Duties

Upon appointment Keep accounts
 The trustee shall  Pearse v Green: Trustee must allow the beneficiaries or their solicitors to
1. Familiarise, inspect and comply with the trust instrument inspect accurate record of his management when requested to do so.
2. Ensure that all trust properties are duly and properly vested in him  Section 28: A trustee may employ an agent for the purpose of maintaining
3. Investigate any prior breach of trust by any retired or removed trustees accounts.
and take the necessary legal action to claim back the property or have  Wroe v Seed: A trustee who was illiterate and therefore could not keep
any sum of money repaid to the trust. accounts himself was justified in employing an agent to keep accounts.
 Re Brogden: Previous trustee did not take action against the debtor  Section 27(4): Trustees may from time to time have the accounts of the trust
(bankrupt) who owed money to the trust. New trustee take action property examined or audited by an independent accountant.
against the previous trustee. CH the retired trustees were found
liable as they should have taken steps to claim the money earlier. Act in the best interest of the beneficiaries in all matters
4. Act fairly between the beneficiaries  Cowan v Scargill: The trustees refused to approve an annual investment place
5. Act unanimously and jointly with his co-trustees for £200 unless certain clauses were amended which affects his personal
interest. Held: The trustees must treat beneficiaries’ interest as paramount.
Provide information to the beneficiaries  Eg: When the purpose of the trust is to provide financial benefits for the
 O’Rourke v Darbishire: Beneficiaries have a right of access to the document beneficiaries, as is usually the case, the best interests of the beneficiaries are
they desire as they are beneficiaries to the trust. normally their best financial interests.
 Re Marquess of Londonberry’s Settlement: One of the beneficiaries  The rule in Howe v Dartmouth: In acting in the best interests of the
complained that she received too little and thus wanted to inspect all the beneficiaries, the trustees have a duty to convert the trust property into
documents which indicated the reasons which led the trustees to act as they something valuable, subject to the trust instrument.
did. Held: The beneficiary was not allowed to see the documents as the reason
documents are not in beneficiary interest.

the trustee can allocate the trust fund as though the  Eaves v Hickson: The trustees were held liable for breach of trust when beneficiary had died. if the beneficiary turns up. the beneficiaries can call upon the trustees to convey  Re Benjamin: David Benjamin left his residuary estate to all children equally. CH: If the trustees decide the property to the persons entitled to. of the beneficiaries. the trustee. 3. However. Duties Distribute Protection for trustees Arise in three circumstances:  Section 32(1): Trustees may advertise their intention to distribute the trust 1.  Hilliard v Fulford: The trustees were held liable for breach of trust for distributing the trust property based on an erroneous but bona fide interpretation of the trust deed. However. The trustees cannot be held certificate liable for any breach of trust where distribution is made after the court order. the trustees may distribute pay or not pay income to certain beneficiaries. . he may then trace they made payment to the wrong person on the faith of a forged marriage his share of the property from the recipients. Distribution of trust property when the trust requires immediate distribution Held: In the absence of any contrary evidence. executor then paid the estate money to the Crown. or the capital share of one of the property in order for any person interested to send particulars of his claim to several beneficiaries who has fulfilled the requirements under the trust. the court presumed that the beneficiary had died. Payment of income to the beneficiary. the between themselves.  Section 32(3): It is applicable regardless of any contrary provision in the trust 2. The trustees will not then be liable to in good faith and at appropriate times to give none of the income to any any person who did not have notice at the time of the distribution. a year before he died.  Re Gulbenkian’s Settlement Trusts: Trustees were given the discretion to  Section 32(2): When the time has reached its limit. the court will not review their decision. the trust property to them and bring the trust to an end.  The rule in Saunders v Vautier: Where all the beneficiaries of a trust are of full age and capacity who together are entitled to the full beneficial Benjamin Order interest of the trust. Distribution of the whole of the trust fund when all the beneficiaries have instrument. one of his children disappeared in France. and thus his share of the property was to be allocated Failure to distribute trust property to those rightfully entitled accordingly. reached their full age and are absolutely entitled to the trust property  Re Aldhous: Where no beneficiaries responded to the advertisement. Thus.

interest and duty conflict.  Re Mulholland’s Will Trusts: The rule remains applicable where the  Bray v Ford: A trustee is not allowed to put himself in a position where his trustee has retired and intends to purchase the property. unless expressly provided  Campbell v Walker: Any trustee purchasing the trust property is liable to have the purchase set aside. failure to disclose such interest will cause him to be liable for any profits received. the trustee transaction were made while he was still a trustee. Such circumstances are: party with the intention of repurchasing such property from that person. own benefit although the lessor refused to renew it. the Duties under fiduciary duties beneficiary choose to say that he is not satisfied with it. CH Reid was found liable to account for the bribe money he accepted. iii) Full disclosure of material facts  Re Thompson: If a trustee concurs in a transaction in which he has an interest. purchased trust  Keech v Sanford: The trustee applied and received such a grant for his property at a price that had been fixed by independent valuers. . unless authorised. if in any reasonable time. Duties Fiduciary ii) Purchase of trust property (self-dealing rule)  Bray v Ford: It is an inflexible rule that a person in a fiduciary position is not  General rule: Trustees cannot purchase trust property for himself. .  Duty to not allow his interest and duties to conflict. then used to purchase three properties in New Zealand. entitled to make a profit. Council ordered for it to be set aside. The money was on his conduct. the Privy should have let the lease expire rather than have it renewed in his favour.Campbell v Walker: It is immaterial that the sale was i) Receiving bribes made at an auction and that the trustee paid well above the  AG of Hong Kong v Reid: Reid accepted bribes amounting to $2.  Parker v McKenna: A trustee cannot sell trust property to a third  Mustn’t take any secret profit. where it was discovered that the arrangements for the trustee’s duty to hold the lease on trust for the beneficiary. CH: Where it is the However. who had resigned.  Wright v Morgan: A trustee.5 reserve price as the rule is based on his status as a trustee and not million to obstruct the prosecution of criminals.

There  Plus Group v Pyke: The rule also applies to situations where the can be no fraud.  Tito v Waddell: The rule is that if a trustee purchases the beneficial  IDC v Cooley: A trustee will be liable to account for profits made interest of any of his beneficiaries can be set aside. or taking of advantage by the trustee becomes involved with a competing third party without trustee. Held: The trustees had purposely put themselves shares for the trust was in fact prohibited unless authorised by the in a position where their duty and interest conflicted. testator. thus resulting in a profit. CH the solicitor was liable to account for the profit he made the fees shall be put into the trust back. concealment. purchasing more shares for the trust. Duties iv) Purchase of beneficial interest (fair-dealing rule) vi) Competing with trust. the beneficiary’s consent. and thus court. which  Boardman v Phipps: A solicitor took the opportunity to reorganise is subjected to the rule that a trustee must not take any profit the company in which the trust had a minority shareholding by obtained from his position as a trustee. and that the  Re Thompson: One of the trustee set up a business similar to the transaction was fair and honest. As the shares increased in  Re Macadam: The trustees used their position to appoint value. a purchase of more director’s fee. and has made full disclosure to the beneficiary. unless the by him from a business which competes with the business of the trustee can show that he has taken no advantage of his position trust. v) Director’s fees vii) Misuse of opportunities and information  Any director’s fees obtained is regarded as an incidental profit. . so did the shares which he purported to purchase for themselves as directors of a company so that they will get himself. However.  Re Dover Coalfield Extension Ltd: The trustee was already a director before he became a trustee. in breach of his duty. beneficiary intended for the trustee to make the purchase. CH this amounted to a breach of the trustee’s fiduciary  Coles v Trecothick: A trustee may purchase from the beneficiary duty as his personal interest was in conflict with his duty of provided that there is a clear and distinct contract proving that the protecting the beneficiary’s interest.

before exercising such power to invest. The degree of risk involved in the particular investment 3.  Section 6(5): Such advice must be given or confirmed in writing  Tan Soo Lock v Tan Jiak Choo: If it can be inferred from the will that the trustee  Section 28(1): If the investment is made through an agent. obtain proper advice on whether the investment is satisfactory. The need for variation of the investments of the trust prudent man to have.  From trustees in making an investment  Re Lake: Where a trustee makes an unauthorised investment.  Section 6(3): ‘Proper advice’ is the advice of a stockbroker obtained through the trustee’s bank manager or the advice of an authorised accountant. not be liable for the default of the agent. 2. provided that he was employed in  Section 4: Trustee may decide where to invest provided that they are not good faith and in absence of the trustee’s own wilful default. they must be judged by the standard of skill and  Lian Neo: The court may direct to variant the investment. property from which interest or profit is expected. expertise that they profess to have. ordinary prudent businessman acting in his own affairs. they will be  Speight v Gaunt: Trustees must exercise the standard of care of an liable for any loss incurred. The suitability of the investment to the trust  Section 6(2): A trustee whose power of investment is limited to that authorised under Sec. there is a duty to invest. a trustee must consider themselves as having expertise which would be unrealistic to expect a 1.  Re Harari’s Settlement: Any express power of investment under the trust Standard of care required instrument should not be interpreted restrictively. shall. the trustee will is to collect income from the trust property. . contrary to authorised investment clause in the trust instrument.  From professional trustees (trust corporations or banks) Choosing an investment  Bartlett v Barclays Bank Trust: Where professional trustees view  Section 6(1): In exercising the power of investment. Duties Invest  Section 6(4): It is up to the trustee to decide when it would be desirable to  Re Wragg: ‘To invest’ includes to apply money in the purchase of some obtain the advice and consider it. 4.

capital of not less than five million ringgit. the trustee or  It is subjected to requirement beneficiary can apply to the court under for such power to be granted. in Sabah or Sarawak and having  Section 59(1): If the trust instrument does not expressly provide the a place of business in Malaysia. 4(2) (b): The approved company must have paid a dividend at the rate of not less than 5% during each of the last three years prior to the time of investment. trustees with power to sell or deal with the trust property. for the time being secured to the approve company from its borrowers. shall not exceed two-thirds of the amount excluding prospective interest. Duties Sell land Invest on approved companies  Trustees can sell land under the trust property in order to buy another piece  Section 4(1) (e): Make investment by giving loan to approved companies of land or other shares.  Sec. not provide any income or if incorporated prior to Malaysia day.  Sec. 4(2) (c): The total amount of the borrowings of the approve company from all sources.  Definition of approved company  Section 16: Trustee may sell land for benefit of the trust if the land does  Section 3: An approved company is a company incorporated in Malaysia. .  Section 4(2) (a): Approved company must have a paid-up ordinary share where the court considers it expedient.

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