9.The Public Trustee’s liability to the beneficiaries of the funds he manages is imposed by section 2 of the Public Trustee Act 1906.
10.Section 2 of the Public Trustee Act 1906 provides that (subject to the other provisions of the Act) the Public Trustee has the same powers, duties and liabilities as a private trustee acting in the same capacity. In general, the position is that a private trustee is personally liable to reimburse a fund where his breach of trust causes a loss to it.
11.Section 7 imposes a liability on the Consolidated Fund to make good any sums required to discharge the Public Trustee’s liability. It also provides, however, that the Public Trustee (and accordingly the Consolidated Fund) is not liable where the Public Trustee (or any of his officers) has not contributed in any way to that liability, and could not have prevented it by reasonable diligence.
12.The intention behind the limitation of liability in section 7 seems to have been to exclude liability for a breach of trust caused solely by the actions of a co-trustee. This exception to the general liability imposed by section 7 of the Act is not needed because private trustees are not liable for breach of trust by co-trustees in the absence of their own fault. Accordingly, the exception in section 7 is of no effect.
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