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Week 5 The Trustee - Coggle Diagram

- - - - to see trust deeds, trust accounts, and profit and loss statements: Re Fairbairn [1967] VR 633.
      - the right is confined to ‘trust documents’: Re Londonderry’s Settlement; Peat v Walsh [1965] Ch 918.
  - - - Remuneration is authorised by the trust instrument: Re Dowling (dec’d) [1961] VR 615, 619-26;
      - Trustees and beneficiaries agree for payment of the trustees’ services; or
      - Court-awarded remuneration to ensure proper administration of trust and compensation of trustees’ efforts: Will of Moore.
  - - - Life tenants – beneficial interest in the income; and
      - Remaindermen – capital.
      - The Rule in Howe v Dartmouth applies – sell wasting assets.
  - - - The trust instrument may permit delegation; or
      - Under section 56, Trusts Act 1973 (Qld); or
      - As a matter of necessity, as long as the powers to be exercised are not part of a trustee’s discretionary powers.
  - - - can be whole or partial relief
- - - - Definitions s 5
        
        trustee includes—
        
        (a) a trustee corporation; and
        
        (b) any other corporation in which property subject to a trust is vested; and
        
        (c) any person who immediately before the commencement of this Act was a trustee of the settlement or in any way a trustee under the Settled Land Act 1886 and who, if that Act had not been repealed, would be such a trustee; and
        
        (d) a personal representative; and
        
        (e) a statutory trustee within the meaning of this Act.
      - Number of trustee's limitation s 11
        
        Qld max number are 4 that can be named
  - - - Appointment via Trust Instrument
        
        Typically, a trustee is appointed according to the express terms of the trust deed
        
        The power to appoint may be with the trustee or another person, known as an appointor.
        
        If there is no power to appoint in the trust deed,
        
        Act section 12 provides a power of appointment to individuals who fall within identified categories
        
        see section 2 below
        
        The nature of the trust may dictate the decision of the settlor to appoint a private individual or a corporate trustee
        
        the trustee’s rights, duties and powers will be governed by the Trusts Act 1973 (Qld).
      - Trusts Act 1973 (Qld) s 12
        
        s 12 of the Act provides for the appointment (replacement) of a trustee.
      - The Court
        
        The court’s inherent power to appoint a trustee
        
        The court may appoint, replace, or remove trustees using its inherent power: Sinnot v Hockinn (1882) 8 VLR (E) 205: Evans (2016) 558.
        
        The court’s power to appoint a trustee under the Trusts Act 1973 (Qld)
        
        s 80
        
        In summary, section 80(1) provides the court with the power to appoint trustees where it is difficult, impractical or inexpedient to do so without the assistance of the court.
        
        Exercise of the court’s powers under section 80 requires that the appointment be expedient. In general, expediency will require that the appointment be ‘for the advantage to the beneficiaries’ interests or the security of the trust’: Porteous v Rinehart (1998) 19 WAR 495, 507
        
        When appointing or removing trustees, the court’s primary consideration is the welfare of the beneficiaries.
        
        If a person nominated as trustee fails to take up office, the trust will not fail
        
        If the circumstances involve a testamentary trust the office will fall on the legal personal representative of the estate until a new trustee is appointed: Re Smithwaite’s Trusts (1871) LR 11 Eq 251
        
        Under an inter vivos trust, the trust will revert to the settlor: Pearce v Pearce (1856) 52 ER 1103
        
        When applying to the court the applicant would rely on s 98.
  - - - If a sole trustee dies, the office of trustee becomes vacant. Under s 16(2) of the Act, in this situation, the public trustee is given the trust powers until the personal representative of the deceased takes up the appointment or until a new trustee is appointed.
        
        this will apply regardless of any contrary intention in the instrument;
    - - The company can be re-appointed if, and when, it is re-registered: Danich Pty Ltd Re Cenco Holdings Pty Ltd (2005) 53 ACSR 484.
  - - - The trustee will need to retire in writing or by deed, and the retirement will require the consent of the remaining trustees. The trust property will be vested in the remaining trustees.
      - ● where the deed permits;
      - ● under s 12 of the Act, when he or she is replaced;
      - ● via section 14 of the Act: there must be the minimum number of trustees remaining (i.e., two natural persons or one if it is the public trustee or a corporate trustee);
      - ● section 80 of the Act - statutory jurisdiction to permit a trustee to retire; or
      - ● by exercise of the court’s inherent jurisdiction to discharge a trustee.
  - - - if express provisions are provided in the trust and they are not followed the attempted removal will fail Northwest Capital Management v Westate Capital Ltd [2012] WASC 121 at [218]-[225]
      - express power to remove trustees and appoint new ones has often been described as a 'fiducary power'
        Pope v DRP Nominees Pty Ltd (1999) 74 SASR 78 at 89-90
        which is required to be exercised in good faith for the benefit of the trust as a whole.
      - If the trustee is removed via a power under the trust instrument, the power to remove and replace the trustee must be ‘exercised in good faith and for the benefit of the trust as a whole’: Scaffidi v Montevento Holdings Pty Ltd v Scaffidi [2011] WASCA 146 [149];
    - - two forms of power to remove a trustee
        
        its inherent jurisdiction
        
        arises from the court’s ‘principal duty to see that trusts are properly executed’: Ngarluma Aboriginal Corporation RNTBC v The Attorney General of Western Australia [2014] WASC 245 [34].
        
        Regarding the inherent jurisdiction of the court, in Miller v Cameron (1936) 54 CLR 572, 575 Dixon J stated that the court looks to ‘the interests of the beneficiaries, to the security of the trust property and to the efficient and satisfactory execution of the trust’
        
        statutory powers.
        
        statutory powers under section 80 of the Act to appoint a new trustee.
        
        Section 98 is also relevant. Section 98(1) of the Act identifies persons entitled to apply to the court
        
        Under the statute, the ‘main test’ is ‘whether removing the trustee is ‘expedient’
        
        the ultimate consideration in deciding whether to remove a trustee is the due and proper administration of the trust; Hancock v Rinehart [2015] NSWSC 646
        
        dominant consideration in appoint and removing a trustee is the welfare of the beneficiaries. Three main considerations inform the court in appointing a new trustee
        
        wishes if the person by whom the trust is created express or inferred
        
        the trustee should not be appointed with a view to promoting the interests of the beneficiaries in opposition to either the settlor or those of the other beneficiaries
        
        appointing a trustee regard should be had as to whether the appointment would impact the execution of the trust.
        
        other reasons court may exercise its powers
        
        ● where the trustee is unfit for office and acts in ways inimical to the trust: Officer v Haynes (1877) 3 VLR (Eq) 115; or
        
        ● where the trustee is hopelessly conflicted: Hill v Fry [2008] VSC 13; or
        
        ● the trustee is incapable of acting (for example, this may apply when a trustee has been declared bankrupt): Miller v Cameron (1936) 54 CLR 572.
        
        However, there are several circumstances in which the court will not exercise its power to remove a trustee. These include:
        
        ● a disagreement between the beneficiaries and the trustee: National Westminster Bank plc v Lucas [2014] EWHC 653 (Ch) [83]; or
        
        ● that the beneficiaries want to replace the trustee due to friction between a beneficiary and the trustee: Kershaw v Micklethwaite [2010] EWHC 506 (Ch) [9].
        
        1 more item...
- - - - In equity:
        expenses must have been incurred properly in the exercise of the trustee’s duties: Franknelly Nominees Pty Ltd v Abrugiato [2013] WASCA 285 [212].
      - Under statute
        Trusts Act 1973 (Qld) s 72
        
        Reimbursement of trustee out of trust property
        
        Trusts Act 1973 (Qld) s 72:
        “A trustee may reimburse himself or herself for or pay or discharge out of the trust property all expenses reasonably incurred in or about the execution of the trusts or powers.”
    - - If the trust property is not sufficient to cover the trustee’s costs, a trustee has the right to pursue the beneficiaries personally: Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439.
  - - - Where there is a breach of trust and there is more than one trustee, the foundational principle is that the co-trustees are jointly liable, even if only one trustee is responsible for the wrong: Bahin v Hughes (1886) 31 ChD 390.
        
        This principle has been altered by statute: see the Trusts Act 1973 (Qld) s 71.
    - - ..... and shall be answerable and accountable only for the trustee’s own acts, receipts, neglects or defaults, and not for those of any other trustee, nor those of any financial institution, broker or other person with whom any trust money or securities may be deposited......
- - - - A power to sell trust property may be granted expressly or impliedly in the trust deed: Alston v Equity Trustees Executors and Agency Ltd (1912) 14 CLR 341.
    - - Trusts Act 1973 (Qld)
        
        ● Section 32(1)(a) which provides a general power of sale;
        
        ● Section 34 – the trustee can sell by auction;
        
        ● Section 51 – concerns trustee powers relating to valuation of the property (prior to sale).
    - - Trusts Act 1973 (Qld)
        
        s 32(1)(d)
    - - power to sell property may arise from
        
        be implied
        
        be provided for under statute
        
        the trust deed
        
        or the court may grant the trustee powers when varying a trust
  - - - However, this does not extend to improvements where there is no express power granted
        
        In contrast, inactive (bare) trustees do not have a power to repair or maintain the trust property: Amos v Fraser (1906) 4 CLR 78, 84.
    - - ● Repair and improve trust property – s 33
      - ● Insure trust property – s 47
      - ● Carry on a business – s 57
        
        Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319
    - - Can exist where there is no express power in the trust: Byrnes v Kendle (2011) 243 CLR 253, 279.
  - - - Section 61
        
        provides for the trustee’s power to ‘apply income for maintenance etc, and to accumulate surplus income while a beneficiary is a minor’
      - Section 62
        
        provides the trustee with the power to make advancements out of capital
      - s 60.
        
        these powers prevail despite any contrary intention in the trust instrument