Who’d be a trustee? An example of trustee liability
It has never ceased to surprise me- and I suppose in some ways I should find it flattering- the number of clients over the years who expect the skills of the litigator to be those of a wizard. I mean: me? The chipolatas I am pleased to call fingers can’t even perform the most rudimentary of card tricks: but still, the odd, off the wall instruction sometimes raises its head.
One such request was: what can a trustee of a fund do to limit potential liabilities in respect of the purchase of land? Quite often what can be an interesting exercise of the little grey cells can still be frustrating for the client when, although better informed, they learn that there is only so much, if anything that the law can do to fend off such problems.
In the first instance, as my conveyancing colleagues will testify, the usual searches and reports should be made, including mining searches and environmental reports. Any troubling findings can then be followed up by any one of a plethora of expert risk assessors.
Subject to what is provided in the deed of trust, the trustee may look to the value of the assets by way of an indemnity. However, the inconvenient truth is that the wording of a trust contract cannot avoid liability to third parties, such as visitors to the land, or in respect of liabilities for breach of the provisions of an Act of Parliament.
Where that liability outstrips the assets of the trust, the balance may then be claimable from the trustee in their personal capacity. This liability is unlimited pursuant to the Environment Act 1990: see the case of X v A and others .
It should also be pointed out that the trustee might be in breach of his or her duties in making such a risky investment if there are known environmental risks, such as exposure to chemicals or asbestos.
Of course, there is always the option to take out insurance as to title, public indemnity and environmental cover, which provides better piece of mind then crossing one’s figures, or believing in a certain, boy wizard…