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Liability of Directors of a Corporate Trustee

David Pollard

(From Issue 9, October 1999)

Where a company acts as a trustee, clearly in practice the actual decisions in relation to the trust will have to be made by individuals.  Commonly those individuals will be directors or employees of the trustee company. Clearly if the trustee company commits a breach of trust as a result of such a decision, the company itself will be liable, in the usual way, to the beneficiaries and others affected.  This will, of course, be subject to the terms of any relevant clause limiting or excluding liability.  However, are the individuals who actually made the decision (or omitted to act in the case of an omission) on the part of the trustee company also potentially liable?  Or can they shelter behind the corporate personality of the trustee company and so escape all personal liability altogether?

Basis for Liability?

A director or employee could potentially become personally liable by six different routes:

(i)                   through a direct fiduciary duty owed by directors of corporate trustees;

(ii)                 through a direct tort duty owed by directors of corporate trustees;

(iii)                by an accessory liability of a third party who dishonestly procures or assists in a breach of trust;


(iv)               an indirect fiduciary duty or duty of care in tort – i.e. that the individual director owed a fiduciary duty and a tortious duty of care to the trustee company.  This can then be enforced by the company itself (e.g. through its liquidator) or arguably the benefit of the claim based on breach of that duty is an asset of the trust and so could be enforced by the new trustees and/or the beneficiary;


(v)                 by the corporate veil of the trustee company  being disregarded and pierced; and

(vi)                by statute operating to impose direct liabilities for criminal fines and penalties onto directors and officers.

1              Direct Fiduciary Duty

This would, in effect, be a claim that a director of a company which is also a trustee is automatically be liable for any breaches of trust by the trustee company..  This is, apparently, the position in both Jersey and Guernsey by reason of an express statutory provision.

There was some support for a direct approach in two unreserved judgments of Dankwerts J. in the 1950’s.  In Re French Protestant Hospital [1951] Ch 567 and Abbey and Malvern Wells Limited v Ministry of Local Government [1951] Ch 728, Dankwerts J. had held that (in effect) directors were directly liable to beneficiaries of the trust of which the company was trustee.

However, both judgments are unreserved and do not seem well argued.  More recently in HR v JAPT [1997] OPLR 123 Lindsay J. pointed out that the earlier Court of Appeal authorities of Wilson v Lord Bury (1880) 5 QBD 518 and Bath v Standard Land [1911] 1 Ch 681 had not been cited to Dankwerts J.  In both these cases the Court of Appeal had held (by a majority in the Bath case) that directors were not as such liable for breaches of trust by the trustee company.


In the HR case, the plaintiffs’ counsel sought to distinguish these two Court of Appeal decisions by arguing that they should not apply to the case of a trustee company which administers only one trust and has only a very small issued share capital.  However Lindsay J. considered that he was not, without more, able to depart from the clear expressions of principle of the Court of Appeal.

Lindsay J. also considered two Australian decisions:  that of Finn J. in Australian Securities Commission v A S Nominees [1996] PLR 297, (1995) 13 ACLC 1822 and Walters J. in Hurley v B G H Nominees Ltd [1984] 10 ACLR 197.  Lindsay J. did not refer to other Australian authorities which could be seen as supporting the Bath  approach – see Galladin Pty v AimNorth Pty Ltd (1993) 11 ACLC 838 (Perry J.); Jeffrey v NCSC(1989) 7 ACLC 556 (Wallace, Brimsden and Pidgeon JJ).  He did discuss in a later part of the judgment another case, Young v Murphy (1994) 12 ACLC 558 (Supreme Court of Victoria).

Accordingly, Lindsay J. held:

“in my judgment neither subsequent English authority nor Commonwealth authority enables me to distinguish Bath…… There is a broad principle, as Cozens-Hardy M.R. described it in Bath at page 627, that the directors of a trust company stand in a fiduciary position only  to the company itself not to strangers dealing with the company and not even where the stranger is able to describe himself as a beneficiary of the trust of which the company is trustee.  Whilst exceptional facts can be envisaged, as Finn J. suggested and as Barnes v Addy (as I shall come to) illustrates, in which a finding of a fiduciary relationship between a beneficiary and the directors of the trustee company may be justified, I do not see the facts here relied on in argument, consisting only of directors purporting to act as such and acting (alleged carelessness apart) as one might expect directors of a trustee company to act, to be sufficient to enable any such a finding.  In other words, at any rate at first instance and so long as Bath stands, I regard this way of putting the Plaintiffs’ case as unarguable.”

This seems to me to be right as a matter of principle.  It seems wrong to impose an automatic liability, effectively as a guarantor, on directors of a trustee company regardless of their involvement in the particular circumstances.

Perhaps it could be argued that trust beneficiaries are not in the same position as normal contractual creditors.  Such creditors are voluntary creditors.  They take the risk of dealing with a limited liability company.  Conversely trust beneficiaries can be seen as involuntary claimants and so deserve greater protection.  However this argument would also apply in relation to other involuntary claims e.g. claims based on tort.  This argument seems  likely to probably be very difficult to sustain following the decision of the Privy Council in Re Goldcorp Exchange: Liggett v Kensington [1995] 1 AC 4 – see in particular Lord Mustill at page 104D but compare the comments at page 109H based on “swollen assets” and “involuntary creditors etc.”


As an alternative, it could be argued that it would be right to impose such an automatic liability only in the case of specific trustee companies set up in relation to one trust and with a very limited capital.  This was argued by counsel in the HR Case, drawing a contrast with the earlier Court of Appeal decisions.  Conversely, perhaps only those directors actually involved in the relevant decision with knowledge of the relevant facts could be held directly liable?

However both these approaches involve drawing a line at some stage.  When would a director be held to have sufficient knowledge?  When would a trustee company be considered to be undercapitalised for this purpose?  It must be better in the interests of certainty to keep the line clear.  Indeed, as counsel pointed out in the HR Case, it is difficult to see why the questions of “accessory” liability can arise in relation to directors (as many of the leading cases involved) if the direct fiduciary liability route is available.

Counsel in the HR Case reserved the right to claim in a higher court that the Court of Appeal decisions in Bath and Wilson were wrong.  No such appeal has emerged.  The prospects of overruling the two Court of Appeal decisions in a case going to the House of Lords, must be interesting.  (Note that comments in Wilson were relatively recently approved by the Privy Council in Kuwait Asia v National Mutual Life Nominees [1991] 1 AC 187.) 

2              Direct Tort Duty

The plaintiffs in HR v JAPT argued that a director of a trustee company could direct tort duties to the beneficiaries in two ways:

(i)                   by the imposition of a duty to act with care and skill on those who take upon themselves to act for others, following comments of the House of Lords inHenderson v Merrett Syndicates Limited [1995] 2 AC 145 and White v Jones [1995] 2 AC 207;

(ii)                 on the basis that directors can be personally liable in tort for actions of their company – following cases such as the decision of the Court of Appeal in Williams v Natural Life Health Foods Limited [1997] 1 BCLC 131.

However, Lindsay J. felt that no such tort liability could arise here.  He considered that arguments based on an imposition of a duty of care where persons act for others in tort could only apply where there was otherwise a lacuna in the law which would be unjust. For example in White v Jones, the projected beneficiaries of the deceased would have no claim open to them against the negligent solicitor unless a tortious duty was involved. Lindsay J. felt that he “cannot read the broad language as intended impliedly to override long established existing principles as to the identification, outside the identified lacuna, of as between whom fiduciary relationships exist or as to the identity of he who should be taken to have been the actor who should have assumed responsibility and who, on that account, became vulnerable to a claim”.

Here there was no lacuna in the law and to hold otherwise would in effect be to overturn the well established principles such as that found in Salomon v Salomon [1897] AC 22. Accordingly this argument did not have any prospect of success.

The second argument was based on the principle that where a tort has been committed by a company, the court has, by reference to special facts, felt able to impose liability on the director or directors personally concerned.

Lindsay J. discussed the recent decision of the Court of Appeal in Williams v Natural Life Health Foods, itself discussing the New Zealand decision of Trevor Ivory v Anderson[1992] 2 NZLR 517.  In this case a director was held personally liable for a misrepresentation made by the company in a leaflet issued to clients.


However, Lindsay J. considered that the decision in Williams depended largely on the fact that the action was based on the various (misleading) claims made by the company which were stated to be based on the direct personal experience of the director concerned and that director’s personal involvement in his company.  In the HR Case the activity of the director was “activity of the kind which one might expect of a director of such a company.  Although the line is hard to describe and will sometimes be hard to see, I do not see [the director] as here overstepping the line between the area in which identification of a director’s acts with his company is the basic premise and that area in which it can be recognised that the director’s acts involve an assumption of personal liability.”

The correctness of Lindsay J’s remarks was borne out by the later reversal by the House of Lords of the decision of the Court of Appeal in Williams – see [1998] 2 All ER 638

Accordingly neither of the direct tort routes are likely to be available to beneficiaries.

3              Accessory Liability

The House of Lords in Barnes v Addy (1874) LR 9 Ch App 244 made it clear that a third party can be directly liable to beneficiaries of a trust in some circumstances where the third party has been involved in a breach of trust by the trustee i.e. has procured or assisted the breach of trust.  This accessory liability does not require the third party to have benefited personally nor to have received any trust property.

The extent of such accessory liability was recently considered by the Privy Council inRoyal Brunei Airlines v Tan [1995] 2 AC 378.  The Privy Council stated that dishonesty is required on the part of the third party and that there is no requirement for the trustee itself to be dishonest.  The case involved a claim against the managing director of a travel agency company.  The director was held liable because he had arranged for trust money held by the company for the airline plaintiff to be paid away in breach of trust and this was dishonest on his part.

Royal Brunei is a decision of the Privy Council and so, in theory is not strictly binding on courts here.  However the decision has been followed in various cases in England and Wales, in particular the first instance decisions in HR v JAPT [1997] OPLR 123 andWakelin v Read [1998] PLR 337 and (more recently) the decision of the Court of Appeal in Heinl v Jyske Bank (Gibraltar) Ltd (1999) The Times 28 September.

Lindsay J. in HR v JAPT also considered the recent statement of the law by the Privy Council in Royal Brunei Airlines v Tan.  Lindsay J. pointed out that:

“dishonesty is carefully defined in the judgment for use in this particular concept.  I shall speak of “Royal Brunei dishonesty”, an appellation which I hope that the airline will tolerate with the stoical indifference which the citizens of Wednesbury bear the attribution to them of that particular degree of unreasonableness”.

Lindsay J. pointed out that:

Royal Brunei dishonesty is governed by an objective rather than a subjective standard;

it is not dependent on the lower/higher moral standards of the individuals concerned, although regard may be had to some personal attributes such as the experience and intelligence of the individuals concerned;

carelessness is not as such dishonesty; nor is imprudence, although imprudence may be carried recklessly to such lengths to call in question the honesty of a person concerned;

acting in reckless disregard of others’ rights or possible rights can be a telltale sign of this kind of dishonesty.

According to Lindsay J. it is ‘Royal Brunei dishonest’ for a person “unless there is a very good and compelling reason, to participate in a transaction if he knows it involves a misapplication of trust assets for the detriment of the beneficiaries or if he deliberately closes his eyes and deliberately chooses not to ask questions so as to avoid his learning something he would rather not know and then for him to proceed regardless”.

Lindsay J. then discussed the meaning of this:

“in other words, as I understand the judgment in the case, Royal Brunei dishonesty so far as concerned with risk is not directed to the taking of risk in relation to one’s own position but with the taking of a risk which is “commercially unacceptable” because it might jeopardise the position of others.  However, on the facts of this case, [the director] could hardly say that his activity as a director of the [trustee company] could reasonably be thought not to affect any one but that trust company.”

Dishonesty may well be difficult to prove. A high standard of proof of dishonesty is required – see the decision of the Court of Appeal in Heinl and Others v Jyske Bank (Gibraltar) Ltd (1999) The Times 28 September.

For example, in Australia in Compaq Computer Australia Pty Ltd v Merry (1998) ALR 1, Finkelstein J. held that directors of a company did not have sufficient knowledge of breach of the terms of an agreement to segregate sale proceeds and place them in a separate account.

Conversely, Hart J. in Wakelin v Read [1998] PLR 337 considered that the Ombudsman had good grounds for considering a director (Mr Read) to have been dishonest in relation to sale and leaseback of property that had resulted in a big loss to the scheme.  He held (at paragraph 37) that:

“The finding that Mr Read was oblivious to the conflict of interest, the fact that the investment was obviously fraught, the fact that Mr Read and his co-directors plunged into the transaction `eyes shut ears stopped`, and the fact that the transaction represented a commercially unacceptable risk in that it jeopardised the position of the beneficiaries, are all independent of the finding that the leaseback was a sham, and, taken together, compel the conclusion that Mr Read was dishonest in the Royal Brunei sense.”

The Royal Brunei principle does not apparently extend to dishonestly assisting a breach by a company director of his duty to the company – Rattee J. in Brown v Bennett [1998] 2 BCLC 97.

Exclusion Clauses

It is unclear whether a director (or other third party) could be liable as an accessory if there is in fact no breach of trust because the trustee can rely on an exemption clause. (See e.g. the article “Knowing Assistance and Receipt” by Simon Gardner of Lincoln College Oxford in [1996] LQR 56 at 68.)  Lord Nicholls in Royal Brunei stated (at [1995] 3 WLR 69D.):

These examples suggest that what matters is the state of mind of the third party sought to be made liable, not the state of mind of the trustee.  The trustee will be liable in any event for the breach of trust, even if he acted innocently, unless excused by an exemption clause or relieved by the court”.


It would therefore seem arguable that a director may be liable even if the trustee company is not.  In practice it is likely that if a director is dishonest, the trustee company will be treated as dishonest (as happened in Royal Brunei itself).

Emily Campbell of Wilberforce Chambers has argued (see her article “Dishonest assistance: to plead or not to plead” in the December 1998 issue of Trusts & Estates Journal) that, in the light of Lord Nicholls’ remarks, if an exoneration clause is “worded in such a way as to preclude a breach of trust from having occurred, then any claim against a third party in dishonest assistance is bound to fail.”  This seems to me to give too much weight to the actual wording of the clause (as opposed to its effect), but may well be followed by the courts.

It would be prudent to provide in any trust deed for any exclusion clause to be expressly stated to apply to trustee directors.  It is unlikely however that any exclusion clause will have a wider scope and cover “dishonesty”.

Nicholas Warren QC has suggested  (in his talk to STEP and TACT on “Trustee Risk and Liability” (1999, 22 March.) that one reason to include directors of a corporate trustee within an exclusion clause is to cover the potential divergence between the “subjective” dishonesty that Millet LJ (as he then was) held in Armitage v Nurse [1998] Ch 241 could not be covered by an exoneration clause and the “objective” dishonesty held by Lord Nicholls in Royal Brunei as sufficient to fix liability on a third party (such as a director).

It seems that the Directors of a trustee company are probably able to rely on an exclusion clause (or indemnity) even though they are (in most cases) not parties to the trust deed.  The point does not seem to have been raised in a reported case, but it seems to me to be best to consider the Directors to be able to enforce the provisions in their favour on the basis that they are, to that extent, beneficiaries of the pension trust.

If the Contracts (Rights of Third Parties) Bill (currently before Parliament) is enacted, Directors may be able to rely on these provisions as a matter of contract law. 

4              Indirect Fiduciary Duty or Duty of Care (a “dog-leg” claim)

Directors (and to a lesser extent employees) owe a range of duties to their company or employer (i.e. the trustee company).  These include fiduciary duties based on their office as Directors, various statutory duties (including, importantly commonly, duties in relation to wrongful and fraudulent trading) and, in the case of executives and executive Directors, contractual (and tortious) duties in relation to their position as employees.

The duty of care and skill of a Director has historically been set at a relatively low level, following the decision of Romer J. in Re City Equitable Fire Insurance Co [1925] Ch 407 at page 427.

In addition, the implied term in contracts for the supply of a service under section 14 of the Supply of Goods and Services Act 1982 that, where the supplier is acting in the course of the business, the supplier would carry out the service with reasonable care and skill.  However this does not apply to the provision of services to a company by a Director of the company in his capacity as such – see the Supply of Services (Exclusion of Implied Terms) Order 1982 (SI 1982/1771).

However the Courts have recently been extending the liability of Directors (in particular non-executive Directors as would be the case for non-professional Directors of a trustee company) owed to the company. . See, for example,  Re Continental Assurance Company Plc (1996) 14 June, Chadwick J;  AWA Limited v Daniels (1995) 13 ACLC 614 (NSW Court of Appeal);  Re Property Force Consultancy Pty Ltd (1995) 13 ACLC 1051 (Derrington J, Queensland Supreme Court);  Norman v Theodore Goddard [1991] BCLC 1028 (Hoffmann J),  Re D’Jan of London [1994] BCLC 561;  Ginora Investments v James Capel & Co (1995) (Rimer J).  Similarly, in Bishopsgate Investment Management v Maxwell (No 2) [1994] 1 All ER 261, the Court of Appeal held that a Director was liable to a trustee company (in this case a fund manager) for breach of his fiduciary duty.

Directors of a trustee company may also incur liabilities under the Companies Acts, for example if they engage in wrongful trading or fraudulent trading.  This could easily be the case where their actions result in the trustee company incurring liabilities (e.g. a breach of trust) where it does not have the assets to meet them (e.g. because its indemnity out of the assets in the pension scheme is not available).  However it seems likely that these direct statutory liabilities are probably owed directly only to the liquidator and not available as trust assets – see Re Yagerphone [1935] Ch 392, Re MC Bacon (No 2) [1990] BCLC 607, Re Oasis Merchandising Services [1995] 2 BCLC 493 and Re Ayala Holdings Ltd (No 2) [1996] 1 BCLC 467.

Clearly these duties can be enforced by the trustee company, particularly if it has suffered loss as a result of their breach by the director concerned.  For example if the trustee company has become liable for breach of trust.  But can this claim be enforced by the new trustee of the relevant trust without going through the old trustee company?

In HR v JAPT Lindsay J. considered arguments that the director of the trustee company owed a duty of care (fiduciary duty or a tortious duty) to the trustee company.  By breaching that duty the trustee company suffered a loss, namely a claim by the beneficiaries of the pension scheme.  It was argued that the claim by the trustee company against the director is an asset of the pension scheme which has, therefore, passed to the current trustees.

Lindsay J. pointed out that the current trustees were appointed by deed and so section 40(1)(b) of the Trustee Act 1925 had effect to vest the new trustees with most assets of the trust.

The defendant director argued that the proper means of enforcing any such duty would be by the trustee company itself bringing an action against him.  The plaintiffs (current trustees and the beneficiaries) could force the trustee company to bring such action by driving it into liquidation and then requiring the liquidator take such an action.  The proceeds would then, in effect, pass to the pension scheme as the main creditor of the corporate trustee.

Lindsay J. pointed that there could well be limitation difficulties against such a process. However, Lindsay J. thought it was arguable that such an indirect claim, based on a fiduciary or tort duty, could be brought by the present trustees or by the beneficiaries of the Scheme.  Lindsay J. relied on comments of Lord Nicholls in Royal Brunei where he discussed the position of agents of the trustees.  He said:

“For the most parts they will owe to the trustees a duty to exercise reasonable skill and care.  Where that is so, the rights flowing from that duty form part of the trust property.  As such they can be enforced by the beneficiaries in a suitable case if the trustees are unable or unwilling to do so.”

Lindsay J. thought  it was at least arguable that such an indirect or “dog-leg” claims by beneficiaries could also be made against directors.  He considered the decision of the Supreme Court of Victoria in Young v Murphy (1994) 12 ACLC 558 in which Phillips J. (with whom Booking and Batt JJ. agreed) seemed to hold against any such indirect claim.  However, Lindsay J. distinguished the decision in Young on the basis that he thought that the decision there rested in part on the particular form of pleading and in part on the particular facts.

Lindsay J. seems to have treated it as a factual matter that in Young it could not be said that the directors owed their duties “only in relation to some particular trust or trusts”, whereas in the HR case the trustee company was only ever trustee of one trust.

In effect Lindsay J. said that he was “not confident that the reasoning involved in Youngcannot be distinguished, if not on the pleadings alone then on the facts”.  Accordingly the point was arguable and so striking out would not be ordered.

Lindsay J. went on to analyse the level of care that was involved.  He thought it was clear that any duty owed by the director would be on the “yardstick of his being a director” rather than on a different one of his being a trustee.  He also dismissed the argument that allowing such a “dog-leg” claim may discourage individuals themselves from accepting office as directors.  He (rightly) dismissed this as only being relevant if the trustee company is insubstantial and uninsured and stated that “if all that is discouraged is the use of insubstantial uninsured trust companies, that would be a discouragement many might think timely enough”.

Lindsay J. pointed out that the alternative (of allowing the trust company to enforce the director’s duty) would involve extra complication and expense (perhaps needing a liquidator to be appointed).  It could also give rise to limitation problems.  Note that there may also be difficulties in allowing certain statutory claims to be transferred. There is authority in the UK that certain claims given to a liquidator (e.g. to bring an action under section 214 of the Insolvency Act 1986 for a contribution by a director to the assets of the company by reason of wrongful trading) cannot be assigned to a third party – see the decision of the Court of Appeal in Re Oasis Merchandising Services Ltd[1997] 1 All ER 1009, distinguishing (on the basis of differently worded statutory provisions) the decision of Drummond J. in Re Movitor Pty Ltd (1995) 19 ACSR 440.

Note that in Victoria in Collie v Merlaw Nominees Pty Ltd [1998] VSC 203, (1998) 22 December, Byrne J. followed Young v Murphy and held that a substitute trustee had no right to sue a director of a former trustee for breaches of statutory and fiduciary duty. However HR v JAPT was not mentioned by Byrne J. in this case.

This could give rise to some issues about whether any exoneration clause applicable to the trustee can be relied on by the director.  It seems to me that this should be possible.  The liability of the director can be no greater than the loss suffered by the trustee company, which is itself limited by the exoneration clause.  Statutory provisions limiting the ability of a director to exclude or restrict his liability to the company for breach of duty would not impact on this analysis.  (See section 310 of the Companies Act 1985.) Nevertheless, it is common for exoneration clauses to be stated expressly to extend to directors of a corporate trustee.

5              Piercing the Corporate Veil 

In some (limited) cases, the courts are prepared to pierce the corporate veil and ignore the separate existence of the company.  Usually some degree of deception or fraud is needed.  In HR v JAPT the plaintiffs argued that the separate legal personality of the trustee company should be disregarded and instead the directors seen as the only real parties to the relevant transactions.

However Lindsay J. thought that this was not possible.  There had never been any deception – no one being deceived into thinking that the trustee company was other than it was, “an assetless, incomeless corporate entity with no function other than the management and administration of the Scheme, a function necessarily carried out by individuals on their behalf…..No concealment of any relevant fact is pleaded.”  Nor was there any evidence of “a device or sham or cloak”.   

Accordingly Lindsay J. held that any case based on this argument was quite hopeless.

6              Statutory liabilities 

Where statutes imposing criminal fines and penalties on companies they commonly include a provision allowing those penalties to apply to the directors and officers of the company if the relevant act `was done with the consent or connivance of, or is attributable to any neglect on the part of,` any director.

This can apply to directors or officers of trustee companies.  For example under the Pensions Act 1995 fines and civil penalties are generally imposed on the trustee i.e. the trustee company.  However, there is provision for this liability to flow through to the directors of a trustee company in certain circumstances.  For example, section 10(5) entitles the Occupational Pensions Regulatory Authority (OPRA) to levy a civil penalty against a director of a trustee company if the company would be so liable for a penalty and the relevant act or omission of the trustee company `was done with the consent or connivance of, or is attributable to any neglect on the part of,` any director.  A similar provision applies under section 115 in relation to criminal offences under Part I of the 1995 Act.

These provisions are similar to the liability provisions in many recent statutes – see the discussion at para 5.31 to 5.38 of my book “Corporate Insolvency: Employment and Pensions Issues” (Butterworths, forthcoming).


It seems that a director is not automatically liable under these provisions if there is a breach by the trustee company.  A criminal prosecution by OPRA in July 1999 against the managing director of an employer company failed because the managing director could rely on another director in this area.  According to the note in OPRA Bulletin 11:

During his trial, the managing director claimed that he had no knowledge of the failure to pay the employees’ contributions to the pension scheme. After a trial lasting four days, the jury found him not guilty on 20 July 1999. The jury’s decision was based on a direction from the judge that a company director was entitled under company law principles to delegate to a fellow director the responsibility for matters falling within that director’s area of management. So, for example, a director – as in this case – was entitled to rely on the finance director for paying contributions to the pension scheme on time, since this fell into the category of work that a finance director would be expected to carry out.  While the managing director’s lack of understanding of the company’s financial position might reflect on his abilities as a director, it did not amount to consent, neglect or connivance in relation to the offences under the Pensions Act.”

If a director has a penalty levied on him or here by OPRA under s10(5), the trustee company cannot be penalised as well (s10(7)).  This does not apply to the criminal penalties.  There is no equivalent to s10(7) in s115.


Broadly then, directors and officers of corporate trustees are not, in the UK, automatically liable for breaches of trust committed by the corporate trustee, even if they were involved in the breach.  However they may incur personal liability if they were dishonest or if they are found to have broken a duty owed to the trustee company itself.  In addition they may incur a liability for criminal or civil penalties in some cases.

© David Pollard