“House of Lords revolutionizes trust law by requiring causation for breach claims”
Target Holdings lent money for a property purchase, with solicitors Redferns acting as trustees of the loan funds. Redferns released the money before completion and proper security was in place, in breach of trust. The property transaction later collapsed and Target suffered significant losses.
Whether trustees who commit a breach of trust are liable for all losses flowing from their breach, or only those losses that would not have occurred but for the breach (causation requirement).
Trustees are only liable to compensate for losses that would not have occurred but for their breach of trust. The traditional rule of strict liability without regard to causation does not apply to commercial trust arrangements.
This case fundamentally changed breach of trust law by introducing causation requirements, moving away from strict liability and aligning trust compensation more closely with common law damages principles.
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OSCOLA Citation
Target Holdings Ltd v Redferns [1996] AC 421 (HL)
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