The Davros-Dalek Trust (“the Trust”) has 3 trustees: Alice, Betty, and Corey: Equity and Trust Law Essay, TCD, Ireland
|University||Trinity College Dublin (TCD)|
|Subject||Equity and Trust Law|
The Davros-Dalek Trust (“the Trust”) has 3 trustees: Alice, Betty, and Corey. Decisions of the trustees must be unanimous. The beneficiaries of the Trust are the descendants of the late Dr. SkaroDavros-Dalek (“SDD”). Alice was a special friend of the late SDD over a long period of time. Alice is educated, but she has no specific trust, business, or law-related skills. Betty is a highly trained chartered accountant who had advised the late SDD over a long period of time in regard to financial matters. Corey is a highly skilled solicitor who had advised the late SDD over a long period of time in regard to legal matters.
On January 1, 2020, Corey proposed that the Trust invest €9,000,000 in X-Industries stock. Corey owned stock in X-Industries but failed to disclose this. In order to convince the other 2 trustees to support the proposal, Corey knowingly puts forward false financial materials to make the investment look more attractive than it really is. Although Betty was aware of Corey’s wrongdoing, Betty voted for the proposal. Alice never read Corey’s documents. Alice was entirely passive, and she only voted for the proposal because she saw the two professional trustees’ doing so. The proposal passed 3-to-0. The investment failed within a week, and the Trust lost all €9,000,000.
On February 1, 2020, Betty proposed that the Trust invest €6,000,000 in Y-Industries stock. Betty owned stock in Y-Industries but failed to disclose this. Corey’s office was in a building owned by Betty, and Corey lived in an apartment over the office. The apartment was also owned by Betty. Corey was 6 months behind on rent for both. Betty told Corey: “if you vote against my Y-Industries proposal, I will begin ejectment proceedings against you; if you vote for my proposal, I will give you a further year to pay your back rent.” Alice was entirely passive, and she only voted for the proposal because she saw the two professional trustees’ doing so. The proposal passed 3-to-0. The investment failed within a week, and the Trust lost all €6,000,000.
On March 1, 2020, Alice proposed that the Trust invest €3,000,000 in Z-Industries stock. Alice chose this investment by throwing darts at the financial page. Betty and Corey asked for a delay to research the investment. They both independently concluded, after conducting a professional investigation of Z-Industries’ prospects, that it was a sound investment. The 3 trustees met again on March 10, 2020, and the proposal passed 3-to-0. Within a week, the investment succeeded, and the Trust sold the Z-Industries stock for a €30,000,000 profit.
On April 1, 2020, all the beneficiaries brought suit against the 3 trustees and the trust.
Why can or cannot the profits from the March 10, 2020 investment offset the trustees’ liabilities for the other two investments?
What are the primary remedies that the beneficiaries can seek with a reasonable likelihood of success against each trustee?
In regard to each of the three separate transactions (from January, February, and March 2020):
 What is the scope of the monetary relief or damages (if any) that the beneficiaries can seek with a reasonable likelihood of success against each trustee; and,
 What is the scope of indemnity or contribution (if any) that each trustee can seek with a reasonable likelihood of success against each of the two remaining trustees? Discuss what liability (if any) is joint and several.
If there is a monetary recovery, who or what entity receives the funds?
In answering these questions, do not discuss pre- and post-judgment interest in regard to any damages, and make use of the judge-made law of equity, as opposed to modern statutory reforms. Support your answers with case law, doctrine, and policy.
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