Breach of Trust

Abstract

Introduction Put very simply, a breach of trust occurs whenever the trustee fails to perform one of the duties or obligations discussed in earlier chapters. This chapter is not, therefore, principally concerned with how a breach of trust occurs. Instead, the focus is on the consequences of a breach of trust. There are many different duties that can be breached by a trustee; the consequences that attend a breach will depend on the nature of the breach. A breach of trust does not automatically mean that the trustee must compensate the trust, in the sense that breach of a common law obligation exposes the defendant to liability for damages. Firstly, the breach may be of a minor or merely technical nature, or may not call for relief in monetary terms. Secondly, no matter how poorly the trustee has performed his obligations, if he has not been dishonest he may be protected by a valid exculpation given by the trust instrument. Further opportunities for relief are given by explicit statutory provisions and by the general law. Finally, it must always be borne in mind that equity’s remedies are discretionary. Courts try to give effect to the terms of the trust and will utilise the appropriate remedy to achieve that aim. Exculpatory provisions, defences and remedies for breach of trust are discussed below.