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6. TRUSTEES  Dal Pont (text), Ch 21  Dal Pont (casebook), Ch 21 A. Types of Trustees To be a trustee: you must basically, possess the capacity to hold property. There must be the appropriate characteristics in the trustee to allow ethical administration of the trust. Equitable maxim equity will not allow a trust to fail for lack of a trustee. Considerations: 

Someone who, ideally is independent of the beneficiaries

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Have financial acuit.

(1) COMPANY AS TRUSTEE The law allows the appointment of companies as trustee. 2) TRUSTEE COMPANIES Refers to companies licensed under statute that provide trustee services. Statute can empower specified trustee companies to act as executor of an estate or authorised to act by the executor. Provides: trustee services [administration etc] Trustee Companies Act 1953 (Tas) Corporations Act 2001 (Cth), Ch 5D (3) THE PUBLIC TRUSTEE Public Trustee Act 1930 (Tas) B. Appointment of Trustee (1) APPOINTMENT UNDER THE EXPRESS TERMS OF THE TRUST INSTRUMENT Trust instruments include a provision governing the occasions and manner of appointments of new trustees. The power to appoint and remove a trustee is invested in one or more appointors; cannot be exercised in the appointor’s interest but instead the beneficiaries’ interest. This power is treated as a fiduciary duty. Express powers of appointment take precedence over statutory powers of appointment. The scope and application of an express power of appointment is determined by a process of construction of its terms. Re Burton (1994) 126 ALR 557

The R, a bankrupt, was the appointer and beneficiary under a discretionary family trust. The trust deed gave the respondent the power to appoint and remove a new trustee. The R’s trustee in bankruptcy (Wily) sought to restrain the R from exercising his power of appointment on the basis that this power constituted ‘property’ within the meaning of s 116 of the Bankruptcy Act 1966 and was therefore vested in the trustee in bankruptcy. Held: the power to remove a trustee and appoint a new trustee is neither a general power of appointment nor a power which may be executed in the interests of the appointor. 

The interest of the persons other than the appointor must be taken into account.

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The power is a trust or fiduciary power, being a power conferred by a deed of trust and must be exercised in the interest of the beneficiaries. A power must be exercised in furtherance of the purpose for which it was conferred.

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When the power is contained in a deed of trust, the donee of the power is even more constrained to act in the interests of the persons for whose benefit the power was conferred

As the interests of the beneficiaries must be taken into account, and the power exercised in their interest is not property which vests in his trustee in bankruptcy or a power exercised for his own benefit. (2) APPOINTMENT PURSUANT TO STATUTE Trustee Act 1898 (Tas), s 13 In the absence of the appointment power; it describes the circumstances in the appointing of and the identity of the trustee. The surviving and continuing trustees have the power to appoint a trustee (3) APPOINTMENT BY THE COURT Courts have inherent jurisdiction as to the appointment of trustees. Trustee Act 1898 (Tas), s 32 Courts have the power to substitute or appoint a new trustee if it is expedient to do so; or impracticable to do so without the assistance of the Court. The court is concerned with the welfare of the beneficiaries above all else in exercising this power. Re Tempest (1866) 1 Ch App 485 at 487–488 Turner LJ on the exercise of the Court’s power to appoint a trustee: 

The court will be primarily concerned with the wishes of the settlor

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Court is not bound by the type of person who is identified by the settlor as a possible trustee

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A court will not appoint a trustee if he cannot hold an even hand with the beneficiaries (if the possible appointment has some sort of bias due to the link he has with the beneficiaries)

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The trustee must have some sort of financial knowledge

C. Disclaimer By / Retirement of Trustee Just because a person is appointed a trustee under an express trust, the person is not compelled to be a trustee. Procedure to do so: disclaimer. Underlying notion: a person is not compelled to accept an office or a gift. Ledgerwood: when you start to act as a trustee, you cannot disclaim. If there are express terms in the trust instrument/statute (s 14 of the Trustee Act), then you can use these terms to retire as trustee. Just because a person is carrying out the duties and functions of a trustee, it does not mean that the person will remain a trustee forever. \ 

If the trustee is not acting in accordance with standard trustee procedures etc; the other trustees can apply to the court to have the trustee removed.

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The Court’s main consideration in removing

D. Removal of Trustee Miller v Cameron (1936) 54 CLR 572 Dixon J: the interest of the beneficiaries, the security of the trust property are the main considerations on the court’s part in removing a trustee. *Titterton v Oates (1998) 143 FLR 467 Difficulties that can arise where the trustee who is also a beneficiary. Titterton: established trust for the benefit of his three children. Daughter #1 was appointed the trustee. After the testator passed away, the trustee developed a considerable animosity towards her sister, the other benefdiciary, which made her biased towards the sisyer and rendered her unable to perform some functions of a trustee Sister applied to the Court: to remove Daighter #1 as trustee. Held: should give significant weight to the testator’s choice as to trustee as the testator must have havce foresight of such tension. However, given the circumstances, it could be said that the testator could not have foreseen the degree of animosity and tension and the degree of the dereliction of her duties as trustee. Note: Just because there is tension between the beneficiary and trustee, it does not automatically call for the removal of the trustee. Other considerations: the trustee did not have the best interests of the beneficiaries, the trustee did not know what she was doing. 

Sufficient grounds then to remove the trustee.

Issue: appointment of another trustee thinking of a trustee that is independent of the familial relationship and circumstance. The Court then suggested a public trustee issue with the costs involved were not insignificant. The annual amount charged was $38,000 annually.

Daughter #1 argued keeping her as trustee, as she would be able to preserve the estate. Crispin J: public trustee needed to end litigation and tension; having public trustee as co-trustee would not solve anything as the co-trustees must come to a decision collectively. Problem here as Daughter #1 would still be able to display her bias in decisions. Because of the mental illness of Daughter #1, the cost of removal would not fall on her, but on the estate. E. Death Of Trustee Trustee Act 1898 (Tas), s 25(1) “Where a power or trust is given to or vested in two or more trustees jointly, then, unless the contrary is expressed in the instrument, if any, creating the power or trust, the same may be exercised or performed by the survivor or survivors of them for the time being.”...