Trusts & Trustees Advance Access originally published online on December 4, 2007
Trusts & Trustees 2007 13(10):596-603; doi:10.1093/tandt/ttm109
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© The Author (2007). Published by Oxford University Press. All rights reserved.
Going to the dogs?
* Barrister, Serle Court, London.
Corporate trustees administer assets worth billions and directors of these trusts expect to carry on their work without fear of personal liability to beneficiaries other than in exceptional cases whose ambit is limited and well understood.
The emergence in recent years of an action known as the dog-leg claim threatens this certainty. The claim is brought by beneficiaries for breach of trust generally, directly against the trustees, where none of the usual grounds for personal liability is even alleged.
The claim relies on being able to prove that the corporate trustee's rights against directors for breach of director's duties are held by the trustee not for its own benefit, but for the benefit of the trust. This article explains how the claims are put together and why, fortunately, in practice they will rarely (if ever) succeed. The recent case of Alhamrani v Alhamrani has stimulated this appraisal.
I am grateful to Douglas Close (counsel in Alhamrani) for suggesting the topic for this article and his suggestions and comments as it evolved.