Stranger who takes it upon himself to Act as a Trustee: A trustee de son tort

A trustee de son tort

A person who has not been appointed a trustee but intermeddles in the administration of a trust by taking it upon himself to act as if he were a trustee will be held liable as if he were in fact a properly appointed trustee. He is known as a trustee de son tort. The principle was explained by Smith LJ in Mara v Browne:

‘…if one, not being a trustee and not having authority from a trustee, takes upon himself to intermeddle with trust matters or to do acts characteristic of the office of trustee, he may thereby make himself what is called in law a trustee of his own wrong-i.e. a trustee de son tort, or, as it is also termed a constructive trust.’

The principle that an intermeddling stranger may become a trustee de son tort is an application to the law of trusts of the principle that anyone who takes it upon himself to act in a fiduciary position he assumed. Thus, a person who takes it upon himself to act as an agent for another will be held liable to account to his principle just as if he had been properly appointed. The principle was applied in Blyth v Fladgate [1891] 1 Ch 337, where a firm of solicitors, Fladgates, held Exchequer bills which were assets of a marriage settlement. After all three trustees of the settlement had died, the moneys were advanced by the firm on a mortgage at the instigation of the husband. The securities proved to be insufficient and it was held that the partners of the firm were liable to make good the shortfall. The rationale for this was that when the Exchequer bills were sold, the firm (meaning each and every partner) became a constructive trustee of the money. They could not possibly be seen as acting as the agents of the trustees because at that stage there were no trustees. By their actions they had assumed upon themselves the position of trustees and it was their duty to see that the moneys were properly applied. They were therefore liable.

One limitation to the principle seems to be that a person will only be held liable as a trustee de son tort if he had the trust property vested in him or had the right to call for its transfer. This was made clear in Re Barney [1892] 2 Ch 265, where Kekewich J held that it was essential to the character of a trustee that ‘he should have trust property actually vested in him or so far under his control that he has nothing to do but require that that…it should be vested in him,’ and that ‘if that is true of a trustee properly appointed, why is it not also true of a trustee de son tort.’ However, it should be noted that he may be using the concept of a trustee de son tort in the wider sense of a constructive trustee rather than the more limited modern usage of an intermeddling stranger.

Remedies

In Soar v Ashwell, Lord Esher MR took the view that an intermeddling stranger must be treated, and therefore held liable, as if he were a properly appointed trustee:

‘Where a person has assumed, either with or without consent, to act as a trustee of money or other property…a Court of Equity will impose upon him all the liabilities of an express trustee…’ [1893] 2 QB 390.

The prime liability of the express trustee is not to act in breach of trust, and the trustee de son tort will likewise be held personally liable to account for any such breach. In Particular, if he was wrongfully transferred or dissipated trust property will have to account for it to the trust. As already illustrated in Blyth v Fladgate, the partners of a firm of solicitors who had become trustees de son tort were held liable to the trust for the loss caused by an investment in a mortgage. If the trustee de son tort has trust property, or property which can be shown to represent the original trust property, in his hands the trust will be able to claim that property as its own. This will be particularly important if the trustee de son tort is insolvent.


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Stranger who takes it upon himself to Act as a Trustee

A trustee de son tort

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