Oonagh B. Breen has made available for download the article “Trustee Liability for Breach of Trust in the Common Law World”, which was published as part of the UCD Working Papers in Law, Criminology & Socio-Legal Studies Research Papers. The abstract reads as follows:
When is a trustee liable at common law for breach of trust? Equity teaches us that a trustee’s duties are onerous and far-reaching not least because a trustee is bound in law and in conscience to give full effect to the terms of the trust in furtherance of the sole interests of the beneficiary. Liability is strict and is focused on restoring the trust fund when loss is occasioned or stripping the trustee of unauthorised gains made on the back of the fiduciary relationship, even if the beneficiaries have also gained. The quantum of damages (and, indeed, the extent of liability) typically requires some consideration of variables relating to the nature and context of the alleged breach; the form of damage suffered and its causal connection to the occasioned wrong; the involvement or non-involvement of any co-trustees in the transaction in question and their professional status; and the terms of the trust deed governing the trustees’ behaviour. In recent years, judicial consideration has been given to the degree to which it is possible for a trustee to contract out of the fiduciary obligations traditionally associated with a trust without undermining the valuable benefits bestowed by this relationship. Attention has also been focused lately on the courts’ ability to intervene and to undo discretionary decisions taken by trustees which, in hindsight, turn out to have unintended consequences for the beneficiaries concerned.
This paper sets the context for traditional trustee liability outlining some of the forms, causes and general measures of liability in Part I, before exploring in Part II the recent UK Supreme Court judgment in Futter v. HMRC and its implications for trustees who, in hindsight regret decisions made. Part III considers the issue of commercial transaction trusts and the options available to corporate trustees to limit or exclude liability, concluding with an assessment of developments in common law jurisdictions outside the UK towards trustee liability, trustee forgiveness and trustee exoneration.