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The trustee act 1925 is the act or the law which are considered as a part of the legislation about the land reform in the year 1920. This act is considered as the consolidated law as well as the codified laws, which are based on the appointments and the powers of the trustee in a country like the United Kingdom. The basic reason that the trustee act 1925 was introduced as a response towards the decline of the trusteeship that is considered gratuitous. This was treated as a model of such trusteeship, which is disinterested.The trustee act 1925 is responsible for covering five major areas under the laws of trusts:
The fiduciary duty of care which are being imposed on the trustees and the power of trustees.
The authority of investment of the trustees.
The authority of appointing the agents as well as nominees
The power of acquiring the land,
The authority of receiving the salary or the remuneration for work done as a trustee.
SECTION 61 OF TRUSTEE ACT 1925
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If it is believed by the law of courts that any trustee has been either appointed by the court of law or otherwise, then he or she might be held liable on a personal basis for any kind of breach of the trust. It is also taken into consideration that whether the transaction which has been alleged is considered as a breach of trust that might occur before or after the act has come into effect. But he or she might have acted reasonably and also considered fairly so that could be excused for this breaching of the trust. They could also be sought for such omissions which are caused for obtaining the directions of the courts of law in such matters where he had committed such breach. This would be the only condition when the law of courts might relieve him either partly or wholly from the held liability on a personal basis for the same action.
EXEMPTION CLAUSES OF SECTION 61 OF TRUSTEE ACT 1925
Under this provision of the trustee act 1925, the court would have discretion as to whether it should grant relief or not. And before the court of law could exercise its power of discretion, few things must be satisfied. These points are also considered as an exemption that when the person who has been involved in breach of the trust could be granted relief. These points are-
A trustee who is in the question or the breaching party must have been acting both reasonably as well as honestly in the given scenario.
It would be very fair to excuse one in the eyes of courts of law who is in regards to various of the situations of the case.
There is a burden of the proof that is up to the party or the trustee who has been seeking relief. In the order of showing his or her reasonableness, any trustee who is in the general need of demonstrating that he or she would have treated the property of the trust in such a manner that a reasonable man or a man of prudence in his business would deal like with his or her property.
The laypeople who have been acting as the trustees are unpaid and are more likely to find themselves relieved under these provisionswhen are compared with the professional trustees, as well as renumerated trustees. However,this power of discretion can be exercised ultimately depending upon the facts and the matters of each of the cases.
With reference to the case law Lloyds TSB v Markandan,it was found by the high court as well as the court of appeal that the trust on which the party in defence have held the amount of loan which was permitted to the vendors regarding the payment and the defendant was having no such authority of remittancesthe amount of loam. Therefore, it was considered a breach of trust.
Therefore, it could be concluded that the trustees in the contract are required to continue for ensuring that their decisions would stand up in the field of scrutiny and when it would fall in the reasonable category because it is the case where the concern of the fraud done by the third party are taken into consideration. Their actions are also required to be justifiable as per the principles of section 61 of the trustee act 1925.
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Case law decision in armitage v nurse [1998] ch 241 representing an unwarranted reduction in minimum standard that the law should expect from a trustee.
The case law of Armitage v Nurse [1998] CH 241 is considered as one of the recognised decision taken in the law of the trusts in the country of the United Kingdom. This case law has concerned with the validity of exemption clauses. It was decided by the court of appeal that in trustee law, few clauses are called exemption clauses. These exemption clauses have the power to exempt the trustees legally from all kinds of liabilities that have occurred because of the breaches of trust except the fraud. This leading judgment was given by lord Millet LJ.
While the case law of Armitage v Nurse [1998] CH 241 was held in the court of appeal, the irreducible core duties of the trustee and its elements were submitted by Bernard Weatherill, which are discussed as below are-
With reference to the case-law of Hallows v Lloyd [1888] 39 CH D 686, 691; and also, to the case-law of Nestle v National Westminster Bank Plc [1993] 1 WLR 1260, 1265E, 1266H, 1275E-G andWyman v Paterson [1900] AC 271, this was held that trustee must inquire[9] up to the full extent about the trust and the nature of the property.
With reference to the case-law of Harrison v Randall [1851] 9 HARE 397, 407 and also to the case of Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, 390 A-B, it was held that it was the duty of the trustee for obeyingthe path required in the settlement unless any other path is mentioned by the court of law, this was held that trustee has for obeying the path given in the case of settling unless any other way is issued by the courts of law.
This was also held that it is the duty of the trustee for accounting for their stewardship of the assets which are held under his or her that are under the power or the control of the trustee.
With reference to the case-law of Speight v Gaunt [1883] 9 APP CAS 1, 19 and also in the case-law of Whiteley v Learoyd [1886] 33 CHD 347, 555, this was held that it is the obligation of the party for carrying out the business under the name of trust with the highest degree of the reasonableness[10] as well as prudence that has been expected in the case similar to the man of prudence.
In the year 1998, in the case-law of Armitage v Nurse, it was the court of appeal who have dispelled all the doubts regarding the trustees and its validity and also the exemption clauses that were the reason for excluding the liability which occurs after ordinary negligence as well as gross negligence. The court was also a reason as the court had set out the clause which could be a reason for excluding the trustee from the occurrence of such liability which takes place due to any losses or damages which has been caused to the property of the trust. In the words of the judge that it does not matter how imprudence as well as indolence has taken place, and also there might be some lack in diligence, and some negligent or how much wilful or intentional he might have been, but it is the matter as long as he has been acting honestly regarding this property of the trust.
This clause is also now settled in the region of England and wales that the exemption clause regarding trustee act 1925 will be validly responsible for exempting the trustees from occurrences of the liability regarding breaches in the trust matter. This exemption does not include the liability[11] of the fraud. As it is recognised under the current law that also there exists an obligation which is having some irreducible core, and this obligation would not let the trustees escape from being caught. However, as that core obligations have been comprising with little more than a duty that the trustee must act honestly as well as the trustee must act in good faith. This would not be responsible for impacting in some serious manner the freedom of the settlor, which would ultimately exclude the liability of the trustees with the help of the clause that is expressed in the deed.
References
Akhtar, Zia. "Mediation as a remedy in trust and probate disputes: a review of the comparative approach for international lawyers." Journal of Mediation & Applied Conflict Analysis 6, no. 1 (2019): 728-742.
Kleiner, Graeme, and Jonathan Harris. "The application of section 61 of the Trustee Act 1925: the court’s dubious prerogative of mercy?." Trusts & Trustees 23, no. 2 (2017): 215-226.
Lowry, John, and Rod Edmunds. "Relieving the trustee-solicitor: a modern perspective on section 61 of the Trustee Act 1925?." The Law Quarterly Review 133 (2017): 223-243.
Mitchell, C., and Y. K. Liew. "Beneficiaries' consent to trustees' unauthorised acts." Hart Publishing, 2018.
Piller, Anton. "Accounts, duty of trustees to provide, 259 Acquiescence, injunctions and, 21–2 Additional trustees, appointment of. See Further trustees, appointment of Advancement power of trustees."
[3]Mitchell, C., and Y. K. Liew. "Beneficiaries' consent to trustees' unauthorised acts." Hart Publishing, 2018.
[4]Akhtar, Zia. "Mediation as a remedy in trust and probate disputes: a review of the comparative approach for international lawyers." Journal of Mediation & Applied Conflict Analysis 6, no. 1 (2019): 728-742.
[5]Hughes, R. A. "A Trustee's Borrowing Power."
[6]Piller, Anton. "Accounts, duty of trustees to provide, 259 Acquiescence, injunctions and, 21–2 Additional trustees, appointment of. See Further trustees, appointment of Advancement power of trustees."
[7]Lowry, John, and Rod Edmunds. "Relieving the trustee-solicitor: a modern perspective on section 61 of the Trustee Act 1925?." The Law Quarterly Review 133 (2017): 223-243.
[8]Davies, Paul S. "Section 61 of the Trustee Act 1925: Deus Ex Machina?." The Conveyancer and Property Lawyer 6, no. 5 (2019).
[9]Kleiner, Graeme, and Jonathan Harris. "The application of section 61 of the Trustee Act 1925: the court’s dubious prerogative of mercy?." Trusts & Trustees 23, no. 2 (2017): 215-226.
[10]Haley, Michael. "Section 61 of the Trustee Act 1925: A Judicious Breach of Trust." Cambridge LJ 76 (2017): 537.
[11]Davies, Paul S. "Section 61 of the Trustee Act 1925: Deus Ex Machina?." The Conveyancer and Property Lawyer 6, no. 5 (2019).
[12]Akhtar, Zia. "Mediation as a remedy in trust and probate disputes: a review of the comparative approach for international lawyers." Journal of Mediation & Applied Conflict Analysis 6, no. 1 (2019): 728-742.
