Graham Virgo: Where we have identified that a trustee has breached the trust,
so there has been a breach of duty,
we then need to move on and consider the remedies.
Now, there is a key divide between remedies which are personal
and those which are proprietary.
Proprietary remedies will be looked at in the next chapter
so we need to focus on personal remedies.
Now, frankly this is an area where the courts
have made the law rather complicated,
through rather complex analysis of core principles.
So we need to get a grip of this area of the law, and you need to keep in mind
what are the functions of the different personal remedies
that might be available for breach of trust.
Now, in this chapter, you will see various of these functions identified.
But I think there are three core functions.
The first is compensatory.
Where we look at the trust, for example, and say,
“that trust has suffered loss as a result of the breach of trust,
and therefore it is important to provide a remedy, to compensate the trust for that loss.”
Now, for example, a trustee may have failed to invest trust property,
and had the trust property been invested there would have been a return to the trust.
So therefore, the function of a compensatory remedy is to put the trust in the position
it would have been in, had there not been the breach of trust.
A second function of a personal remedy is: to restore to the trust what has been lost.
Now this notion of restitution actually overlaps with compensation.
If for example, I am a trustee and I take property from the trust,
in breach of trust, that trust will have suffered a loss—the loss in the value of that property.
And if I have used that property for myself,
I have gained from the value of that property.
So, a restorative remedy puts back into the trust what was taken from the trust.
And you can say, that's operating both to compensate the trust
for what's being lost, but also to give back to the trust what the trustee took.
And a third function of a personal remedy can be called disgorgement.
This is where a trustee may profit from a breach of trust,
but not actually having taken anything from the trust.
Maybe they obtained property from a third party in breach of trust
and will be liable to account for the value of the property which has been obtained.
Here, the function of the remedy is to disgorge the value of that profit.
In other words, to give up what has been received from a third party.
So whether it's compensating for loss, or giving back, or giving up,
these are all functions of personal remedies for breach of trust.