Gregson v HAE Trustees Ltd

[2008] 2 BCLC 542; [2008] WTLR 1623

8th May 2008

High Court


The claimant sued both a corporate trustee and its directors alleging a breach of trust, for failing to diversify the trust fund; they had retained shares in a family company put into the trust many years before and the company was now insolvent. Against the directors she relied on the "dog-leg" claim, the contention that if the directors were in breach of their duty to the corporate trustee its claim against them was part of the trust property and could be enforced by her as a beneficiary. The directors applied to strike out the claim.



(i) the dog-leg claim was not maintainable, for the directors' duties were owed to the corporate trustee in its own right and so a claim for breach of them was not part of the trust property; but (ii) the directors were wrong in contending that, because the shares were property originally settled, the shares were not "investments" within the Trustee Act 2000, s. 4 (obliging trustees to review investments).

It has been a vexed question for some time how far, if at all, directors of a corporate trustee can be made liable for breach of trust on the part of the trustee. A corporate trustee may (as here) have no assets to meet any liability. (Legislation in Guernsey and Jersey which formerly made the directors liable as guarantors for payment of a judgment against the trustee for breach of trust has been repealed.) The dog-leg claim, which offered the only possibility of making the directors liable, can now succeed, if at all, in very limited circumstances.

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