Substitutive Performance Management Case Study

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Substitutive performance as it used to be
Traditionally, where there has been a breach of trust arising from a misapplication of the trust property, the breach had to be remedied by having the trust falsified. This subjected the trustee to a strict liability to restore the trust property in specie. Where this was not possible, the trustee had to compensate the beneficiary by paying him or her a monetary sum equivalent to the value of the trust property. This is known as substitutive performance. As stated by Elliott, ‘a beneficiary seeking substitutive performance relief in respect of a misapplication of trust property does not complain of a breach of trust causing loss’ . However, this position was altered in the decision of Target Holdings Ltd v Redferns .
Target Holdings Ltd v Redferns in a nutshell
The case of Target Holdings can be summarised as follows. In Target Holdings, Redferns acted as solicitors for Target Holdings, a mortgage lender in a commercial transaction of property. Redferns also acted
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Before the requirement of causation, common law and equity cannot be said to have been completely untouched by each other. Both systems were anchored on the fundamental principle that claimant is to be put in the position he would have been had the breach not occurred. Furthermore, the primary obligation of both systems is performance of the trust or contract and the secondary obligation is to pay damages or compensate for loss. However, common law can be distinguished on the basis that the aim of the remedy is to remove the loss caused by the breach while in equity, equitable compensation aims to eradicate the breach instead. Furthermore, no fault was required to claim for a remedy in breach of trust. Thus, the harmonization between both systems can be seen to extend only to the fundamental principles but does not affect its detailed

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