Trusts - Appointment And Administration

Front 1

S70 A Charities and Trustees Investment (S) Act 2005

Back 1

There is a special provision of how trustees can be appointed.

Disqualified under S69

Front 2

How can new trustees be appointed?

Back 2

S3(b) 1921 - Deed of assumption. Trustees can appoint a new trustee.

S22 1921 - The court can appoint a trustee

Nobile Officium - the court has a common law power to appoint upon deadlock.

S34(5)/70A 2005 - For charities

Front 3

Sch B Trusts (S) Act 1921

Back 3

When a new trustee is appointed the patrimony must be conveyed. This is done in accordance with sch B.

It must be added to the land register for a real right.

Front 4

Ker v City of Glasgow

Back 4

Acceptance can be implied.

Ker acted as trustee, signed some documents and this meant that he was joint and severally liable. Best expressly decline.

Front 5

Resignation of a trustee

Back 5

S3(a) 1921 - allows a trustee to resign office except where prohibited by the trust deed says or due to 3(1) or (2). you cannot resign if you are sole trustee.

S19 - A minute of resignation is required. Explains which ones can be used

Trustees that are paid cannot simply quit

Front 6

McKenna v Rafique

Back 6

Sheriff suggested that explicitly resigning 'I'm done, I resign' could count.

However, note that in Ker v City of Glasgow Bank being inactive does not constitute resignation.

Front 7

Moness Country Club v First National Trust Co Ltd

Back 7

With the purpose of the trust it appeared that the trustee could simply be replaced by the beneficiaries (the clerk and office members)

Front 8

S23 1921 Act

Back 8

Covers certain grounds for removal - insanity, incapacity, absence from the UK, disappearance for 6 months.

Prelonged absence discretionary whether remove

REMOVAL REQUIRED IF INSANE OR INCAPAX

Front 9

Effect of removal/resignation on patrimony/liabilities

Back 9

There is no need for a conveyance - the remaining trustees automatically become the joint owners (minus old trustee).

Neither removal or resignation reduces or removes the personal liability of the trustee. However, there is not further liability.

Front 10

Lapsed trusts

Back 10

If there are no trustees left then the court can appoint new trustees.

S22 1921

Front 11

Wolfe v Richardson

Back 11

Any decision binding the trust must be by a quorum of trustees (unless trust deed provides otherwise).

Must be quorum of all the trustees - not just those that have turned up.

Front 12

S3(c) 1921 act

Back 12

Definition of quorum. This is what is used

Apart from if the trust deed sets another number.

Front 13

Wyse v Abbott

Back 13

All trustees must be consulted

2/3 trustees decided to assume new trustees but this was invalid as the 3rd trustee had not been consulted.

Front 14

Malcom v Goldie

Back 14

Held that it is okay not to consult a trustee if they are not contactable within reasonable time.

In this case it would take 6 weeks for the trustee to receive the letter

Front 15

S7 Act 1921

Back 15

Although joint property a quorum can technically push through a deed. Land register will accept a deed if the quorum can explain why the others did not sign

Front 16

Where can you find the trustee's powers?

And examples of these powers

Back 16

S4 1921 act

• Sell all or part of the estate (heritable or movable)
  
• lease all or part of heritable property
• borrow money on security of trade estate
• Convey (excamb) heritable property
• Acquire/invest in heritable property
• discharge trustees who have resigned and the representatives of trustees who have died

Front 17

Rezac's Excrs v Rezac's Ex

Back 17

S4 provides general powers but the powers exercised cannot be at invariance with the terms or purpose of the deed.

They were going to sell a property subject to a liferent and this was against the purpose and therefore not allowed.

Front 18

S5 1921 act

Back 18

If there is any question to whether a power/action is at invariance with the terms, then a s5 can be raised.

Allows them to exercise s4 regardless if there in an invariance with the terms

Front 19

Administration under Nobile Officium

Back 19

The Court of Session can grant additional powers. It remedies 2 situations:

• No legal rule adequately covering a given situation
• Where there is a legal rule, the application would be unduly excessive, oppressive or burdensome

Front 20

Investment of trust funds

Back 20

S4(1)(ea) - allows for unrestricted right to acquire land and invest it

S4A - they must be careful with their investments. There must be diversification (not all eggs in one basket)

Front 21

S2(1) Trusts (S) Act 1961

Back 21

VERY IMPORTANT -

Cannot void 3rd party transactions (even if it was a bad faith transaction).

Donations can still be struck down. Has to be a transaction.

Front 22

S2(2) Trusts (S) Act 1961

Back 22

Although transaction cannot be struck down -

Trustee personally liable and will have to make up the loss from their own personal patrimony.

not clear what loss would be for sentimental values.

Front 23

Sanders v Sanders' Trs

Back 23

Contracts by trustees - if the contract was entered into ultra vires, then the trustee's personal patrimony is liable.

Front 24

Gordon v Campbell

Back 24

Contract with a third party -

This one was intra vires and expressly contracted as a trustee. The trust's patrimony was liable.

Front 25

Brown v Sutherland

Back 25

Contracts with a third party - who is liable?

They failed to mention that they were acting as trustees when signing the bill of exchange.

Front 26

Alexander's Trs v Dymock's Trs

Back 26

When looking at which capacity the trustee has entered into the contract, they may look at the nature of the contract.

In this, they were entering into the contract as a group and therefore it was implied that it was as trustees not individuals.

Front 27

Cunningham v Montgomery

Back 27

Where the trustees are personally liable for a contract -

They can pay the third party from the trust patrimony first. This liability wiped out the trust patrimony and the two trustees.

Front 28

Appointment of agents

Back 28

S4f 1921 - The trustees can appoint agents: 'factors and law agents'.

Trustee still ultimately liable - however, if they supervised and paid due care, then they are not personally liable. Not strict liability.

Front 29

Scott v Occidental Petroleum (Caledonia)

Back 29

The traditional view is that a trustee can delegate their administrative duties, but not their discretionary ones.

This case was on fiduciary duties (not trustee but legal representative, ratio still relevant).

YOU CANNOT DELEGATE FIDUCIARY DUTIES.

Front 30

S16 1921

Back 30

Advance of vested share to minor for beneficiary for education and maintenance.