Re Thompson's Settlement
The self dealing rule makes any purchase of trust property by a trustee voidable by the beneficiaries, however fair the transaction.
Facts
The trustees of a settlement held leases of land, which they assigned to companies in which some of the trustees and beneficiaries were interested. The other beneficiaries challenged the assignments, arguing that they were made in breach of the rule that trustees must not deal with trust property for their own benefit.
Legal principle
Vinelott J held that the assignments were voidable. He said that the self dealing rule is an application of the wider principle that a man must not put himself in a position where duty and interest conflict, and that it applies wherever a trustee is on both sides of the transaction, including where he is a director or shareholder of a company that buys the trust property. The beneficiaries can set the transaction aside as of right, however fair it may be, unless they consented to it. The rule applied to the grant or assignment of leases as well as sales.
Related cases on fiduciary duties
- Attorney General for Hong Kong v Reid [1994] 1 AC 324
- Boardman v Phipps [1967] 2 AC 46
- Bray v Ford [1896] AC 44
- Bristol and West Building Society v Mothew [1998] Ch 1
- Re Duke of Norfolk's Settlement Trusts [1982] Ch 61
- FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, [2015] AC 250
- Guinness plc v Saunders [1990] 2 AC 663
- Holder v Holder [1968] Ch 353
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