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Trust Law Reform Essay

Extracts from this essay...

Introduction

Trust Law Reform Essay Current Law At present much of trust law derives from the common law. Under this a trustee is strictly liable when they act outside the terms of the trust deed or the general law, thus committing an Ultra Vires breach. This is so, even if they have acted honestly and in good faith. Proposal 1 Questionably this rule is unjustifiably strict. The Commission proposes1 that trustees should cease to be liable for this kind of breach of trust if they have "acted in good faith and taking all reasonable steps and making all reasonable enquires believed that the action was in their powers"2. This proposal aims to simplify the uncertain existing law and offers a greater level of protection to trustees acting honestly and in good faith. Nevertheless, lowering the standard of legal responsibility may have a detrimental effect on the beneficiaries. The Commission's position is that it is doubtful that it will limit the beneficiaries' right of recovery, apart from in the instance of unauthorised investment, which the commission states is unlikely to happen. Even though it is true that trustees have wide powers of investment, recent case law demonstrates that beneficiaries still have the need to claim under this ground of breach3.

Middle

Thus it is submitted that the suggested reform in part (a) is rejected. (b) At present the law in not clear whether any higher standard of care is expected of professional trustees. The Commission proposes that "a trustee who acts in the course of his or her business or profession should in addition have to use any special knowledge or expertise that it is reasonable to expect of a member of that business or profession"11. This move by the Commission to link skills and knowledge as opposed to financial benefit is laudable. It has been said that the standard of care is designed to protect beneficiaries and it is entirely fortuitous whether they are professional12 or not, yet it is presumed that the standard of care is also designed to protect the truster and by the necessity of carrying out the trust purposes, the trustee. Consequently it seems reasonable to lay trustees that they should not be subject to the same standard of care as those who possess special knowledge or skills. It has previously been contested that trustees that are remunerated should be subject to a higher standard of care13 yet it seems more sensible to base the standard of care upon the level of skill and knowledge that the trustee claims to have.

Conclusion

In relation to the section proposing whole or partial relief of the trustee, it is submitted that this is a necessary power for the court to have as each individual case that comes before the court will have different circumstances and thus require different degrees of relief. 0205429 Word count 1598 1 Scottish Law Commission Discussion Paper No 123 on Breach of Trust (September 2003) 2 ibid. Subparagraph 2 page 7 3 Public Trustee Gordon's Executor v Williams [2002] W.T.L.R. 45, this case illustrates the need for beneficiaries still to have a remedy against unauthorised investment by the trustee. 4 Douglas v Douglas's Trs (1867) 5 M 827 5 Raes v Meek (1889) 16 R (HL) 31 6 ibid per Lord Hershnell page 33 7 Knox v MacKinnon (1888) 15 R 83 8 Tibbert v McColl 1994 SLT 1227 9 Scottish Law Commission Discussion Paper No 123 on Breach of Trust (September 2003) page 15 10 Tibbert v McColl 1994 SLT 1227 11 Scottish Law Commission Discussion Paper No 123 on Breach of Trust (September 2003) page 17 12 Norrie and Scobbie, Trusts, Edinburgh 1991, pg 141 13 Jobson v Palmer [1983] 1 Ch 71 14 Cherry's Trs v Patrick (1911) 2 SLT 313, Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461 15 Cherry's Trustees v Partick (1911) 2 SLT 313 1

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