Topic 2: Appointment and removal of trustees

Question 0

How many trustees can the settlor appoint?

Answer 0

1. Before commencement, four, can’t add any after: s11(1)
2. At commencement of Trust Act, only allowed four: s11(2)(a)
3. If more than 4 named, first 4 willing and able are trustees: s11(2)(a)
4. Where charitable trust, allowed more than 4: s11(3)(a)

Question 1

Who can be trustees?

Answer 1

1. Any natural person;
2. Corporate trustees
3. A person can be a beneficiary and a trustee so long as they are not the SOLE beneficiary AND SOLE trustee.

Question 2

Why is it better to have two trustees than 4?

Answer 2

1. They act as a check and balance a they have to act as one
2. Generally property vested in trustee as joint tenants because of right of survivorship. If one trustee dies, the property vests in the other surviving joint tenant.

Question 3

Who can appoint trustees?

Answer 3

1. The Trust Act can nominate a person who has the power to appoint or replace trustees
2. If silent, s12(1) Trust Act comes into play.

Question 4

Who can have the power to appoint new trustees?

Answer 4

Under s12 Trust Act:

1. s12(1) - Surviving trustees have power
2. s12(1) - if no surviving trustee, then personal representative of last surviving trustee.
3. 12(1) - circumstances where a new trustee must be appointed
4. s80 - Where all else fails, courts can step in and use their inherent jurisdiction to supervise administration of trusts to appoint a new trustee.

Question 5

What happens when a new trustee is appointed?

Answer 5

1. s15 TA which applies s12 TA - the document of appointment vests trust property in them
2. If Court appoints them under s80, s82 and s83 applies
3. s15 TA - “subject to any other act” - If trust property is land, the trustee must register the land. Trustee cannot deal with land unless they are registered under LTA

Question 6

How can a trustee be removed?

Answer 6

1. Express power in the trust instrument to remove the trustee
2. Obtain an order from the Supreme Court

Question 7

What is the relevance of Guazzini v Pateson

Answer 7

It relates to removal of trustees.

• A court will not remove a trustee for mere mistake or neglect of duty
• it is where:
  1. it endangers the trust property to allot the trustee to continue to manage it; and
  2. General unfitness to be a trustee.

Question 8

What is a case for removal of trustee because they endanger the trust property?

Answer 8

Re Whitehouse.

Question 9

What are the facts of Re Whitehouse?

Answer 9

• Whitehouse family operated business and also operated a trust.
• Mr and Mrs W were trustees for their two sons who were beneficiaries.
• MR W was governing director of some companies.
• He behaved as if he was boss and behaved in a dictative way.
• He was in conflict with his two sons about conduct of business

Court held:
1. He carried over the same attitude to being trustee.
He didn’t see himself as accountable to other members of family and his authority was not to be questioned
3. Mere argument not enough, but in this case animosity towards sons and he wasn’t accountable to anyone endangered trust property.
4. His attitude lead to general deficiencies in administration of trust
4. He was removed as was his wife because she did everything he told her to.