Breach of trust & remedies
A breach of trust is a failure by a trustee to carry out their duties. Beneficiaries have a range of personal and proprietary remedies.
What "Breach of trust & remedies" covers
- A trustee in breach is personally liable to restore the trust fund (equitable compensation); causation is assessed on a 'but for' basis judged at the date of judgment (Target Holdings v Redferns; AIB v Redler).
- Liability is generally for the loss caused by the breach; trustees are not insurers of the fund where loss would have occurred anyway.
- Trustees are liable jointly and severally; a trustee who pays may seek contribution from co-trustees (Civil Liability (Contribution) Act 1978).
- Defences: an exemption clause (valid even for gross negligence but not fraud — Armitage v Nurse), consent/acquiescence by a fully-informed beneficiary, and the court's power to relieve where the trustee acted honestly and reasonably (Trustee Act 1925 s.61).
- Limitation: generally six years (Limitation Act 1980 s.21(3)), but no limitation period for fraudulent breach or recovery of trust property still in the trustee's hands (s.21(1)).
- Proprietary remedies allow the beneficiary to recover the trust property or its traceable proceeds and to take any increase in value.
- Personal claims may also lie against knowing recipients and dishonest assistants (third-party liability).
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For breach of trust & remedies, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Assuming any breach makes the trustee liable for all subsequent loss regardless of causation.
- Thinking an exemption clause can excuse actual fraud or dishonesty — Armitage v Nurse limits it to short of fraud.
- Applying the six-year limitation period to a fraudulent breach or to trust property retained by the trustee.
Learn and practise this subtopic
A guided lesson and exam-style questions on breach of trust & remedies.
FAQ
Is breach of trust & remedies tested on SQE1?
Yes — breach of trust & remedies is part of the SQE1 Trusts syllabus (FLK2) and can appear in single best answer questions.
How is breach of trust & remedies examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (Target Holdings v Redferns [1996], AIB Group v Mark Redler [2014]) helps.