A breach of trust occurs when the trustee’s duty to act precisely within the terms of his obligations is not fulfilled. If he fails in this, it is of no significance that he or she had no intention of departing from his duty. Trustees have been found in various conditions of blameworthiness — fraudulent, wilfully neglectful, slovenly, and incompetent — but none of these elements needs to be proven in order to establish a breach of trust. If the letter of the trustee’s obligation has not been adhered to for whatever reason, he is liable to his beneficiaries for any loss that has occurred as a result. (Waters On Trusts). The question in law then becomes: is the trustee personally liable in damages for the breach of trust, innocent or otherwise?
The trustee is obliged to follow the terms of the trust.
The principle is so basic that it does not need authority; however, it is described succinctly in Merrill Petroleum Ltd. v. Seaboard Oil Co. (1957), 22 W.W.R. 529 at 557 (Alta. S.C):
…While it is also true that there are certain general obligations imposed by law on any trustee (e.g.. the duty not to profit from the trust at the expense of the beneficiaries) the more specific obligations and duties of a trustee are set forth in the instrument creating the trust – in other words, except for those general duties imposed by law on all trustees, the terms of a trust are to be found within the four comers of the trust instrument…. In other words, the first duty of this trustee (as of all trustees) was to follow implicitly the terms of the trust instrument, and, secondly, to observe those general principles of trustee law which did not run counter to the express terms of the trust.