INTERNATIONAL TRUSTS ACT, 1994 (Act 26 of 1994)

PART VII

LIABILITY OF TRUSTEES

43.(1) Subject to this Act and to the terms of the international trust, a trustee who commits or concurs in a breach of trust shall be liable for -

(a) any loss or depreciation in value of the trust property resulting from the breach; and

(b) any profit which would have accrued to the international trust had there been no breach.

(2) A trustee may not set off a profit accruing from one breach of trust against a loss or depreciation in value resulting from another.

(3) Where trustees are liable for a breach of trust, they are liable jointly and severally.

(4) Nothing in the terms of an international trust shall relieve a trustee of liability for a breach of trust arising from the fraud, wilful misconduct or gross negligence of the trustee.

44.(1) A trustee of an international trust is not liable for a breach of trust committed by -

(a) another person prior to the trustee's appointment;

(b) a co-trustee unless -

(i) the trustee becomes or ought to have become aware of the breach, or of the intention of the co-trustee to commit the breach; and

(ii) the trustee actively conceals the breach or intention or fails within a reasonable time to take proper steps to protect or restore the trust property or to prevent the breach.

(2) A trustee who becomes aware of a breach of trust to which subsection (1)(a) applies shall take all reasonable steps to have the breach remedied.

45.(1) Subject to subsection (2), a beneficiary may -

(a) relieve a trustee liable for a breach of trust from such liability;

(b) indemnify a trustee against liability for a breach of trust;

(2) Subsection (1) shall not apply if the beneficiary -

(a) is a minor or a person under legal disability;

(b) does not have full knowledge of all material facts; or

(c) is improperly induced by the trustee to act under subsection (1).

46.(1) A trustee shall not, in the absence of fraud, be affected by notice of any instrument, matter, fact or thing in relation to an international trust if the trustee obtained notice of it by reason of the trustee acting or having acted for the purposes of another trust.

(2) A trustee of an international trust shall disclose to a co-trustee any interest which the trustee has as trustee of another trust if any transaction in relation to the former trust is to be entered into with the trustees of the other trust.

47.(1) Notwithstanding any other law, where in a transaction or matter affecting an international trust a person who is a trustee informs a third party that the person is acting as trustee, a claim by the third party in respect of the transaction or matter shall, subject to subsection (3), extend only to the trust property.

(2) If the trustee fails to inform the third party that the trustee is acting as such the trustee shall -

(a) incur personal liability to the third party in respect of the transaction or matter; and

(b) have a right of indemnity against the trust property in respect of the personal liability, unless the trustee acted in breach of trust.

(3) In this section, "third party" means a person other than a settlor, trustee or beneficiary of the international trust.

48.(1) A person who derives a profit from a breach of an international trust, or who obtains property on breach of the trust, shall be deemed to be a trustee of the profit or property, unless the person derives or obtains it in good faith without notice of the breach of trust.

(2) A person who becomes a trustee by virtue of subsection (1) shall deliver up the profit or property to the person properly entitled to it.

(3) This section does not exclude any other circumstances in which a constructive trust may arise.

49.(1) Where a person who is a trustee resigns or is removed -

(a) the person shall, subject to paragraph (b), duly surrender all trust property held by or vested in the person or otherwise under the person's control;

(b) the person may require to be afforded with reasonable security for liability (existing, future, contingent or otherwise) before surrendering t he trust property.

(2) A trustee who complies with subsection (1)(a) shall be relieved of liability to any beneficiary, trustee or other person interested under the trust for any act or omission in relation to the trust property or to the trustee's except any liability -

(a) arising from a breach of trust to which the trustee (or, in the case of a corporate trustee, any of its officers or employees) was a party or was privy;

(b) in respect of any action to recover from the trustee (or, in the case of a corporate trustee, any of its officers or employees) trust property or the proceeds thereof in the trustee's possession.