Re Somerset
A beneficiary's interest can be impounded to indemnify the trustee only where the beneficiary instigated, requested or consented in writing to the specific breach.
Facts
The trustees of a marriage settlement lent trust money on a mortgage of an estate, at the request of the husband, who was a beneficiary. The security proved insufficient. The husband had asked the trustees to invest on mortgage, but had not asked them to lend more than a proper amount on the particular property. When the children sued, the trustees claimed to impound the husband's life interest to indemnify them.
Legal principle
The Court of Appeal held that the trustees could not impound the husband's interest. Lindley LJ said that, to impound a beneficiary's interest under what is now section 62 of the Trustee Act 1925, the beneficiary must have intended to request or consent to the investment that was a breach of trust, and must have known the facts that made it a breach, although he need not know that it was a breach in law. The husband had instigated an investment on mortgage, but had left the amount to be lent to the trustees, and the breach consisted in lending too much.
Related cases on breach of trust and defences
- AIB Group (UK) plc v Mark Redler & Co [2014] UKSC 58, [2015] AC 1503
- Armitage v Nurse [1998] Ch 241
- Bahin v Hughes (1886) 31 Ch D 390
- Re Dawson (deceased) [1966] 2 NSWR 211
- Re Diplock [1948] Ch 465
- Re Evans (deceased) [1999] 2 All ER 777
- Fletcher v Collis [1905] 2 Ch 24
- Head v Gould [1898] 2 Ch 250
Studying equity and trusts? Our tutors help you understand and apply cases like this in essays, problem questions and exams. Request a quote or browse our law notes.
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.
