Abstract:
The equitable accounting rules are notorious for being ancient and technical, and hence hinder the development of the rules governing compensating claims against trustees. The present article seeks to overcome these difficulties by conducting a historical survey of the traditional accounting rules in order to identify their governing principle. It argues that equity acts on a principle different from common law, in that the purpose of accounting is to restore the beneficiaries or the trust fund, as from the time when the trustee departed from his duty, to the position they would have been in had the trustee performed his duty. This way, equity achieves exact justice so that the beneficiaries will not be kept out of their rights from the time when performance was due to the time when it is actually obtained. To do so, equity adopts the legal fiction of treating the unauthorised disbursement as having never been made and the property as having already been obtained. The article argues that this fundamental norm should also be applicable to equitable compensation, and proposes analysing this remedy on the basis of the duties breached, rather than the type of breach as in traditional accounting rules. It then uses this new framework to propose detailed remedial rules for various breaches of duty by the trustee.