The case of AIB v Redler has resulted in a novel method to determining trustee
personal liability that is poorly reasoned! Before we look at the new rule and quote
in AIB, we'll have a look at traditional approach to determining a trustee's personal
liability. Lord Millett explained extra judicially in Libertarian Investment v Hall, that
trustee's primary responsibility is to keep the trust account separate; they're only
liable if they deal with trust assets in a way that violates the trust's conditions and
results in a loss. Thus, beneficiaries have a right to an account that they can falsify or
surcharge. Trustees are held to a high standard of accountability. Trustee
has liability for accounting for beneficiaries' remedies when breach of trust. The
trustee's liability to account is to protect the trust fund's in unique property or
interest in value. When trustee made an unauthorised disbursement, the Lord
instructed in para 168 that trustee must refund the trust fund in specie such as
share or in money.
The award is sometimes referred to as equitable compensation for the trust property
being restituted or restored. When account is taken and in hindsight, the amount of
award is determined by objective value of the lost. It was mentioned at paragraph
169, if investment has lost value, the loss will attributed to defendant; if investment
has gained value, it will treated as if it was purchased with trust funds, and proceeds
will be traced back to beneficiary. We must keep in mind that if misapplied asset is
company shares, which is prone to fluctuation in value, how would trustee be held
liable in falsification? For example, if trustee in breach sells 200 shares in A company
at market value of £2000 and later determined that violated shares are now worth
£2000, trustee must pay either 100 shares or £2,000. In a other scenario, if breach is
found and value falls below £500, beneficiary can choose to sell the shares.
We'll look into whether beneficiaries have a claim for consequential loss. Glister
raised the question of whether such a claim should be possible. This may appear
unjust, but if goes outside the account and claims her consequential loss in a broader
sense, the wrongdoer is not liable for victim's loss that did not directly result
from damage, it is argued that wrongdoer is not liable for victim's loss that did not
directly result from the damage. According to Steven, the law prohibits you from
profiting from economic opportunities.
Fiduciaries who handle the business of others or administer their rights on their
behalf must apply their discretions and authorities appropriately. So, if a fiduciary
has control over the asset's title, and misapplies the asset, he is treated as if he has
breached the trust. His personal liability would be similar to one described above,
i.e., he would be responsible for reimbursing the funds out of his own pocket.
If plaintiff expert can establish correct investment policy was followed, plaintiff
would entitled 'reasonable' compensation, according to Dillon LJ’s obiter as per
Nestle v National Westminster Bank. In the future cases, Dillon LJ's judgment should
always be followed! This was a departure from previous ruling in Watts v
Girdlestone, which required court to assume defendant had invested in most
valuable one and was based on principle that all doubt is settled in favour
of wrongdoer. This is completely incorrect, because selecting the largest possible
personal liability that is poorly reasoned! Before we look at the new rule and quote
in AIB, we'll have a look at traditional approach to determining a trustee's personal
liability. Lord Millett explained extra judicially in Libertarian Investment v Hall, that
trustee's primary responsibility is to keep the trust account separate; they're only
liable if they deal with trust assets in a way that violates the trust's conditions and
results in a loss. Thus, beneficiaries have a right to an account that they can falsify or
surcharge. Trustees are held to a high standard of accountability. Trustee
has liability for accounting for beneficiaries' remedies when breach of trust. The
trustee's liability to account is to protect the trust fund's in unique property or
interest in value. When trustee made an unauthorised disbursement, the Lord
instructed in para 168 that trustee must refund the trust fund in specie such as
share or in money.
The award is sometimes referred to as equitable compensation for the trust property
being restituted or restored. When account is taken and in hindsight, the amount of
award is determined by objective value of the lost. It was mentioned at paragraph
169, if investment has lost value, the loss will attributed to defendant; if investment
has gained value, it will treated as if it was purchased with trust funds, and proceeds
will be traced back to beneficiary. We must keep in mind that if misapplied asset is
company shares, which is prone to fluctuation in value, how would trustee be held
liable in falsification? For example, if trustee in breach sells 200 shares in A company
at market value of £2000 and later determined that violated shares are now worth
£2000, trustee must pay either 100 shares or £2,000. In a other scenario, if breach is
found and value falls below £500, beneficiary can choose to sell the shares.
We'll look into whether beneficiaries have a claim for consequential loss. Glister
raised the question of whether such a claim should be possible. This may appear
unjust, but if goes outside the account and claims her consequential loss in a broader
sense, the wrongdoer is not liable for victim's loss that did not directly result
from damage, it is argued that wrongdoer is not liable for victim's loss that did not
directly result from the damage. According to Steven, the law prohibits you from
profiting from economic opportunities.
Fiduciaries who handle the business of others or administer their rights on their
behalf must apply their discretions and authorities appropriately. So, if a fiduciary
has control over the asset's title, and misapplies the asset, he is treated as if he has
breached the trust. His personal liability would be similar to one described above,
i.e., he would be responsible for reimbursing the funds out of his own pocket.
If plaintiff expert can establish correct investment policy was followed, plaintiff
would entitled 'reasonable' compensation, according to Dillon LJ’s obiter as per
Nestle v National Westminster Bank. In the future cases, Dillon LJ's judgment should
always be followed! This was a departure from previous ruling in Watts v
Girdlestone, which required court to assume defendant had invested in most
valuable one and was based on principle that all doubt is settled in favour
of wrongdoer. This is completely incorrect, because selecting the largest possible
