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Implied indemnity of trustees
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- Vicarious Liability
- Involvement of the Beneficiary
- Statutory Defence
Implied indemnity of trustees95 A trustee, without prejudice to the provisions of any instrument creating the trust, is chargeable only for money and securities actually received by the trustee even though the trustee signed a receipt for the sake of conformity, and is answerable and accountable only for the trustee's own acts, receipts, neglects or defaults, and not for those of other trustees or a banker, broker or other person with whom trust money or securities may be deposited, nor for the insufficiency or deficiency of securities or any other loss, unless it happens through the trustee's own willful default, and may reimburse himself or herself, or pay or discharge out of the trust premises, all expenses incurred in or about the execution of his or her trusts or powers. Ceepeear School District No 3069 v Security Trust Co Facts: Plaintiffs trustees bringing action to recover ~900 worth of taxes they paid, levied by the school district. The vendors and purchasers of the land entered into an agreement whereby the trustee would hold the land in their name. When the school district wanted to see who to tax, they saw the trustee on the land title registry and dinged them accordingly. The purchaser promised to pay taxes, and the trustee wanted them to foot the bill. Part of the issue was that the subdivision done created a much larger tax burden, obviously one no one wanted to pay Issue: Can the trustee be made whole by the agreement of the parties? Ratio: Check the agreement homie Analysis: The trust instrument clearly included a provision that the trustee wouldn’t be liable except for payments or disbursements under the agreement. Here however, the wrinkle was that the tax was owed by the purchaser as between him and the vendor. But, since the trust was indemnified and the trust is essentially for the benefit of the beneficiaries (here, the purchasers), it is the purchasers who have to step into the trustees shoes (and somewhat vice versa) to foot the bill. Liability Vicarious Liability Re Gray and Giant Yellowknife Mines Ltd. Facts: Ann and JJ were joint trustees for shares and all of the trust funds from dividends were paid directly to Ann (who was the beneficiary). Out of nowhere, JJ purported to revoke the past directions and wanted the trust funds devolved to both trustees. Ann opposed this. The money originally was paid to Ann in her personal capacity, not as trustee Issue: Can a trustee unilaterally revoke past directions and force funds to be paid to all trustees? Ratio: Trustees are able to force payment to all trustees instead of one trustee alone. Analysis: To not have the ability to prevent the wrong doing of trustees might jeopardize the ability of the trustees to administer the estate. This might also leave liability open to the company divesting the dividends. Ultimately, trustees need to be able to eliminate the risk of special assignments and there is no downside to the dividends being given to both trustees. Note: Trustee does not want to be held liable for the wrongdoing of their fellow trustee as they might be held liable and be forced to pay damages. Even though they may be jointly and severably liable, the other party may have no funds. Holding: Decision upheld. Head v Gould Facts: Case concerning the indemnity of trustees viz a breach of the trust. Head wanted indemnity by virtue of relying on expert advice. Gould was a lawyer and also a trustee. Her and Head made a boo-boo and breached the trust by virtue of paying the life estate everything. Notes: Retiring trustees will be liable where the breach of trust was not simply the outcome of retirement and new appointment but was contemplated by the retiring trustee. In order to be liable, you must have known or set the course for the breach of the trust (guilty before the fact). Holding: Head had no idea what was happening, no idea breach would occur, no worries Involvement of the Beneficiary Mclaughlin v McLaughlin Estate Facts: Upon the death of their parents, Ernest was appointed trustee to watch over the estate on behalf of all 7 children beneficiaries. He sold the house for 167k and deposited the funds into his personal bank account. 100K was put in an investment account but the remainder was gone within 18 months. No one raised a fuss as small cash awards were given out from time to time. As Ernest began getting Alzheimer’s, his brother Bruce helped him draft a new will claiming 50k to be held in trust. Bruce later sued Ernest’s estate for the 167k plus interest. The original judge found the 50k to be a settlement. Issue: Can a beneficiary unilaterally settle an account with a trustee? Does this absolve them of their wrong doing? Ratio: A beneficiary may inadvertently settle accounts with the trust if their involvement with a trustee appears to do so. Analysis: If Bruce had made no reference to the 50k in Ernest’s will, he would no doubt be able to sue for the whole estate as that was what the trust was owing. However, the provision of the 50k in the will served as a kind of settlement that absolved Ernest of any wrong doing. Here, Bruce was basically cloaked in the authority of a trustee as he had been administering the estate to the complaint of no one, and by virtue of instigating the provision in the will himself, constructively reconciled the accounts owing. He also filed probate for Ernest’s estate for 408k, not 408k plus the additional trust funds owing which would be part of his estate. As a final kicker, Bruce knew he had intermingled funds in his personal accounts. No one ever complained and it would be inequitable to complain now. Note: At law, there is nothing illegal about mixing funds, although it is highly unadvisable. Holding: Dismissed appeal. Jacques v The Canada Trust Co Facts: Jacques dad died in 1953 and left a life interest in the income of the estate to his wife. Upon her death, the estate was to be divided equally between Jacques and her brother. Her mom died in 1978, she is bringing a claim in 2005 alleging that under the discovery principle, she didn’t know about the interest until much later (2004). She alleged a breach of trust. Issue: Is there an issue with the delay via laches or the limitation act? Ratio: A claim crystallizes when a reasonable ought to have known that their rights would be affected Equitable doctrine of laches must show 1: plaintiff acquiesced and 2: Caused prejudice Analysis: Although the test is about what kind of inquiries a normal, reasonable person would make, the woman in this case was doubly affected as she had signed documents which effected the transfer of the estate, as well as seeing details of letters probate which indicated she had an interest in the land. She knew her mother had died and effected a second deed transfer of real property owned by the estate, but decided to do nothing for about 30 years. Not only was the action statute-barred, but it was also barred by laches as her brother as co-trustee would no doubt suffer a prejudice by the claim as well as by the fact that the old documents had been lost and witnesses were no longer available. There was no proof that her brother actually did act recklessly or wilfully negligent. Holding: No dice Statutory Defence Trustee Act – S.96 Directory: wp-content -> uploads -> gravity forms -> 1-7d6c8355b7f07846e8789d85deabdb60 -> 2016 gravity forms -> Earl E. Klein Jr gravity forms -> Narrative of how the entry meets the award criteria – July 28, 2016 gravity forms -> Revonda M. Baldwin gravity forms -> Air Atlanta Icelandic November 2006 – Current 2016 -> Ip master Guide 1-7d6c8355b7f07846e8789d85deabdb60 -> Insurance Law can Download 0.79 Mb. Share with your friends:
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