Self-dealing rule: trustee buying trust property

The self-dealing rule, stated by Megarry V-C in Tito v Waddell (No 2) and applied in Barnsley v Noble, is that if a trustee sells trust property to himself, the sale is voidable by any beneficiary ex debito justitiae, however fair the transaction. The rule reflects the fiduciary's duty not to place himself in a position where his interest and duty conflict. As Barnsley v Noble records, it applies unless the fiduciary has obtained the principal's fully informed consent, or the transaction is authorised by the trust instrument or the court. Mairead, as trustee, was on both sides of the transaction, and none of those safeguards was present. The fairness of the price and the co-trustee's agreement are therefore beside the point. The objecting beneficiary can have the sale set aside as of right. This is different from the fair-dealing rule, which governs a trustee buying a beneficiary's own beneficial interest.

Why A is wrong: The self-dealing rule applies however fair the price; a full valuation is no defence.

Why B is wrong: A co-trustee cannot authorise a conflicting transaction; the beneficiaries' informed consent or other authority is needed.

Why D is wrong: The transaction is voidable, not void, so it stands until a beneficiary elects to set it aside.

Why E is wrong: Proof of no advantage taken is the test under the fair-dealing rule, which governs purchases of a beneficiary's interest.