Appointment, Retirement

and Removal of Trustees

 s. 40 The first trustees are usually appointed by the settlor
(in case of inter vivos trust) or the testator in a will.
If no trustees are appointed then the court will
ultimately appoint one.

s. 40 (1 ) (a) A Settlor may have also appointed certain persons to

appoint trustees when a need to appoint trustee arises
and frequently the settlor may reserve the power himself.
But it must be noted that the person or persons who
has that power are not trustees themselves.

England a minor cannot be a trustee of an express trust and trusts

Of land under S 120 of the Law of Property Act (English)
Case: Re Vinogradoff
- Same position in Malaysia
 When the trustees so appointed, the property will vest in them
and they will hold the property until they die, retire or removed.

Example:
- S (Settlor) appoints Tl, T2, T3 and T4tb hold a land on trust
for X and Y, his infant sons. The trust was created in 1970.
- Tl died in 1971
- The property then vests in T2, T3 and T4.
- Then T2 retired in 1973.
- The property then vests with T3 and T4T3 was removed in 1975.
- The property then vests' in T4 as sole trustee.
- T4 died in 1976, The property then vested in the personal;
representative ofT4

Section 40 (1) (b) and Bhikku Daeng 19802 MLJ

Section 40 (5)
 Section 40 contains powers of appointment and also
removal and it confers wide powers to appoint new trustee
or trustees in place of a trustee who:-

Unfit to act
Is dead Refuses
– Re Roche Disclaimer An infant
S.40 (8) to act
(bankrupt)

remain out of Malaysia Has been removed under a

-Re Walker/Ligar Fernandez power contained in the instrument
2002 5MLJ creating the trust - s 40(2)

Desires to be Incapable of acting in the trusts

discharged from all or any eg old age or infirmnity
of his trust or powers - Re Lemann's will Trust
 Number of trustees

Usually 4 (s.39(1))
 Who may appoint trustees (s. 40 (1)(a) and (b)

(a)The persons nominated in the instrument, or

(b) The surviving or continuing trustees OR the personal
Representative (ie. either an executor or administrator)
of the last surviving or continuing trustees.

If no persons in these categories is available to make

the appointment, the court will use Section 45
to appoint a trustee as a last resort.
 Mode of Appointment

1) By the Trustees or Persons Nominated

Section 40(1):

- an appointment of a trustee be in writing

-Sometimes a trust may have named only one or may be

two trustees (not exceeding 4 trustees). In these cases the
Trustees may appoint new trustees to fill a vacancy
 Section 40(6):

However there may be circumstances where the trustees

may need to have some other persons to be co - trustees.
Here, it will be noted that there is no "vacancy" as no
trustee was removed under section 40 or section 45
(appointment or removal by the court), but still statutory
power is given to the trustees, but subject to the proviso
that the total number of trustees does not exceed 4
 Appointment of a person as a trustee can be made
without his knowledge/consent and in his absence.

Case law seems to draw a distinction between an

appointment and his acceptance of trusteeship

Re Tyron:
A person appointed as a trustee cannot be compelled
to accept the office and he may disclaim it

Mountford V Cadogan:
Acceptance of trusteeship may be express or implied
for example when the trustee appointed acts in the trust
The grounds for removal under S 40(1) are only exercisable
where a replacement trustee is being appointed since
the section is concerned primarily with the appointment
of trustees rather than their removal
(see the last limb of s 40(1)
..in place of the trustee so deceased...)
 2) Appointment /Removal Bv the Court

1) Where all the trustees named predeceased

Section 45: the testator (Re Smirthwaite)

This power rests

on it being 2) Where the trustee was incapable of acting
"inexpedient, because of old age or some other infirmity
difficult or such as mental illness (Re Lemanns Trust)
impracticable"
to make an 3) Where there was doubt as to whether the
appointment out statutory or an express power of appointment
of court. It has was exercisable (RE Woodgate)
been used in
the following
instances: 4) Where the trustee was in enemy
occupied territory (Re Mary)
 Removal

Section 45 (I) (b)

The court can also remove a trustee against his will and replace
him such as when a trustee is imprisoned, mentally disordered
or becomes a bankrupt, but at the same time the court must
appoint a new trustee in place of him.
Re Hodson's Settlement:
Where a person has a statutory or express power to nominate
trustees of a trust the court will generally not interfere

Re Gadd:
Even if trustees are nominated whom the court believes could have been
bettered it will not interfere. If however the court concludes that the trustees
nominated are unsuitable, it can call for a fresh nomination. Several unsuitable
nominations may be regarded as a refusal to nominate and the court would
make its own choice
 Termination Of Trusteeship
1. Disclaimer
Re Lister:
A person appointed as a trustee is
Not obliged to take up the office and
He may therefore disclaim it at any
Time before acceptance. However,
there can be no disclaimer after
acceptance
A disclaimer is usually effected by
deed but this is not essential, it can
be oral or implied from conduct or
even from the fact that a long time
has elapsed since the appointment
of the trustee and he has done
nothing.
2. Death
On the death of a trustee his trusteeship
automatically terminates. If there are
surviving trustees then the trust estate
will vest in them automatically as
trustees will invariably hold the trust
estate as joint tenants.
On the death of a sole or last surviving
trustee the trust estate devolves 011 his
personal representatives who is not
obliged to accept the trust and they
may appoint new trustees of the trust
under the provisions of
Section 40(1)
 3. Retirement 4. Removal

A trust may contain an express Sections 40 and 45 gives

power permitting a trustee to Room for the removal of
retire. Apart from this, a trustee certain trustees but the
can retire when a new trustee Trustees so removed must
is appointed in his place under be replaced generally.
Section 40(1).
If no new trustee is to be
appointed then he may retire
Under the provisions of
Section 43(1)