Cap.96] TRUSTS

CHAPTER 96TRUSTS

Ordinances AN ORDINANCE TO DEFINE AND AMEND THE LAW RELATING TO TRUSTS.Nos. 9 of 1917,

4 of 1918,1 of 1934,

ActsNos. 7 of 1968.

30 of 1971. [16th April. 1918.]

Short title.

Application ofEnglish taw.

Interpretation.

CHAPTER 1

PRELIMINARY

1. This Ordinance may be cited as theTrusts Ordinance.

2. All matters with reference to any trust,or with reference to any obligation in thenature of a trust arising or resulting by theimplication or construction of law, for whichno specific provision is made in this or anyother enactment, shall be determined by theprinciples of equity for the time being in forcein the High Court of Justice in England.

3. In this Ordinance, unless the context orthe subject-matter otherwise implies—

(a) " trust " is an obligation annexed to theownership of property, and arisingout of a confidence reposed in andaccepted by the owner, or declaredand accepted by him, for the benefitof another person, or of anotherperson and the owner, of such acharacter that, while the ownership isnominally vested in the owner, theright to the beneficial enjoyment ofthe property is vested or to be vestedin such other person, or in such otherperson concurrently with the owner ;

(b) the person who reposes or declares theconfidence is called the " author ofthe trust ";

(c) the person who accepts the confidence iscalled the " trustee " ;

(d) the person for whose benefit theconfidence is accepted is called the" beneficiary ";

(e) the subject-matter of the trust is called" trust property " or " trustmoney ";

the beneficial interest " or " interest "of the beneficiary is his right againstthe trustee as owner of the trustproperty ;

(f)

(g) the instrument, if any, by which thetrust is declared is called the" instrument of trust " ;

(h) the expression " instrument of trust "includes a scheme settled underChapter X of this Ordinance ;

(i) a breach of any duty imposed on atrustee, as such, by any taw for thetime being in force is called a" breach of trust " ;

(j) a person is said to have " notice " of afact either when he actually knowsthat fact, or when, but for wilfulabstention from inquiry or grossnegligence, he would have known it,or when information of the fact isgiven to or obtained by any personwhom the court may determine tohave been his agent for the purposeof receiving or obtaining suchinformation ;

(k) every person is u competent tocontract " who is of the age ofmajority, or has otherwise acquiredthe status of majority according tothe law to which he is subject, andwho is of sound mind, and is notdisqualified by law from contracting ;

(l) a " married woman " is competent tocontract :

Provided tha t in any case inwhich the consent, concurrence,acquiescence, or ratification of abeneficiary is referred to, thepower of consent, concurrence,acquiescence, or ratification of a

. married woman who is a beneficiary

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shall be subject to the sameconditions and limitations as herpower to contract with reference tothe matter in question ;

(m) " court " means the District Courthaving jurisdiction in the matter inquestion, or a District Court uponwhich the Court of Appeal, on theapplication of any party interested,may confer jurisdiction for thepurposes either of the trust generallyor of the matter in question ;

{h} A, while in insolvent circumstances, transfersproperty to B in trust for A during his life, andafter his death to B. A is declared an insolvent.The trust for A is invalid as against hiscreditors.

5. (1) Subject to the provisions of section107, no trust in relation to immovableproperty is valid unless declared by the lastwill of the author of the trust or of the trustee,or by a non-testamentary instrument inwriting signed by the author of the trust orthe trustee, and notarially executed.

Tnistofimmovableproperly.

lawfulpurpose.

(n) " notarially executed " means executedin the manner prescribed by section 2of the Prevention of FraudsOrdinance, and any reference toM notarial execution " shall bedeemed to include a reference toexecution in accordance with theDeeds and Documents (Executionbefore Public Officers) Ordinance.

CHAPTER II

OF THE CREATION OF TRUSTS

4. (1) A trust may be created for anylawful purpose. The purpose of a trust islawful, unless—

(a) it is forbidden by law, or .

(b) it is of such a nature that, if permitted.it would defeat the provisions of anylaw, or

(c) it is fraudulent, or

(d) it involves or implies injury to theperson or property of another, or

(e) the court regards it as immoral: oropposed to public policy.

(2) Every trust of which the purpose isunlawful is void. And where a trust is createdfor two purposes, of which one is lawful andthe other unlawful, and the two purposescannot be separated, the whole trust is void.

Explanation.—In this section the expression " law "includes where the trust property is immovable fand situate in a foreign country, the law ofsuch country.

Illustrations

(a) A bequeaths property to B in trust to employ it incarrying on a smuggling business, and out ofthe profits thereof to support A's children. Thetrust is void.

(2) No trust in relation to movable property Trust ofis valid unless declared by the last will of the movableauthor of the trust or of the trustee, or by a propertynon-testamentary instrument in writing signedby the author of the trust or the trustee, orunless the ownership of the property istransferred to the trustee by delivery.

(3) These rules do not apply where theywould operate so as to effectuate a fraud.

6. Subject to the provisions of sections 5 Creation ofand 107, a trust is created when the author of trust-the trust indicates with reasonable certaintyby any words or acts—

(a) an intention on his part to createthereby a trust,

(b) the purpose of the trust,

(c) the beneficiary,

(d) the trust property, and

(unless the trust is declared by will or theauthor of the trust is himself to be the trustee)transfers the trust property to the trustee.

Illustrations

(a) A bequeaths certain property to B, *' having thefullest confidence that he will dispose of it forthe benefit of " C. This creates a trust so far asregards A and C.

(b) A bequeaths certain property to B," hoping he willcontinue it in the family ". This does not createa trust, as the beneficiary is not indicated withreasonable certainty.

(c) A bequeaths certain property to B, requesting himto distribute it amongst such members of C'sfamily as B should think most deserving. Thisdoes not create a trust, for the beneficiaries arenot indicated with reasonable certainty.

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Who maycreate trusts.

Subject oftrust.

Who may bebeneficiary.

Disclaimer bybeneficiary.

Who may betrustee.

No one boundto accept trust.

Acceptance oftrust.

Disclaimer oftrust.

(d) A bequeaths certain property to B, desiring himto divide the bulk of it among C's children.This does not create a trust, for the trustproperty is not indicated with sufficient

. certainty.

(e) A bequeaths a shop and stock in trade to B, oncondition that he pays A's debts and a legacyto C. This is a condition, not a trust, for A'screditors and C.

7. A trust may be created-

(a) by every person competent tocontract ; and

(b) with the permission of the court byor on behalf of a minor ;

but subject in each case to the law for thetime being in force as to the circumstancesand extent in and to which the author of thetrust may dispose of the trust property.

8. The subject-matter of a trust must beproperty transferable to the beneficiary. Itmust not be a merely beneficial interestunder a subsisting trust.

9. (1) Every person capable of holdingproperty may be a beneficiary.

(2) A proposed beneficiary may renouncehis interest under the trust by disclaimeraddressed to the trustee, or by setting up,with notice of the trust, a claim inconsistenttherewith.

10. (1) Every person capable of holdingproperty may be a trustee ; but, where thetrust involves the exercise of discretion, hecannot execute it unless he is competent tocontract.

(2) No one is bound to accept a trust.

(3) A trust is accepted by any words oracts of the trustee indicating with reasonablecertainty such acceptance.

(4) Instead of accepting a trust, theintended trustee may, within a reasonableperiod, disclaim it, and such disclaimer shallprevent the trust property from vesting inhim.

(5) A disclaimer by one of two or moreco-trustees vests the trust property in theother or others, and makes him or them soletrustee or trustees from the date of thecreation of the trust.

Illustrations

(a) A bequeaths certain property to B and C. hisexecutors, as trustees for D. B and C proveA's will. This is in itself an acceptance of thetrust, and B and C hold the properly in trustforD.

(b) A transfers certain property to B in trust to sell iland to pay out of the proceeds A's debts- Baccepts the trust and sells the property. Sofar as regards B, a trust of the proceeds iscreated for A's creditors.

(c) A bequeaths a lakh of rupees to B upon certaintrusts and appoints him his executor. Bsevers the lakh from the general assets andappropriates it 10 the specific purpose. Thisis an acceptance of the trust.

CHAPTER III

OF THE DUTIES AND LIABILITIES OFTRUSTEES

11. (I) The trustee is bound to fulfil the Trustee topurpose of the trust, and to obey the execute trust.directions of the author of the trust given atthe time of its creation, except as modifiedby the consent of all the beneficiaries beingcompetent to contract,

(2) Where the beneficiary is incompetentto contract, his consent may, for thepurposes of this section, be given by thecourt.

Explanation.—Unless a contrary intention beexpressed, the purpose of a trust for thepayment of debts shall be deemed to be—

(a) to pay only the debts of the author of the trustexisting and recoverable at the date of theinstrument of trust, or, when such instrumentis a will, at the date of his death, and

(b) in the case of debts not bearing interest, to makesuch payment without interest.

Illustrations

(a) A, a trustee, is simply authorized to sell certainland by public auction- He cannot sell theland by private contract.

(b).A, a trustee of certain land for X, Y, and Z, isauthorized to sell the land to B for a specifiedsum. X, Y, and Z, being competent to '

contract, consent that A may sell the land toC for a less sum. A may sell the landaccordingly.

(c) A, a trustee for B and her children, is directed bythe author of the trust to lend, on B's request,trust property to B's husband C, on thesecurity of his bond. C becomes insolvent, andB requests A to make the loan- A may refuseto make il.

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Trustee toinform himselfof state of trustproperty.

Trustee toprotect title totrust property.

Trustee not loset up titleadverse tobeneficiary.

Care requiredfrom trustee.

12. A trustee is bound to acquainthimself, as soon as possible, with the natureand circumstances of the trust property ; toobtain, where necessary, a transfer of thetrust property to himself; and (subject tothe provisions of the instrument of trust) toget in trust moneys invested on insufficientor hazardous security.

Illustrations

' (a) The trust property is a debt outstanding onpersonal security. The instrument of trustgives the trustee no discretionary power toleave the debt so outstanding. The trustee'sduly is to recover the de:bt withoutunnecessary delay.

(b) The trust property is money in the hands of oneor two co-trustees. No discretionary power isgiven by the instrument of trust. The otherco-trustee must not allow the former toretain the money for a longer period than thecircumstances of the case required.

13. A trustee is bound to maintain anddefend all such suits, and (subject to theprovisions of the instrument of trust) to takesuch other steps as, regard being had to thenature and amount or value of the trustproperty, may be reasonably requisite forthe preservation of the trust property andthe assertion or protection of the. titlethereto.

Illustration

The trust property is immovable property, which hasbeen given to the author of the trust by anunregistered instrument. The trustee's duty isto cause the instrument to be registered.

14. The trustee must not for himself oranother set up or aid any title to the trustproperty adverse to the interest of thebeneficiary.

15. A trustee is bound, subject to theprovisions of the instrument of trust, to dealwith the trust property as carefully as a manof ordinary prudence would deal with suchproperty if it were his own ; and, in theabsence of a contract to the contrary, atrustee so dealing is not responsible for theloss, destruction, or deterioration of thetrust property.

IlIusiraiions

(a) A. living in Colombo, is a trustee for B. living inLondon. A remits trust funds to B_ by billsdrawn by a person of undoubted credit infavour of the t rus tee as such and payable atLondon. The bi l l s are dishonoured. A is notbound to make go.od the loss,

(b) A, a trustee of leasehold property, directs thetenant to pay the rents, on account of thetrust to a banker, B, then in credit. The rentsare accordingly paid to B, and A leaves themoney with B only till wanted. Before themoney is drawn out, B becomes insolvent. A,having had no reason to believe that B wasin insolvent circumstances, is not bound tomake good the loss.

(c) A, a trustee of two debts for B, releases one andcompounds the other, in good faith, andreasonably believing that it is for B's interestto do so. A is not bound to make good anyloss caused thereby to B.

(d) A, a trustee directed to sell the trust property byauction, sells the same, but does notadvertise the sale, and otherwise fails inreasonable diligence in inviting competition.A is bound to make good the loss causedthereby to the beneficiary.

(e) A, a trustee for B, in execution of his trust, sellsthe trust property, but from want of duediligence on his part fails to receive part ofthe purchase money. A is bound to makegood the loss thereby caused to B.

(f) A, a trustee for B of a policy of insurance, hasfunds in band for payment of the premiums.A neglects to pay the premiums, and thepolicy is consequently forfeited. A is boundto make good the loss to B.

(g•) A bequeaths certain moneys to B and C as.trustees, and authorizes them to continue

. trust moneys upon the personal security of acertain firm in which A had himself invested

• : them. A dies. and a change takes place in thefirm. B and C must not permit the moneys toremain upon the personal security of the newfirm.

(h) A. a trustee for B. allows the trust to be executedsolely by his co-trustee C, C misapplies thetrust properly. A is personally answerable

.for the loss resulting to B.

16. Whe.re t he trust is created for the conversion ofbenefit of several persons in succession, and perishablethe trust property is of a wasting nature or a propertyfuture or reversionary interest, the trustee isbound, unless an intention to the contrarymay be inferred from the instrument oftrust, or unless the court otherwise directs,to convert the property into property of apermanent and immediately profitablecharacter.

17. ( I ) Wheere there are more Trustee to bebeneficiaries than one, the trustee is bound impartialto be impar t ia l , , and must not execute thetrust for the advantage of one at the expenseof another.

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(2) Where the trustee has a discretionarypower, nothing in this section shall be deemedto authorize the court to control the exercisereasonably and in good faith of suchdiscretion..

Illustration

A, a trustee for B, C, and D, is empowered to choosebetween several specified modes of investingthe trust property. A in good faith chooses oneof these modes. The court will not interfere,although the result of the choice may be tovary the relative rights of B, C, and D.

Trustees to 18. Where the trust is created for theprevent waste, benefit of several persons in succession, and

one of them is in possession of the trustproperty, if he commits, or threatens tocommit, any act which is destructive orpermanently injurious thereto, the trustee isbound to take measures to prevent such act.

19. A trustee is bound—Accounts andinformation.

(a) to keep clear and accurate accounts ofthe trust property, and

(b) at all reasonable times, at the request ofthe beneficiary, to furnish him withfull and accurate information as tothe amount and state of the trustproperty.

Investment of 20. Where the trust property consists oftrust money, money and cannot be applied immediately or

at an early date to the purposes of the trust,the trustee is bound (subject to any directioncontained in the instrument of trust) to investthe money on the following securities, and onno others :—

(a) in promissory notes, debentures, stock,or other securities of the Governmentof Sri Lanka ;

(b) on a first mortgage of immovableproperty situated in Sri Lanka ;

Provided that the property is not aleasehold for a term of years, andthat the value of the property exceedsby one-third, or if consisting whollyor mainly of buildings, exceeds byone-half the mortgage moneys;

(c) in promissory notes, debentures, stockor other securities issued by a,Government corporation, institutionor agency and guaranteed by theGovernment of Sri Lanka ;

Saving as toexistinginvestments andinvestments inGovernmentSavings Bankor NationalSavings Bank.[§2.7 of 1968.][§89,30 of1971.]Sale by trusteedirected to sellwithin specifiedtime.

(d) on any other security expresslyauthorized by the instrument of trustor by any rule which the Ministermay from time to time prescribe inthat behalf.

21. Nothing in section 20 shall apply toinvestments made before the commencementof this Ordinance, or shall be deemed topreclude a deposit of trust money in aGovernment Savings Bank or in the NationalSavings Bank.

22. Where a trustee directed to sell withina specified time extends such time, the burdenof proving, as between himself and thebeneficiary, that the latter is not prejudiced bythe extension lies upon the trustee, unless theextension has been authorized by the court.

Illustration

A bequeaths property to B, directing him with allconvenient speed and within five years to sellit, and apply the proceeds for the benefit of C.In the exercise of reasonable discretion, Bpostpones the sale for six years. The sale is notthereby rendered invalid, but C, alleging thaihe has been injured by the postponement,institutes a suit against B to obtaincompensation. In such suit the burden ofproving that C has not been injured lies on B.

23. (1) Where the trustee commits a Liability forbreach of trust, he is liable to make good the breach of trust-loss which the trust property or thebeneficiary has thereby sustained, unless thebeneficiary has by fraud induced the trustee tocommit the breach, or the beneficiary, beingcompetent to contract, has himself, withoutduress or undue influence having beenbrought to bear on him, concurred in thebreach, or subsequently acquiesced thereinwith full knowledge of the facts of the caseand of his rights as against the trustee.

(2) A trustee committing a breach of trust isnot liable to pay interest except in thefollowing cases :—

has actually received(a)

•(b)

(c)

where heinterest ;

where the breach consists inunreasonable delay in paying trustmoney to the beneficiary ;

where the trustee ought to havereceived interest, but has not doneso :

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(d) where he may be fairly presumed tohave received interest;

(e) where the breach consists in failure toinvest trust money and to accumulatethe interest or dividend thereon, he isliable to account for compoundinterest (with half-yearly rests) at thesame rate ;

(f) where the breach consists in theemployment of trust property or theproceeds thereof in trade or business,he is liable to account, at the optionof the beneficiary, either forcompound interest (with half-yearlyrests) at the same rate or for the netprofits made by such employment.

(3) He is liable in case (a) to account for theinterest actually received, and in cases (b), (c),and (d) to account for simple interest at therate of six per centum per annum, unless thecourt otherwise directs.

Illustrations

(a) A trustee improperly leaves trust propertyoutstanding, and it is consequently lost ; he isliable tomake good the property lost, but he isnot liable to pay interest thereon.

(b) A bequeaths a house to B in trust to sell it and paythe proceeds to C. B neglects to sell the housefor a great length of time, whereby the house isdeteriorated and its market price falls. B isanswerable to C for the loss.

(c) A trustee is guilty of unreasonable delay in investingtrust money in accordance with section 20, orin paying it to the beneficiary. The trustee isliable to pay interest thereon for the period ofthe delay;

(d) The duty of the trustee is to invest trust money inany of the securities mentioned in section 20.Instead of so doing, he retains the money inhis hands. He is liable, at the option of thebeneficiary, to be charged either with theamount of the principal money and interest, orwith the amount of such securities as he mighthave purchased with the trust money when theinvestment should have been made, and theintermediate dividends and interest thereon.

(e) The instrument of trust directs the trustee to investtrust money either in any such securities or onmortgage of immovable property. The trusteedoes neither. He is liable for the principalmoney and interest.

(f) The instrument of trust directs the trustee to investtrust money in any of such securities and toaccumulate the dividends thereon. The trusteedisregards the direction. He is liable at theoption of the beneficiary, to be charged eitherwith the amount of the principal money and

compound interest, or with the amount ofsuch securities as he might have purchasedwith the trust money when the investmentshould have been made, together with theamount of the accumulation which would havearisen from a proper investment of theintermediate dividends.

(g) Trust property is invested in one of the securitiesmentioned in section 20, clause (a), (c), or ((d).The trustee sells such security for somepurpose not authorized by the terms of theinstrument of trust. He is liable, at the optionof the beneficiary, either to replace the securitywith the intermediate dividends and interestthereon, or to account for the proceeds of thesale with interest thereon.

(h) The trust property consists of land. The trustee sellsthe land to a purchaser for a considerationwithout notice of the trust. The trustee isliable, at the option of the beneficiary, topurchase other land of equal value to besettled upon the like trust, or to be chargedwith the proceeds of the sale with interest.

24. A trustee who is liable for a loss No set-offoccasioned by a breach of trust in respect of allowed to trusteeone portion of the trust property cannot setoff against his liability a gain which hasaccrued to another portion of the trustproperty through another and distinct breachof trust.

25. Where a trustee succeeds another, he Non-liability foris not, as such, liable for the acts or defaults predecessor's

d e f a u l t .of his predecessor.

26. (1) Subject to the provisions of Non-liability forsections 13 and 15, one trustee is not, as such, co-trustee'sliable for a breach of trust committed by his default.co-trustee :

Provided that, in the absence of an expressdeclaration to the contrary in the instrumentof trust, a trustee is so liable—

(a) where he has delivered trust property tohis co-trustee without seeing to itsproper application ;

(b) where he allows his co-trustee to receivetrust property and fails to make dueinquiry as to the co-trustee's dealingstherewith, or allows him to retain itlonger than the circumstances of the

case reasonably require ;

(c) where he becomes aware of a breach oftrust committed or intended by hisco-trustee, and either activelyconceals it, or does not within areasonable time take proper steps toprotect the beneficiary's interest.

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Joining in (2) A co-trustee who jons in signing areceipt for receipt for trust property, if he proves, or ifconformity. . . . , , , • ,it otherwise appears that he has not received

the same, is not answerable, by reason of- such signature only, for loss or

misapplication of the property by hisco-trustee.

Illustration

A bequeaths certain property to B and C, and directsthem to sell it and invest the proceeds for thebenefit of D. B and C accordingly sell theproperty, and the purchase money is receivedby B and retained in his hands. C pays noattention to the matter for two years, andthen calls on B to make the investment. B isunable to do so. becomes insolvent, and thepurchase money is lost, C may be compelledto make good the amount.

Several liability 27. (1) Where co-trustees jointly commitof co-trustees. a breach of trust, or where one of them by

his neglect enables the other to commit abreach of (rust, each is liable to thebeneficiary for the whole of the lossoccasioned by such breach.

But as between the trustees themselves, ifone be less guilty than another and has hadto refund the loss, the former may compelthe latter, or his legal representative to theextent of the assets he has received, to makegood such loss, and if all be equally guilty,any one or more of the trustees who has hadto refund the loss may compel the others tocontribute.

Contributionas betweenco-trustees.

(2) Nothing in this section shall bedeemed to authorize a trustee who has beenguilty of fraud to institute a suit to compelcontribution.

28. When any beneficiary's interestbecomes vested in another person, and thetrustee, not having notice of the vesting,pays or delivers trust property to the personwho would have been entitled thereto in theabsence of such vesting, the trustee is notliable for the property'so paid or delivered.

Non-liabil i ty oftrustee payingwithout noticeof transfer bybeneficiary.

29. When the beneficiary's interest isforfeited or awarded by legal adjudicationto Government, the trustee is bound to holdthe trust property to the extent of suchinterest for the benefit of such person insuch manner as the Government may directin this behalf.

Liability oftrustee wherebeneficiary'sinterest isforfeited toGovernment.

Relief of trusteefrom

consequences ofbreach of trust.

30. Subject to the provisions of theinstrument of trust and of sections 23 and 26,trustees shall be respectively chargeable onlyfor such moneys, stocks, funds, and securitiesas they respectively actually receive, and shallnot be answerable the one for the other ofthem, nor for any banker, broker, or otherperson in whose hands any trust propertymay be placed, nor for the insufficiency ordeficiency of any stocks, funds, or securities,nor otherwise for involuntary losses.

Indemnity oftrustees.

31. If it appears to the court that a trusteeis or may be personally liable for any breachof trust, whether the transaction alleged to bea breach of trust occurred before or after thecommencement of this Ordinance, but hasacted honestly and reasonably and oughtfairly to be excused for the breach of trust,and for omitting to obtain the directions ofthe court in the matter in which he committedsuch breach, then the court may relieve thetrustee either wholly or partly from personalliability for the same.

CHAPTER IV

OF THE RIGHTS AND POWERSOF TRUSTEES

32. A trustee is entitled to have in his Right to titlepossession the instrument of trust and all the deed-documents of title (if any) relating solely tothe trust property.

33. (1) Every trustee may reimburse Right tohimself , or pay or discharge out of the trust reimbursementproperty, all expenses properly incurred in or of expensesabout the execution of the trust, or therealization, reservation, or benefit of the trustproperty, or the protection or support of thebeneficiary.

(2) If he pays such expenses out of his ownpocket, he has a first charge upon the trustproperty for such expenses and interestthereon ; but such charge (unless the expenseshave been incurred with the sanction of thecourt) shall be enforced only by prohibitingany disposition of the trust property withoutprevious payment of such expenses andinterest.

(3)' If the trust property fail, the trustee isentitled to recover from the beneficiarypersonally on whose behalf he acted, and atwhose request, expressed or implied, hemade the payment, the amount of suchexpenses.

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Right to berecouped forerroneousoverpayment.

Right toindemnity fromgainer bybreach of trust.

Right to applyto court foropinion inmanagement oftrust property.

Right tosettlement ofaccounts.

(4) Where a trustee has by mistake madean overpayment to the beneficiary, he mayreimburse the trust property out of thebeneficiary's interest. If such interest fail,the trustee is entitled to recover from thebeneficiary personally the amount of suchoverpayment.

34. (1) A person other than a trustee, ora transferee in good faith for considerationwho has gained an advantage from a breachof trust must indemnify the trustee to theextent of the amount actually received bysuch person under the breach, and wheresuch person is a beneficiary, the trustee hasa charge on his interest for such amount.

(2) Nothing in this section shall bedeemed to entitle a trustee to be indemnifiedwho has in committing the breach of trust,been guilty of fraud.

Illustration

The trustee of a family trust bona fide pays over acertain part of the trust moneys to a memberof the family contrary to the terms of theinstrument of trust, and the court orders thetrustee to replace the money. He is entitledto be indemnified by the person to whom hehas paid il.

35. (1) Any trustee may, withoutinstituting a suit, apply by petition to thecourt for its opinion, advice, or direction onany present questions respecting themanagement or administration of the trustproperty other than questions of detail,difficulty, or importance not proper, in theopinion of the court, for summary disposal.

(2) A copy of such petition shall be servedupon, and the hearing thereof may beattended by, such of the persons interestedin the application as the court thinks fit.

(3) The trustee stating in good faith thefacts in such petition, and acting upon theopinion, advice, or direction given by thecourt, shall be deemed, so far as regards hisown responsibility, to have discharged hisduty as such trustee in the subject-matter ofthe application.

(4) The costs of every application underthis section shall be in the discretion of thecourt to which it is made.

36. When the duties of a trustee, assuch, are completed, he is entitled to havethe accounts of his administration of the

trust property examined and settled ; and,where nothing is due to the beneficiaryunder the trust, to an acknowledgment inwriting to that effect.

37. In addition to the powers expressly Generalconferred by this Ordinance and by the authority ofinstrument of trust, and subject to the trusteerestrictions, if any, contained in suchinstrument and to the provisions of section17, a trustee may do all acts which arereasonable and proper for the realization,protection, or benefit of the trust property,and for the protection or support of abeneficiary who is not competent tocontract.

38. (1) Except with the permission of the Power to lease.court, and subject to any special statutoryprovision in that behalf, no trustee shalllease trust property for a term expiring at adate later than the end of ten years from thedate of the execution of the lease, or if thedate of the termination of the trust isascertained, for a term expiring at a datelater than the date of such termination, norwithout reserving the best yearly rent thatcan be reasonably obtained.

(2) Any lease executed without thepermission of the court for a term exceedingthe limits authorized by this section shall bevoid to the extent to which it so exceeds thesaid limits.

39. Where the trustee is empowered tosell any trust property, he may sell the same,subject to prior charges or not, and eithertogether or in lots, by public auction orprivate contract, and either at one time or atseveral times, unless the instrument of trustotherwise directs.

40. (1) The trustee making any such salemay insert such reasonable stipulationseither as to title or evidence of title, or termsof payment, or otherwise, in any conditionsof sale or contract for sale, as he thinks fit ;and may also buy in the property or any partthereof at any sale by auction, and rescind

»or vary any contract for sale, and re-sell theproperty so bought in, or as to which thecontract is' so rescinded, without beingresponsible to the beneficiary for any lossoccasioned thereby :

Provided he shall have acted in good faithand without negligence,

Power to sell inlots, and eitherby publicauction orprivatecontract.

Power to sellunder specialconditions.

Power to buyin and re-sell.

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Time allowedfor selling trustproperty.

Power toconvey.

Power to varyinvest menls.

Power of courtto authorizesale, exchange,&c., of trustproperty.

Power to applyproperty ofminors, &c.,for theirmaintenance.

(2) Where a trustee is directed to sell trustproperty or to invest trust money in thepurchase of property, he may exercise areasonable discretion as to the time ofeffecting the sale or purchase.

Illustrations

(a) A bequeaths property to B, directing him to sell itwith all convenient speed and pay theproceeds to C. This does not render animmediate sale imperative.

(b) A bequeaths property to B, directing him to sell itat such time and in such manner as he shallthink fit and invest the proceeds for thebenefit of C. This does not authorize B, asbetween him and C, to postpone the sale toan indefinite period.

41. For the purpose of completing anysuch sale, the trustee shall have power toconvey or otherwise dispose of the propertysold in such manner as may be necessary.

42. (1) A trustee may, at his discretion,call in any trust property invested in anysecurity and invest the same on any of thesecurities mentioned or referred to in section20, and from time to time vary any suchinvestments for others of the same nature.

(2) When any immovable property is thesubject-matter of any trust, the court mayauthorize any sale, exchange, mortgage, orother disposition of the property, which itconsiders to be in the interests of the objectsof the trust.

(3) Nothing contained in subsection" (2)shall be deemed to derogate from the rightsof a trustee under subsection (1).

43. (1) Where any property is held by atrustee in trust for a minor, either for life orfor any greater interest, and whetherabsolutely or contingently on his attainingthe age of majority, or on the occurrence ofany event before his attaining that age, thetrustee may at his sole discretion pay to theminor's parent or guardian, if any, orotherwise apply for or towards the minor'smaintenance, education, or benefit, theincome of the property, or any part thereof,whether there is any other fund applicableto the same purpose, or any person boundby law to provide for the minor'smaintenance or education or not.

(2) The trustee shall accumulate all theresidue of the income in the way ofcompound interest by investing the same

and the resulting income thereof from timeto time in securities in which he is by theinstrument of trust, if any, or by section 20of this Ordinance, authorized to invest trustmoney, and shall hold the accumulations forthe benefit of the minor ; but so that thetrustee may at any time, if he thinks fit,apply the accumulations, or any partthereof, as if the same were income arisingin the then current year.

(3) This section applies only if and as faras contrary intention is not expressed in theinstrument of trust, and shall have effectsubject to the terms of that instrument andto the provisions therein contained.

(4) Where the income of the trustproperty is insufficient for the minor'smaintenance, or education, or marriage, oradvancement in life, the trustee may, with thepermission of the court, and not otherwise,apply the whole or any part of suchproperty for or towards such maintenance,education, marriage, or advancement.

44. Any trustees or trustee may give areceipt in writing for any money, securities,or other movable property payable,transferable, or deliverable to them or himby reason, or in the exercise, of any trust orpower ; and, in the absence of fraud, suchreceipt shall discharge the person paying,transferring, or delivering the sametherefrom, and from seeing to theapplication thereof, or being accountablefor any loss or misapplication thereof.

45. (1) Two or more trustees actingtogether, or if there is only one trustee ofthe trust, such trustee may, if and as they orhe shall think fit—

(a) accept any composition or anysecurity for any debt or for anyproperty claimed ;

(b) allow any time for payment of anydebt ;

(c) compromise, compound, abandon,, submit to arbitration, or otherwise

settle any debt, account, claim, orthing whatever relating to the trust ;and

(d) for any of those purposes enter into,give, execute, and do sucha g r e e m e n t s , i n s t r u m e n t s of

Power to givereceipts.

Power tocompound,&c.

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Power toseveral trusteesof whom onedisclaims or •dies.

Suspension oftrustee's powerby decree.

Trustee cannotrenounce afteracceptance.

Trustee cannotdelegate.

composition or arrangement,releases, and other things as tothem or him seem expedient,without being responsible for anyloss occasioned by any act or thingso done by them or him in goodfaith and without negligence.

(2) The powers conferred by subsection(I) on two or more trustees acting togethermay be exercised by a sole acting trustee,when by the ins t rument of trust, if any, asole trustee is authorized to execute thetrusts and powers thereof.

(3) This section applies only if and as faras a contrary intention is not expressed inthe instrument of trust if any, and shall haveeffect subject to the terms of that instrumentand to the provisions therein contained.

(4) Nothing in this section shall bedeemed to affect the application of the lawrelating to the property of minors.

46. When an authority to deal with thetrust property is given to several trusteesand one of them disclaims or dies, theauthority may be exercised by the-continuing trustees, unless from the terms ofthe ins t rument of trust it is apparent thatthe au thor i ty is to be exercised by a numberin excess of the number of the remainingtrustees.

47. Where a decree has been made in asuit for the execution of a trust, the trusteemust not exercise any of his powers except inconformity with such decree, or with thesanction of the court by which the decree hasbeen made, or, where an appeal against thedecree is pending, of the Court of Appeal.

CHAPTER V

OF THE DISABILITIES OF TRUSTEES

48. A trustee who has accepted the trustcannot afterwards renounce it, except—

(a) with the permission of the court ; or

(b) if the beneficiary is competent tocontract, with his consent; or

(c•) by virtue of a special power in theinstrument of trust.

49. A trustee cannot delegate his office orany of his duties either to a co-trustee or to astranger, unless—

(a) the instrument of trust so provides ; or(b) the delegation is in the regular course

of business ; or

(c) the delegation is necessary ; or(d) the beneficiary, being competent to

contract, consents to the delegation ;or

(e) the court so directs,Explanation.—The appointment of an attorney or

agent or proxy to do an act merely ministerialand involving no independent discretion is nota delegation within the meaning of this section.

Illustrations

(a) A bequeaths certain property to B and C on certaintrusts to be executed by them or the survivorof them or the assigns of such survivor. B dies.C may bequeath the trust property to D and Eupon the trusts of A's will.

(b) A is a trustee of certain property with power to sellthe same. A may employ an auctioneer toeffect the sale.

(c) A bequeaths to B fifty houses let at monthly rents intrust to collect the rents and pay them to C. Bmay employ a proper person to collect theserents.

50. When there are more trustees thanone, all must join in the execution of the trust,except where the instrument of trust otherwiseprovides, or except when on good causeshown the court otherwise directs.

51. Where a discretionary powerconferred on a trustee is not exercisedreasonably and in good faith, such power maybe controlled by the court.

52. (1) In the absence of expressdirections to the contrary contained in theinstrument of trust, or of a contract to the servicescontrary entered into with the beneficiary, anorder of court, or express statutory provisionin that behalf, a trustee has no right toremuneration for his trouble, skill, and loss oftime in executing the trust.

(2) Nothing in this section shall be deemedto prejudice the right of any resident trusteeactually managing the daily administration ofany religious foundation, in respect of whichthe remuneration of the trustee shall not havebeen settled under section 108, to suchremuneration as has been in practicereceived :

Provided that such remuneration shall inno case exceed ten per centum of the grossincome of the foundation.

Co-trusteescannot actsingly.

Control of"discretionarypower.

Trustee maynot charge for

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Trustee maynot use trustproperty forhis own profit.

Trustee for saleor his agentmay not buy.

Trustee maynot buybeneficiary'sinterestwithoutpermission.

Trustee forpurchase.

Co-trusteesmay not lendto one ofthemselves.

Right to rentsand profits.

Right tospecificexecution.

Right totransfer ofpossession.

53. A trustee may not use or deal withthe trust property for his own profit or forany other purpose unconnected with thetrust.

54. No trustee whose duty it is to selltrust property, and no agent employed bysuch trustee for the purpose of the sale may,directly or indirectly, buy the same or anyinterest therein on his own account or asagent for a third person.

55. No trustee, and no person who hasrecently ceased to be a trustee, may, withoutthe permission of the court, buy or becomemortgagee or lessee of the trust property orany part thereof ; and such permission shallnot be given unless the proposed purchase,mortgage, or lease is manifestly for theadvantage of the beneficiary,

And no trustee whose duty it is to buy orto obtain a mortgage or lease of particularproperty for 'the beneficiary may buy it orany part thereof, or obtain a mortgage orlease of it or any part thereof for himself.

56. A trustee or co-trustee whose duty itis to invest t rus t money on mortgage orpersonal security must not invest it on amortgage by, or on the personal security of,himself or one of his co-trustees.

CHAPTER VI

OF THE RIGHTS AND LIABILITIESOF THE BENEFICIARY

57. The beneficiary has, subject to theprovisions of the instrument of trust, a rightto the rents and profits of the trust property.

58. The beneficiary is entitled to havethe intention of the author of the trustspecifically executed to the extent of thebeneficiary's interest.

And, where there is only one beneficiaryand he is competent to contract, or wherethere are several beneficiaries and they arecompetent to contract, and all of one mind,he or they may require the trustee totransfer the trust property to him or them,or lo such person as he or they may direct.

Illustrations

(a) Certain Government securities are given totrustees upon trust to accumulate the interestuntil A attains majority, and then to transfer

60. The beneficiary, if competent to Right tocontract, may transfer his interest, but transfer

, , , . , . , . . „ beneficialsubject to the law for the time being in force interest.as to the circumstances and extent in and towhich he may dispose of such interest.

Right toinspect and

take copies ofinstrument oftrust, accounts,&c.

the gross amount to him. A on attainingmajority may. as the person exclusivelyinterested in the trust property, require thetrustees to transfer it immediately to him.

(b) A bequeaths Rs. 10,000 to trustees upon trust topurchase an annuity for B. who has attainedhis majority and is otherwise competent tocontract. B may claim the Rs. 10.000.

(c) A transfers certain properly to B and directs himto sell or invest it for the benefit of C, who iscompetent to contract, C may elect to takethe property in its original character.

59. The beneficiary has a right, asagainst the trustee and all persons claimingunder him with notice of the trust, toinspect and take copies of the instrument oftrust, the documents of title relating solelyto the trust property, the accounts of thetrust property and the vouchers (if any) bywhich they are supported, and the casessubmitted and opinions taken by the trusteefor his guidance in the discharge of his duty.

61. When no trustees are appointed, orall the trustees die, disclaim, or aredischarged, or where for any other reasonthe execution of a trust by the trustee is orbecomes impracticable, the beneficiary mayinstitute a suit for the execution of the trust,and the trust shall, so far as may bepossible, be executed by the court until theappointment of a trustee or new trustee, orunt i l the execution of the trust becomespracticable.

62. Subject to the provisions of theinstrument of trust, the beneficiary has aright to require that the trust property shallbe properly protected and held andadministered by proper persons and by aproper number of such persons. ,

Explanation /.—The following are not proper* persons within the meaning of this section:--

An alien enemy ; a person having an interestinconsistent with that of the beneficiary : aperson in insolvent circumstances ; a minor.

Explanation 2.—When the administration of thetrust involves the receipt and custody ofmoney, the number of trustees should be twoat least.

Right to suefor executionof trust.

Right toproper trustees.

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Right 10compel toperform any actof duty

Wrongfulpurchase bytrustee.

Illustrations

(a) A. one of several beneficiaries, proves that B. thetrustee, has improperly disposed of part of thetrust property. or that the property is indanger from B's being in insolventcircumstances. or that he is incapacitatedfrom acting as trustee. A may obtain areceiver of the trust properly.

(b) A bequeaths certain jewels to B in trust for C. Bdies during A's lifetime ; then A dies. C isentitled !o have the property conveyed to .1trustee for him.

(c•) A conveys certain properly to four trustee.- in trustfor B. Three of the trustees die. B mayinstitute a suit to have three new trusteesappointed in the place of the deceasedtrustees,

(d) A conveys certain property to three trustees intrust for B. All the trustees disclaim. B mayinstitute a suit to have three trusteesappointed in place . of the trustees sodisclaiming.

(e') A. a trustee for B. refuses to act. or is declared aninsolvent, or compounds with his creditors, orsuffers a co-trustee to commit a breach oftrust. B may institute a suit to have Aremoved and a new trustee appointed in hisroom.

63. The beneficiary has a right to requirethat his trustee shall be compelled to performany p a r t i c u l a r act of his duly as such,and r e s t r a i n e d f r o m c o m m i t t i n g anycontemplated or probable breach of trust.

Illustrations

(a) A contracts with B to pay him monthly Rs. 100 forthe benefit of C. B writes and signs a letterdeclaring thai he will hold in trust tor C themoney so 10 be paid, A fails to pay the moneyin accordance with his contract- C maycompel B on a proper indemnity to allow C tosue on the contract in B's name.

(b) A is trustee of certain land. with a power to sell thesame and pay the proceeds to B and Cequally. A is about to make an improvidentsale of the land. B may sue on behalf ofhimself and C for an injunction to restrain Afrom making the sale.

64. (1) Where a trustee has wrongfullybought trust property, the beneficiary has aright to have the property declared subject tothe trust, or re-transferred by the trustee if itremains in his hands unsold, or, if it has beenbought from him by any person with notice ofthe trust, by such person. But in such case thebeneficiary must repay the purchase moneypaid by the trustee, with interest and suchother expenses (if any) as he has properlyincurred in the preservation of the property ;and the trustee or purchaser must—

(a) account for the net profits of theproperty,

(b) be charged with an occupation rent ifhe has been in actual possession ofthe property, and

(c) allow the beneficiary to deduct aproportionate part of the purchasemoney if the property has beendeteriorated by the acts or omissionsof the trustee or purchaser.

(2) Nothing in this section—

(a) impairs the rights of lessees andothers who, before the institution ofa suit to have the property declaredsubject to the trust or re-transferred,have contracted in good faith withthe trustee or purchaser ; or

(b) entitles the beneficiary to have theproperty declared subject to the trustor re-transferred where he, beingcompetent to contract, has himself.without duress or undue influencehaving been brought to bear on him,ratified the sale to the trustee withfull knowledge of the facts of thecase and of his rights as against thetrustee.

65. (I) Where trust property comes into Following trustthe hands of a third person inconsistently properly into

. . . i i i" - • - the hands ofwith the trust, the beneficiary may institute a third persons -suit for a declaration that the property is into that intocomprised in the trust. which it has

been converted.(2) Where the trustee has disposed of trust

property, and the money or other propertywhich he has received therefor can be tracedin his hands or the hands of his legalrepresentative or legatee, the beneficiary has,in respect thereof, rights as nearly as may bethe same as his rights in respect of theoriginal trust property.

Illustrations{a) A. a trustee for B of Rs. 10,000 wrongfully invests

the Rs. 10.000 in the purchase of certain land.B is entitled to the land.

(b) A. a trustee, wrongfully purchases land in his ownname. partly with his own money, partly withmoney subject to a trust for B. B is entitled toa charge on the land for the amount of thetrust money so misemployed,

66. (1) Nothing in section 65 entitles the Saving of rightsbeneficiary to any right in respect of property of certain• .1- i- J e ' transferees.in the hands of—

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Acquisition bytrustee of trustpropertywrongfullyconverted-

Right in caseof blendedproperty.

Wrongfulemployment bypartner trusteeof trust ,property forpartnershippurposes.

(a) a transferee in good faith forconsideration without having noticeof the trust, either when thepurchase money was paid, or whenthe conveyance was executed ; or

(b) ii transferee for consideration fromsuch a transferee.

(2) A judgment-creditor of the trusteeattaching and purchasing trust property isnot a transferee for consideration within themeaning of this section.

(3) Nothing in section 65 applies tomoney or currency notes in the hands of abona fide holder to whom they have passedin circulation, or to negotiable instrumentsin the hands of a bona fide holder tor value,or shall be deemed to affect sections 22 and23 of the Sale of Goods Ordinance, or therights of any holder in good faith forconsideration of any document of title whichby law passes the ownership of goods towhich it relates by endorsement or delivery,or the liability of a person to whom a debtor charge is transferred, or the right of aperson who holds property under a titledeclared indefeasible by statute or of hissuccessor in title.

67. Where a trustee wrongfully sells orotherwise transfers trust property andafterwards himself becomes the owner of theproperty, the property again becomessubject to the trust, notwithstanding anywant of notice on the part of interveningtransferees in good faith for consideration.

68. Where the trustee wrongfullymingles the trust property with his own, thebeneficiary is entitled to a charge on thewhole fund for the amount due to him.

69. If a partner, being a trustee,wrongfully employs trust property in thebusiness or on the account of thepartnership, no other partner is liabletherefor in his personal capacity to thebeneficiaries unless he had notice of thebreach of trust . The partners having suchnotice are jointly and severally liable for the,breach of trust.

Illustrations

(a) A and B are partners. A dies, having bequeathedall his properly to B in trust for Z, andappointed B his sole executor. B, instead ofwinding up the affairs of the partnership,

retains all the assets in the business. 1 maycompel him, as partner, to account for somuch of the profits as arc derived from A'sshare of the capital. B is also answerable toZ for the improper employment of A'sassets.

(A) A, a trader, bequeaths his property to B in trustfor C, appoints B his sole executor, and dies.B enters into partnership with X and Y inthe same trade, and employs A's assets in thepartnership business. B gives an indemnity toX and Y against the claims of C. Here X andY arc jointly liable with B to C as havingknowingly become parlies to the breach oftrust committed by B.

70. Where one of several beneficiaries Liability ofbeing competent to contract— beneficiary

joining on

(a) joins in committing a breach oftrust ; or

(b) knowingly obtains .any advantagetherefrom without the consent ofthe other beneficiaries ; or

(c) becomes aware of a breach of trustcommitted or intended to becommitted, and either actuallyconceals it, or does not within areasonable time take proper steps toprotect the interests of the otherbeneficiaries ; or

(d/) has deceived the trustee and therebyinduced him to commit a breach oftrust,

the other beneficiaries are entitled to haveall his beneficial interest impounded asagainst him and all who claim under him(otherwise than as transferees forconsideration without notice of the breach)until the loss caused by the breach has beencompensated.

71. Every person to whom a beneficiarytransfers his interests has the rights, and issubject to the liabilities, of the beneficiary inrespect of such interest at the date of thetransfer.

CHAPTER VII

. OF VACATING THE OFFICE OF TRUSTEE

72. The office of a trustee is vacated byhis death or by his discharge from his office.

73. A trustee may be discharged fromhis office only as follows :—

breach of trust.

Rights andliabilities ofbeneficiary'stransferee.

Office howvacated.

Discharge oftrustee.

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Pelilion to bedischargedfrom trust-

Appointmentof new trusteeson death. &c,

(a) by the extinction of the trust ;

(b) by the completion of his dutiesunder the trust ;

(c) by such means as may be prescribedby the instrument of trust or by anyscheme under this Ordinance ;

(d) by appointment under thisOrdinance of a new trustee in hisplace ;

(e) by consent of himself and thebeneficiary, or, where there aremore beneficiaries than one, by theconsent of all the beneficiaries beingcompetent to contract ; or

by the court.(f)

74. Notwithstanding the provisions ofsection 11, every trustee may apply bypetition to the court to be discharged fromhis office ; and, if the court finds that thereis sufficient reason for such discharge, itmay discharge him accordingly, and directhis costs to be paid out of the trustproperty. But where there is no such reason,the court shall not discharge him, unless aproper person can be found to take hisplace.

75. (1) Whenever any person appointeda trustee disclaims, or any trustee, eitheroriginal or substituted, dies, or is absentfrom Sri Lanka for such a continuous periodand under such circumstances that, in theopinion of the court, it is desirable, in theinterests of the trust, that his office shouldbe declared vacant, or is declared aninsolvent, or desires to be discharged fromthe trust, or refuses or is or becomes, in theopinion of the court, unfit or personallyincapable to act in the trust, or accepts aninconsistent trust, a new trustee may beappointed in his place by—

(a) the person nominated for that purposeby the instrument of trust (if any) ;or

(b) if there be no such person, or no suchperson able and willing to act, theauthor of the trust if he be alive andcompetent to contract, or thesurviving or continuing trustees ortrustee for the time being, or legalrepresentative of the last survivingand continuing trustee, or (with the

consent of the court) the retiringtrustees, if they all retiresimultaneously, or (with the likeconsent) the last retiring trustee.

(2) Every such appointment shall be bywriting under the hand of the personmaking it, and shall be notarially executed.

(3) Every instrument by which any suchappointment is made, in so far as it affectsimmovable property, shall contain theparticulars required by section 13 of theRegistration of Documents Ordinance andshall be deemed to be an instrumentaffecting land for the purposes of the saidOrdinance :

Provided that no deed of appointment ofa trustee of any charitable trust shall bedeemed to be invalidated by reason of thefact that it does not contain the saidparticulars, or shall be liable to be defeatedby the registration of any subsequent deed,order, or other instrument under section 7of the said Ordinance.

(4) On an appointment of a new trustee,the number of trustees may be increased.

(5) The provisions of this section relativeto a trustee who is dead include the case of aperson nominated trustee in a will but dyingbefore the testator, and those relative to acontinuing trustee include a refusing orretiring trustee if willing to act in theexecution of the power.

76. (1) Whenever any such vacancy ordisqualification occurs, and it is found notreasonably practicable to appoint a newtrustee under section 75, or where for anyother reason the due execution of the trustis or becomes impracticable, the beneficiarymay, without instituting a suit, apply bypetition to the court for the appointment ofa trustee or a new trustee, and the courtmay appoint ,a trustee or a new trusteeaccordingly.

(2) In appointing new trustees, the courtshall have regard—

(a) to the wishes of the author of the trustas expressed in or to be inferredfrom the instrument of t rust ;

(b) to the wishes of the person, if any,empowered to appoint newtrustees ;

Appointmentby court.

Rules forselecting newtrustees.

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Cap.96] TRUSTS

Vesting of trustproperty innew trustees-

Powers of newtrustees.

(c) to the question whether theappointment will promote orimpede the execution of the trust;and

(d) where there are more beneficiariesthan one, to the interests of all suchbeneficiaries.

(3) Every order of appointment madeunder this section shall, in so far as it affectsimmovable property, contain the particularsrequired by section 13 of the Registration ofDocuments Ordinance and section 29 of thesaid Ordinance shall apply to every suchorder in the same manner as if it were aninstrument which affects land ;

Provided that no order of appointment ofa trustee of any charitable trust under thissection shall be deemed to be invalidated byreason of the fact that it does not containthe said particulars, or shall be liable to bedefeated by the registration of any.subsequent deed, order, or other instrumentunder section 7 of the said Ordinance.

77. (1) Whenever any new trustee isappointed under section 75 or section 76, orunder or in pursuance of any otherprovision of this Ordinance, all the trustproperty for the time being vested in thesurviving or continuing trustees or trustee,or in the legal representatives of any trustee,and all the rights of suit in relation theretoof the trustee in whose place theappointment is made, shall become vested insuch new trustee, either solely or jointlywith the surviving or continuing trustees ortrustee, as the case may require.

(2) Every new trustee so appointed, andevery trustee appointed by a court citherbefore or after the passing of thisOrdinance, shall have the same powers,authorities, and discretions, and shall in allrespect act as if he had been originallynominated a trustee by the author of thetrust.

(3) Where any trust property comprisesany stocks or any shares or securitiestransferable in any book kept by anycompany or society, or any shares in anyship registered under the law relating tomerchant shipping, an instrument or orderof appointment shall not take effect so faras it relates thereto, unless and until noticein writing of the appointment under such

instrument or order shall have been given byor on behalf of the new trustee so appointedto the person or authority in charge of theregister or book in which such stocks,shares, or securities, as the case may be, areentered, and upon such notice in writingbeing given, and on reasonable proof beingfurnished that such stocks, shares, orsecurities form pan of the said trustproperty, the new trustee shall be entitled toa transfer into his name of any such stocks,shares, or securities, and to the receipt of alldividends, interest, or other sums due, or tobecome due, in respect of any such stocks.shares, or securities.

78- On the death or discharge of one of Survival ofseveral co-trustees the trust survives, and the trust-trust property passes to the others, unlessthe instrument of trust expressly declaresotherwise.

CHAPTER VIII

OF THE EXTINCTION OF TRUSTS

79. A trust is extinguished—

(a) when its purpose is completelyfulfilled ; or

(b) when its purpose becomes unlawful;or

(c) subject to the powers of the courtunder Chapter X and to section 110(4), when the fulfilment of itspurpose becomes impossible bydestruction of the trust property orotherwise ; or

the beneficiaries areto contract, by their

(a) where all« competent

consent ,

(b) where the trust has been declared bya non-testimentary instrument or byword of mouth, in exercise of apower of revocation expresslyreserved to the author of the trust;or

Trust howextinguished.

(d) when the trust, being revocable, isexpressly revoked.

80. (1) A trust created by will may be Revocation ofrevoked at the pleasure of the testator. trust'

(2) A trust created otherwise than by willcan be revoked only—

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Revocation notto defeat whattrustees haveduly done.

Whereobligation innature of trustis created.

Where it doesnot appear thattransferorin tended todispose ofbeneficialinterest.

(c) where the trust is for the payment ofthe debts of the author of the trust,and has not been communicated tothe creditors, at the pleasure of theauthor of the trust.

Illustration

A conveys properly to B in trust to sell the same andpay out of the proceeds the claims of A'screditors. A reserves no power of revocation.if no communication has been made to thecreditors. A may revoke the trust. But if thecreditors are parties to the arrangement, thetrust cannot be revoked without theirconsent.

81. No trust can be revoked by theauthor of the trust so as to defeat orprejudice what the trustees may have dulydone in execution of the trust.

CHAPTER IX

CONSTRUCTIVE TRUSTS

82. An obligation in the nature of atrust (hereinafter referred to as a" constructive trust ") is created in thefollowing cases.

83. Where the owner of propertytransfers or bequeaths it, and it cannotreasonably be inferred consistently with theattendant circumstances that he intended todispose of the beneficial interest therein, thetransferee or legatee must hold suchproperty for the benefit of the owner or hislegal representative.

Illustrations

(a) A conveys land to B without consideration anddeclares no trust of any part. It cannot,consistently with the circumstances underwhich the transfer is made, reasonably beinferred thai A intended to transfer thebeneficial interest in the land. B holds theland for the benefit of A.

(b) A transfers certain stock belonging to him into thejoint names of himself and B. It cannot,consistently wi th the circumstances underwhich the transfer is made, reasonably beinferred that A intended to transfer thebeneficial interest in the stock during his life.A and B hold the stock for the benefit of Aduring his life.

(c) A makes a gift of certain land to his wife B. Shetakes the beneficial interest in the land freefrom any trust in favour of A, for it mayreasonably be inferred from thecircumstances that the gift was for B'sbenefit.

Transfer to oneforconsiderationpaid byanother.

Trust incapableof execution orexecutedwithoutexhausting trustproperty.

84. Where property is transferred to oneperson for a consideration paid or providedby another person, and it appears that suchother person did not intend to pay or providesuch consideration for the benefit of thetransferee, the transferee must hold theproperty for the benefit of the person payingor providing the consideration.

85. Where a trust is incapable of beingexecuted, or where the trust is completelyexecuted without exhausting the trustproperty, the trustee, in the absence of adirection to the contrary, must hold the trustproperty, or so much thereof as isunexhausted, for the benefit of the author ofthe trust or his legal representative.

Illustrations

(a) A conveys certain land to B—

" Upon trust ", and no trust is declared ; or

" Upon trust to be thereafter declared ", and nosuch declaration is ever made ; or

Upon trusts that are too vague to be executed ; or

Upon trusts that become incapable of takingeffect; or

"In trust for C ", and C renounces his interestunder the trust.

In each of these cases B holds the land for the benefitof A.

(b) A transfers Rs. 10,000 in the four per cents, to B, intrust to pay the interest annually accruing due

. to C for her life. A dies- Then C dies. B, holdsthe fund for the benefit of A's legalrepresentatives.

(c) A conveys land to B upon trust to sell it and applyone moiety of the proceeds for certaincharitable purposes, and the other for themaintenance of a particular form of worship.B sells the land, but the charitable purposeswholly fail, and the maintenance of theworship does not exhaust the second moiety ofthe proceeds- B holds the first moiety and thepart unapplied of the second moiety for thebenefit of A or his legal representative.

(d) A bequeaths Rs. 10,000 to B, to be laid out inbuying land to be conveyed for purposeswhich either wholly or partially fail to takeeffect. B holds for the benefit of A's legalrepresentative the undisposed of interest in themoney or land, if purchased.

86. Where the owner of property transfers Transfer forit to another for an illegal purpose, and such illegal purpose.purpose is not carried out into execution, orthe transferor is not as guilty as the transferee,or the effect of permitting the transferee toretain the property might be to defeat theprovisions of any law, the transferee musthold the property for the benefit of thetransferor.

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Bequest forillegal purpose.

Bequest ofwhichrevocation isprevented byduress.

Transferpursuant torescindable'contract-

Debtorbecomingcreditor'srepresentative.

Advantagegained byfiduciary.

87. (1) Where a testator bequeathscertain property upon trust, and the purposeof the trust appears on the face of the will tobe unlawful, or during the testator's lifetimethe legatee agrees with him to apply theproperty for an unlawful purpose, thelegatee must hold the property for thebenefit of the testator's legal representative. '

(2) Where property is bequeathed and therevocation of the bequest is prevented byduress, the legatee must hold the propertyfor the benefit of the testator's legalrepresentative.

88. Where property is transferred inpursuance of a contract which is liable torescission or induced by fraud or mistake,the transferee must, on receiving notice tothat effect, hold the property for the benefitof the transferor, subject to repayment bythe latter of the consideration actually paid,and subject to any compensation or otherrelief to which the.transferee may be by lawentitled.'

89. Where a debtor becomes theexecutor or other legal representative of hiscreditor, he must hold the debt for thebenefit of the persons interested therein.

90. Where a trustee, executor, partner,agent, director of a company, legal adviser,or other person bound in a fiduciarycharacter to protect the interests of anotherperson, by availing himself of his character,gains for himself any pecuniary advantage, orwhere any person so bound enters into anydealings under circumstances in which hisown interests are, or may be, adverse tothose of such other person and therebygains for himself a pecuniary advantage, hemust hold for the benefit of such otherperson the advantage so gained.

Illustrations

(a) A, an executor, buys at an under-value from B, alegatee, his claim under the will. B isignorant of the value of the bequest. A musthold for the benefit of B the differencebetween the price and value.

(b) A, a trustee, retires from his trust inconsideration of his successor paying him asum of money. A holds such money for thebenefit of his beneficiary.

(c) A, a partner, buys land in his own name withfunds belonging to the partnership. A holdssuch land for the benefit of the partnership.

(d) A, a partner, employed on behalf of himself andhis co-partners in negotiating the terms of alease, clandestinely stipulates with the lessorfor payment to himself of a lakh of rupees. Aholds the lakh for the benefit of thepartnership.

(e) A and B are partners- A dies. B, instead ofwinding up the affairs of the partnership,retains all the assets in the business. B mustaccount to A's legal representative for theprofits arising from A's share of the capital.

(f) A, an agent employed to obtain a lease for B,obtains the lease for himself. A holds thelease for the benefit of B.

(g) A, a guardian, buys up for himself incumb raneeson his ward B's estate at an under-value. Aholds for the benefit of B the incumb raneesso bought, and can only charge him withwhat he has actually paid.

91. Where, by the exercise of undueinfluence, any advantage is gained inderogation of the interests of another, theperson gaining such advantage withoutconsideration, or with notice that suchinfluence has been exercised, must hold theadvantage for the benefit of the personwhose interests have been so prejudiced.

92. Where a co-owner, mortgagee, orother person with a qualified interest in anyproperty, by availing himself of his positionas such, gains an advantage in derogation ofthe rights of the other persons interested inthe property, or where any such person, asrepresenting all persons interested in suchproperty, gains any advantage, he musthold, for the benefit of all persons sointerested, the advantage so gained, butsubject to repayment by such persons oftheir due share of the expenses properlyincurred, and to an indemnity by the samepersons against liabilities properlycontracted, in gaining such advantage.

Illustration

A mortgages land to B, who enters into possession. B- allows taxes due on the land to fall into

arrear with a view to the land being put upfor sale and his becoming himself thepurchaser of it. The land is accordingly soldto B. Subject to the repayment of theamount due on the mortgage and of hisexpenses properly incurred as mortgagee, Bholds the land for the benefit of A.

Advantagegained byexercise ofundueinfluence.

Advantagegained byqualified

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Propertyacquired withnotice ofexistingcontract.

Purchase bypersoncontracting tobuy propertyto be held ontrust.

Advantagesecretly gainedby one ofseveralcompoundingcreditors.

Constructivetrusts in casesnot expresslyprovided for.

Obligor'sduties,liabilities, anddisabilities.

93. Where a person- acquires propertywith notice that another person has enteredinto an existing contract affecting thatproperty, of which specific performancecould be enforced, the former must hold theproperty for the benefit of the latter to theextent necessary to give effect to thecontract:

Provided that in the case of a contractaffecting immovable property, such contractshall have been duly registered before suchacquisition.

94. Where a person contracts to buyproperty to be held on trust for certainbeneficiaries and buys the propertyaccordingly, he must hold the property fortheir benefit to the extent necessary to giveeffect to the contract.

95. Where creditors compound the debtsdue to them, and one of such creditors, by asecret arrangement with the debtor, gains anundue advantage over his co-creditors, hemust hold for the benefit of such creditorsthe advantage so gained.

96. In any case not coming within thescope of any of the preceding sectionswhere there is no trust, but the personhaving possession of property has not thewhole beneficial interest therein, he musthold the property for the benefit of thepersons having such interest, or the residuethereof (as the case may be), to the extentnecessary to satisfy their just demands.

Illustrations

(a) A, an executor, distributes the assets of histestator B to the legatees without havingpaid the whole of B's debts. The legateeshold for the benefit of B's creditors, to theextent necessary to satisfy their justdemands, the assets so distributed.

(b) A by mistake assumes the character of a trusteefor B, and under colour of the trust receivescertain money. B may compel him toaccount for such moneys.

(c) A makes a gift of a lakh of rupees to B,reserving to himself, with B's assent, powerto revoke at pleasure the gift as to Rs.10,000, The gift is revoked by A as to Rs.10,000 and B thereupon holds that sum forthe benefit of A.

97. The person holding property inaccordance with any of the precedingsections of this Chapter must, so far as maybe, perform the same duties, and, save as in

Saving rightsof bona fidepurchasers.

this Ordinance otherwise provided, issubject, so far as may be, to the sameliabilities and disabilities, as if he were atrustee of the property for the person forwhose benefit he holds i t :

Provided that—

(a) where he rightfully cultivates theproperty or employs it in trade orbusiness, he is entitled to reasonableremuneration for his trouble, skill,and loss of time in such cultivationor employment; and

(b) where he holds the property by virtueof a contract with a person for

. whose benefit he holds it, or withanyone through whom such personclaims, he may, without thepermission of the court, buy orbecome lessee or mortgagee of theproperty or any part thereof.

98. Nothing contained in this Chaptershall impair the rights of transferees in goodfaith for valuable consideration, or create anobligation in evasion of any law for the timebeing in force.

CHAPTER X

CHARITABLE TRUSTS

99. (1) The expression " charitable Specialtrust " includes any trust for the benefit of "definitions.the public or any section of the publicwithin or without Sri Lanka of any of thefollowing categories :—

(a) for the relief of poverty ; or

(b) for the advancement of education orknowledge ; or

(c) for the advancement of religion or themaintenance of religious rites andpractices ; or

(d) for any other purposes beneficial or ofinterest to mankind not fallingwithin the preceding categories.

(2) The expression " adaptation " withreference to a trust means adaptation of the

"trust in such a manner as to carry out thewishes of the author of the trust as nearly aspracticable, according to the doctrine ofcypres, where it is not possible to carry outthose wishes in the exact manner prescribedby the instrument of trust.

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General powersof the court.

Actions forcarrying intoeffect trusts forpublic charity.

(3) The expression " settlement of ascheme " includes variation of a scheme.previously settled.

(4) The expression " place of religiousresort " includes the establishmentscommonly known as " madams " or" chat trams ".

100. The court shall have the samepower for the establishment, regulation,protection, and adaptation of all" charitable trusts " (as defined by thisOrdinance) as are exercised for the timebeing with reference to " charitable trusts "within the meaning of English law by theHigh Court of Justice in England.

101. (1) In case of any alleged breach ofany express or constructive charitable trust,or whenever the direction of the court isdeemed necessary for the administration ofany such trust, the Attorney-General actingex officio. or two or more persons having aninterest in the trust, and having obtained theconsent in writing of the Attorney-General,may institute an action in the court withinthe local limits of whose civil jurisdictionthe whole or any part of the subject-matterof the trust is held or situate to obtain adecree—

(a) removing any trustees or trustee of thecharity and, if necessary, appointingnew trustees thereof;

(b) directing accounts and inquiries ;

(c) declaring what proportion of the trustproperty or of the interest thereinshall be allocated to any particularobject of the trust;

(d) authorizing the whole or any part ofthe trust property to be let, sold,mortgaged, or exchanged ;

(e) settling a scheme for the managementof the trust ;

(f) granting such further or other relief asthe nature of the case may require.

(2) Nothing contained in this or the nextsucceeding section shall be deemed topreclude the trustee or author of anycharitable trust from applying to the courtby action or otherwise for such direction orrelief as he may be entitled to obtain underthe general provisions of this Ordinance, or

for the purpose of invoking the assistance ofthe court for the better securing of theobjects of the trust, or for regulating itsadministration or the succession to thetrusteeship, and upon any such applicationthe court may make such order as it maydeem equitable.

(3) For the purpose of any proceedingunder this section with respect to anyreligious trust, regard shall be had to thestatutory or other powers belonging to, orcustomarily exercised by, the authorities ofany religious body or society concerned inthe administration of the trust.

(4) This section shall not apply to trustsgoverned by the next succeeding section.

102. (1) Subject to the conditions ofsubsection (3) hereof, any five personsinterested in any place of worship, or in anyreligious establishment or place of religiousresort, or in the performance of the worshipor of the service thereof, or in the trusts,express or constructive, relating thereto,may, without joining as plaintiff any of theother persons interested, institute an actionin the court within the local limits of whosecivil jurisdiction any such place orestablishment is situate, or if such place issituate outside Sri Lanka, and the action isinstituted with respect to immovableproperty situate within Sri Lanka, in thecourt having local jurisdiction, to obtain adecree—

(a) settling a scheme for the managementof the trusts thereof ;

(b) vesting any property in the trustees ;

(c) enumerating the properties comprisedin the trust, or declaring that anyproperty is trust property

- comprised in the trust ;

(d) directing accounts and inquiries ;

(e) declaring what proportion of the trustproperty or of any interest therein

- shall be allocated to any particularobject of the trust;

(f) - declaring any trustee, manager, orsuperintendent of such place orestablishment, or member of anycommittee of management, guilty ofany misfeasance, breach of trust, orneglect of duty ;

Suits bypersonsinterested inreligious trusts-

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(g) awarding damages and costs "againstany such trustee, manager,superintendent, or member of acommittee in respect of any suchmisfeasance, breach of trust, orneglect of duty ;

(h) directing the removal of any trustee,manager, superintendent, ormember of a committee, and, ifnecessary, directing theappointment of any new trustee,manager, superintendent, ormember of a committee ;

(i) directing the specific performance ofany act by any trustee* manager,superintendent, or member of acommittee ;

(j) granting such further or other relief asthe nature of the case may require.

(2) The interest required in order toentitle a person to sue under this sectionneed not be a pecuniary or immediateinterest, or such an interest as would entitlethe person suing to take any part in themanagement or superintendence of thetrust. Any person who is connected with thetrust as donor, or by family or hereditaryinterests, or who for a period of not lessthan twelve months has been in the habit ofattending at the performance of the worshipor services of, or connected with, the placeor establishment in question, or ofcontributing to the general or any specialexpenses incidental to such worship orservices, or of partaking in the benefit ofany distribution of alms thereat, or inconnection therewith, or of otherwiseenjoying the benefit of the trust, shall bedeemed to be a person interested within themeaning of this section.

(3) No action shall be entertained underthis section unless the plaintiffs shall havepreviously presented a petition to theGovernment Agent of the AdministrativeDistrict in which such place orestablishment is situate praying for theappointment of a . commissioner orcommissioners to inquire into the subject-matter of the plaint, and unless theGovernment Agent shall have certified thatan inquiry has been held in pursuance of thesaid petition, and that the commissioner orcommissioners (or a majority of them) hasreported—

(a) that the subject-matter of the plaint isone that calls for the considerationof the court ; and

(b) either that it has not proved possibleto bring about an amicablesettlement of the questionsinvolved, or that the assistance ofthe court is required for the purposeof giving effect to any amicablesettlement that has been arrived at.

(4) It shall be the duty of the GovernmentAgent, in any case in which he shall havegood reason to believe that the personspresenting such petition or any five of themare persons interested within the meaning ofsubsection (2) of this section, for whichpurpose he may require to be satisfied byaffidavit or otherwise, to appoint for thepurposes of the inquiry a commissioner orcommissioners whom he may consider to bea person or persons of acknowledgedstanding and repute in the general or localreligious community concerned ,

Provided that the Government Agent mayappoint himself as the commissioner or asone of the commissioners ;

Provided further, that the GovernmentAgent may require the petitioners to depositwith him an amount sufficient to cover thereasonable expenses of the commissioner orcommissioners in respect of travellingexpenses and subsistence incidental to theinquiry prayed for and any such costscertified by.the Government Agent to havebeen properly incurred for the purposes ofthe inquiry and to have been duly paid shallbe deemed to be costs in the action.

(5) It shall be the duty of anycommissioner or commissioners appointedfor the purpose of any such inquiry torender a report in terms of subsection (3)hereof within such time as shall be specifiedfor the purpose by the Government Agent,or within such further time as he may fromtime to time authorize.

(6) The report shall be Filed in the officeof the Government Agent, and thepetitioners and the trustee shall be entitled,on payment of the usual copying charges, tobe furnished with a copy thereof.

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Power to refermatter forarbitration orinquiry.

Powers ofcommissioners,&c.

(7) The court shall not be precluded fromamending the plaint so as to include thereinany matter arising in the course of theproceedings by the fact that such matter wasnot included in the petition to theGovernment Agent, if it shall be of opinionthat in all the circumstances of the case suchmatter may be equitably included in theaction.

(8) This section shall not apply to anyChristian religious trust.

103. In any action instituted under thelast preceding section, it shall be lawful forthe court—

(a) on the application of the parties, toorder any matter in differencetherein to be referred for decision to

- one or more arbitrators ;

(b) to appoint a committee for thepurpose of making an inquiry andreporting to the court ' withreference to any matter involved inthe action or arising in the coursethereof, or for the purpose ofassisting the court in the exercise ofits powers under the last precedingsection, or for the settlement oradjustment of any matter involvedin the action or arising in the coursethereof.

104. (1) The following persons, that is tosay—

(a) any commissioner or commissionersappointed under section 102 (4) ;

- . » '

(b) any persons directed to make inquiriesunder section 102 (1)(d) ;

(c) any arbitrator or committee appointedunder section 103,

shall, in addition to any other powersnecessary for the effective discharge of theduties imposed upon such persons,have thefollowing powers, that is to say—

(i) to summon witnesses ;

(ii) to administer oaths or affirmations ;

(iii) to require the trustee or any witnesssummoned for the purpose to giveall particulars that may be withinhis knowledge relating to anyimmovable property which is or

ought to be comprised in the trust,the offerings received for thepurposes of the trust, the expensesincidental to its administration andthe manner in which it isconducted.

(2) Any person who, without due excuse,the proof of which shall lie on him, shallmake default in complying with any summonsauthorized under this section, or who shallrefuse to answer to the best of his ability anyquestion or inquiry addressed to him underthe provisions of this section, shall be guilty ofan offence, and shall be liable on summaryconviction to a fine not exceeding twohundred rupees.

105. In the exercise of its powers under Power of courtsection 102, without prejudice to its general as to accounts.powers under that section, the court may—

(a) order any trustee of any place orestablishment therein mentioned tofile accounts for a period notexceeding three years prior to thedate of the order ;

(b) hold or direct an inquiry into thematters complained of or accounts sofiled;

(c) surcharge and falsify any item in theaccounts ;

(d) require the trustee to make good anydefalcation, irregular payment, ordeficiency ;

, (e) in any case in which it shall be satisfiedthat owing to the manner in whichthe trust incidental to such place orestablishment has been conducted inthe past it is not possible for thetrustee to furnish accounts, require asa condition of the continuance of thetrustee in his office that he shalldeposit for the purposes of the trust aspecified amount not exceeding theamount for which, in the opinion ofthe court after inquiry into all thecircumstances of the case, he may bereasonably held to be responsible inrespect of the three years prior to thedate of the order ;

(f) indemnify the trustee on such terms as itmay deem equitable in respect of anypast neglects, misfeasances, orirregularities ;

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Application ofreligious law.

De facto trusts.

Special powersof court.

(g) direct the manner in which all futureaccounts shall be kept;

(h) authorize in any scheme framed underthe said section the devotion of aportion of the income of the trustproperty to the education ofchildren of the religious communityinterested in the trust, and, ifnecessary, the utilization of anyimmovable property comprised inthe trust as a site, for; the saidpurpose.

106. In settling any scheme for themanagement of any trust under section 102,or in determining any question relating to—

(a) the constitution or existence of anysuch trust;

(fr) the devolution of the trusteeship ;

(c) the administration of the trust;

the court shall have regard—

(i) to the instrument of trust (if any) ;

(ii) to the religious law and custom of thecommunity concerned ;

(iii) to the local custom or practice withreference to the particular trustconcerned ;

and may have regard to any arrangement defacto in force for the purpose of theadministration of the trust.

107. In dealing with any propertyalleged to be subject to a charitable trust,the court shall not be debarred fromexercising any of its powers by the absenceof evidence of the formal constitution of thetrust, if it shall be of opinion from ail thecircumstances of the case that a trust in factexists, or ought to be deemed to exist.

108. In settling any scheme for themanagement of a charitable trust (withoutprejudice to its general powers), the courtshall have the powers following :—

(a) to provide for the periodical auditingof the accounts of the trust propertyby auditors appointed by or subjectto the approval of the court, orotherwise as the court may deemexpedient ;

(b) to provide for the visitation of thecharity ;

Exclusion oftrusts underthe BuddhistTemporalitiesOrdinance andthe MuslimMosques andCharitableTrusts orWakfs Act.

(c) to provide for the settlement of theremuneration of the trustee :

Provided that no suchremuneration shall in any caseexceed ten per centum of the grossincome of the trust;

(d) to devote any surplus income that maybe available after the reasonablesatisfaction of the objects of thetrust to the extension of suchobjects, or, if the court see fit, topurposes of education.

109. This Chapter shall not apply—

(a) to religious trusts regulated by theBuddhist Temporalities Ordinance ;

(b) to religious trusts regulated by theMuslim Mosques and CharitableTrusts or Wakfs Act.

CHAPTER XI

MISCELLANEOUS

110. (1) No trust shall operate to create Rule againstan interest which is to take effect after the perpetuities.lifetime of one or more persons living at thedate of the constitution of the trust, and theminority of some person who shall be inexistence at the expiration of that periodand to whom, if he attains full age, theinterest created is to belong.

(2) If owing to any trust an interest iscreated for the benefit of a class of personswith regard to some of whom such interestfails by reason of the provisions of thissection, such interest fails as regards thewhole class.

(3) Where an interest fails by reason ofthe provisions of this section, any interestcreated in the same transaction andintended to take effect after or upon failureof such prior interest also fails.

(4) In any case in which any interestintended to be created fails by reason of theprovisions of this section, the court shallhave power to give effect to the trust in sucha manner as to carry out as nearly aspracticable the intentions of the author ofthe trust, subject to the limits imposed bythis section, and may make any ordernecessary for the purpose.

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(5) The restrictions of this section shallnot apply to charitable trusts as defined bysection 99.

Prescription 111. (1) In the following cases, that is tosay

(a) in the case of any claim by anybeneficiary against a trusteefounded upon any fraud orfraudulent breach of trust to whichthe trustee was party or privy ;

(b) in the case of any claim to recovertrust property, or the proceedsthereof still retained by a trustee, orpreviously received by the trusteeand converted to his use , and

(c) in the case of any claim in the interestsof any charitable trust, for therecovery of any property comprisedin the trust, or for the assertion oftitle to such property,

the claim shall not be held to be barred orprejudiced by any provision of thePrescription Ordinance.

(2) Save as aforesaid, all rights andprivileges conferred by the PrescriptionOrdinance shall be enjoyed by a trustee inall actions and legal proceedings in the likemanner and to the like extent as they wouldhave been enjoyed if the trustee had notbeen a trustee ;

Provided that in the case of any action orother proceeding by a beneficiary to recovermoney or other properly, the period ofprescription shal l not begin to run againstsuch benef ic iary , unless and unt i l theinterest ot such beneficiary shall be aninterest in possession.

(3) No beneficiary as against whom therewould be a good defence by virtue of thissection shall derive any greater or otherbenefit from a judgment or order obtainedby another beneficiary than he could haveobtained if he had brought such action orother proceeding and this section had beenpleaded.

(4) Nothing in this section shall precludethe court from giving effect to anyapplication by a trustee for any equitablerelief to which he would otherwise beentitled on any ground recognized by thecourt.

(5) This section shall not apply toconstructive trusts, except in so far as suchtrusts are treated as express trusts by thelaw of England.

112. ( I ) In any of the following cases. Vesting orders.namely :--

(i) where it is uncertain in whom the titleto any trust property is vested , or

(ii) where a trustee or any other person inwhom the title to trust property isvested has been required in writing , .to transfer the property by or onbehalf of a person entitled torequire such transfer, and haswilfully refused or neglected totransfer the property for twenty-eight days after the date of therequirement,

the court may make an order (in thisOrdinance called a " vesting order ") vestingthe property in any such person in any suchmanner or to any such extent as the courtmay direct.

(2) A vesting order under any provision ofthis Ordinance shall have the same effect asif the trustee or other person in whom thetrust property was vested had executed atransfer to the effect intended by the order.

(3) A vesting order under this Ordinance,in so far as it affects immovable property,shall contain the particulars required bysection 13 of the Registration of DocumentsOrdinance, and section 29 of the saidOrdinance shall apply to every such order inthe same manner as if it were an instrumentwhich affects land :

Provided that no such order in the case ofany charitable trust shall be invalidated byreason of the fact that il does not containthe said particulars, or shall be liable to bedefeated by the registration of anysubsequent deed, order, or other instrumentunder section 7 of the said Ordinance.

(4) Where any trust property comprisesany stocks or any shares or securitiestransferable in any book kept by anycompany or society, or any shares in anyship registered under the law relating tomerchant shipping, a vesting order underthis section shall not take effect, so far as itrelates thereto, unless and until notice of

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such order in writ ing shall have been givenby or on behalf of the person in whom theproperty is vested under the order to theperson or authority in charge of the registeror book in which such stocks, shares, orsecurities, as the case may be, are entered,and upon such notice in wri t ing being given,and on reasonable proof being furnishedthat such stocks, shares, or securities formpart of the said trust property, the person inwhom the property is vested under the ordershall be entitled to a transfer into his nameof any such stocks, shares, or securities, andto the receipt of all dividends, interest, orother sums due, or to become due, inrespect of any such stocks, shares, orsecurities.

(5) In all cases in which a vesting ordercan be made under this section the courtmay, if it is more convenient, appoint aperson to transfer the property, and atransfer by that person in conformity withthe order shall have the same effect as anorder under this section, and every personso appointed for the purposes of alltransactions, proceedings, and formalitiesincidental to the said transfer shall have allthe powers and capacities of the trustee orother person in whom the trust propertywas vested, and shall be deemed to be theduly authorized attorney of such trustee orother person for the purposes aforesaid.

Dcvolution of 113. ( I ) Where, whether before or aftertrust properly. the commencement of this Ordinance, it is

declared or intended in any instrument oftrust that the trustee of the trust shall be aperson for the time being holding or actingin any publ ic office, or holding or acting inany office or discharging any duty in anypublic or private inst i tut ion, body,corporation, association, or community, orwhere any property comes into or is in thepossession or ownership of any such personin any of the aforesaid capacities upon anyconstructive trust, the title to the trustproperty shall devolve from time to timeupon the person for the time being holdingor acting in any such office, or dischargingsuch duly, without any conveyance, vestingorder, or other assurance otherwisenecessary for vesting the property in suchperson.

(2) Where, whether before or after thecommencement of this Ordinance, in thecase of any charitable trust, or in the case of

any trust for the purpose of any public orprivate association (not being an associationfor the purpose of gain), a method for theappointment of new trustees is prescribed inthe instrument of trust (other thannomination in the manner referred to inparagraph (a) of section 75), or by any rulein force, or in the absence of any suchprescribed method is established by custom,then upon any new trustee being appointedin accordance with such prescribed orcustomary method, and upon the executionof the memorandum referred to in the nextsucceeding subsection, the trust propertyshall become vested without anyconveyance, vesting order, or otherassurance in such new trustee and the oldcont inuing trustees jointly, or if there are noold continuing trustees, in such new trusteewholly.

(3) Every appointment under the lastpreceding subsection shall be made toappear by a memorandum under the handof the person presiding at the meeting, orother proceeding at which the appointmentwas made, and attested by two otherpersons present at the said meeting orproceeding. Every such memorandum shallbe notarially executed.

(4) It shall be the du ty of the Registrar-General to prepare and maintain specialregisters of trustees appointed undersubsection (2) of this section, and it shall bethe duty of every notary before whom anysuch memorandum is attested to forward tothe prescribed officer for the purpose ofsuch registers all such particulars withreference to such memorandum as may beprescribed by rules made under the NotariesOrdinance.

(5) All rules made in pursuance of the lastpreceding subsection shall apply to notarieswho are attorneys-at-law in the samemanner as to other notaries, anything insection 36 of the Notaries Ordinance, to thecontrary notwithstanding.

114. The Minister may, in his discretion, Incorporationby Order, on the application of the trustees of trustees.of any charitable trust or of any public orprivate association (not being an associationfor the purposes of gain), authorize theincorporation of the said trustees, and uponthe publication of the said Order, the saidtrustees of the charity or association and

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Persons mayassign propertyin trust tothemselves andothers.

their successors for the time being shall beconstituted a corporation under such styleand subject to such conditions as may bespecified in the Order.

115. Any person shall have power toassign and convey movable and immovableproperty, now by law assignable, directly tohimself and another person, or otherpersons or corporation, by the like means ashe might assign or convey the same toanother. And no transfer or assignment ofmovable or immovable property heretoforemade or executed by a person to himselfand another person or persons orcorporation shall be deemed to be in anymanner invalid by reason of its being atransfer or assignment by a person tohimself and another person or persons orcorporation :

Provided that nothing in this sectioncontained shall give any validity to anyassignment or conveyance which wouldhave been heretofore by any law or custominvalid by any other reason than by reasonof its being an assignment or conveyance bya person to himself and any other person orpersons or corporation.

116. (1) All actions and other Procedure.proceedings under this Ordinance shall begoverned by the enactments and rulesrelating to civil procedure for the time beingin force.

(2) The Judges of the Supreme Court maymake rules regulating the procedure to beobserved in all proceedings under thisOrdinance in respect of all matters forwhich no provision is made by suchenactments and rules, and pending themaking of such rules, such procedure shallbe followed as shall be directed by the court,

(3) All petitions presented in any court inany proceeding under this Ordinance shallbear a stamp of ten rupees.

117. If the court shall be of opinion, at Costs.the termination of any suit instituted withreference to any trust, that the suit has beenfor the benefit of the trust, and that noparty to the suit ought to be maderesponsible for the whole of the costs, thecourt may order the costs of such portion asit may consider just to be paid out of thetrust property -

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