Relief from Liability for Breach of Trust

The statutory provisions in all jurisdictions allow the court to excuse a trustee who has committed a breach of trust if the trustee has acted honestly and reasonably and ought fairly to be excused.

“Honestly and reasonably”



And ought fairly be excused

It is not sufficient that a trustee has acted honestly and reasonably if the court takes the view that he or she not to be fairly excused {Ede v Ede [2006] QSC 378;[2007] 2 Qd R 323}


The test for dishonesty

In Fattal v Walbrook Trustees (Jersey) Ltd [2010] EWHC 27 67 (Ch) at 81-82 Lewison J said

    1. After all the twists and turns in the legal definition of dishonesty (see Twinsectra Ltd v Yardley [2002] AC 164; Barlow Clowes v Eurotrust International Ltd [2006] 1 WLR 1476 and Abou-Rahmah v Abacha [2006] EWCA Civ 1492), all parties accepted that the law about the interpretation of exoneration clauses was still to be found in Walker v Stones [2001] QB 902. Although Sir Christopher limited his observations to the case of a solicitor-trustee, I did not understand Mr Taube to argue that a different principle was applicable to a professional trustee. Based on this common ground, therefore, what is required to show dishonesty in the case of a professional trustee is:

i) A deliberate breach of trust;

ii) Committed by a professional trustee:

a) Who knows that the deliberate breach is contrary to the interests of the beneficiaries; or

b) Who is recklessly indifferent whether the deliberate breach is contrary to their interests or not; or

c) Whose belief that the deliberate breach is not contrary to the interests of the beneficiaries is so unreasonable that, by any objective standard, no reasonable professional trustee could have thought that what he did or agreed to do was for the benefit of the beneficiaries




Test for bad faith see Alexander v Perpetual Trusts WA Ltd [2001] NSWCA 240

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