Trusts 14: Appointment, Retirement & Removal of Trustees Cases
Terms in this set (10)
Re Wheeler and De Rochow  1 Ch 315
In s. 10 of the Trustee Act, 1893, the words "person or persons nominated for the purpose of appointing new trustees by the instrument creating the trust," refer to the person or persons nominated for the purpose of appointing new trustees in the particular event which has happened.
Where, therefore, by a marriage settlement the husband and wife, or the survivor of them, were empowered to appoint new trustees in certain specified events, including the event of a trustee becoming incapable, but not the event of a trustee becoming unfit, and one of the trustees became unfit but not incapable:—
Held, that the appointment of a pew trustee ought to be made not by the surviving husband as the person nominated in the settlement, but by the continuing trustees under the provisions of the Act.
Re Coates to Parsons (1886) 34 ChD 370
Where some trustees intend to undertake the trust or continue as trustees, but some refuse or intend to retire, respectively, the appointment of new trustees by the continuing trustees without the concurrence of a refusing or retiring trustee will make the appointment invalid if shown that the latter was competent & willing to act.
On a summons under the Vendor and Purchaser Act, 1874, an objection was taken by a purchaser from trustees that an appointment of one of their number, under the power given by sect. 31 of the Conveyancing Act, 1881, in the place of a trustee who had been abroad for more than twelve months, was invalid because that trustee had not joined in making the appointment:—
Held, that, there being no evidence that the absent trustee was either willing or competent to join in making the appointment, the objection could not be sustained.
The instrument creating a trust cannot be taken to have expressed a contrary intention within sub-s. 7 of sect. 31 of the Conveyancing Act, 1881, merely because it does not provide for filling up a vacancy in the number of the trustees upon the happening of an event not contemplated by the parties to that instrument.
Semble, that if a trust deed contained a power to appoint new trustees expressed in the same words as sub-s. 1 of sect. 31, without anything more, it would not be necessary that a retiring trustee should join in the appointment of his successor. In such a case the words "continuing trustee" would mean only a trustee who is to continue to act in the trusts after the completion of the appointment.
Re Stoneham ST  Ch 59
On the true construction of the Trustee Act 1925 s.36(1), a trustee who had remained outside the UK for more than 12 months can be removed against his will. A trustee who has been removed against his will is not a refusing or retiring trustee within the meaning of s.36(8) of the Act and therefore a trust who has been removed because of his absence outside the UK for consecutive periods of more than 12 months is not entitled to demand that he shall have a hand in the appointment of the new trustee or trustees.
By two appointments relating to a will land a settlement respectively, C one of the trustees, appointed by two plaintiffs to be trustees in the place of S and himself and, by the dame deed, retried from the trusts. The basis of the appointment in each case was that S had remained out of the UK for more than 12 months. S (though he id not dispute that he had been out of the UK for more than 12 months claimed that he was entitled to be called on to concur in the appointments which he alleged, as they were made by C alone, were not valid.
Re Brockbank  Ch 206
The power to appoint new trustees must be exercised either according to the express power of appointing new trustees contained in the trust instrument or, if there is no such power, by the continuing or surviving trustee under s.36(1)(b) of the Trustee Act, 1925. The power of nominating a new trustee is a discretionary power, and the beneficiaries cannot arrogate to themselves or control the exercise of such discretionary power. If they are all sui juris they might put an end to the trust and establish a new settlement which repeats the former trusts, but such transaction might inter alia (a) attract ad valorem stamp duty, and (b) lose them the benefit of the exemption from estate duty given by the Finance Act, 1894, s.5(2), and the Finance Act, 1914, s.14(a).
A testator by his will settled his residuary estate in trust for his widow for her life and after her death for his children. W and the defendant were the trustees of the will. W wished to retire and the widow and children desired that a bank should be appointed trustee. The defendant was unwilling to join in exercising the statutory power of appointment vested in himself and W and to appoint the bank, and the widow and children asked that the defendant might he directed to concur with W in making the appointment.
Held, dismissing the summons, that beneficiaries who are together absolutely entitled to trust property are not entitled to control the exercise by their trustees of the fiduciary power of appointing new trustees. Either such beneficiaries must keep the trust on foot, in which case the trusts must continue to be executed by trustees duly appointed pursuant to the original instrument or to the power conferred by s. 36 of the Trustee Act, 1925 and not by trustees arbitrarily selected by themselves; or such beneficiaries must put an end to the trusts.
Stephenson v Barclays Bank Trust Co  1 WLR 882
By his will the testator appointed the taxpayer company as executors and trustees and disposed of his residuary estate, which included shares, by making provision for annuities to be paid out of the income to his daughters during widowhood and subject thereto on trust to accumulate the income for a period of 21 years from his death, and then on trust for all his grandchildren living at his death who should attain the age of 21 years in equal shares. When the accumulation period ended, his three daughters were widows and his two grandchildren had attained the age of 21. On January 27, 1969, a deed of family arrangement was made by which a fund was appropriated to the annuities and the remainder of the estate and the trustees were released from all claims by the annuitants. The trustees did not transfer the estate to the grandchildren. The revenue assessed the trustees to capital gains tax for the year 1969-69. The special commissioners, on the trustees' appeal, discharged the assessment, holding that, since the trustees continued to have power in dealing with the trust which the grandchildren beneficiaries could not over-ride, the grandchildren were not absolutely entitled as against the trustees, within the meaning of section 22 (5) of the Finance Act 1965 1. and paragraph 9 of Schedule 19 to the Finance Act 1969, 2. so that there was no deemed disposal of the estate, under section 25 (3) of the Act of 1965, by the trustees to the grandchildren.
On appeal by the Crown: — Held, allowing the appeal, (1) that in the context of paragraph 9 of Schedule 19 to the Finance Act 1969 "outgoings" could not include the charge on the income of the residuary estate of the annuities; that, therefore, the annuitants' interest in the estate could not be excluded and the grandchildren were not persons absolutely entitled against the trustees, within the meaning of that paragraph and section 22 (5) of the Act of 1965, as at April 13, 19S5, when the younger grandchild attained the age of 21 and, accordingly, section 25 (3) of the Act of 1965 could not apply and there had been no deemed disposal of the assets at that date.
(2) That, on the execution of the deed of family arrangement, the grandchildren became absolutely entitled as against the trustees to the assets of the residuary estate not appropriated to the daughters' annuities, within the meaning of section 22 (5) of the Finance Act 1965 and paragraph 9 of Schedule 19 to the Act of 1969; that "a person" in section 25 (3) of the Act of 1965 included the plural and, accordingly, the trustees were deemed by virtue of the subsection to have disposed of the remaining residuary estate to the two grandchildren and capital gains tax was chargeable.
(3) That, although paragraph 2 (1) of Schedule 7 to the Finance Act 1965 provided that the shares forming part of the residuary estate and held by the trustees were to be regarded as a single asset, that sub-paragraph dealt with the computation of tax and could not be construed so as to produce the result that the shares remained a single entity and could not be divided between the grandchildren for the purposes of section 25 (3); that accordingly, so much of the residuary estate as consisted of shares was to be deemed disposed of to the grandchildren.
Gartside v IRC  AC 553
The objects of a discretionary trust do not have an "interest" in the trust fund, let alone an "interest in possession" within the meaning of the Finance Act 1940 s.43 .
By his will, made in 1934, the testator gave a fourth share of the residue of his estate to trustees to hold on trust as follows: (1) to apply the income of the fund at their discretion for the maintenance or benefit of all or any of his son, his son's wife or children (if any), and to accumulate surplus income as an addition to capital with power at any time to resort to the accumulations and to apply them as current income, and (2) after the son's death, to hold the capital, income, and accumulations upon trust for such of the son's children as being male attained 21 or being female attained that age or married, and if more than one equally. He gave power to the trustees to advance at any time to a grandchild of his sums of up to one-half of the presumptive or vested share of that grandchild in the fund.
The testator died on January 8, 1941; in 1942 the son married and, in 1945, twin sons were born; there were no other children. On January 2, 1962, the trustees exercised their power of advancement in favour of the testator's grandsons. They declared that they held investments and the income thereof on trust for each grandson should he attain 21 years; the investments formed part of the original capital of the testator's son's share, and represented less than one-quarter of it. The testator's son died in May, 1963, and the Crown claimed estate duty on the two funds advanced in 1962. The trustees contested this claim on the grounds that (1) before the power of advancement was exercised in 1962 neither the discretionary objects nor the accumulation beneficiaries had an "interest in possession" or, indeed, any "interest" at all in the trust fund, within the meaning of section 43 of the Finance Act, 1940 ; and (2) even if there was an interest in possession, it was not of a measurable amount as required by section 2 (1) (b) and section 7 (7) of the Finance Act, 1894 :-
Held, that the only right of an object of a discretionary trust, of income is to require the trustees to consider from time to time whether or not to apply the whole or some part of the income for his benefit, and this right is not an interest in the whole fund or any part of it within the meaning of section 43 of the Finance Act, 1940.
An "interest in possession" must mean that the person's interest enables him to claim whatever may be the subject of the interest. A right to require trustees to consider whether they will pay him something does not enable him to claim anything.
Per Lord Wilberforce: As regards the accumulations, there was no "interest in possession" because the whole income was being validly accumulated for the benefit of persons with contingent interests and accordingly section 43 did not attach.
Re Gibbon's Trusts (1882) 30 WR 287
The Court should not be asked to exercise its power when a statutory provision is available.
Conveyancing Act 1881 (c 41) s 31 (repealed), having given a power to appoint new trustees in every case where a trust was subsisting, it was improper to apply to the court for the appointment of new trustees under Trustee Act 1850 (c 60) s 32 (repealed), unless there was some reason making it 'difficult, inexpedient, or impracticable to appoint them without the assistance of the court' other than the mere absence of a power to do so in the instrument creating the trust.
Re May's Will Trusts  Ch 109
By s. 36, sub-s. 1, of the Trustee Act, 1925: "Where a trustee desires to be discharged from the trusts reposed in him, or is incapable of acting therein, then, the continuing trustees or trustee may, by writing, appoint one or more other persons to be a trustee or trustees in the place of the trustee so being incapable, as aforesaid."
By s. 41, sub-s. 1: "The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient difficult or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees."
A testator's widow, who was one of the three trustees of his will, was in Belgium at the date of the German invasion and, so far as was known, at the date of this summons:-
Held, that the Court would not declare that the continuing trustees had power to appoint a new trustee in her place, would not lay down any rule, and would deal only with the particular case. There was no evidence that the widow was "incapable of acting" within s. 36, sub-s. 1, but there was evidence showing that the proper course was for the Court to appoint a new trustee under s. 41, sub-s. 1.
Re Tempest (1866) LR 1 Ch 485
In a testamentary trust, of the trustees died before the testator. The persons with the right to choosing a trustee could not agree on a choice. Most of the persons agreed with the chose of Edward Petre but Mr Flemming (a beneficiary) opposed him because Mr Petre was not on friendly terms with the testator. No question arose from the codicil as the two surviving trustees agreed in choice of Mr Petre.
Question: what criteria should a court use when making appointments for trusts? The court should always have regard to three requirements: 1) the wishes of the person by whom the trust was created; 2) the interests which may be conflicting of all the beneficiaries; 3) the efficient administration of the trust.
Holding: Overruling the Master of Rolls earlier decision and omitting Mr Petre. Court will look to the wishes of the settlor, if ascertainable, will not make appointments which favour some beneficiaries over others, and in general will make an appointment which will further the proper execution of the Trust.
Letterstedt v Broers (1884) 9 App Cas 371
There is a jurisdiction in Courts of Equity to remove old trustees and substitute new ones in cases requiring such a remedy.
The main principle on which such jurisdiction should be exercised is the welfare of the beneficiaries and of the trust estate.
Case in which their Lordships, overruling the decree of the Court below, held that the trustees (the Board of Executors of Cape Town, a body incorporated by an ordinance of the Cape of Good Hope) should, in the special circumstances of the case, be removed without costs of appeal, the Appellant having persisted in charges of fraud which the evidence did not sustain.
It is the duty of a court of equity to see that trusts are properly executed, and, therefore, even though no charge of misconduct is made out against a trustee, the court will remove him if satisfied that his continuance in office would be detrimental to the proper execution of the trust. Friction or hostility between the trustee and the immediate possessor of the trust estate is not of itself a reason for the removal of the trustee, but it will not be disregarded by the court when grounded on the mode in which the trust has been administered. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate, and the main guide for the court, when considering whether a trustee should be removed, must be the welfare of the beneficiaries.