Trustees: Appointment And Duties

Front 1

Q to ask: Is the removal of the trustee necessary for the welfare of the beneficiaries?
Dispute between T and Bs not sufficient grounds for removing trustee. However in this situation father (trustee) took his role as dictator of family business over to trust; affected trust, eg, financial records were not in place. Court allowed removal. Court will only Q discretion if used in bad faith, irresponsibly, etc.

Back 1

Re Whitehouse

Front 2

Court looking for: where a trustee exercises their discretion within their power, but has acted inappropriately- without giving a real or genuine consideration to the exercise of the discretion. But will not substitute their own judgement.

Back 2

Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd

Front 3

Remainderman argued co-trustee did not take into account everything he should have in using discretion. Court said all they had to decide was whether there was a real or genuine consideration, in good faith, in accordance with the purpose for which it was conferred.

Back 3

Karger v Paul

Front 4

s8 does not change grounds- Court will still only second guess discretion on grounds of bad faith, irresponsibility, arbitrariness, etc

Back 4

Hennessy v Perpetual Trustees Queensland Limited

Front 5

1.Obligations to preserve trust property
2. Obligations of fidelity and loyalty (fiduciary obligations)
3. Obligations of care and skill
(per Tipping J)

Back 5

Bank of NZ v NZ Guardian Trust

Front 6

Trustees took 15 years, dragged on, eventually company went bankrupt. Duty to get in trust property qualified by clause allowing trustee to postpone getting debt, but clause should be read WITHIN duty to get in trust property.

Back 6

Partridge v Equity Trustees Executors and Agency

Front 7

Trustee sold land and kept cash for six months instead of giving it to bens immediately. Court held he’d deprived them of value of appreciation.

Back 7

Adamson v Reid

Front 8

Trustees inherited lease and option to purchase land needed to run business- did not exercise option, land sold, business worth less. Trustees had to consider whether they needed to exercise option to maintain value- answer obviously yes- breached duty to preserve.

Back 8

Elder’s Trustee and Executor Co v Higgins

Front 9

Q is whether in failing to insure trustee has failed to show appropriate care and skill

Back 9

Pateman v Heyen

Front 10

Court: to work out best interests of present AND future trustees, must consider purpose of trust. In this case, to provide for coal miners in retirement. Thus, must have paramount consideration to financial reasons in ensuring they are provided for, and cannot be overridden by agenda of trustees.

Back 10

Cowan v Scargill

Front 11

Harries v Church Commissioners for England

Back 11

Must have regard to aims and values of charity insofar as is consistent with getting maximum return. Investment inconsistent with purpose may deter people from investing- so financial concern in disguise. But also possible to be so inconsistent with purpose as to be inappropriate.

Front 12

Rule: trustee must take middle road between life and remainder bens. Reason why they had erred on side of life ben in this case is because she was also the trustee- life ben had thus been unduly favoured. Trustees did not comply with requirement of impartiality.

Back 12

Re Mulligan

Front 13

Court refused to direct trustee to use discretion to choose co-trustee favoured by bens. Discretion was his, non justiciable unless he used it in bad faith, capriciously, etc.

Back 13

Re Brockbank

Front 14

1. One person undertakes to act in interests of another and gets legal power to act on those interests
2. Special vulnerability of principal

Back 14

Hospital Products v United States Surgical Corporation

Front 15

Maj: no fiduciary relationship (though could occur in financial advice cases.) Company had already decided to take over, company not relying on them.
Kirby (dissenting): Company is in fact vulnerable to outcome of report. Can't hid behind previous association. Full and frank disclosure needed. Must place principal in position where it can decide whether or not it will consent to allow the fiduciary to pursue its personal interests.

Back 15

Pilmer v Duke Group

Front 16

The fact that telling the principal would have made no difference is not a defence.

Back 16

Brickenden v London Loan and Savings; Maguire v Makaronis

Front 17

Board were able to consider whether they has any interest in the Tasmanian iron ore mine and agreed they did not. That renunciation of interest was made with FULL KNOWLEDGE of the facts, thus no breach- anything less will not suffice.

Back 17

Queensland Mines Ltd v Hudson

Front 18

Nature of info:
Employers used enhanced knowledge of rubber glove making machine as springboard.

Back 18

Ansell Rubber Co v Allied Rubber Industries

Front 19

Court agreed government info is capable of being protected by equitable duty of confidence- state secrets, security, etc- of a nature anyone would think should be treated confidentially. However in this case injunction was refused on basis of public interest defence.

Back 19

AG (UK) v Heinemann Publishers Australian (The Spycatcher Case)

Front 20

Must show ‘trust documents’ (essential documents inc trust instrument and financial records), but not documents trustee keeps in course of admin for their own record.

Back 20

Re Londonderry’s Settlement

Front 21

‘Memorandum of Wishes’:
Maj: not an essential document because did not have any legal effect in face of ‘absolute and uncontrolled discretion’; also communication between trustee and settlor, who seemingly deliberately kept it secret- attracts duty of confidence
Kirby: was an essential document because it had some practical effect

Back 21

Hartigan Nominees Pty Ltd v Rydge

Front 22

Trustee employed trusted stockbroker who behaved dodgily. Court: Had to do what a ordinary prudent man of business (careful and doesn’t take risks, but not an expert) would do in conducting his own business. Cannot completely abdicate responsibility. Has to check on process. However court held he should not have realised (by dodgy form etc) what was happening because he was not an expert.

Back 22

Speight v Gaunt

Front 23

Trust company advertising expertise in managing trust property, etc- invested trust money in shares that turned out to be a disaster- comp didn’t see it coming until too late. Court held if you hold yourself out to have a certain level of skill you are expected to exercise that level of skill.

Back 23

Bartlett v Barclays Bank Trust Co (No 1)

Front 24

Acting in someone else’s interests, rather than your own.

Back 24

Australian Securities Commission v AS Nominees Ltd

Front 25

Carpet grip guy disclosed information for negotiations to sell only- company used info to start making it themselves. Fact that info was to be used for limited purpose only, in these circumstances, would have been clear to any reasonable person.

Back 25

Seager v Copydex

Front 26

Manufactured breathalyser to be used by UK police, former employees gave press evidence the breathalyser might be faulty. Public interest in giving info to press overrode duty of confidence.
Griffith CJ warning: World of difference between what is of public interest and what is of interest to the public.

Back 26

Lion Laboratories v Evans

Front 27

Going to publish illegally obtained info about a jockey breaching horseracing regulations and committing some crim offences- is a public interest issue- but Mirror Newspapers were pursuing private interest of selling papers; public interest could be served by giving tapes to police, etc. So just because there is a public interest character does not mean the defence will be available.

Back 27

Francombe v Mirror Newspapers

Front 28

Court will be more concerned about protecting private interests of citizens than protecting the interests of the government.
McHugh J: In a private case, there is a heavy onus on D to prove the info is in the public interest. In a case against the government, the onus switches so that the government must prove it is not in the public interest.

Back 28

AG (UK) v Heinemann Publishers Australian (The Spycatcher Case) - PI defence

Front 29

If fid partners have lease and one renews lease on its own, presumption of breach on basis of profit from position rule (unless fid can prove they obtained lease in another way).

Back 29

Keech v Sandford; Chan v Zacharia

Front 30

Trustee used firm of stockbrokers where he was employed to value shares of trust- got 50% commission. Shares needed valuing. Still- overlap of interests; breach of conflict rule. Had to disgorge.

Back 30

Williams v Barton