There are 3 main contexts where a breach of trust scenario may arise :-
Where an employee or director is in breach of a duty of trust associated with the relationship between them.
Concerns or issues relating to a formal trust such as a family trust.
Where executors of a will are alleged to be in breach of duties to administer a probate estate.
This page on our site does not cover the first scenario above – for these types of issues, please see our employment law content or contact Ben Jones our Head of Employment Law.
The starting point for any concerns or issues about the competency, actions or lack of actions of a trustee is to consider the terms of the trust deed and other documents. A well drafted trust deed ought to make it clear the expected powers and duties of the trustees.
It is also possible for a trust deed to expressly excuse a trustee from liability for something that would otherwise be a breach of trust (a trustee exemption clause). As a minimum a trustee will always be expected duty to perform the trusts honestly and in good faith for the benefit of the beneficiaries. An exemption clause will not override this duty.
Further, before seriously contemplating legal action there are 2 other primary and vital considerations :-
Ensure you have your facts straight – sometimes problems can relate to a personality clash or confusion or insufficient information. These issues rarely, if ever, should lead to taking the risk of starting a claim without further, measured exploration.
Position of other trustees – what do the other trustees (if any) think about your concerns or complaints? Is your dispute with all trustees or just one?
Joint responsibility of trustees
Trusteeship imposes a duty on each Trustee to comply with the Trust Deed and with the law. Trustees are not entitled to allow co-Trustees free rein to do as they see fit. Allowing a co-Trustee to commit a breach of trust, whether expressed or implied, will result in both of them being potentially liable for breach of trust.
Conflicts of interest
Trustees must separate their own interests from those associated with being a trustee. Difficulties can arise where, for example a trustee is involved with a charity but also a successful business person. Where there is a potential conflict of interest the Trustee should abstain from participating in relevant decisions and it may be necessary in some situations to consider resignation.
Standard of skill expected of trustees
The legal standard expected is the skill and knowledge of a prudent business person adopting a reasonable basis for decisions taken.
The law in relation to Trusts is now governed by the provisions of the Trustee Act, 2000.