A Contract of Trust - Essay Example

Running Head: Problem Question in Equity and Trust Problem Question in Equity and Trust The question in this case refersto a creation of a trust which depicts the formalities that are required in dissemination of the deceased properties to the beneficiaries. In the case, John drafts a will and appoints Tessa and Vincent as the trustees of his widow Susan and the two children. On the death of John Susan accuses the trustees of breaching their mandates, therefore the following advice is going to be very important to determine whether Susan will be able to win the case and granted trust of the properties. It is notable will contained no express power; it simply stated that Tessa and Vincent were to hold the said properties until the opportune moment for them to grant them to the right beneficiaries who are the family. According to Target Holdings Ltd v Redferns [1996] AC 421 (HL) 4341, the right of the beneficiary is to have the trust administered in the best way it was intended in conformity with the general law and the trust instruments. Thus, according to law the beneficiary will always be granted access to the will or deed and the accounts which are linked to the trust. Proper justifications are to be given on any shortcomings which may be pinpointed; however, in this case it is apparent that the trustees never informed the beneficiaries on the investments they had made. Thus, there is a breach of contract which makes them liable for the loss and any abnormalities which come about. It is evident that the trustees misapplied the money in their hands for their personal use. None of the beneficiary is really aware of what is going on until when they make the claim and want to have the money for their own use. According to the case of Wallersteiner v Moir (No 2) [1975] QB 373 (CA) 397 (Buckley LJ)2, the trustees are liable for any unnecessary delays and circumstantial impacts they may cause the beneficiaries. Susan is thus on the right position to sue the trustees and claim their authority inappropriate in managing the properties and accounts. There is a falsification impression which is created in the whole process. It is sufficient that the trustee is liable to a want of ordinary prudence. By the trustees delegating their duties to the Best Finance Company they defied their obligations entirely. Besides that, there is no clear motive for them to surrender managerial roles of the will to this company which has questionable characters and performances. In accordance with the case of Armitage v Nurse [1998] Ch 241 (CA) 252 (Millett LJ)3: there is a breach of contract which was stipulated by the will. Thus, Tessa and Vincent are held accountable for footing of wilful default which stipulates that a trustee is not only accountable for the money received, but also for the long term effects which they may personally inflict on the properties and money in their hands. Susan will be able to be in a position to sue the trustees on this premise and comfortably win her case. Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [2011] EWCA Civ 347, [2011] 3 WLR 11534, this case depicts that the beneficiary has the right to get an explanation on the account of the trust money. If any investments are done, then the beneficiary would either comply with them or neglect them on the implications they bring. However, the case of Tessa and Vincent did not take the initiative of meeting the beneficiaries and weighing the options which would come after that. In accordance with the stated case Tessa and Vincent are liable for the misappropriation of the funds, thus Susan’s case will prove to be strong since it has a strong argument. The traditional principles of law depict that if the trustee invests in unauthorised projects or puts the funds those who are not clarified to hold them, then a loss emanates from the process then the trustee is liable. In the case of Susan vs. Tessa and Vincent, Tessa and Vincent will be found liable for the loss of the money and it serves as a proof that the trustees are not capable of handling the tasks that was granted to them. Clough v Bond (1828) 3 My & Cr 490, 496 (Lord Cottenham LC)5 depicts that Susan stands in a winning position. Both Tessa and Vincent have illustrated a breach of a duty of skill and care. John having bestowed the will on their hands as professionals the best thing they could have done is to demonstrate their professionalism. However, the trustees do not put into use the real purpose of the money they have in their hands. Susan and the children are in compromising situations since it is illustrated by the amount of money they are asking. Thus, according to Bristol and West Building Society v Mothew [1998] Ch 1 (CA) 17 (Millett LJ)6. The trustees are liable for the breach of the trust endorsed to them; hence Susan will have to carry on with the legal mechanism to regain the lost money and control of the trust account. The liability of a fiduciary for neglect exhibited by the trustees is no separate actions of a liability. A law of general duty to act with care is broken in this case which means that Vincent and Tessa need to compensate the beneficiaries for the illegal undertakings. According to the case of Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 (HL) 205 (Lord Browne-Wilkinson)7 the plaintiff will stand a chance to win a case of negligence and breach of contract with is utterly depicted in this scenario. Following the judgement made in prior cases concerning breach of trust and equitable obligations, Susan needs to depict that there is a degree of negligence which to a large extent is illustratable. It is argued that joining up cestui que trust with the trustees in a breach of a trust would lead no complaints from the beneficiary. However, in the case of Susan and the trustees such aspect never exists since none of the beneficiaries either Susan or the children knew of any undertakings exhibited by Tessa and Vincent. It is apparent also that there is no conformity between Tessa and Vincent which means that one of the parties is acting on their own principles and personal gains. Deducting from the case of Walker v Symonds (1818) 3 Swans 1, 64 (Lord Eldon LC)8, it is evident that Vincent will be found liable for the approaches he makes and any losses that may be associated. Sometimes a beneficiary can be denied a remedy if only they did approve of the trustee moves or they legally consented, and gave a mandate for the trustee to undertake the administrative roles. But according to this case, neither Susan nor the children consented to the trustees’ moves to invest and delegate their duties. Furthermore the legal jurisdictions of the will do not consent to this. According to the essentials used to determine the case of J Payne, Consent in P Birks and A Pretto (eds), Breach of Trust (Hart Publishing, Oxford 2002) 3059. It is apparent that the situation is quite opposite and Susan will obviously win if she sues the trustees for breach of trust. According to Trustee Act 1925, it is evident that a trustee appointed by any institution or party will be personally liable for any breach of trust which they may commit. According to Re Turner [1897] 1 Ch 536 (Ch) 542 (Byrne J),10 there is a jurisdictional extent of a trustees commitment. It analyses some of the real and concrete factors which have to be absorbed when a court is making a decision. A trustee ought to ensure a smooth flow of the business of trust just like any prudent man would do to their business. Unfortunately Tessa and Vincent did not amalgamate these principles in their business, instead they opted to act on a greedy basis. Thus, according to a trustee act of 1925 they are held liable for their mistakes. In conclusion, it is apparent from the above discussion that Susan stands a chance to win. Susan can prove to a possible measure that Tessa and Vincent breached a contract of trust. The trustees for instance, acted on their own premises instead of considering an opinion from the beneficiaries; secondly, they transferred their managerial role to another party which is of questionable integrity; third there is no formal agreement and communication between the beneficiaries which begs the question whether they are reading from the same page or not; lastly the issue of administrative limits is exceeded. None of the trustees were given full control of the trust account or will rather than for the benefits of the beneficiaries. It is very important to note that Susan stands a chance to win the case. Bibliography C Mitchell (ed), Constructive and Resulting Trusts (Hart Publishing, Oxford 2010) J Edelman, Money Awards of the Cost of Performance (2010) 4 J Eq 122 J Getzler, Equitable Compensation and the Regulation of Fiduciary Relationships in P Birks And F Rose (eds), Restitution and Equity Volume One: Resulting Trusts and Equitable Compensation (Mansfield Press, London 2000) J Payne, Consent in P Birks and A Pretto (eds), Breach of Trust (Hart Publishing, Oxford 2002) Law Commission, Trustee Exemption Clauses (Law Com No 301 Cm 6874, 2006) L Smith, Unjust enrichment, property and the structure of trusts (2000) 116 LQR 412 PJ Millett, Equitys place in the law of commerce (2008) 114 LQR 214 R. Pearce, the Law of Trusts and Equitable Obligations (5th edn, OUP 2010) SB Elliott and C Mitchell, Remedies for Dishonest Assistance (2004) 67 MLR 16 TM Yeo, Dishonest assistance: restatement from the Privy Council (2006) 122 LQR 171 Read More