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SQE – Equity and Trust – Relief Granted by the Court Under Section 61 Trustee Act 1925
Introduction
Trustees who commit a breach of trust are normally personally liable for any loss caused to the trust. However, equity recognises that not every breach results from dishonesty, fraud, or deliberate misconduct. Trustees are often laypersons acting in good faith, faced with difficult decisions in complex circumstances.
To address this, Parliament enacted section 61 of the Trustee Act 1925, which gives courts a discretionary power to relieve trustees from personal liability where fairness requires it.
Section 61 provides an important safeguard for trustees who have acted honestly and reasonably but nevertheless find themselves technically in breach of trust.
Statutory Provision
Section 61 of the Trustee Act 1925 provides that:
the court may relieve a trustee from personal liability wholly or partly if the trustee has acted honestly and reasonably and ought fairly to be excused.
This means that even where a breach of trust has occurred, the court may decide that it would be unjust to impose full liability.
Requirements for Relief
The court generally considers three questions:
1. Did the Trustee Act Honestly?
The trustee must have acted in good faith.
Relief will not be available where the trustee acted:
2. Did the Trustee Act Reasonably?
The trustee’s conduct must be objectively reasonable.
The court considers:
3. Is It Fair to Excuse the Trustee?
Even where honesty and reasonableness are established, the court retains discretion.
The court asks whether:
it would be fair and equitable to excuse the trustee from liability.
Nature of the Relief
The court may grant:
Complete Relief
The trustee bears no personal liability.
Partial Relief
The trustee remains liable for part of the loss only.
No Relief
The trustee remains fully liable.
Re Evans (Deceased), Evans v Westcombe
The leading illustration is Re Evans (Deceased), Evans v Westcombe.
Facts
A woman acted as executor of her father’s estate.
The will directed that the estate should be divided equally between:
30 years.
Most people believed him to be dead.
Actions Taken by the Executor
Before distributing the estate, she:
The Problem
Several years later:
✅ the brother reappeared.
He demanded his half share of the estate.
Unfortunately, the insurance policy did not cover the entire amount owed.
Court Decision
The court held that the executor had technically breached her duties.
However, she had:
✅ acted honestly;
✅ sought professional legal advice;
✅ attempted to protect her brother’s interests through insurance;
✅ acted reasonably throughout.
Result
The court granted:
✅ partial relief under section 61.
She was required to pay only some interest rather than the full amount claimed.
Importance of Re Evans
The case demonstrates that:
a trustee may make a mistake and still obtain relief.
The crucial issue is whether the trustee acted responsibly and conscientiously.
Daniel v Tee
A more recent example is Daniel v Tee.
Facts
The case involved trustees who made poor investment decisions.
The investments performed badly and losses occurred.
Issue
Should trustees be personally liable for the losses?
Court Decision
The court accepted that:
Result
The court held that:
✅ section 61 relief could apply.
Importance
Daniel v Tee demonstrates that poor investment outcomes do not automatically create trustee liability.
A distinction exists between:
Relationship with Trustee Act 2000
Section 61 often operates alongside:
Trustee Act 2000.
The Trustee Act 2000 encourages trustees to seek professional advice under section 5 when dealing with investments.
If trustees:
Example 1 – Full Relief
Sarah is trustee of a trust worth:
£2 million.
Before investing, she obtains advice from a qualified investment manager.
The investment unexpectedly collapses due to a global financial crisis.
Loss:
£500,000.
Outcome
Sarah:
✅ full relief under section 61.
Example 2 – Partial Relief
Thomas distributes trust funds based on legal advice.
Later it emerges that the advice was incomplete.
Loss:
£100,000.
The court concludes Thomas should have made further enquiries.
Outcome
The court may grant:
✅ partial relief,
requiring Thomas to contribute only part of the loss.
Example 3 – No Relief
Daniel transfers trust money into his personal account because he believes he will repay it later.
Loss:
£300,000.
Outcome
Although Daniel claims he intended no harm:
❌ he acted improperly;
❌ he acted in conflict with beneficiaries’ interests.
Section 61 relief would almost certainly be refused.
Relationship with Exclusion Clauses
Section 61 differs from exclusion clauses.
Exclusion Clause
Protects trustees because the trust instrument says so.
Section 61 Relief
Protects trustees because the:
✅ court exercises discretion.
The court independently assesses fairness.
Policy Considerations
Section 61 reflects an important policy balance.
Without protection:
Key SQE Principles
To obtain relief under section 61 Trustee Act 1925, trustees must show:
✅ honesty;
✅ reasonableness;
✅ and that they ought fairly to be excused.
Relief may be:
Conclusion
Section 61 of the Trustee Act 1925 provides an important equitable safeguard for trustees who commit breaches of trust despite acting honestly and reasonably. The provision reflects the courts’ recognition that trustees often face difficult decisions and should not automatically be punished for every mistake. Cases such as Re Evans and Daniel v Tee demonstrate that trustees who seek professional advice, act conscientiously, and genuinely attempt to fulfil their duties may receive complete or partial relief from liability. The provision therefore balances accountability to beneficiaries with fairness toward trustees who act in good faith.
Sources of Reference
Trustee Act 1925, s 61.
Re Evans (Deceased), Evans v Westcombe [1999] 2 All ER 777.
Daniel v Tee [2016] EWHC 1538 (Ch).
Trustee Act 2000.
Alastair Hudson, Equity and Trusts (11th edn, Routledge 2022).
James Penner, The Law of Trusts (12th edn, OUP 2020).
Graham Virgo, The Principles of Equity and Trusts (5th edn, OUP 2024).
John McGhee (ed), Snell’s Equity (35th edn, Sweet & Maxwell 2024).
Introduction
Trustees who commit a breach of trust are normally personally liable for any loss caused to the trust. However, equity recognises that not every breach results from dishonesty, fraud, or deliberate misconduct. Trustees are often laypersons acting in good faith, faced with difficult decisions in complex circumstances.
To address this, Parliament enacted section 61 of the Trustee Act 1925, which gives courts a discretionary power to relieve trustees from personal liability where fairness requires it.
Section 61 provides an important safeguard for trustees who have acted honestly and reasonably but nevertheless find themselves technically in breach of trust.
Statutory Provision
Section 61 of the Trustee Act 1925 provides that:
the court may relieve a trustee from personal liability wholly or partly if the trustee has acted honestly and reasonably and ought fairly to be excused.
This means that even where a breach of trust has occurred, the court may decide that it would be unjust to impose full liability.
Requirements for Relief
The court generally considers three questions:
1. Did the Trustee Act Honestly?
The trustee must have acted in good faith.
Relief will not be available where the trustee acted:
- fraudulently;
- dishonestly;
- recklessly;
- or for personal gain.
2. Did the Trustee Act Reasonably?
The trustee’s conduct must be objectively reasonable.
The court considers:
- the information available at the time;
- professional advice obtained;
- steps taken to protect beneficiaries;
- and the trustee’s level of experience.
3. Is It Fair to Excuse the Trustee?
Even where honesty and reasonableness are established, the court retains discretion.
The court asks whether:
it would be fair and equitable to excuse the trustee from liability.
Nature of the Relief
The court may grant:
Complete Relief
The trustee bears no personal liability.
Partial Relief
The trustee remains liable for part of the loss only.
No Relief
The trustee remains fully liable.
Re Evans (Deceased), Evans v Westcombe
The leading illustration is Re Evans (Deceased), Evans v Westcombe.
Facts
A woman acted as executor of her father’s estate.
The will directed that the estate should be divided equally between:
- herself;
- and her brother.
30 years.
Most people believed him to be dead.
Actions Taken by the Executor
Before distributing the estate, she:
- obtained legal advice;
- purchased an insurance policy;
- ensured the policy covered half of the estate value.
The Problem
Several years later:
✅ the brother reappeared.
He demanded his half share of the estate.
Unfortunately, the insurance policy did not cover the entire amount owed.
Court Decision
The court held that the executor had technically breached her duties.
However, she had:
✅ acted honestly;
✅ sought professional legal advice;
✅ attempted to protect her brother’s interests through insurance;
✅ acted reasonably throughout.
Result
The court granted:
✅ partial relief under section 61.
She was required to pay only some interest rather than the full amount claimed.
Importance of Re Evans
The case demonstrates that:
a trustee may make a mistake and still obtain relief.
The crucial issue is whether the trustee acted responsibly and conscientiously.
Daniel v Tee
A more recent example is Daniel v Tee.
Facts
The case involved trustees who made poor investment decisions.
The investments performed badly and losses occurred.
Issue
Should trustees be personally liable for the losses?
Court Decision
The court accepted that:
- the trustees acted honestly;
- they relied on professional advice;
- they believed the adviser was competent.
Result
The court held that:
✅ section 61 relief could apply.
Importance
Daniel v Tee demonstrates that poor investment outcomes do not automatically create trustee liability.
A distinction exists between:
- negligent conduct;
and - reasonable decisions that later prove unsuccessful.
Relationship with Trustee Act 2000
Section 61 often operates alongside:
Trustee Act 2000.
The Trustee Act 2000 encourages trustees to seek professional advice under section 5 when dealing with investments.
If trustees:
- obtain proper advice;
- act in accordance with it;
- and honestly believe it to be competent,
Example 1 – Full Relief
Sarah is trustee of a trust worth:
£2 million.
Before investing, she obtains advice from a qualified investment manager.
The investment unexpectedly collapses due to a global financial crisis.
Loss:
£500,000.
Outcome
Sarah:
- acted honestly;
- sought expert advice;
- acted reasonably.
✅ full relief under section 61.
Example 2 – Partial Relief
Thomas distributes trust funds based on legal advice.
Later it emerges that the advice was incomplete.
Loss:
£100,000.
The court concludes Thomas should have made further enquiries.
Outcome
The court may grant:
✅ partial relief,
requiring Thomas to contribute only part of the loss.
Example 3 – No Relief
Daniel transfers trust money into his personal account because he believes he will repay it later.
Loss:
£300,000.
Outcome
Although Daniel claims he intended no harm:
❌ he acted improperly;
❌ he acted in conflict with beneficiaries’ interests.
Section 61 relief would almost certainly be refused.
Relationship with Exclusion Clauses
Section 61 differs from exclusion clauses.
Exclusion Clause
Protects trustees because the trust instrument says so.
Section 61 Relief
Protects trustees because the:
✅ court exercises discretion.
The court independently assesses fairness.
Policy Considerations
Section 61 reflects an important policy balance.
Without protection:
- many individuals would refuse to act as trustees;
- trustees might become excessively cautious.
- incompetence;
- negligence;
- and mismanagement.
Key SQE Principles
To obtain relief under section 61 Trustee Act 1925, trustees must show:
✅ honesty;
✅ reasonableness;
✅ and that they ought fairly to be excused.
Relief may be:
- complete;
- partial;
- or refused entirely.
Conclusion
Section 61 of the Trustee Act 1925 provides an important equitable safeguard for trustees who commit breaches of trust despite acting honestly and reasonably. The provision reflects the courts’ recognition that trustees often face difficult decisions and should not automatically be punished for every mistake. Cases such as Re Evans and Daniel v Tee demonstrate that trustees who seek professional advice, act conscientiously, and genuinely attempt to fulfil their duties may receive complete or partial relief from liability. The provision therefore balances accountability to beneficiaries with fairness toward trustees who act in good faith.
Sources of Reference
Trustee Act 1925, s 61.
Re Evans (Deceased), Evans v Westcombe [1999] 2 All ER 777.
Daniel v Tee [2016] EWHC 1538 (Ch).
Trustee Act 2000.
Alastair Hudson, Equity and Trusts (11th edn, Routledge 2022).
James Penner, The Law of Trusts (12th edn, OUP 2020).
Graham Virgo, The Principles of Equity and Trusts (5th edn, OUP 2024).
John McGhee (ed), Snell’s Equity (35th edn, Sweet & Maxwell 2024).
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