The Court of Session considered the applicability of the rule against self dealing as it applied to the wives of trustees. The wives in question were wealthy members of the Burrell shipping family who in each case were ‘capable business women accustomed to manage their own ample means’, who bought shares from the family trust of which their husbands were trustees, out of their own means and on their own initiative. Only if the strict rule applied, would the court set aside the purchase.
Held: Neither authority nor principle required the rule’s strict application. Lord Mackenzie ‘The category under which it apparently falls is the category which is referred to by Lord Justice Cottenham in Ferraby v Hodson in terms to which every Court must subscribe: ‘Trustees expose themselves to great peril in allowing their own relatives to intervene in any matter connected with the execution of the trust; for the suspicion which that circumstance is calculated to excite, where there is any other fact to confirm it, is one which it would require a very strong case to remove.’ Therefore I venture to remark that in all cases of this class the Court will seek to be certain, by vigilant scrutiny, of the true nature of such a transaction; because one can readily see that the close relationship between husband and wife may, unless the nature of the transaction is explained, give rise to the not unnatural inference that the husband was truly the party intervening in the case, and that not without benefit to himself.’
Lord Dundas, Lord Mackenzie
[1915] SC 333
Scotland
Cited by:
Cited – In re Douglas 1928
(New South Wales) The court considered the application of the rule against self dealing as it applied to trustees’ wives: ‘the Court of Equity would presume that the contract was for the benefit of the trustee, and evidence would be required to . .
Cited – Tanti v Carlson 1948
(Victoria – Australia) The court considered the application of the rule against self dealing for trustees as it applied to wives: ‘The matrimonial relationship then becomes merely a ground of suspicion, and it becomes necessary to consider whether . .
Cited – Newgate Stud Company, Newgate Stud Farm Llc v Penfold, Penfold Bloodstock Limited ChD 21-Dec-2004
The claimants sought damages from the defendant. He had been employed to manage their horse-racing activities, and it was alleged that he had made secret profits. The defendant denied any dishonesty, saying all matters were known to the deceased . .
Lists of cited by and citing cases may be incomplete.
Trusts
Updated: 18 December 2021; Ref: scu.220733