. Winder

In tracing through mixtures for wrongdoers, When account balance is zero and trustee replenishes it the new balance is a repayment to the trust

Barlow Clowes

If the court feels FIFO leads to unjust outcome the proportional approach is taken

El Ajou

Accepted backward tracing

Bishopsgate Investments

Rejected backward tracing

Brazil v. Durant International Cup

Backward tracing explicitly allowed by the Privy Council in 2015

Shovlin v. Site Civils and Surfacing

For backward tracing to apply transactions must have a ‘close, casual and transactional link’

Boscawen v. Bajwa

Subrogation. Trust can claim against the debtor whose debt was paid off by trust money