LSS Trusts Revision Seminar Jules Marshall. Express Trust: By Declaration or By Transfer Private or Public (charitable) Fixed or Discretionary

LSS Trusts Revision SeminarJules Marshall

Express Trust:

By Declaration or By Transfer

Private or Public (charitable)

Fixed or Discretionary

Creating a Valid Trust

Requirements: 1. The three certainties:

Certainty of intention (to create the trust by the settlor)

Certainty of subject matter (must be trust property)Certainty of objects (must be identifiable beneficiaries or a valid purpose)

2. Statutory formalities

3. No illegality (not covered in this course)

Creating a Valid Trust: Certainty of Intention

Importance of Intention (Mallot v Wilson)

Whether 'in the circumstances of the case and on the true construction of what was said and written, a sufficient intention to create a true trust has been manifested': Megarry VC in Tito v Waddell (No 2)

Creating a valid trust: Certainty of Intention

Subjective or Objective Intention?

Subjective intention (HC majority in Joliffe) Isaacs J in dissent: concerned about parol evidence rule.

Joliffe followed countless times (Star v Star)

Not restricted to bank accounts (Hyhonie Holdings)

Creating a valid trust: certainty of intention

Onus of Proof: Ultimate burden on person asserting the trust

Where trust involves a contractual or bilateral

arrangement an objective test will be applied (What did both parties think was happening?) - (per Shortall v White)

Creating a valid trust - certainty of intention

Intention must be immediate (where no consideration) per Harpur v Levy

Creating a valid trust – certainty of intention

No particular words needed (Re Armstrong, Paul v Constance) Factors indicating intention: Bank accounts in a third parties name – Re Armstrong Communications of intention with third party – Re Armstrong Subsequent Conduct: 'It's as much yours as it is mine'; depositing shared income; etc – Paul v Constance (bearing in mind his unsophistication)Clear words declaring trust – Hyhonie, Owens v Lofthouse

Factors against intention: Conduct – treating property as one's own – Hyhonie Listing property as income for tax purposes – Hyhonie

Other considerations:Compare clause to others in the instrument – context of the whole instrument

Certainty of intention – testamentary trusts

The clause should be constructed having regard to the words used, the entire document and surrounding circumstances (per Dixon J in Countess)

Two step process (Dixon J in Countess):

Did the testator intend the donee to be under any obligation to confer a benefit on a third party?

If so, did they intend a trust obligation or some other form of obligation?

Certainty of intention – testamentary trusts

Did the testator intend the donee to be under any obligation to confer a benefit on a third party?

1. Look at words used (strong words or precatory words?)2. Compare words used in different clauses within the will (Re Williams)3. Look at outcome (did testatory truly intend that outcome) 4. Look at contextual factors

Conclude – does the clause contain an obligation (ie, more than just an expression of wishes? If yes, next question)

Certainty of Intention – Testamentary Trusts

If so, did they intend a trust obligation or some other form of obligation? Possibilities: 1. Gift subject to a condition (Gill v Gill/Re Gardener) 2. Gift subject to a charge 3. A trust (Chang v Tijong)

Creating a Valid Trust: Certainty of Subject Matter

There must be trust property (cannot have a trust over nothing)

Trust will fail if property is:future property uncertain property (unascertainable)or there has been a failed transfer by the settlor to the trustee (constitution)

Certainty of Subject Matter:

Problem with Future prop/mere expectancy or inalienable rights

Mere expectancies - examples: A person named in a will of a person who has not yet died or an interest in an object of a discretionary trust before a decision is made to distribute to that person (Kennon v Spry, Howard-Smith)

Future property cf. Underlying to future property (revise Equity)

Inalienable rights

Certainty of Subject Matter:

Problem with Ascertainability It may be argued that the property is not ascertainable as: 1. Amount of the interest held on behalf of each B is unable to be

specified (fixed interest trust)2. Vague 'Bulk of my estate', 'my favourite books'3. Instrument allows T to determine the trust property (Musoorie)

Shares cases – Hunter v Moss and Shortall v White

Certainty of Subject matter: Situations

Problem with ConstitutionNo issues will arise with trusts by declaration If the trust is a trust by transfer this requirement means that at

minimum the equitable interest in the subject property must be properly assigned to the trustee. REVISE EQUITY

Consideration?Legal property – transfer rules – Corin v Patton (Mason CJ &

McHugh J cf. Deane J) Equitable property (or partial chose) – Manifest an intention to

immediately and irrevocable pass the interest NB: Ttrust may still fail due to the operation of S 53 PLA

Certainty of Object

A trust must have certainty of object by being in favour of one or more identifiable beneficiaries or for a valid purpose (such as a Charitable purpose) (per Morice v Bishop of Durham, Re Shaw)

Why do we need certainty of object?

Certainty of Object: Determining trust structure

Tests for certainty of object are different depending on what trust structure was intended by the settlor

Two step test to determine trust structure:1. Obligation to distribute the trust fund?Compare clauses Strong language – similar to law under 'certainty of

intention' Time limit to appoint (not conclusive) (Re Hay's)Gift over in default – indicates a mere power (Re Hay's) Absence of gift over (not conclusive)

If no obligation – mere power If obligation – then fixed interest trust or discretionary

trust

Certainty of Object: Determining Trust Structure

2. If obligation – Is there any discretion as to who to distribute to?

If yes – discretionary trust If no – fixed interest trust

Certainty of Object: Fixed Interest Trust

List Certainty Trustee must be able to make a list of all the

beneficiaries and their entitlements

If no specification as to proportions – assume they take in equal shares (Paul v Constance)

Certainty of Object: Powers of appointment

A power to appoint property Used in discretionary trust

Mere Power v Trust Power A mere power (bare power, power collateral) is power withough an

obligation whereas a trust power (power coupled with a duty) gives the donee a power with an obligation

Classes of Powers of Appointment: General Hybrid Special

Certainty of Object: Discretionary Trusts & Mere Powers

Criterion Certainty – Re Gulbenkian 1. Semantic/Linguistic certainty 2. Evidential certainty

Certainty of Object: Semantic Certainty

Uncertain:Any class that is inherently subjective – ie, the best news reporterFuture employees – Broadyway Cottages To improve quality of life – Re Blyth (Qld) per Thomas JDeserving members – unless do indicates how to distinguish deserving My old friends (unless instructions) – Lord Upjohn in Re GulbenkianAny person engaged in – to what extent must you be engaged?

Certain: Anything that can be objectively determinedRelatives – McPhail; Near relatives – Griffiths (LJ Stamp means nearest blood

relations – Aus positioN) Employers – GulbenkianEmployee, officer, former employee or officer – Gulbenkian

Working to alleviate war – Re Blythe Dependents – McPhail

Inhabitants of an area – District Auditor Residents - Gulbenkian

Certainty of Object: Evidential Certainty

Evidential Certainty: Evidential certainty can be resolved by seeking a

court order.

Certainty of Object: Additional requirements

Discretionary Trusts & Administrative workability McPhail v Doulton, Lord Wilberforce - new requirement

Rationale – if not administratively workable then court could not establish who had standing and the donee could not undertake an adquate survey of the class.

Applied in R v District Auditor – administratively unworkable.

Certainty of Object: Administrative Workability & Classes of Powers

A general trust power or a hybrd trust power is invalid as fails the administrative workability requirement of criterion certainty. The reason it fails this requirement is that the class is so hopelessly wide that the court could not determine who had standing and the trustee could not undertake an adequate survey of the class (the whole world/the whole world bar one person/one group) in order to properly exercise the power (McPhail v Doulton per Lord Wilberforce and R v District Auditor)

Therefore, a discretionary trust power can only be a SPECIAL trust power

Certainty of Object: Additional Requirements

Mere power & Capriciousness

Administrative unworkability does not invalidate a mere power (Re Hay's)

Re Manisty and capriciousness

Creating a Valid Trust: Statutory Formalities

S 53 (1) PLA Situations & Solutions 1. CREATION of interest IN LAND (legal or

equitable NOT by trust => s 53(1)(a) – creation of the interest must be in writing by the transferor or agent

2. DISPOSITION of LEGAL interest in LAND eg legal mortgage/lease => s53(1)(a)

Creating a Valid Trust – Statutory Formalities

3. DISPOSITION of SUBSISTING EQUITABLE INTEREST IN LAND

a) by assignment or by final direction (Howard-Smith) => must comply with s 53(1)(a) AND (c) but they have the same requirements

Final Direction cf. Revocable mandate (Dixon J in Howard Smith)

Creating a Valid Trust – Statutory Formalities

3. DISPOSITION of SUBSISTING EQUITABLE INTEREST IN LAND

b) by declaration of sub-trust Two possible approaches as to which subsection will applyConduit v Active sub-trustee

Creating a Valid Trust: Statutory Formalities

4. DECLARATION OF A TRUST OVER LAND- Lee J in DSS v James interpreted ss(b) as an exception

to the general rule in ss (a) – followed in Hagan v Waterhouse

Consequences – trust is unenforceable until manifested and proved in writing by some person able to declare such a trust (ie, formalities in ss(b) only evidentiary function)

No provision for agent Trustee in argument against T and B (Hagan)

Statutory Formalities

5. NOT LAND SS (a) and (b) won't apply Is it subsisting equitable interest? If yes => s 53(1)

(c)

NOTE: CONSIDERATION

Quistclose Trusts

Specifc purpose/obligationUsually imposed on debtor creditor relationship Factors towards specific purpose: - Conditions in K such as 'exclusively' or 'only' per Gummow J in AETT cf. Precatory words - Paid into a seperate account – Quistclose, Salvo cf. AETT- X would not have transferred if they knew it would be applied for a different purpose (cf. AETT)

QC: Express or Resulting Trust?

Express Trust or Resulting Trust Intent – Dal Pont

Quistclose and Salvo per Spigelman CJ & Young J- Two limbed express trust

Gummow in AETT – unremarkable express trust – intention Twinsectra v Yardley – Lord Millet – resulting trust Salvo v New Tel – majority – two limbed express trust but on facts

neither classification would result in different outcomeNo HC decision -

Quistclose – Third Party

THIRD PARTY HOLDING PROPERTY:Although the lendor appears to have a beneficial

interest in [property] due to the operation of the QC trust, they will only be able to enforce that interest against [third party] if the [third party] can be shown to have taken the [property] with notice of the lendors interest (per Lord Wilberforce in Quistclose).

Charitable Trusts

A trust for a valid charitable purpose is one of the exceptions to the rule that a trust for a purpose rather than a person will fail (Latimer v Inland Revenue)

AG will have standing to enforce charitable trusts

Certainty of Intention & Certainty of Subject Matter/Constitution – still require but Certainty of Object does not apply – charitable trust will depend on the purpose of the trust and whether or not it is for public benefit

Charitable Trusts

Requirements: 1. Valid Charitable Purpose 2. Public Benefit

- Public Benefit - Section of the Public

Note: Not covering trusts for political purposes or Aid watch case in this seminar

Charitable Trusts: Valid Charitable Purpose

Valid Charitable Purpose: - 'spirit and intendment' of the preamble to the

Statute of Elizabeth - Pemsel's case1. Relief of Povery 2. Advancement of Education3. Advancement of Religion 4. Other purposes beneficial to the community

Charitable Trusts: Public Benefit

1. Public Benefit Assumed for trusts for relief of poverty (Dingle) Presumed (able to be rebutted) for advancement

of education and religion:- Education see Re Shaw and Re Pinion - Religion – Benefit presumed to be positive

influence on human conduct

Must be positively demonstrated for fourth head

Charitable Trusts: Public Benefit

2. Section of the publicQuestion of fact (must be reasonable section of public) Poverty – an exception unless Saunders rule applies

membership/barsThe people who will benefit from the trust cannot be connected to one or

a few named people (Re Compton) - The point of distinction between those who will benefit and those who won't cannot be their relationship (nexus) to a particular individual or company even if large no. (11,000) Oppenheim

Charitable Trusts: Severance

At equity, if one purpose was invalid the whole trust would fail despite there being other valid charitable purposes (McGovern)

S 7M of the Charities Act operates to save some trustsThree different ways it operates per Leahy

Charitable Trusts: Cy Pres

Trust fails initially: S 2 Charities Act - charitable intention (Re Lysaght)

Trust failes after a period of time because purpose no longer exists/illegal etc (Re Anzac Cottages)

Duties relating to mere powersHolder of a mere power has no obligation to exercise the power

at all - court will not intervene to force exerciseNon Fiduciary Donee: No obligation to consider exercise of

discretion. If there is exercise then appointment must be within limits, in good faith and for proper purpose (Megarry VC in Re Hay's)

Fiduciary Donee: Broader range of responsibilities than non-fiduciary – cannot simply ignore

Object of mere power – request court intervention to require T to consider exercise (Re Hay's)

Court will require (per Megarry VC in Re Hay's) that the T:1. consider periodically whether or not to exercise the power

(Turner v Turner) 2. consider range of objects3. consider appropriateness of particular appointments

Duties relating to trust powers

The trustee is under a duty to exercise their discretion and must appoint the property to a person

WHERE THERE HAS BEEN EXERCISEThe power to review the exercise of discretion is limited to

examining whether or not it was exercised in good faith, on real and genuine consideration and in accordance with the purpose for which the discretion was conferred except where the trustee has given reasons for the exercise of their discretion. (Karger v Paul, per McGarvie J)

Duties relating to trust powers

WHERE THE FIDUCIARY HAS NOT YET EXERCISED POWER

Objects of a trust power have standing to force the consideration of exercise (McPhail) however they have no proprietary right to the property (Kennon).

Trustees Duties

Trustees under valid express trusts and charitable trusts have same duties

There are three sources of trust duties: The terms and conditions of the trust instrument itselfEquitable principles Statute

Supremacy of Trust Deed

Is there a trust deed?

Can alter equitable and statutory duties

S 2 (3) Trustee Act

Must be familiar with terms of trust deed

General Summary of Duties per Green v Wilden

1. Adhere to the terms of the trust deed 2. Act fairly by beneficiaries and keep proper

accounts 3. Exercise prudence in conducting affairs of the

trust 4. Adhere to the profits and conflicts rules 5. Disclose information to the beneficiaries.

Valid Departures from Trust Deed

Where Trustee is permitted or required (by Statute or by order of the Court) to depart from the trust deed:

Court may require/permit departure where: - Circumstances require a departure in B's interests- Terms of deed unable to be carried out - Under s 63 of Trustee Act (power to authorise dealings

with trust property)

All sui juris beneficiaries were absolutely entitled to the fund and agreed unanimously to ratify a departure

Duties

1. Duty to 'GET IN' the trust property: Consider who has title and control of property??Not just an initial duty (Caffrey) Recovery from previous trustee? Duty to inquire

as to breaches (Permanent v Perpetual)

2. Duty to PROTECT Trust Assets Power under s 23 of the Act to insure the property No obligation Common sense

Trust Management: Investment Duties

A trustee may only invest trust property in investments authorised by the trust deed, legislation or the Court.

S 5 of the Act (inserted in 1995) allows the trustee to invest in anything unless expressly prohibited by the Actor the trust deed

Is there a restriction on investment power contained in the trust deed? If yes – must adhere to that restriction as part of duty to adhere to trust deed.


S 5 of the Act – qualified by ss 6 – 8 (further restrictions)DUTY OF PRUDENCE (S 6)Statutory standard of prudence to be exercised when

investing- Bifurcated standard: professionals held to higher

standard of care than non-professionals Professional Trustee s 6(1)(a): Does the trustee's profession, business or employment

include acting as trustee or investing on behalf of others

Standard: Care, diligence and skill a prudent person engaged in that profession would exercise in managing the affairs of others


Non-Professional Trustee s 6(1)(b):Standard: care, diligence and skill that a prudent

person would exercise in managing the affairs of others (cf. Morally obliged prudent business person req. in Bartlett)


Modern Portfolio Theory: Line by Line Assessment v MPT Before Act – Line by Line - each investment individually assessed for prudence- trusts were conservative, highly risk averse – low rate of

return and opportunity for decline in real value of the fund (Nestle v Nat West)

MPT – max growth/min risk – through diversification – range of investment to reflect market

Does Act reflect adoption of theory? Several sections suggest yes - S 8, s 6(3), s 12C and 12D

Case: HLB v Trust Co LtdDebeljak article


Factors to Consider in Assessing Breach of Investment Duties:

1. ANNUAL REVIEW per s 6(3) individually and as a whole Minimum standard Also when new investment is made per 8(1)(o)

2. SPECULATIVE INVESTMENTS per s 7(2)Might be too speculative even considering MPT Bartlett


3. DUTY TO TAKE ADVICE per s 7(2)Supported by ss 7(4) and (8)(2) – can recover

costs of advice

4. SECTION 8 MATTERSMake a list

5. Other enumerated duties in s 7(2): Duty to act in best interests of B's and Duty to act impartially between B's/classes of B's (discussed later)

Trust Management: Investment Duties - Defences

- not strictly defences S 12 C: Court can relieve T of liability (partially or

in full) Court must consider 4 factors1. T invested according to an investment strategy

(sound strategy)2. Whether they had regard to ths s 8 factors 3. Whether they considered the nature & purpose

of the trust 4. Whether they acted on independent advice

(was it needed?)

Trust Management: Investment Duties - Defences

Set Off Under s 12D the court has discretion to allow set off

of liability in relation to profit made through investment. There must be some correlation with the gains and losses (ie, part of an investment strategy eg Bartlett).

Trust Management: Equitable Duties

S 7 of the Act preserves all the equitable duties that existed before the Act (except to extent they are inconsistent with Act/trust instrument)

Standard of prudence: The statutory standard only applies to investment – must use equitable standard for duties NOT related to investment


Equitable Standard of Prudence:BifurcatedProfessional: T will be held to the higher standard of care than a non-

professional trustee as they are holding themselves out as havng more skills than an ordinary trustee and are usually paid for their services (Bartlett; ASC v AS Nominees)

Non-Professional:T, in relation to management of trust, will be held to the

standard of care that an ordinary prudent businessman would use in conducing his own affairs (per Speight v Gaunt)


Trustee – fiduciary – subject to conflicts and profits rules ConflictsDuty v Duty (per Farrington) Duty v Interest (per Boardman) - Particular applications 1. Self Dealing Rule – applies where there is sale of trust

property to trustee himself – sale automatically void (Clay v Clay) Note: also applies to loans

2. Fair Dealing Rule – B's might want to deal with beneficial interest – want to sell to trustee – sale not automatically void – voidable unless trustee shows no advantage taken and full disclosure and fair and honest


3. Duty not to mix assets (must keep trust assets separate) (ASC v AS Nominees)

- important for avoiding risk of fraud and allowing proper accounting

Profits Rule: Duty to Act Gratuitously – unless provision made in trust

instrument Has there been profit? Williams v Barton Was there authorisation? - trust instrument (contra proferentum) - Trustee Act – recovery of out of pocket expenses - Application to court under s 77


DUTY TO ACT PERSONALLY Issues: Agents – Delegation – Following Advice – Co-T's

General Rule: Trustee must act personally, and cannot delegate powers/discretions without express authority in trust instrument.

Trust Management: Equitable DutiesDelegation v Agency

1. Is there express authority to delegate in trust deed? If no,

2. Was T absent from state – s 30 of the Act? If no, then cannot delegate

3. Was it delegation ora) appointing an agent under s 28 of the Act; or b) taking advice under s 7(2)(d) of the Act

If AGENT – was appropriate level of care in selection of agent taken? If yes, not liable for default of agent (note: Speigh v Gaunt Standard)


If ADVICE was appropriate standard of care exercised (Speigh v Gaunt)?

For both AGENT and ADVICE – consider did the acts occur as a result of T's own wilful default (s 36(1))

Was T ACTING UNDER DICTATION or FETTERING his discretion?

- Not personally exercising own discretion (Turner) - Includes B telling T what to do (Brockbank) - Includes Co-T telling T what to do (Mulligan) - Co-T must actu unanimously (Cowan)


Duty to act in best interests of the B's:T must act solely in best interests of B's S 7 modification – 'future and present B's

Best Interests? Best Financial interests subject to prudence (Cowan) Other considerations may be relevant if all B's shared those views and thought pursuit of them was in best interests of B's (Cowan)


Duty to Act Impartially1. Not acting impartially between individual B's

(Mortacye v Mortacye) OR 2. Not acting fairly between different classes of B's (Re Mulligan) - Life tenant/remainderman - Nestle v Nat West

Requirements of a fair decision – VBN v ARPA


Duty to keep accounts/inform B's: Must account for trust property and have accounts

prepared at time they are called for – otherwise preparation costs from own pocket

Further discussed under Right of B's to Trust Docs

Duties upon Termination: - Discharge ROI - Pay Creditors- Distribute to B's - May request release - Re Lost B's: seek direction from court/lost B's insurance

Defences: Breach of Trust

Breach of trust made out? T's jointly and severably liable

Does a limitation clause in trust instrument or statutory or equitable defence apply to reduce liability?

Defences: Exclusion clause in Trust Instrument

Note: Was there loss/damage or profit??

Did breaches fall within the exclusion clause? Irreducible core of trustees duties (Millet LJ in Armitage)Clause construed contra preferentum/ T bears burden of proof

(Hasluck J in Green)

Actual Fraud

Fraudulence

What do these terms cover?

Statutory Defences Re Investments (disussed earlier)

S 67 – Court has discretion to relieve T of liability where:

- T has acted honestly and reasonably and - ought fairly to be excused for the breach AND for

omitting to obtain directions of the Court

HC in Macedonian – trustee is meant to seek directions from court FIRST

Applies only to trustees

Defences: Equitable Defences

Usual equitable defences (revise Equity)

Consent: obtained before the breach Acquiescence: beneficiary going along with the breach

Ratification: more formal step which occurs after a breach

Beneficiaries must be sui juris. Beneficiaries must be fully informed as to the facts of the matter

and legal consequences of consent/release/acquiescence etc. Beneficiary need not benefit from giving consent. Consent may not be a complete defence – only a prima facie defence per

Sepllson v George.

RIGHTS OF TRUSTEES

Right to contribution from co-trustees Right of Indemnity (ROI):Equity S 36(2)

Has the ROI been excluded on the facts?In Vic – ROI can be altered by trust deed due to operation of s 2(3) per

Brooking J in RWG (cf. NSW position – Jonco)Exclusion – requires clear language (Lindley J in Hardoon)

What will T attempt to claim?

Rights of Trustees

ROI cont...

ROI extends only to properly incurred expenses Onus on B to show expenses were not properly

incurred (Nolan v Ollie)

The court will assess whether or not the expense was properly incurred by reference to the duty that the trustee was attempting to exercise (Ormiston J in Nolan v Collie) CF. NSWCA approach under which any expense incurred in carrying out trust may be properly incurred as long as it is not fraudulently incurred (ie, very little risk of losing ROI) per Gatsios NSWCA.

Rights of Trustees

CORPORATE TRUSTEE: S 197(1) of Corps Act might be applied to allow

the company to recover from the director if the trustee company has not and cannot discarge it's liability to its creditors (ss (a)) and the trustee company has no ROI due to either

(b)(i) breach of trust by the company(b)(ii) the company acted outside the scope of its

powers as trustee (b)(iii) a term of the trust denies/limits the trustee

company's ROI

Rights of Trustees

ROI qualified by breach of T? Brooking J in RWG

Rights of Trustees

ROI operates as charge over assets – preference over B's interests

Charge can pass to T's trustee in bankruptcy Trust creditor – right to subrogation unclear

whether this applies to general creditor (Re Enhill (Vic) cf Byrne NSW)

Rights of Trustees

ROI < Trust Fund: T can recover directly from fund

ROI > Trust Fund: Recover directly from fund and pursue rights gurther against the B's personally for remaining amount (Hardoon; JW Broomhead)

B's must be sui juris and absolutely entitled to the fund (Hardoon)

Rights of Trustees

Right to Approach the Court Order 54 of Supreme Court Rules

Cannot be limited by trust instrument

Beneficiaries' Rights Generally

Beneficiaries can enforce all duties owed by the trustee.

Right to possession of trust property Right to compel performance of the trust To restrain a breach of trust To approach the court To extinguish the trust

Right to Inspect Trust Documents

Held to be Trust documents: Documents touching on legal status or trust - Re Londonderry, Rouse Documents containing terms of trust deed (cf. Memo of wishes but note

Kirby J in Hartigan) Documents showing past distibution to B's (cf. Future) – Re Londonderry

per LJ HarmonHeld not to be trust documents: Internal deliberative documents (per LJ Harmon in Londonderry) Documents which are held by the trustee not as a trustee but for their own

purposes (per LJ Salmon in Londonderry) Cf LJ Harmon's decision which reflects the view that trust documents are documents that go towards the establishment of the trust and not documents that are only relevant to the ongoing decision making of the trust.

Importance of confidentiality (Hartigan Nominees)Memo of wishes normally attracts confidentiality w/o the need for express

words (cf. Kirby in Hartigan)

Right to Inspect Trust Docs

Different approaches/interpretations to right to inspect: 1. Right to inspect lined to proprietary interest CO in Londonderry

& Mahoney J in Hartigan2. Two judges (Kirby J & Sheller JA) of the COA in Hartigan noted that

the proprietary analysis applies easily to fixed interest trusts but issues arise when applying the rationale to objects of a mere power/discretionary trust. Noted certain LIMITATIONS which appear to have been adopted by Doyle CJ in Rouse who suggested test should be whether or not an old trustee would be required to pass on documents on to a new trustee if replaced and also explained that the right to inspect trust documents is a qualified right. Trustee may be able to refuse inspection of trust documents (per Dolye CJ in Rouse) if:

it is necessary to maintain confidentiality of the reasons for exercise of a discretion where B's have no right to access the reasons

if the documents were received in confidentiality if it is not in the interests of the beneficiaries as a whole

Right to inspect trust docs

3. The UK – different approach in Schmidt and in Breakspear – B's do not have a right to inspect but court may use their inherent jurisdiction to supervise administration of a trust to allow inspection. In deciding this, considerations in Rouse and Hartigan to be given attention

Position unclear HC DictaAttitude in Macedonian

Rights of B's

Rights to seek property and wind up trust: Rule in Saunders & Vautier – must be sui juris

and have asbolute, vested and indefeasible titleLimitations: - Outstanding ROI - Trust created by court order Settlor can avoid rule – see methods in Laycock v

Ingram One B entitled – others are not?

Rights of B's

To seek removal of the trustee: - provision in trust instrument?- trustee is dead, out of state or wants to be

discharged or is unfit to act per s 41 then continuing trustee can appoint new trustee

- it is expedient to appoint new trustee in terms of administration of the trust – s 48

- exercise of court's inherent jurisdiction Discretionary power

Remedies

Revise EquitySituations: Where there has been a profit Where there has been loss to trust fund

- misappropriation/misapplication by T - Conflict of interest/negligence/breach of

investment provisionsWhere there has been loss and profitProprietary remedies – tracing rules