Breach of Trust

What is Breach of Trust in Tort Law?

Quick Definition

Breach of trust occurs where a trustee fails to comply with the duties imposed under a trust, acting outside the terms of the trust or failing to act in the beneficiaries’ best interests. It is an equitable wrong rather than a classic tort, but it often overlaps with tort-like liability where loss is caused. The focus is on misuse or mismanagement of trust property.

In Context

A breach of trust arises where a trustee misapplies trust assets, invests them improperly, or fails to follow the trust deed. For example, if a trustee uses trust funds for personal expenses or makes speculative investments that fall outside permitted categories, liability will follow. In Target Holdings v Redferns (1996), the House of Lords clarified that trustees are liable only for losses caused by the breach, not all subsequent financial downturns. Similarly, Bristol and West Building Society v Mothew (1998) distinguished breach of trust from breach of fiduciary duty, emphasising that not every mistake by a trustee amounts to disloyalty. The courts aim to restore the trust fund to the position it would have been in but for the breach, focusing on compensation rather than punishment. This makes causation and loss key issues in exam problem questions.

See Also

• Fiduciary Duty

• Equitable Remedies

• Trustee Duties

Learn More

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