November 4, 2014

All is not lost where the trustee of a trust breaches his fiduciary obligation, misappropriates trust assets, and disappears. Where there has been a fraudulent breach of trust, the defrauded beneficiaries are able to pursue strangers to the trust for damages or the return of the trust property.

There are three main circumstances in which a beneficiary can bring a claim against a stranger to the trust:

(i) where the stranger purported to act as trustee (trustee de son tort),

(ii) where the stranger participated in the fraud, or

(iii) where the stranger received the misappropriated trust property having notice of the trust.

To read more about the circumstances where a beneficiary can recover trust property from a stranger to the trust, as well as a discussion of possible defences available to the person accused of defrauding the trust, click here.