Foreign Currency: Claims, Judgments and Damages

Michael Howard; John Knott and John Kimbell

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CHAPTER 9 The law of trusts and fiduciaries

Introduction

9.1 The law of trusts has an important role to play in modern commercial transactions and therefore in commercial litigation. Given the increasingly transnational context of modern business, disputes over the administration of a trust or the subject matter of a trust may involve a number of different currencies. However, there has been surprisingly little focus in the English case law on foreign currency judgments in the context of the law of trusts.1 Some guidance can be found in Commonwealth jurisprudence.2 Otherwise, the applicable principles must be extracted by drawing appropriate analogies from other areas of law. 9.2 This chapter is divided into four sections. The first section focuses on the claims available to a beneficiary against a trustee. The second section focuses on the claims available to a beneficiary against third parties. The third section covers claims available to a trustee against a beneficiary. The final section covers some claims available against fiduciaries.

Claims available to a beneficiary against a trustee

9.3 Trustees are under a duty to produce accounts for the beneficiaries to examine.3 Beneficiary B can obtain an order for account as a way of enforcing a right to performance of the primary obligations owed by the trustees, and reparation for losses resulting from the trustees’ default.4 The beneficiary can demand that the trustee produce accounts, but may then ‘surcharge’ the accounts. A useful summary of this process is provided by Lewison J in Ultraframe (UK) Ltd v Fielding:5

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[The beneficiary] surcharges the account when he alleges that the trustee has not obtained for the benefit of the trust all that he might have done, if he had exercised due care and diligence. If the allegation is proved, then the account is taken as if the trustee had received, for the benefit of the trust, what he would have received if he had exercised due care and diligence. The beneficiary falsifies the account when he alleges that the trustee has applied trust property in a way that he should not have done (e.g. by making an unauthorised investment). If the allegation is proved, then the account will be taken as if the expenditure had not been made; and as if the unauthorised investment had not formed part of the assets of the trust. Of course, if the unauthorised investment has appreciated in value, the beneficiary may choose not to falsify the account: in which case the asset will remain a trust asset and the expenditure on it will be allowed in taking the account.6

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