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A trust fund, which has a sole trustee, is held for a man for life, remainder to the man’s daughter who is aged 23. The trust instrument contains no provisions relating to investment.
The daughter suggests to the trustee that £200,000 from the fund should be invested in land in Australia. The man has not expressed a view on this. The trustee is an English estate agent who has recently retired, but shortly before his retirement, he spent five years working in Australia, where he acquired expertise in the Australian property market. The trustee agrees with the daughter’s suggestion and invests £200,000 in land in Australia.
In the year since the trust made the investment, the value of land has fallen in Australia, and the land purchased by the trust is now worth only £100,000.
Does the trustee have any liability for the fall in value?
A. No, because he acted as a prudent man of business.
B. No, because he acted in accordance with the daughter’s suggestion.
C. No, because land is a long-term investment.
D. Yes, because land overseas is an unauthorised investment.
E. Yes, because he was an expert in land values in Australia and should have known that it was not a prudent investment.
D - Yes, because land overseas is an unauthorised investment.
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