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Tutorial 4 Week 5

Lemon must advise Blue on removing Lavender as trustee and appointing a new trustee to the trust established by Blue. Lavender can be removed as trustee under section 40(1) of the Trustees Act 1949 due to her mental illness from the car accident. As the continuing trustee, Lemon has the power to appoint a new trustee under section 40(1)(b) of the Act. However, the trust instrument states that only those appointed by Blue can be trustees. Therefore, Lemon should seek the court's appointment of a new trustee under section 45(1)(b) of the Act, as the court has the power to override the terms of the trust instrument in this situation.

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107 views3 pages

Tutorial 4 Week 5

Lemon must advise Blue on removing Lavender as trustee and appointing a new trustee to the trust established by Blue. Lavender can be removed as trustee under section 40(1) of the Trustees Act 1949 due to her mental illness from the car accident. As the continuing trustee, Lemon has the power to appoint a new trustee under section 40(1)(b) of the Act. However, the trust instrument states that only those appointed by Blue can be trustees. Therefore, Lemon should seek the court's appointment of a new trustee under section 45(1)(b) of the Act, as the court has the power to override the terms of the trust instrument in this situation.

Uploaded by

Vishithira Manoharan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Equity & Trust

Tutorial 4 Week 5

Blue made a declaration of private trust in favour of his wife Berry, his daughters, Fuchia and Ivory. He
named his aunty, Lavender and his nephew, Lemon as the trustees. In the trust, Blue stated that no
one will be a trustee apart from the one that he has appointed.

After the death of Blue, Lavender who agreed to be the trustee, involved in car accident and was
hospitalized. The doctor who treated her, confirmed that Lavender may suffered mental illness due to
the accident.

Advise Lemon.

General rule on appointment of trustees.

- General rule: Any person capable of holding property under the law can be a trustee. -Settlor
(for inter-vivos trust) / testator (for testamentary trust) decides who to be the trustee

Explain initial and subsequent appointments.

- Initial appointment is done by the settlor by declaring himself to become a trustee or nominate

other person to become trustee. This usually be done by way of trust deed.

- Initial trustee could be appointed in an inter vivos trustor a testamentary trust.


- Subsequent appointment is Exercised by people with power to appoint new trustee to appoint a
subsequent trustee.
- After initial trustee are appointed, there could be situation where subsequent appointment may
need to be made.
- 3 ways where subsequent appointment under Malaysian law > By Settlor’s Express Method of
Appointment- trust instrument > nominated appointment (by way of statute) > by court.
- The power to appoint and circumstances in which the power may be exercised have been
illustrated under Trustees Act 1949.

There are 2 main issues here. Removal of lavender and appointment of trustee.

Removal by virtue of statutory provision.

S40(1)

Re east – mental infirmities is a factor removing trustees.

Lavender can be removed as per s40(1) due to his mental illness.


1. Whether lemon has the power to appoint new trustee.
S40(1)(a) – person nominated by trust instrument – in current case, no nominated person by the
settlor. Therefore, we rely on S40(1)(b) – when no person is nominated, the continuing trustee
for the time being may appoint new trustees. Re Shafto Trusts – in this case the remaining
trustee was the last surviving truste. This he had to find new trustee.
-Lemon by virtue of S40(1)(b), as a continuing trustee has power to appoint subsequent trustee.

2. Whether lemon can exercise his power to appoint subsequent trustee by virtue of S40(1).
S40(1)- one of the circumstances where subsequent appointment may be made is when a
trustee is unfit to act. Re East (1873) 8 Ch App 735A person was given a power of appointing
new trustee if any original trustee dies or became unwilling or unable to act. In this case, one of
the 3 trustees became of unsound mind. So, the other 2 trustees appointed a replacement
trustee.
Lemon can exercise his power to appoint subseq trustee as lavender is unfit to act.

3. Whether it is mandatory to appoint additional trustee by lemon.


-S40(6)(b) states that it is not obligatory for lemon to appoint new trustees unless provided in
the trust instrument or any written laws not exceeding 4.
-If Lemon want’s to exercise power, - as per re brockbank & Re power’s settlement he does not
need to ask the permission from the beneficiaries bcs the right to appoint is vested on the
trustee by virtue of s40 of TA.
-Lemon has to make sure the formalities of appointment such as being in written form as in
S40(6).

- “Blue stated that no one will be a trustee apart from the one that he has appointed”. – since
there is a clause in deed restrain Lemon from exercising his power, he can seek the court as the
court has power to appoint subject to S.45(1)(b).
- S45(1)(a) The court has statutory power to appoint new trustee or trustees either
in substitution for or in addition to any existing trustee or trustees, or although there is no
existing trustee When it is found inexpedient, difficult or impracticable so to do
without the assistance of the court
- S45(1)(b) – The court may make an order appointing a new trustee in substitution for a
trustee who Is sentenced to a term of imprisonment or mentally disordered or of unsound mind
or a bankrupt or a corporation which is in liquidation or has been dissolved
Re lysaght – no one else can be trustee unless the person stated by the settlor. need the court’s
interference
Henderson v Hnederson
Re Tempest - in exercising its discretion to appoint a new trustee, the court would have regard
to: i) the wishes of the settlor; ii) should not appoint a person interested under the trust; iii)
should consider whether the appointment would promote or impede the execution of
the trust.

Explain capacity in introduction.


S3(1) TA

Initial appointment
Phua chin Har v Amanah raya bhd

Whether the trust fail if lemon or lavender refused to act. (yes)


Re lysaght .

Removal of lavender
S40(1)

Subsequent appointment
S40(1)(b)

Additional appointment
S39(1)(b)
S40(6)

Appointment of court
S45(1)(a)
S45(1)(b)
Henderson v Henderson
Re tempest

_______________________________________________________________
-S23 of TA
- if talk about personal representative – need to include s3(1) of TA – interpretation section

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