Question 1

A passive trustee will be responsible for decisions which cause loss to the trust fund if he allows an active co-trustee to make decisions on his own.

Accepted Answer

A passive trustee has the duty to monitor the actions of an active co-trustee and intervene if necessary. If the passive trustee allows the active trustee to make decisions on their own without proper supervision, and those decisions cause loss to the trust fund, the passive trustee can be held responsible for the loss.

Question 2

What is the 'Londonderry principle'?

Accepted Answer

The 'Londonderry principle' refers to a concept in the context of employment and labor relations, particularly in the United Kingdom. It is named after the Marquess of Londonderry, who was a coal owner and employer in the 19th century. The principle is based on the idea that an employer has the right to manage their business without interference and to hire or fire employees at their discretion.

This principle was famously articulated during the coal strikes in the UK, where Londonderry insisted on the right to manage his coal mines without the interference of unions or the government. He believed that the success of his business depended on his ability to make decisions about employment and management practices without being constrained by external pressures.

The Londonderry principle has been a subject of debate in labor relations, with employers often advocating for the freedom to manage their businesses, while labor unions and workers' rights groups argue for protections against unfair dismissal and for the right to collective bargaining.

It's important to note that the application of the Londonderry principle has evolved over time, especially with the introduction of various labor laws and regulations that provide a framework for employment rights and responsibilities. Modern labor relations in the UK and many other countries now balance the rights of employers to manage their businesses with the rights of employees to fair treatment and representation.

Question 3

Trustees are jointly or severally liable for the actions of other trustees.

Accepted Answer

Trustees are generally jointly liable for the actions of other trustees. This means that each trustee is responsible for the entire amount of any liability incurred as a result of their collective decisions or actions. However, the extent of this liability can depend on the specific laws and regulations in different jurisdictions, as well as the terms of the trust deed. If a trustee can prove that they acted prudently, in good faith and in accordance with the trust deed, they may be able to avoid personal liability for the actions of co-trustees. 
In many jurisdictions, trustees are considered to be fiduciaries, which means they have a legal obligation to act in the best interests of the beneficiaries and to manage the trust assets with care, skill, and diligence. As fiduciaries, trustees can be held liable for breaches of their duties.
**Joint Liability:**
Under the principle of joint liability, all trustees are collectively responsible for the actions taken in the administration of the trust. If one trustee commits a breach of trust, all trustees could potentially be held liable for the consequences of that breach, even if they did not directly participate in the action. This is because trustees are expected to act together in the management of the trust and to supervise each other's conduct.
**Several Liability:**
Several liability, on the other hand, means that each trustee is only responsible for their own actions and not for the actions of other trustees. If a trustee acts independently and commits a breach of trust without the involvement or consent of the other trustees, they may be solely liable for that breach.
**Joint and Several Liability:**
In some cases, trustees may be jointly and severally liable, which means that a third party or a beneficiary can choose to hold one or more trustees responsible for the full amount of the liability arising from a breach of trust. The trustee(s) who pays for the liability can then seek contribution from the other trustees.
**Limitations and Protections:**
The trust document itself may include provisions that limit or modify the liability of trustees. Additionally, trustees may be protected from liability if they act in good faith, rely on professional advice, or if they are indemnified by the beneficiaries.
In conclusion, whether trustees are jointly or severally liable for the actions of other trustees is not a one-size-fits-all answer and will depend on the legal framework governing the trust, the specific terms of the trust agreement, and the nature of the actions taken by the trustees. Trustees concerned about liability should seek legal advice to understand their obligations and potential exposure under the law.

Question 4

In Hallows v Lloyd (1888) LR 39 Ch D 686, which trustees' duties were outlined by Kekewich J?

Accepted Answer

The answer of In Hallows v Lloyd (1888) LR 39...

Question 5

What does a breach of non-fiduciary duty generally mean for the trustee?

Accepted Answer

The answer of What does a breach of non-fiduciary duty...

Question 6

Which of these powers does a trustee enjoy?

Accepted Answer

The answer of Which of these powers does a trustee...

Question 7

Under section 5 of the Trustee Act 2000, before investing and when reviewing the investments, the trustees must obtain and consider 'proper advice' as to whether the investment meets the standard investment criteria.

Accepted Answer

This statement is true. Section 5 of the Trustee Act 2000 requires trustees to obtain and consider proper advice before investing and when reviewing investments. One of the factors they need to consider is whether the investment meets the standard investment criteria.

Question 8

Section 3 of the Trustee Act 2000 narrowed a trustee's investment powers considerably.

Accepted Answer

Section 3 of the Trustee Act 2000 expanded a trustee's investment powers, allowing for greater flexibility and consideration of modern investment practices.

Question 9

Trustees have a duty to pay the trust fund to the beneficiaries.

Accepted Answer

Trustees have a legal obligation to distribute the trust fund to the beneficiaries according to the terms of the trust document. Failing to do so can result in legal action against the trustee.

Question 10

Over the last century, the courts have narrowed the circumstances when beneficiaries are entitled to see information about the trust.

Accepted Answer

This statement is true. Courts have generally limited a beneficiary's access to trust information to cases where the information is necessary for them to ensure their interests are being protected or to enforce their rights under the trust. This is often subject to certain limitations and procedures such as confidentiality requirements and a requirement that beneficiaries show a legitimate reason for seeking the information.

Question 11

If an agent, nominee or custodian is appointed, the trustees' task does not end upon that appointment.

Accepted Answer

Even after the appointment of an agent, nominee, or custodian, the trustees still have responsibilities and tasks to fulfill. They must oversee and monitor the actions of the appointed party to ensure that they are fulfilling their duties according to the trust's terms and objectives.

Question 12

If trustees do not delegate an agent prudently they are liable for his errors.

Accepted Answer

Trustees have a duty to exercise reasonable care when delegating to agents and can be held liable for the agent's errors if they do not delegate prudently.

Question 13

A beneficiary can be appointed as an agent of the trust.

Accepted Answer

The answer of A beneficiary can be appointed as an...

Question 14

Trustees may appoint agents, nominees and custodians to whom they may delegate their functions.

Accepted Answer

Trustees have the power to appoint agents, nominees, and custodians to whom they may delegate their responsibilities and tasks. This is a common practice in the management of trusts and other forms of fiduciary relationships, as it allows the trustees to benefit from the expertise and resources of third-party professionals while retaining ultimate control and oversight over the trust assets. The appointment and delegation of functions must be done in accordance with the terms of the trust instrument and applicable laws and regulations.

Question 15

Trustees enjoy a wide ability to delegate their powers. This ability is set out in Part IV of the Trustee Act 2000.

Accepted Answer

Part IV of the Trustee Act 2000 outlines the wide ability for trustees to delegate their powers.

Question 16

What does section 27 of the Trustee Act 1925 provide?

Accepted Answer

The answer of What does section 27 of the Trustee...

Quiz 9: Trustees Non-Fiduciary Duties and Powers