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Variation of Trust PDF

The document summarizes exceptions to the general rule that trusts must be carried out according to their terms without deviation. The four main exceptions discussed are: 1) Express powers to vary terms included in the trust instrument; 2) The rule in Saunders v Vautier allowing unanimous beneficiary consent to end a trust; 3) Section 59 of the Trustees Act 1949 granting courts power to authorize dealings with trust property; and 4) Courts' inherent jurisdiction to depart from terms in limited circumstances of administration or emergency not foreseen by the settlor.

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DHAVEENASHINI A P LETCHUMANAN
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89 views

Variation of Trust PDF

The document summarizes exceptions to the general rule that trusts must be carried out according to their terms without deviation. The four main exceptions discussed are: 1) Express powers to vary terms included in the trust instrument; 2) The rule in Saunders v Vautier allowing unanimous beneficiary consent to end a trust; 3) Section 59 of the Trustees Act 1949 granting courts power to authorize dealings with trust property; and 4) Courts' inherent jurisdiction to depart from terms in limited circumstances of administration or emergency not foreseen by the settlor.

Uploaded by

DHAVEENASHINI A P LETCHUMANAN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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• Similar to any other GR in law, they are always exceptions.

• These exceptions are for the ‘time being’ exhaustive and seem to be the only ones
being applied in Malaysia.
• In the UK, the lack of allowance to deviate, and the cultural/domestic landscape
required more wiggle room
o As such the Variation of Trusts Act 1958 was introduced
o It codified the circumstances in which as trust can or may be varied
• Exceptions:
o Express power to vary
o Rule in Saunders v Vautier
o S.59 Trustees Act 1949
o Court’s inherent jurisdiction

I. Express Powers to Vary


➢ Starting Point:
❖ Paul v Paul [1882] 20 Ch D 742
o Once a trust is fully constituted-irrevocable & the settlor loses the power
to revoke it or amend its terms
• Embodies the GR/basic principle that the trust must be carried out according to
its terms and any deviation from them constitutes a breach of trust
❖ Re New [1901] 2 Ch 534

❖ Re Walker [1901] 1 Ch 879

• However, there may be instances where variations or deviations may be allowed


or provided for within the express terms of the trust instrument
• Very common for a trust to include provisions which allow the terms of the trust
to be varied by the settlor, trustees or protectors
o In each case with or without the requirement of consent by someone else

II. Rule in Saunders v Vautier


• Where the beneficiaries are sui juris, or full age and absolutely entitled-
he/she/they may legitimately decide to bring the trust to an end
❖ Re Chardon[1928] Ch 464
❖ Re Smith [1928] Ch 915
• Recognized for the longest time that the beneficiaries of a trust can consent
to the execution of the trust in a manner other than that specified by the
settlors
❖ Re Pauling’s Settlement Trusts [1964] Ch 303, CA
❖ Saunders v Vautier [1841] Cr &Ph 240
❖ Goulding v James [1997] 2 All ER 239

• Position remains the same in respect of several beneficiaries


o Collectively entitled
o Consent unanimously
o Act together
• BUT law does not allow beneficiaries to override the trust provisions while the
trust remains in existence

III. S.59 Trustees Act 1949


• Provides express power for the court to authorise dealings with the trust property
• Does not confer a general right to rewrite the trust
❖ Re Downshire [1953] Ch 218
• s.59(1)
o management and administration of any property in the opinion of the court
expedient-as the court may think fit
• s.59(2)
o amplification of the court’s powers
(a) authorize the trustees to make any amendments in/upon titles to
immovable property-not authorize by para 4(1)(c)
(b) authorize the trustees to buy land
(c) authorize the trustees to raise funds to improve land/houses vested
in/belonging to the trust
(d) any act which appears to the court to beneficial to the trust estate or
to the beneficiaries
• s.59(3)
o court may from time to time-rescind or vary any order under this section
or may make any new/further order
• S.59(4)
o Application to the court may be made by the:
Trustees
Any of them
Any person beneficially interested under the trust
READ THE SECTIONS WORD FOR WORD!!!!-this is merely a summary
 and then summarise in your own understanding!

❖ Re Estate of Yang Wai Man ex parte Yong Khai Min [1994] 3 MLJ 514
❖ Ramasamy & Ors v Thayalan SK Palanyandy & Ors [1993] 4 CLJ 281

IV. Court’s Inherent Jurisdiction


• Court has the inherent jurisdiction to depart from the terms of the trust but
ONLY in limited circumstances
• These circumstances are ONLY in relation to the administration or management
of the trusts
• The courts have NO authority or discretion to vary or alter the beneficial interests
o Go back to the GR/basic principle that the settlor’s wishes must be abided
by

1. Emergency
• Often it is in an emergency situation
o Eg: an occasion when no provisions were made in the trust instrument
o An event that could not be foreseen by the settlor
• Authorizes transactions involving the trust property which are not otherwise
permitted by the trust if a ‘peculiar set of circumstances arises’- no provision for
this in the instrument-per
❖ Re Jackson [1882] 21 Ch D 786
❖ Conway v Fenton [1888] 40 Ch D 512
❖ Re Montagu [1897] 2 Ch 8
• Previously- extended to situations even when there was NO absolute necessity

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