Where there has been culpa lata on the part of trustees and loss to the trust-estate which it might reasonably be concluded would not have been incurred apart from the trustees’ failure in duty, the onus lies upon them to show that the loss would equally have been incurred if they had performed their duty.
A truster conveyed his whole estate to trustees, who entered on office in 1879. They were empowered to appoint one of their own number or other person as factor for the trust-estate, and were directed to require the factor to lay before them within one month after 31st December in each year an account of his intromissions, ‘with the whole vouchers thereof, to be by them examined, audited, and (if found to be correct) approved of.’ In virtue of this provision the trustees allowed one of their number to act as factor with remuneration. For two years the
accounts were annually delivered to the trustees and audited. No further account was delivered till 1888 for the period between 15th May 1882 and 29th February 1888. A fourth account was delivered on 1st June 1890, which was admitted to he correct, and which showed, as at 1st June 1890, a balance in favour of the factor of pounds 61 odds. No further accounts were delivered to the trustees. During the remainder of 1890 sums of money were received by the factor, which, after allowing for the balance due to him, left in his hands a sum of pounds 104, 2s. 7d. due to the trust-estate. There was at the same time interest due by the trust on certain heritable bonds affecting the lands belonging to the trust-estate which was not paid by the factor. In 1891 further sums were received by the factor on account of the trust-estate, and at the end of 1891 he absconded leaving the whole of these sums unaccounted for.
In an action at the instance of a beneficiary under the trust, held ( reversing the judgment of the Second Division) that the trustees had been guilty of culpa lata in failing to require the delivery of the accounts annually for audit in accordance with the truster’s express direction, and that they were liable to make good to the trust-estate the sum of pounds 104, 2s. 7d. which would presumably have been applied in payment of the interests due had the factor been required to deliver his accounts for audit at the end of year 1890, but not for the further sums misappropriated by him in 1891 prior to the period for delivery of the annual accounts for that year.
Judges:
Lords Herschell, Watson, Macnaghten, Morris, Shand, and Davey
Citations:
[1896] UKHL 809, 33 SLR 809
Links:
Jurisdiction:
England and Wales
Trusts
Updated: 18 May 2022; Ref: scu.634019
