English Trusts Law - Breach and Remedies

Breach and Remedies

See also: Equitable remedy, Breach of contract, English unjust enrichment law, Restitution in English law, and Remedies in English law

When trustees fail in their main duties, the law imposes remedies according to the nature of the breach. In general, breaches of rules surrounding performance of the trust's terms can be remedied through an award of specific performance, or compensation. Breaches of the duty of care will trigger a right to compensation. Breaches of the duty to avoid conflicts of interest, and misapplications of property will give rise to a restitutionary claim, to restore the property taken away. In these last two situations, the courts of equity developed further principles of liability that could be applied even when a trustee had gone bankrupt. Some recipients of property that came from a breach of trust, as well as people who had assisted in a breach of trust, might incur liability. Equity recognised not merely a personal, but also a proprietary claim over assets taken in breach of trust, and perhaps also profits made in breach of the duty of loyalty. A proprietary claim meant that the claimant could demand the thing in priority to other creditors of the bankrupt trustee. Alternatively, the courts would follow an asset or trace its value if the trust property was exchanged for some other asset. If trust property had been given to a third party, the trust fund could claim back the property as of right, unless the recipient was a bona fide purchaser. Generally, any recipient of trust property who knew about the breach of trust (or maybe ought to have known) could be made to give back the value, even if they had themselves exchanged the thing for other assets. Lastly, against people who may never have received trust property but had assisted in a breach of trust, and had done so dishonestly, a claim arose to return the property's value.