References: [2014] 1 HKC 368, [2013] HKCFA 93
Links: Hklii
Coram: Millett NPJ, Ribeiro PJ
(Hong Kong) A trustee owes a duty to hold trust funds and apply them for the purposes of the trust (a stewardship or custodial duty). He is bound to answer for his stewardship when called on by the beneficiary to do so. If for any reason he misapplies the trust fund, or part of it, he must immediately reconstitute the trust fund in full. If he fails to do so, the court will order him to reconstitute the fund in specie, if that is possible, or pay the equivalent sum in money so as to produce the same result in financial terms.
Millett NPJ said that the relevant principle, in a case of unauthorised dissipation of trust funds is that: ‘Where the defendant is ordered to make good the deficit by the payment of money, the award is sometimes described as the payment of equitable compensation; but it is not compensation for loss but restitutionary or restorative. The amount of the award is measured by the objective value of the property lost determined at the date when the account is taken and with the full benefit of hindsight.’
Ribeiro PJ carried out a valuable review of the authorities concerned with equitable compensation in the context of a commercial relationship. He noted that where a relationship was fiduciary, there might be obligations which were not fiduciary in nature; and, equally, even in a commercial relationship, there might be aspects which engaged fiduciary obligations.
This case is cited by:
- Cited – AIB Group (UK) Plc -v- Mark Redler & Co Solicitors SC (Bailii, [2014] UKSC 58, [2014] 3 WLR 1367, [2014] WLR(D) 466, WLRD, Bailii Summary, UKSC 2013/0052, SC, SC Summary)
The court was asked as to the remedy available to the appellant bank against the respondent, a firm of solicitors, for breach of the solicitors’ custodial duties in respect of money entrusted to them for the purpose of completing a loan which was to . .
(This list may be incomplete)
Last Update: 09-Nov-15 Ref: 553779
