The Seventh Duty

Augustine Birrell QC states:

“The seventh duty of a Trustee is not to make one penny-piece of profit out of the trust business, unless he be a professional man specially authorised by the instrument creating the trust to do so.”

Augustine Birrell continues:

“There is no rule of law more deeply rooted in our English system of Jurisprudence than this. It is a rule without an exception.”

Augustine Birrell then quotes the judgement of Lord Brougham in Docker v Somes, 2 Mylne and Keen, page 655:

“Wherever<" says Lord Brougham, "a Trustee or one standing in the relation of a Trustee, violates his duty and deals with the trust estate for his own behoof, the rule is that he shall account to the cestuis que trust for all the gains which he has made. Thus, if trust money is laid out in buying and selling land, and a profit made by the transaction, that shall go not to the Trustee who has so applied the money, but to the cestuis que trust whose money has been thus applied. In like manner (and cases of this kind are more numerous) where a Trustee or executor has used the fund committed to his care in stock speculation, though the loss, if any must fall upon himself, yet for every farthing of profit he may make he shall be accountable to the trust estate...."

Augustine Birrell notes however:

“By special provision in the instrument creating the trust, the Trustee being a professional man, may be allowed to make the usual charges; and such a provision is now usually inserted in carefully drawn documents.”

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This tab updated on 3 June May 2015