What are remedies for Breach of Trust?

The basis remedy available against a Trustee is an Order requiring them to fulfil their obligations under the Trust, or to refrain from breaching those obligations. In effect, this is akin to what is known as either an injunction or specific performance. In effect, it as if there is a contractual obligation imposed upon the Trustee, but it can be distinguished.

The Court can order a Trustee to make good a loss, or to replenish property which he has either lost, disposed of or allowed to be depleted. If the Trustee squandered the money on his personal luxury, he will be ordered to make good the loss to the Trust. The beneficiaries should not lose out merely because he has clearly failed in his duties as Trustee. There is a liability to account for the missing funds. But there is a distinction to be drawn between, on the one hand, duties requiring care and skill and on the other hand the fiduciary duties. Some are matters of care, whilst other duties are absolute. For example, the Trustee of a Charitable Trust may only be permitted to make investments in low risk entities. To do otherwise is an automatic Breach because there was no discretion vested in that Trustee. There is therefore a duty on the part of the Trustee to account. However, many Trusts demand merely a reasonable performance than one which is absolutely perfect. There is therefore an implicit duty of care and skill and that would generally be defined as “reasonable.”

A Breach would arise from dishonesty affecting the Trust, breach of a clear duty of care, neglect, conflict of interest not declared or failure to act in accordance with the terms of the Trust.

As to remedies, the basic ethos and purpose is to ensure the Trust is effective and runs in accordance with the terms of the Trust as expressed and as envisaged by the Settlor.

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