Understanding Trusteeship

14/05/14 Equity & Trust II (Dr. Zuraidah Ali) 1
TRUSTEE

Learning Objectives
 Students will be able to know;
i) The concept of trusteeship
ii) Appointment of trustee
iii) Removal of trustee.
iv) Retirement of trustee
v) Number of Trustee
vi) Fiduciary Nature of Trusteeship.

Nature of Trustee’s office
 Imperatives
 Onerous : He must act exclusively in
the interest of the trust
 Many of these powers and duties are
described in the trust instrument.
 It also depends upon the ctc in which
trust arises.

Position in Malaysia
 Trustee Act 1949.
 Quaere : Does it includes totally the
application of equity in Malaysia
 NO
 Trustee Act only covers some topic.
 Others will be governed by Equity.

Codified Part Relating to
Duties of Trustee
 1) Appointment, retirement and
removal of trustee (s39 - s45)
 2) Powers of trustee
 a) General power (s16 – s30 & s 68)
 b) Investment power (s11 – s15)
 c) Maintenance and Advancement
Power (s36 – s37)

 3) Indemnity from liability of trustee
and his representatives (s31 – s 35 &
s66)
 4) Powers of Court
 a) General (s45 –s 47)
 b) Vesting Power (s44 – 58)
 c) Others (s59 – s 65)

Uncodified Part Relating to
Trustee
 a) A standard of care to be exercised
by the trustee
 b) Duty of trustee or appointment
 c) Duty of trustee as fiduciary
 d) Remuneration
 e) Liability for the breach of trust
 f) Measure of liability

 Defences of trustee
 Personal & Proprietary claim - tracing

WHO CAN APPOINT
TRUSTEE.
 Court has inherent jurisdiction in
actions for the administration of trusts
to appoint or remove a trustee
compulsorily.
 Court will need to look powers
contained in the instruments

APPOINTMENT OF
TRUSTEE
 General rule : Any person capable of
holding property in law could be made a
trustee and it is for the settlor or testator to
decide the basis on which a person is
chosen.
 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
 PHUA CHUI HAR V AMANAH RAYA BHD
[2002] 4 AMR 4753.

Who May be A Trustee
 1) Minor
 - cannot be appointed as a trustee – can’t
hold a legal estate. An infant may become
a resulting or constructive trustee of
personalty
(Re Vinogradoff[1935] WN 68 – a child of 4
years was able to hold property on
resulting trust.
 2) Crown
 Old position : Crown cannot be trustee
 Accepted principal of vicarious liability

 3) Judicial Trustee
 -An individual or corporation appointed
by the court under Judicial Trustee
Act
 Rationale : to provide a middle course
in cases where administration of the
estate by ordinary trustee had broken
down

Section 40 of Trustee Act 1949
 Power of appointing new or additional
trustees.
 (1) Where a trustee, either original or substituted,
and whether appointed by a Court or otherwise,
 i) is dead, or
 ii) remains out of Malaysia for more than twelve
months, or
 iii) desires to be discharged from all or any of the
trusts or powers reposed in or conferred on him,
or
 iv) refuses or is unfit to act therein, or
 v) is incapable of acting therein, or
 vi) is a minor,

Who may exercise power of
appointment
 Section 40(1) stated that it may be exercised by
the following persons subject to the restrictions
imposed by this Act on the number of trustees -
 (a) the person or persons nominated for the
purpose of appointing new trustees by the
instrument, if any, creating the trust; or
 (b) if there is no such person, or no such person
able and willing to act, then the surviving or
continuing trustees or trustee for the time being,
or the personal representatives of the last
surviving or continuing trustee

Appointment by the court
 This can be found under section 45 (1)(a) of
the Trustee Act.
 (similar with s 41 0f the English Trustee Act
1925)
 Statutory formula used by the court: where
 “it is inexpedient, difficult or impraticable so
to do without the assistance of the court.

Section 45 of Trustee Act 1949
Power of Court to appoint new trustees.
 (1) (a) The Court may, whenever it is
expedient to appoint a new trustee or
new trustees, and it is found
inexpedient, difficult or impracticable
so to do without the assistance of the
Court, make an order appointing a new
trustee or new trustees either in
substitution for or in addition to any
existing trustee or trustees, or although
there is no existing trustee.

 (b) In particular and without prejudice to the
generality of the foregoing provision, the
Court may make an order appointing a new
trustee in substitution for a trustee who
 i) is sentenced to a term of imprisonment or
 ii) is mentally disordered or
 iii) is a person of unsound mind or
 iv) is a bankrupt or
 v) is a corporation which is in liquidation or
has been dissolved.

 (2) An order under this section, and
any consequential vesting order or
conveyance, shall not operate further
or otherwise as a discharge to any
former or continuing trustee than an
appointment of new trustees under any
power for that purpose contained in
any instrument would have operated.
 (3) Nothing in this section gives power
to appoint an executor or administrator

Case
 BHIKU Daeng & Ors v Maung Shwe
Tun (1980) MLJ 184

How many Trustee
 s39. Limitation of the number of
trustees.
 (1) In the case of settlements and
dispositions on trust of property,
whether movable or immovable, made
or coming into operation on or after the
material date -

 (a) the number of trustees thereof shall
not in any case exceed four, and
where more than four persons are
named as such trustees, the four first
named (who are able and willing to
act) shall alone be the trustees, and
the other persons named shall not be
trustees unless appointed on the
occurrence of a vacancy; and

 (b) the number of the trustees shall not
be increased beyond four.
 (2) The restrictions hereby imposed on
the number of trustees do not apply in
the case of property vested in trustees
for charitable, religious, or public
purposes.


Public Trust :s 9 of the Government
Proceedings Act
 If there is any breach of trust created
for public, religious, social or charitable
purposes or of there is a direction from
the court, the AG or two or more
persons having interest in the trust,
after obtaining the consent in writing
from AG, may institute a suit for the
purpose of:

 a) asserting any interest or right in the
trust property
 b) removing any trustee
 c)appointing new trustee
 d) vesting any property in a trustee
 e) directing accounts and inquiries
 f) declaring what proportion of trust
property or of the interest therein shall
be allocated to any particular trust

 g) authorising the whole or any part of
the trust property to be let, sold,
mortgaged, charged or exchanged,
 h) settling a scheme and
 i) obtaining such further or other relief
as the nature of the case may require.


4) Removal of Trustee
 Three ways
 1) Under an express power in the trust
instrument
 2) Statutory power
 3) Court’s Inherent jurisdiction.

a) Express Provision
 The trust instrument may expressly
give power to remove trustees.
 Such power must be strictly construed.
 The donee of such power must strictly
comply with it if he wishes to act on it.

b) Statutory Provision
 i) Section 40 (1)
 If trustee remains out of Malaysia for
more than 12 months or refuses to act
or is unfit or incapable to act or is a
minor he can be removed and replace
by one or more trustee

 ii) If the court exercises its powers
under section 45 it may be remove a
trustee in the course of appointing a
new trustee or trustees.

c) Court’s inherent power
 The court possesses an inherent
jurisdiction to remove trustee in the
execution of trusts.
 It is rarely used

 The Court need to have a clear
ground for removal in cases where a
trustee is ignoring one of his duties
because sometimes in some ctc
though it will not constitute breach of
trust

Halsbury’s Laws of England
(4th ed), vol. 48 para. 783:
 The court will remove a trustee, including the trustee of a
foreign settlement,where he refuses to execute the trust
(Palairet v. Carew [1863] 32 Beav 564;Luke v. South
Kensington Hotel Co [1879] 11 Ch D 121) or has mismanaged
the trust (Ex Parte Phelps [1742] 9 Mod Rep 357; Ex Parte
Reynolds [1800] 5 Ves 707; Peatfield v. Benn [1853] 17 Beav
522) or has disqualified himself by hiscircumstances or
conduct from continuing to hold the office (Millard v.
Eyre[1793] 2 Ves 94) or may perhaps do so if his continuance
in office would be likely to be detrimental to the trust owing to
his being out of sympathy with its objects (A-G v. Hardy [1851]
1 Sim NS 338 at p 357) and with the beneficiaries. A trustee
will not, however, be removed against his will on account of a
pecuniary embarrassment which has ceased to exist and
which does not appear to have imperilled the interests of the
beneficiaries (Re Bridgman [1860] 8 WR 598).

Letterstedt (now Vicomtesse
Montmort) v. Broers & Anor [1884] 9
AC 371:at p 389
 per Lord Blackburn
 ‘Friction or hostility between trustees
and the immediate possessor or the
trust estate is not of itself a reason
for the removal of the trustees’

Yusof bin Ahmad & Ors v. Hongkong
Bank (Singapore) Ltd & Ors [1990]
2MLJ 326
 Chan Sek Keong J (as he then was)
held that a trustee who failed to
comply with the directions of the
testator may be removed by the court
even if no harm has been done to the
beneficiaries or to the trust.

Arumugam Ponusamy v.Karupiah
Ramasamy & Ors [2005] 4 CLJ 805
 The discretion vested in the High
Court to direct the removal of a
trustee.
 The trust in the present case is an
express trust.

5) Retirement of Trustee
 Retirement means a discharge from
further responsibility and liability under
the trust .
 A trustee should not retire when faced
with disputes among beneficiaries and
leave them to settle their differences
among themselves

 Three ways
 1) Under an express power in the trust
instrument
 2) Statutory power
 3) Under an Order of Court

a) Express Provision
 The trust provision may expressly
provides for the retirement of trustees.

b) Statutory Provision
 i) Section 40(1) enables a trustee to
retire (desire to be discharged) if he is
being replaced by another trustee or
trustees.

 ii) Section 43 (1) : allows the retirement of a
trustee without new appointment subject to
following conditions :
 A) a min of 2 trustee or a trust corporation
will remain after his retirement
 B) his co-trustee and such person
empowered to appoint new trustees consent
to his retirement
 C) his declaration to retire must be in writing

 iii) Court Order
 The Court may order a trustee to retire
under section 45 when it is appointing
a new trustee or new trustee (in
substitution for)
 The court also possesses power under
its inherent jurisdiction to allow a
trustee to retire.

6) Death
 Trusteeship automatically terminates
on death.
 Section 23 (1) : where a trust is
imposed on 2 or more trustees : the
same may be performed by their
survivors ; for the time being.

 If there is a sole trustee or last
surviving trustee : the trust estate
devolves on his personal
representatives.

FIDUCIARY NATURE OF
TRUSTEESHIP
 1) Remuneration
 Fundamental principle : cannot expect
remuneration except;
 Provided by the trust instrument
 Authorised by the court
 Authorised by legislation S 46

 2) Secret Profits- not suppose to
secure benefit for himself by taking
advantage of the trust
 Not to take remuneration as trustee-
director
 Not to purchase trust
property/beneficial interest
 Not to compete with trust
 Not allowed to receive bribe.

Understanding Trusteeship

Recomendados

Recomendados

Mais conteúdo relacionado

Mais procurados

Mais procurados (20)

Destaque

Destaque (20)

Semelhante a Understanding Trusteeship

Semelhante a Understanding Trusteeship (20)

Mais de Hafizul Mukhlis

Mais de Hafizul Mukhlis (20)

Último

Último (20)

Understanding Trusteeship

Notas do Editor