Re Pauling's Settlement Trusts
Trustees exercising a power of advancement must ensure that the money is applied for the stated purpose, and a beneficiary's consent to a breach of trust must be fully informed.
Facts
The trustees of a marriage settlement, Coutts & Co, made a series of advancements to the children of the marriage, ostensibly for purposes such as buying a house, but the money was in fact used by the children's father to pay his debts and for his own purposes. The children, who had consented to the advancements, later sued the bank for breach of trust.
Legal principle
The Court of Appeal held that the bank was liable for some of the advancements. Willmer LJ said that trustees exercising a power of advancement for a stated purpose must see that the money is applied for that purpose, and cannot simply hand it over to the beneficiary or a third party without inquiry, if they have reason to believe it will be used for other purposes. Some of the children's consents were not a defence, because they had been given under the undue influence of their father, and the bank knew this. However, the court held that the bank was entitled to relief in respect of some advancements.
Related cases on trustees: duties, powers and variation of trusts
- Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515
- Butler-Sloss v Charity Commission for England and Wales [2022] EWHC 974 (Ch), [2022] Ch 371
- Chapman v Chapman [1954] AC 429
- Cowan v Scargill [1985] Ch 270
- Goulding v James [1997] 2 All ER 239
- Harries v Church Commissioners for England [1992] 1 WLR 1241
- Learoyd v Whiteley (1887) 12 App Cas 727
- Re Lucking's Will Trusts [1968] 1 WLR 866
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
