Trustees Breach of Trust Excused

Trustee Act: Trustees Breach of Trust Excused

Section 96 of the Trustee Act allows the court to excuse a trustee for negligence or breach of trust when handling estate assets if the trustee acted honestly and reasonably.

Section 96 states as follows:

96. If it appears to the court that a trustee, however appointed, is or may be personally liable for a breach of trust, whenever the transaction alleged to be a breach of trust occurred, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the court in the matter in which the trustee committed the breach, then the court may relieve the trustee either wholly or partly from that personal liability.



Like trustees, pursuant to section 96, executors may be excused of liability in appropriate circumstances: see Brown v. Brown, 2011 BCSC 649.

To be excused, a trustee must satisfy all three elements in section 96:

  1. he or she must have acted honestly;
  2. must have acted reasonably;
  3. and the court must find that, in the circumstances, it would be fair to excuse the trustee for the breach and for failing to obtain directions from the court: Langley v. Brownjohn, 2007 BCSC 156 at para. 61.

The burden rests with the trustee who is seeking the protection of section 96 to prove that his or her actions are worthy of the exercise of the court’s discretion to excuse the trustee for the breach: Langley, supra, at para. 63.

In exercising its discretion pursuant to section 96, the court will consider factors including {Langley, supra at para. 66):

In Fales v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302 (“.Fales”), the Court discussed the duties of trustees. The principles in Fales apply to executors: see Madock v. Greater, 2010 BCSC 567 at para. 61 and Re Ili/lis Estate, 2015 BCSC 208 at paras. 76- 77.

As set out in Fales, it in large part it reflects the longstanding principles regarding the duties of a trustee:

Traditionally, the standard of care and diligence required of a trustee in administering a trust is that of a man of ordinary prudence in managing his own affairs (Learoyd v. Whiteley [(1887), 12 App. Cas. 727.], at p. 733; Underhill’s Law of Trusts and Trustees, 12th ed., art. 49; Restatement of the Law on Trusts, 2nd ed., para. 174)

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