Soton Equity and Trusts - alastairhudson.com

4) Validity of exclusion clauses
Reading: Hudson, section 8.5
(a)
The core principle
**Armitage v. Nurse [1998] Ch 241, per Millett LJ:
‘[T]here is an irreducible core of obligations owed by the trustees to the
beneficiaries and enforceable by them which is fundamental to the
concept of a trust. If the beneficiaries have no rights enforceable
against the trustees there are no trusts. But I do not accept the further
submission that there core obligations include the duties of skill and
care, prudence and diligence. The duty of trustees to perform the trusts
honestly and in good faith for the benefit of the beneficiaries is the
minimum necessary to give substance to the trusts, but in my opinion it
is sufficient ... a trustee who relied on the presence of a trustee
exemption clause to justify what he proposed to do would thereby lose
its protection: he would be acting recklessly in the proper sense of the
term.’
Hayton, ‘The Irreducible Core Content of Trusteeship’, in Trends in Contemporary Trust
Law (ed. A.J. Oakley, 1996), Ch.3.
(b)
Case law examples
Bogg v Raper (1998/99) 1 ITELR 267
Wight v Olswang (No.2) (1999/2000) 2 ITELR 689
*Walker v Stones [2001] QB 902
Barraclough v Mell [2005] EWHC 3387 (Ch), [2006] WTLR 203
Baker v JE Clark & Co (Transport) UK Ltd [2006] EWCA Civ 464
(c)
Gross negligence and questioning the central principle
*Spread Trustee Ltd v Hutcheson [2010] WTLR 315, Guernsey Court of Appeal, as
affirmed by the majority of the Privy Council [2011] UKPC 13, per Lord Kerr:
“If, as I suggested at the beginning of this judgment, the placing of reliance
on a responsible person to manage property so as to promote the interests
of the beneficiaries of a trust is central to the concept of trusteeship,
denying trustees the opportunity to avoid liability for their gross negligence
seems to be entirely in keeping with that essential aim.”
(C)
Duty to invest.
General Reading: Hudson, Ch9; Martin Ch18; Pettit Ch17
See also, Hudson, The Law of Finance (Sweet & Maxwell,
2009) Ch 7-12 on the regulation of investment.
1) The power of investment under TA 2000
*Trustee Act 2000, s 3(1)
‘…a trustee may make any kind of investment that he could make if he were
absolutely entitled to the assets of the trust.’
2) The statutory duty of care
**Trustee Act 2000, s.1
‘(1) Whenever the duty under this subsection applied to a trustee, he must
exercise such care and skill as is reasonable in the circumstances, having regard
in particular –
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