Term
|
Definition
| Has the trustee exercised the REQUISITE STANDARD OF CARE in doing what is authorised to do under the trust? |
|
|
Term
| Standard of Care: Common Law |
|
Definition
| Trustee cannot be liable if they exercise the requisite standard of care |
|
|
Term
| Non-professional Trustees |
|
Definition
Re Speight; Speight v Gaunt
Test (Jessel MR):
'A trustee has to conduct the business in the same way that an 'ordinary prudent man of business' would conduct his own business'
Held: Gaunt not liable - not required to have expert knowledge / trustees are often members of the family who are acting gratuitously. |
|
|
Term
|
Definition
Bartlett v Barclays Bank Trust Co (No 1)
Test (Brightman J):
If you hold yourself out as having which level of expertise or skill, you are expected to exercise that level of skill/expertise.
Facts & Held:
Trust had majority share in coy and D had potential to influence and control direction of coy - D liable. Their responsibility was not only to know what was going on, but to control what was going on - an expert in the business world should have known their ability to influence. |
|
|
Term
| Statutory Modification of the SoC for INVESTMENTS |
|
Definition
Trusts Act 1973 (Qld):
s22 duties of a trustee in relation to powers of investment
(1) trustee must, in exercising a power of investment -
(a) if the trustee's profession, business or employment is, or includes, acting as a trustee or investing money for other persons--exercise the care, diligence and skill a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons; or
Finn J - Australian Securities Commission v AS Nominees Ltd (higher standard for other people - cautious about the Speight v Gaunt test as you may take more risks with your own property)
(b) if the trustee's profession, business or employment is not, or does not include, acting as a trustee or investing money for other persons--exercise the care, diligence and skill a prudent person of business would exercise in managing the affairs of other persons.
(2) A trustee must, in exercising a power of investment, comply with a provision of the instrument creating the trust that is binding on the trustee and requires the obtaining of a consent or approval or compliance with a direction for trust investments.
(3) A trustee must, at least once in each year, review the performance, individually and as a whole, of trust investments. |
|
|
Term
Failure to Insure Trust Property
Statute: |
|
Definition
Trusts Act 1974 (Qld)
s47(1)
A trustee may insure against loss or damage, whether by fire or otherwise, any insurable property, and against any risk or liability against which it would be prudent for a person to insure if the person were acting for himself or herself.
- gives power to insure but no duty of care created by the language |
|
|
Term
Failure to Insure Trust Property
Common Law: |
|
Definition
Pateman v Heyen
Test:
Cohen J
Would an ordinary prudent businessperson insure the property?
Facts & Held:
D executor and trustee of a deceased's estate and P sole beneficiary - part of estate timber framed rental house which D failed to renew insurance for and house burnt down.
D liable. |
|
|
Term
| Remedy for Breach of DoCS |
|
Definition
Justification for remedy is that the trust estate is worse off as a result of the trustee's carelessness
Breach of CL DoC
Re Tort of negligence - amount of damages can be limited in 2 ways:
(1) novus actus interveniens rule - some event D could not have reasonably foreseen, damages not increased by additional unforeseeable harm
(2) remoteness of loss rule - d not liable to compensate P for losses which are not a reasonably foreseeable consequence of breach of duty |
|
|
Term
|
Definition
Bristol & West Building Society v Mothew - England & NZ
Test - English CoA:
'Equitable compensation for BoCS resembles CL damages in that it is awarded by way of compensation to the P for his loss. There is no reason in principle why the CL rules of causation, remoteness of damage and measure of damages should not be applied by analogy in such a case'
So apply:
1. But for question of causation
2. Novus actus interveniens
3. Remoteness
Approved by NZ CoA in Bank of NZ v NZ Guardian trust
D's liability was limited to compensating the building society for the loss occasioned by the failure to exercise the required standard of care - D not liable because P failed to establish the solicitors (D's) lack of care was the material cause for P's loss. |
|
|
Term
Equitable Compensation
Approved in... |
|
Definition
Bank of NZ v NZ Guardian Trust Co Ltd
Facts & Held:
BoD but trustee company not liable for P's losses - relevant loss was attributed to the downturn in the property market - essentially novus actus - d not liable.
Note: Obiter remarks in Youyang case imply that it cannot be assumed HCA will follow England on this point |
|
|
Term
|
Definition
| Recommendation for the Trusts Act s22 should be extended to apply to all trustees generally, not just trustees exercising power of investment. |
|
|
