Documente Academic
Documente Profesional
Documente Cultură
removal,
retirement and
control
Subtitle
Appointment
• The rule is that any person capable of holding property in law could be
made a trustee.
• Phua Chui Har v Amanah Raya Bhd [2002] 4 AMR 4753 ‘the court is
under no duty or obligation to determine the reasons for the
deceased’s appointment of the defendant as the trustee of her estate’.
(“The court will not acquire why testator appoint the particular
trustee.” )
Ways to Appoint:
• A person may declare himself or herself as a trustee.
• A trust instrument may specify someone to appoint the trustees.
• Settlor may also reserve himself or herself the power of appointment.
• A person could also be a trustee by implication of law, exemplified by
resulting trusts or by operation of law, as illustrated by constructive
trust.
Cont..
• Where the trust instrument or the will makes no provision
for the appointment of trustees, the court will make the
necessary appointment because equity will not allow a
trust to fail for want of trustee.
• However, it will not apply where, exception stated in the
case of Re Lysaght [1965] 2 AII ER 888
1. Express provision :
• The trust instrument or the will may contain express
provisions for the subsequent appointments of trustees.
• This is unnecessary as the statutory power that exists for the
purpose under the TA 1949
2. Section 40(1) (a) (b) (c) (d) (e) (f) of the Trustees Act
1949
Cont….
3. Appointment by Court – Section 45 (1) (a) (b) of the Trustees Act 1949
•S.45(1)(a) –
•Court has statutory power to appoint new trustee either in substitution for or in
addition to any existing trustee or although there is no existing trustee.
•Court can appoint trustee if “it is found inexpedient, difficult or impracticable so to do
without the assistance of the court”.
•Re Tempest (1866) 1 Ch App 485 one of two appointed trustees in family
predeceased the testator. Those with power of appointment could not come into
consensus on a selection. Mr. Petrie was named but was objected by a beneficiary on
ground it was testator’s wish to exclude him. Held could not be appointed given the
testator’s wish and the likelihood of his bias to the prejudice of some of the
beneficiaries.
•Re Tempest Laid down principles governing appointment of trustee:
• Court have to regard to the wishes of the persons by whom the trust is created.
• Court will not appoint a person interested under the trust. (such as beneficiary)
• Whether his appointment will promote or impede the execution of the trust. (someone
who will execute the trust in a proper way)
Cont…
• Re Smirthwaite Trust – appointment by the court can be
made when trustees all of whom had died before the
testator
• Re May’s Will Trust - appointment by court can be made
when a trustee who was in enemy territory and was unable
to escape
• Re Solicitor – appointment by court can be made when the
trustee is bankrupt
Retirement of Trustees
1. Express Provision
• The trust instrument may make specific provisions in respect
of the retirement of trustees.
2. Statutory Provision
• Section 40(1) “..or desire to be discharged from all of the
trusts or powers reposed in or conferred on him..”
• Section 43(1) provides for the retirement of a trustee
without a new appointment but subject to conditions. Such
as :
• There will be either a trust corporation or at least 2 individuals to act
as trustees to perform the trust, then if such trustee declares in
writing that he is desirous of being discharged from the trust.
• And the co-trustees consent in writing to the discharge of the
trustee.
Cont…
3. Consent of all Beneficiaries
• A trustee who secures the consent of all the
beneficiaries who are of full age and sui juris may retire.
4. By court order
• Section 45 of the Trustees Act 1949 court may make
order appointing a new trustee, in substitution, in the
prescribed circumstances. The court also enjoys an
inherent jurisdiction to allow trustee to retire.
Removal of Trustee
1. Express Provision
•The trust instrument may contain express provisions authorizing the removal
of trustees.
2. Statutory Provision
•Section 40(1) of the Trustees Act 1949 : A Trustee may be removed if
•He or she remains out of Malaysia for more than 12 months or
•Refuses to act
•Is unfit to act
•Incapable to act
•Is a minor
•Ligar Fernandez v Eric Claude Cooke his continued absence from Malaysia
for over 12 months as this rendered him legally incapable of acting as a trustee
pursuant to s40(1)
•Phua Chui Har v Amanah Raya Bhd The saving of expenses that a defendant
trustee may charge when administering the estate without more is not valid
ground within the intendment of the section.
Cont…
• Section 45 of the Trustees Act 1949
• The court is empowered to appoint new trustee in the prescribed circumstances.
• Titterton v Oates [1998] 143 FLR May a trustee be removed when court
appoints a new trustee under the section?
• the Plaintiff applied to have the 1st defendant removed as a trustee on the
account that she had not distribute income efficiently, that she was guilty of
conflicts of interest and that she had failed to understand the nature of the
discretion conferred in dealing with 2nd defendant, a brother who was
intellectually disabled.
• It was explained by Crispin J that the section was intended to authorize the court
to make orders where there was an existing and independent right to have a
new trustee appointed.
• The section contains no explicit power to remove a trustee and the power to
appoint in substitution for an existing trustee may be intended to simply
authorize the court to replace a trustee who has resigned or is disqualified form
continuing in that role.
• Held: Court had no power to remove a trustee against his or her will.
3. Courts inherent power to remove trustees
•The court enjoys an inherent jurisdiction to remove trustees in the execution of trust.
•Re Wrightson [1908] 1 Ch 789
• “You must find something which induces the court to think either that the trust property will not
be safe or that the trust will not be properly executed in the interest of the beneficiaries.”
• The complaint must satisfied the court that the alleged is fit to be removed.
•Letterstedt v Broers (1884) 9 App Cas 371
•The courts main guide is the welfare of the beneficiaries.
•In cases of positive misconduct the court will have no difficulty in removing trustees who have abused their
trust.
•It is not every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce the court to
remove the trustee. The trustee’s acts or omission must be as such to endanger the trust property, or to show a
want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.
•Removal will be appropriate when the continuance of the trustee would prevent the trust being properly
executed.
•Friction or hostility between trustees and beneficiaries is not of itself a reason for the removal of a trustees.
However, it should not be disregarded if the hostility is grounded on the mode in which the trust had been
administered, such as where it has been caused wholly or partially by substantial overcharges against the trust
estates.
• Titterton v Oates
• Trustee will not normally be removed merely because certain beneficiaries
desire his or her removal.
• It is insufficient to show that all beneficiaries require such removal. Nor will a
conflict of interest or a breach of trust will necessarily lead to removal.
• The jurisdiction of court as to the removal of a trustee must be exercised with a
view to the interest of the beneficiaries, security of the trust property, the
efficient and satisfactory execution of the trusts and a faithful and sound
exercise of the trustee’s power.
• General law is that breaches of trust may or may not lead to removal. As Crispin
J says: “More importantly, my decision to order removal is not ultimately based
upon the commission of those breaches of trust but upon the conviction that
the maintenance of the present arrangement would be damaging to the
interests of all concerned.”
• Halsbury law of Malaysia : Court will only remove the trustee if he refuse to
execute the trust, mismanaged, or has disqualified himself, or the continuance
will be detrimental to the trust. When a trustee is removed, he is usually
ordered to pay the cost of removal.
Death of trustee
• Where there are 2 or more trustees, and death occurs to one of
them, then the remaining living trustee may fulfill his obligations
until another trustee is appointed or the trustee can act solely to
fulfill the mission of the trust. (If remaining trustee can deals with
the management of trust, they can do so without having to
appoint a new trustee)