Professional Documents
Culture Documents
Appointment of Trustee
Appointment of Trustee
The settlor or testator may declare himself or herself as a trustee. Alternatively, the
trust instrument may specify someone to appoint trustees.
A person could also be a trustee by implication of law such as resulting trust or by
operation of law such as constructive trust.
Generally, if the will or trust instrument did not have provisions to appoint trustees,
the court may make the necessary appointment in order to save the trust because
equity will not allow a trust to fail for want of trustees.
Re Lysaght
In this case, the court held that if there is an express provision in the instrument that
only those person mentioned shall be trustee, in that situation, the court cannot
appoint the trustee.
S.39(2) of TA 1949: 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.
[If the trust is in nature of charitable, religious or public purpose, the number of trustees
could exceed 4 persons]
2.0 APPOINTMENT OF TRUSTEES: SUBSEQUENT APPOINTMENTS
Subsequent appointments of trustees may be made in a number of ways.
S.40(2) of TA 1949: Where a trustee has been removed under a power contained in the
instrument creating the trust, a new trustee or new trustees may be appointed in the place
of the trustee who is removed, as if he were dead, or, in the case of a corporation, as if the
corporation desired to be discharged from the trust, and this section shall apply accordingly,
but subject to the restrictions imposed by this Act on the number of trustees. [The new
trustee will replace the place where the previous trustee has been removed]
S.40(3) of TA 1949: Where a corporation being a trustee is or has been dissolved, either
before or after the commencement of this Act, then, for the purposes of this section and of
any written law replaced thereby, the corporation shall be deemed to be and to have been
from the date of the dissolution incapable of acting in the trusts or powers reposed in or
conferred on the corporation. [If the trustee is a corporation but such corporation has been
dissolved, then the corporation is no longer able to continue his position as trustee]
S.40(4) of TA 1949: The power of appointment given by subsection (1) or any similar
previous written law to the personal representatives of a last surviving or continuing
trustee shall be and shall be deemed always to have been exercisable by the executors for
the time being (whether original or by representation) of the surviving or continuing
trustee who have proved the will of their testator or by the administrators for the time
being of such trustee without the concurrence of any executor who has renounced or has
not proved.
S.40(5) of TA 1949: But a sole or last surviving executor intending to renounce, or all the
executors where they all intend to renounce, shall have and shall be deemed always to
have had power, at any time, before renouncing probate, to exercise the power of
appointment given by this section, or by any similar previous enactment, if willing to act for
that purpose and without accepting the office of executor. [Renouncement from the
executor]
S.40(6) of TA 1949: Where a sole trustee, other than a trust corporation is or has been
originally appointed to act in a trust, or where, in the case of any trust, there are not more
than three trustees (none of them being a trust corporation) either original or substituted
and whether appointed by the Court or otherwise, then and in any such case—
(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 trustee
or trustees for the time being,
may, by writing, appoint another person or other persons to be an additional trustee or
additional trustees, but it shall not be obligatory to appoint any additional trustee, unless
the instrument, if any, creating the trust, or any written law provides to the contrary, nor
shall the number of trustees be increased beyond four by virtue of any such appointment.
[Appointment of additional trustee is not compulsory unless the instrument stated it clearly]
S.40(7) of TA 1949: Every new trustee appointed under this section, as well before as after
all the trust property becomes by law, or by assurance, or otherwise, vested in him, shall
have the same powers, authorities, and discretions, and may in all respects act as if he had
been originally appointed a trustee by the instrument, if any, creating the trust. [New
trustee is entitled to same powers]
S.40(8) of TA 1949: The provisions of this section relating to a trustee who is dead include
the case of a person nominated trustee in a will but dying before the testator, and those
relative to a continuing trustee include a refusing or retiring trustee, if willing to act in the
execution of the provisions of this section.
S.40(9) of TA 1949: Where a person who is mentally disordered or of unsound mind, being
a trustee, is also entitled in possession to some beneficial interest in the trust property, no
appointment of a new trustee in his place shall be made by the continuing trustees or
trustee, under this section, unless leave has been given by the Court to make the
appointment. [A trustee who is mentally disordered or unsound mind is entitled to take
beneficial interest in the property and there shall be no appointment of new trustee to
replace him unless the leave has been granted by the Court]
S.45(1)(a) of TA 1949: 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. [Court may appoint new trustee either in substitution/ in addition to
existing trustee/ whenever there is no existing trustee]
S.45(1)(b) of TA 1949: 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 is sentenced to a term of imprisonment or is mentally disordered or is a person
of unsound mind or is a bankrupt or is a corporation which is in liquidation or has been
dissolved. [Without prejudice to S.45(1)(a), there are 5 circumstances where the Court may
appoint new trustee]
Re Tempest
In this case, one of the two trustees appointed predeceased testator. No consensus
was reached for appointing a new trustee.
When the court makes the appointment of trustee,
a) The court will regard to the wishes of the settlor or the testator.
b) The court will not appoint a person interested under the trust for any other
purposes but not for the execution of trust.
c) The court will look into whether the appointment of that person will give rise to
any difficulty in executing the will.
RETIREMENT OF TRUSTEES
Retirement of trustees may be made in a number of ways.
S.40(1) of TA 1949: Where a trustee, either original or substituted, and whether appointed
by a Court or otherwise, is dead, or remains out of Malaysia for more than twelve months,
or desires to be discharged from all or any of the trusts or powers reposed in or conferred
on him, or refuses or is unfit to act therein, or is incapable of acting therein, or is a minor,
then, subject to the restrictions imposed by this Act on the number of trustees—[A trustee
can discharged if he or she desires to be discharged and to be replaced by one or more
person]
Person who
(a) the person or person nominated for the purpose of appointing new trustees by the
may exercise instrument, if any, creating the trust; or
the power to
appoint. (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,
may, by writing, appoint one or more other persons (whether or not being the persons
exercising the power) to be a trustee or trustees in the place of the trustee so deceased,
remaining out of Malaysia, desiring to be discharged, refusing, or being unfit or being
incapable, or being a minor, as aforesaid.
S.43(1) of TA 1949: Where a trustee is desirous of being discharged from the trust, and
after his discharge there will be either a trust corporation or at least two individuals to act
as trustees to perform the trust, then, if such trustee as aforesaid declares in writing that
he is desirous of being discharged from the trust, and if his co-trustees and such other
person, if any, as is empowered to appoint trustees, consent in writing to the discharge of
the trustee, and to the vesting and shall, by the instrument, be discharged under this Act,
without any new trustee being appointed in his place. [This section provides for the
retirement of a trustee without a new appointment but subject to prescribed conditions.
Where a trustee declares in writing that he desires to be discharged. If his co-trustees
consent in writing, the trustee desirous of being discharged shall be deemed to have retired
from the trust and there is no new appointment]
S.43(2) of TA 1949: Any assurance or thing requisite for vesting the trust property in the
continuing trustees alone shall be executed or done. [Things to do before retirement]
S.45(1)(a) of TA 1949: 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. [Court may appoint new trustee either in substitution/ in addition to
existing trustee/ whenever there is no existing trustee]
S.45(1)(b) of TA 1949: 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 is sentenced to a term of imprisonment or is mentally disordered or is a person
of unsound mind or is a bankrupt or is a corporation which is in liquidation or has been
dissolved. [Without prejudice to S.45(1)(a), there are 5 circumstances where the Court may
appoint new trustee]
REMOVAL OF TRUSTEES
Removal of trustees may be made in a number of ways.
Re Wrightson
In this case, it was held that whoever make the application to the court to remove
the trustee, he must make the court to satisfy that the trust property will not be safe
in the hands of trustee or the trust will not be properly executed in the interest of
beneficiaries.
Letterstedt v Broers
In this case, it was held that unsubstantial allegation of misconduct on the part of the
trustees will not be sufficient for the court to remove the trustee.
Titterton v Oates
In this case, upon the death of Mr. Titterton, the 1st Defendant, his daughter became
the sole trustee of his estate. The plaintiff, the sister of the Defendant, make
application to remove 1st D as a trustee on the basis that she had no distributed the
income efficiently, guilty of a conflict of interest and failed to understand the nature
of discretion in dealing with 2nd Defendant.
Held: Court must take into account the wishes of the testator or settlor but it must not limit
the courts’ jurisdiction as primacy must be given to the welfare of the beneficiaries. As such,
the court had removed the 1st Defendant since the present arrangement would inimical to
the interest of all concerned.
Halsbury’s Laws of Malaysia: The Court will remove a trustee if the person refuses to
execute, mismanage the trust or has disqualified himself from continuing to hold the office
and his continuance in office would be likely to be detrimental to the trust as a whole.
However, a trustee will not be removed based on pecuniary embarrassment.
DEATH OF TRUSTEE
S.23(1) of TA 1949: Where a power of trust is given to or imposed on two or more trustees
jointly, the same may be exercised or performed by the survivors or survivor of them for
the time being. [Where a power of trust is given to 2 or more trustees and one passed away,
the remaining trustee may fulfill his obligation until another trustee is appointed or act
solely without a new appointment.]
S.23(2) of TA 1949: Until the appointment of new trustees, the personal representatives or
representative for the time being of a sole trustee, or, where there were two or more
trustees, of the last surviving or continuing trustee, shall be capable of exercising or
performing any power or trust which was given to, or capable of being exercised by, the
sole or last surviving or continuing trustee, or other the trustees or trustee for the time
being of the trust. [If sole trustee passed away, the personal representatives that appointed
by the court shall exercise the power given to the sole trustee – He can act as trustee or act
temporarily until the appointment of a new trustee]
S.23(3) of TA 1949: In this section "personal representative" does not include an executor
who has renounced or has not proved.
DISCLAIMER
Re Lister
In this case, it was held that a person nominated as a trustee is not obliged to accept
office and may disclaim it. But once he or she accepted the office, he cannot disclaim
it as a trustee.
VESTING OF TRUST PROPERTY
S.44(3) of TA 1949: An express vesting declaration, whether made before or after the
commencement of this Act, shall, notwithstanding that the interest or right to be vested is
not expressly referred to, and provided that the other statutory requirements were or are
complied with, operate and be deemed always to have operated (but without prejudice to
any express provision to the contrary contained in the instrument of appointment or
discharge) to vest in the persons respectively referred to in subsections (1) and (2), as the
case may require, such interests and rights as are capable of being and ought to be vested
in those persons. [Vesting order is automatically]
S.52 of TA 1949: Vesting order consequential on judgment for specific performance, etc.
1.0 REMUNERATION
General Rule
A trustee cannot expect remuneration for performing duties in relation to the trust
because trustee is the person held by the settlor to act for the best interest of
beneficiary.
If trustee is remunerated, it will defeat the whole purpose of having a trust.
Barrett v Hartley
In this case, it was held that a trustee must not make a profit from his trust unless it
has been authorized in trust deed or approved by all beneficiaries. Even a solicitor,
can only charge for his out-of-pocket expenses.
S.35(2) of TA 1949: A trustee may reimburse himself or pay or discharge out of the trust
premises all expenses incurred in or about the execution of the trusts or powers.
Re Chapple
In this case, it is a clause in the trust instrument saying that trustee can charge for
usual professional charges which is a remuneration for solicitor’s professional
services and not trustee remuneration.
Brown v Litton
In this case, it was held that since the mate took over command of vessel upon
captain’s death and made considerable profit, hence, he was entitled to receive a fair
remuneration for his diligence.
b) The court may allow remuneration even if a contract could be set aside on account of
undue influence.
O’ Sullivan v Management Agency and Music Ltd
In this case, it was held that the rescission of a contract due to undue influence did
not stop the court from recognizing the agent’s contribution to the singer’s success
justifying fair remuneration.
c) The court may authorize a trustee to increase the remuneration instrument rate.
Re Duke of Norfolk’s Settlement Trusts
In this case, the English Court of Appeal was held that the court could under its
inherent jurisdiction increase the level of remuneration.
The fundamental fiduciary obligation of loyalty, (a) prohibits a fiduciary from acting
in a situation where there is a conflict between the fiduciary duties and his or her
interest and (b) prohibits the fiduciary from making a profit out of his or her fiduciary
position.
Campbell v Walker
In this case, it explained that the general position that a trustee cannot involved in
self-dealing with property belonging to the trust.
Coles v Trecothick
In this case, it was held that a trustee may purchase beneficial interests from the
beneficiary provided that there is a distinct and clear contract. Besides, it should not
have contained any fraud, any concealment or any advantage taken, by the trustee
due to the information acquired by his position as a trustee.
Fifth Way: Director’s Fees
Exceptions
1. But the rule does not apply if the trustee secures directorship not by virtue of his
position as a trustee.
Re Dover Coalfield Extension Ltd
In this case, it was held that if an appointment of a director was made before the
person’s appointment as trustee, he or she is entitled for the director’s fees received.
3. A trust instrument may in any event provide for a trustee to appoint himself as a
director and be remunerated.
Re Llewellin’s Will Trusts
In this case, the court held that the trustees could lawfully retain the fees received
because there is a clause in the will that permitting them to appoint himslef as a
director and be remunerated.
Re Thomson
In this case, one of the trustees set up a similar business with the testator’s estate
and the court held that this was amount to breach of fiduciary duty. This is because
there might possibly conflict with the interest of those he was bound to protect.
Seventh Way: Receiving Bribes [There are 2 views]
Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [Followed Lister’s case]
In this case, the Court of Appeal also refused to follow Reid’s case because the
principal had no prior proprietary interest in that money. As such, it was not under
constructive trust.