Liability Under Section 61 of the Trustee Act 1925

The Court of Appeal has ruled that a firm of solicitors who paid over a mortgage advance to the seller’s solicitors in breach of trust should not be relieved of liability under section 61 of the Trustee Act 1925 (section 61) because the firm was not able to satisfy the court that their conduct was reasonable or, insofar as it was unreasonable, that it played no material part in causing the lender’s loss.

The decision involved a detailed analysis of the court’s discretionary power to absolve trustees from personal liability under section 61 and the factors to be taken into account in exercising that discretion. In particular, the court considered the question of what would be a sufficient connection between the unreasonable conduct of the trustee and the loss suffered so as to preclude the exercise of the court’s power under section 61.

Santander UK PLC v R A Legal Solicitors [2014] EWCA Civ 183.

Written by James Naylor

Partner, CG Naylor LLP.