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The self-dealing rule

The self-dealing rule is connected to, but distinct from, the fair dealing rule as well as the genuine transaction rule. There is authority that the rules are not, on a correct analysis, part of the duties or discretions of a trustee; rather they are restrictions which inhibit a trustee from acting in certain ways. This has important consequences in terms of limitation of any action against trustees by beneficiaries.

The rule against self-dealing encompasses several slightly different rules which were considered in Right Reverend Hollis (Bishop of Portsmouth) v Rolfe:

1. •

   a trustee cannot make a contract with themselves (subject to statutory exception) so any attempt to do so is ineffective—this was described in Right Reverend Hollis (Bishop of Portsmouth) v Rolfe as the primitive self-dealing rule, although it has also been described as the two-party rule

2. •

   a trustee's power of sale cannot validly be exercised in their own favour (subject to any contrary provision in the trust instrument)—this was described in Right Reverend Hollis (Bishop of Portsmouth) v Rolfe as the