Q&As

What is the personal liability of charity trustees where they institute litigation that is lost and the charity has insufficient assets to pay its liability?

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Published on LexisPSL on 10/04/2018

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • What is the personal liability of charity trustees where they institute litigation that is lost and the charity has insufficient assets to pay its liability?

What is the personal liability of charity trustees where they institute litigation that is lost and the charity has insufficient assets to pay its liability?

Trustees of a charity are subject to the same rules and duties as trustees of private trusts, save that they have an added supervisor in the form of the Charity Commission. Subject to this, trustees have duties and powers. The difference is that a performance of a duty is obligatory and powers are to a greater or lesser degree discretionary in nature. In practical terms the trustees’ duties towards a beneficiary, in this case the charity, are fiduciary.

The guiding duty for trustees is to exercise reasonable care. This common law position was summed up in Re Whiteley:

‘The duty requires a trustee when managing the affairs of a trust, to take “all those precautions which an ordinary prudent man of business would take in managing similar affairs of his own” but having particular regard to the fact that “the duty of a trustee is not to take such care only as a prudent man would take if he had only himself to consider; the duty rather is to take such care as an ordinary prudent man would take if he were minded to [act] for the benefit of other people for whom he felt morally bound to provide”.’

The statutory duty is

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