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Law Notes Trusts and Equity Notes

Trust Remedies Including Tracing Knowing Receipt Trust Dutiies And Powers And Equitable Damages Notes

Updated Trust Remedies Including Tracing Knowing Receipt Trust Dutiies And Powers And Equitable Damages Notes

Trusts and Equity Notes

Trusts and Equity

Approximately 1016 pages

Equity notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB trusts cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

These were the best Equity and Trusts Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest re...

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Any breach of a trustee’s fiduciary/trustee obligation will lead to a remedy. This may be a personal or proprietary claim:

  • Personal claim: claim is made against the trustee/fiduciary personally; it is not based upon the recipient having the property in his or her possession.

  • Proprietary claim: based on D having the property or its replacement in his or her possession and being required to return it, or its substitute, to C.


Proprietary remedies will have an advantage in insolvency proceedings. However, if there’s no insolvency, then a personal claim for the value of C’s loss / D’s gain may be preferable. Personal remedies are also preferable where the property has been dissipated by D.

Primary v Secondary obligations: duties imposed directly by the law of trusts —breach of a primary obligation (e.g. a trust duty) can give rise to a secondary obligation (e.g. duty to compensate C for loss suffered). Distinction is important because remoteness is irrelevant for assessing damages for breach of primary obligations.

  • Equity is less tolerant than the common law (e.g. breach of contract is seen as a necessary element of commercial life).

Courts have a number of ways of enforcing the trustees’ primary duties: (i) compel distribution of the trust property to the beneficiaries; (ii) prevent trustees from distributing trust property improperly; (iii) require the sale of unauthorized investments and reinvestment in authorized ones: (iv) declare a trustee should not act in a particular way; (v) replace trustees.


This isn’t really a remedy; just a process for beneficiaries to assess the state of the trust. However, can be used to enforce trustee’s primary duty to provide information to beneficiaries / keep accurate accounts of the trust.

Where the account shows the trust fund has suffered a loss, a claim may be brought against the trustees to restore the fund to the position it would have been in had there been no breach of duty. Where an account is taken, two principal problems may be revealed:

  • Trustees may have misappropriated assets from trust (making unauthorised investments).

  • Remedy: beneficiary can falsify the unauthorised disbursement.

    • Trustees may have breached their duty in failing appropriately to safeguard the value of the fund (where trustee negligently failed to diversity assets held by the trust).

  • Remedy: beneficiary can surcharge the account to bring value up to right level.

For both remedies, trustee will have to use his own resources to repair the fund.


  • Under a presumption of innocence T is assumed to have used his own money, rather than the funds to make the unauthorised investments.

  • Falsification compels the performance of the primary obligation to maintain the proper state of the trust fund, essentially through restoring the trust to its previous position. As such there is no remoteness restriction here —T must reconstitute the fund using own assets.


  • Lord Millett (extra judicially): surcharge is effectively T being charged with negligence: “the analogy with common law damages for negligence is almost exact.” Difference is liability is enforced via taking an account, rather than damages. Therefore, CL rules of causation and remoteness should apply “to their fullest extent.”

  • When assessing loss suffered, the assessment is made at date of judgment rather than date of breach. Burden of proof is on C (Nestle v NatWest [1993]).

Classifying these remedies:

  • Doesn’t need to be a breach of trust for B to ask T to take account. All it does is enforce T’s primary obligation to account for the administration of the trust. However, it might be possible to view falsification / surcharge as secondary obligations, triggered by a breach of trust, hidden behind T’s primary duty to take proper account of the trust.

  • Edelman and Elliott: falsification is the enforcement of T’s primary duty to maintain proper state of the trust fund. Whereas surcharging is the enforcement of a secondary obligation flowing from a breach of trust. Distinction helps explain why remoteness rules are only relevant to latter.

Development of the law

Nocton established that damages are available for breach of fiduciary duty: need: (i) breach; (ii) loss caused by breach. If established, the remedy is to put C in the position he would have been in but for the breach. No fraud (under Derry v Peek) on D’s part must be shown.

  • Nocton v Lord Ashburton [1914]: A brought an action against N (his solicitor) for the loss suffered as a result of N’s negligent advice that A should release a mortgage security. HL: although N had not acted fraudulently, A was entitled to equitable relief due to N’s breach of fiduciary duty. N must restore A’s estate.

  • Lord Dunedin: If D puts himself in “a fiduciary position,” which “imposes on him the duty of making a full and not misleading disclosure of facts known to him when advising his client” then, if he fails to do so “Equity will give a remedy to the client.”

In Henderson, HL considered the scope of fiduciary duty: (i) the extent of the duty is to be determined by asking what F has assumed responsibility for; (ii) the extent of the duty can be shaped by contract.

  • Henderson v Merrett Syndicates Ltd [1995]: case arose from substantial losses suffered by Lloyd’s Insurance Syndicates in the 90s (due to freak hurricanes in America). Members of the syndicates ‘Names’ brought actions against those responsible for managing the syndicates in tort and contract. HL: The managers were liable to the names. Lord Browne-Wilkinson considered the nature of fiduciary duty:

  • A fiduciary duty is the same as general duty of care: fiduciary duty is part of the general duty of care involved in a relationship where someone has assumed responsibility for another’s affairs. “It arises from the circumstances in which Ds were acting, not from their status or description. It is the fact that they have all assumed...

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