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Trustee

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  • Property such as royalties and copyrights should be converted in the interest of the remainderman : if not it will have no value at all.
  • A beneficiaries is entitled only to see and inspect accounts. It is common to provide a copy for each beneficairies. Information : Trustee must have a ready supply of up to the date information.
  • If someone entitled to it come forward to establish their claim, they may do so within the period of limitation either against the person wrongly paid or against the property itself.
  • If a potential claimant did not file a claim in accordance with the notice, his right to follow the property into the hands of any person or person is not prejudiced
  • Transcript

    • 1. 06/14/1306/14/13 Equity & Trust II (Dr. Zuraidah Ali)Equity & Trust II (Dr. Zuraidah Ali)POWER & DUTIES OFPOWER & DUTIES OFTRUSTEETRUSTEE
    • 2. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)LEARNING OBJECTIVESLEARNING OBJECTIVES Students will be able to know;Students will be able to know;1)1) What are power and dutiesWhat are power and duties2)2) Power to sell trust propertyPower to sell trust property3)3) Power to insure.Power to insure.4)4) Power to compound liabilitesPower to compound liabilites5)5) Power to maintenance and advancementPower to maintenance and advancement6)6) Duty to protect trust assets : investmentDuty to protect trust assets : investment7)7) Duties towards beneficiaries.Duties towards beneficiaries.8)8) Duty to distribute.Duty to distribute.
    • 3. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)IntroductionIntroduction Equity equips trustees with;Equity equips trustees with; i) numbers of powersi) numbers of powers ii) imposes a range of duties.ii) imposes a range of duties. All these may be modified or excluded byAll these may be modified or excluded byexpress terms in the instrument.express terms in the instrument. Need to know the differences between trustNeed to know the differences between trustand power as similar distinction exists relatingand power as similar distinction exists relatingto duties and power of trustee.to duties and power of trustee.
    • 4. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) The general principle:The general principle: Trustees have discretion as to whether or not theyTrustees have discretion as to whether or not theywill exercise a power.will exercise a power. If after a proper consideration they decide on goodIf after a proper consideration they decide on goodfaith not to exercise, beneficiaries will not be allowedfaith not to exercise, beneficiaries will not be allowedto complain.to complain. Duties and powers vary according to the character ofDuties and powers vary according to the character ofthe trust.the trust. Some kinds of power are in principle widely availableSome kinds of power are in principle widely availableto trustee – most are now statutory and serve toto trustee – most are now statutory and serve tofacilitate the management of trust.facilitate the management of trust.
    • 5. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)PowerPower Trustee is under an obligation to invest theTrustee is under an obligation to invest thefunds in authorised securities according to thefunds in authorised securities according to thepowers given by the trustee instruments orpowers given by the trustee instruments orunder the Trustee Actunder the Trustee Act Other power;Other power;- sale of trust property- sale of trust property-provision for infant beneficiaries-provision for infant beneficiaries-power of appointment-power of appointment
    • 6. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)DutiesDuties Certain fundamental duties arising from fiduciary nature ofCertain fundamental duties arising from fiduciary nature oftrustee, eg; duty of loyalty & duty not to make personal profittrustee, eg; duty of loyalty & duty not to make personal profitout of trust property.out of trust property. Duties may also be modified by the trust instrumentDuties may also be modified by the trust instrument Other type of duties;Other type of duties;- Duty to maintain custody of documents titleDuty to maintain custody of documents title- Duty to investDuty to invest- Duties towards beneficiariesDuties towards beneficiaries- Duty to provide informationDuty to provide information- Duty to maintain equality between beneficiaries,Duty to maintain equality between beneficiaries,- Duty to make proper distribution.Duty to make proper distribution.
    • 7. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Sale of Trust propertySale of Trust property Power to sell some or all trust property isPower to sell some or all trust property isusually given by the trust instrument .usually given by the trust instrument . In exercising their power of sale, trustee dutyIn exercising their power of sale, trustee dutyis obtain the best price on behalf ofis obtain the best price on behalf ofbeneficiariesbeneficiaries Fry v Fry (185() 28 LJ Ch 591Fry v Fry (185() 28 LJ Ch 591 The executors/trustees were liable to make up,The executors/trustees were liable to make up,out of their own pocket money, the differenceout of their own pocket money, the differencebetween selling price and the offer ofbetween selling price and the offer of £900.£900.
    • 8. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Section 16 of Trustee Act 1049.Section 16 of Trustee Act 1049.Power of trustees for sale to sell by auction, etc.Power of trustees for sale to sell by auction, etc. (1) Where a trust for sale or a power of sale of property is(1) Where a trust for sale or a power of sale of property isvested in avested in a trusteetrustee, he may sell or concur with any other, he may sell or concur with any otherperson in selling all or any part of the property, either subjectperson in selling all or any part of the property, either subjectto prior charges or not, and either together or in lots,to prior charges or not, and either together or in lots, by publicby publicauction or by private contractauction or by private contract, subject to any such conditions, subject to any such conditionsrespecting title or evidence of title or other matter as therespecting title or evidence of title or other matter as thetrusteetrustee thinks fit, with power to vary any contract for sale, orthinks fit, with power to vary any contract for sale, orto rescind any contract for sale and to resell, without beingto rescind any contract for sale and to resell, without beinganswerable for any loss.answerable for any loss. (2) A trust or power to sell or dispose of land includes a trust(2) A trust or power to sell or dispose of land includes a trustor power to sell or dispose of part thereof, whether the divisionor power to sell or dispose of part thereof, whether the divisionis horizontal, vertical, or made in any other way.is horizontal, vertical, or made in any other way.
    • 9. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)s17. of Trustee Act 1949.s17. of Trustee Act 1949.Power to sell subject to depreciatory conditions.Power to sell subject to depreciatory conditions. (1) No sale made by a(1) No sale made by a trusteetrustee shall be impeached by any beneficiary uponshall be impeached by any beneficiary uponthe ground that any of the conditions subject to which the sale was madethe ground that any of the conditions subject to which the sale was mademay have been unnecessarily depreciatory, unless it also appears that themay have been unnecessarily depreciatory, unless it also appears that theconsideration for the sale was thereby rendered inadequate.consideration for the sale was thereby rendered inadequate. (2) No sale made by a(2) No sale made by a trusteetrustee shall, after the execution of the conveyance,shall, after the execution of the conveyance,be impeached as against the purchaser upon the ground that any of thebe impeached as against the purchaser upon the ground that any of theconditions subject to which the sale was made may have beenconditions subject to which the sale was made may have beenunnecessarily depreciatory, unless it appears that the purchaser was actingunnecessarily depreciatory, unless it appears that the purchaser was actingin collusion with thein collusion with the trusteetrustee at the time when the contract for sale wasat the time when the contract for sale wasmade.made. (3) No purchaser, upon any sale made by a(3) No purchaser, upon any sale made by a trusteetrustee, shall be at liberty to, shall be at liberty tomake any objection against the title upon any of the grounds aforesaid.make any objection against the title upon any of the grounds aforesaid. (4) This section applies to sales made before or after the commencement of(4) This section applies to sales made before or after the commencement ofthisthis ActAct..
    • 10. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Power to InsurePower to Insure Trustees are under no duty to insure the trustTrustees are under no duty to insure the trustproperty.property. They will not be liable for failure to insure ifThey will not be liable for failure to insure ifsubsequent damage or loss occurs.subsequent damage or loss occurs. Unless the power to insure is stated in anyUnless the power to insure is stated in anyexpress provision in the trust instrument.express provision in the trust instrument.
    • 11. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)S24 of the Trustee Act 1949.S24 of the Trustee Act 1949.Power to insure.Power to insure. (1) A(1) A trusteetrustee may insure against loss or damage by fire anymay insure against loss or damage by fire anybuilding or other insurable property to any amount, includingbuilding or other insurable property to any amount, includingthe amount of any insurance already on foot, up to the fullthe amount of any insurance already on foot, up to the fullvalue of the building or property, and pay the premiums forvalue of the building or property, and pay the premiums forthe insurance out of the income thereof or out of the income ofthe insurance out of the income thereof or out of the income ofany other property subject to the same trusts without obtainingany other property subject to the same trusts without obtainingthe consent of any person who may be entitled wholly orthe consent of any person who may be entitled wholly orpartly to the income.partly to the income. (2) This section does not apply to any building or property(2) This section does not apply to any building or propertywhich awhich a trusteetrustee is bound forthwith to convey absolutely to anyis bound forthwith to convey absolutely to anybeneficiary upon being requested to do so.beneficiary upon being requested to do so.
    • 12. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Power to compound liabilitesPower to compound liabilites A trustee is a legal owner.A trustee is a legal owner. A trustee has the right to maintain an actionA trustee has the right to maintain an actionwith regards to the trust property.with regards to the trust property. In the case of a legal claim, only the trusteeIn the case of a legal claim, only the trusteewill be able to suewill be able to sue In pursuit of legal claims trustee need to use itsIn pursuit of legal claims trustee need to use itsdiscretion : litigation is a risky businessdiscretion : litigation is a risky business Section 19 of the Trustee Act 1949.Section 19 of the Trustee Act 1949.
    • 13. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Power of Maintainance andPower of Maintainance andAdvancementAdvancement Very appropriate to family type-investmentVery appropriate to family type-investment The object is usually meant for infantThe object is usually meant for infantbeneficiaries (under 18) who are not yetbeneficiaries (under 18) who are not yetentitled to income or capital BUT requireentitled to income or capital BUT requirefinancial support during their minorityfinancial support during their minority Payment by way of maintenance are paymentsPayment by way of maintenance are paymentsout of income for necessities. Eg : educationout of income for necessities. Eg : education Payment by way of advancement are sumsPayment by way of advancement are sumsadvanced from the capitaladvanced from the capital
    • 14. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) PART III of the Trustee Act 1949 deals withPART III of the Trustee Act 1949 deals with General powers of trustees and personalGeneral powers of trustees and personalrepresentatives, maintenance, advancementrepresentatives, maintenance, advancementand protective trusts.and protective trusts. Section 36. Power to apply income forSection 36. Power to apply income formaintenance and to accumulate surplus incomemaintenance and to accumulate surplus incomeduring a minority .during a minority . Section 37 : Power of AdvancementSection 37 : Power of Advancement Permits the trustee to pay capital sums toPermits the trustee to pay capital sums tobeneficiary some time before he is entitled tobeneficiary some time before he is entitled toclaim : for the advancement and benefit ofclaim : for the advancement and benefit ofbeneficiarybeneficiary
    • 15. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Trustee and the investment of trustTrustee and the investment of trustfunds in authorised investmentfunds in authorised investment A trustee is under a duty to invest trust moneyA trustee is under a duty to invest trust moneyin his handsin his hands To invest : to employ money in purchase ofTo invest : to employ money in purchase ofanything from which interest or profit isanything from which interest or profit isexpected.expected.
    • 16. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Matters to be considered in investingMatters to be considered in investingtrust propertytrust property The interest of life tenantThe interest of life tenant To act fairly between beneficiariesTo act fairly between beneficiaries Investments must produce income andInvestments must produce income andmaintain capitalmaintain capital
    • 17. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Power to invest.Power to invest. 1) Trust instrument : incorporates wide power1) Trust instrument : incorporates wide powerof investmentof investment 2) Statutory Provisions :2) Statutory Provisions : - range of investments is very restrictive- range of investments is very restrictive - Section 4 – 15 of the TA- Section 4 – 15 of the TA 3) By the court3) By the court
    • 18. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) Although investment is considered as power but theAlthough investment is considered as power but theduty lies upon the trustee to continue protecting theduty lies upon the trustee to continue protecting thetrust assets i.e through investment.trust assets i.e through investment. Gen principle : Once assets are in, they must beGen principle : Once assets are in, they must beprotected and an important aspect is the selection ofprotected and an important aspect is the selection ofproper investment.proper investment. Divided to two:Divided to two:a)a) Trustee have a general duty to act fairly as betweenTrustee have a general duty to act fairly as betweenbeneficiariesbeneficiariesb)b) Limitations on the making of risky investmentLimitations on the making of risky investment
    • 19. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)i) Failure to invest amount toi) Failure to invest amount tobreach of trustbreach of trust Amounts to Breach of TrustAmounts to Breach of Trust Cases :Cases : 1)1) Tan Soo Lock v Tan Ger Choo (1930 )Tan Soo Lock v Tan Ger Choo (1930 )SSLR 109SSLR 109 : It is a breach of trust to leave trust: It is a breach of trust to leave trustfund lying and was not invested.fund lying and was not invested. 2)2) In Re Tan Tye Deceased (1963) 29 MLJIn Re Tan Tye Deceased (1963) 29 MLJ373373 : The trustee fixed the trust fund in the: The trustee fixed the trust fund in thebank account. It is a breach of trustbank account. It is a breach of trust
    • 20. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)ii) Discretion in matter ofii) Discretion in matter ofinvestmentinvestment Trustee can choose where to invest.Trustee can choose where to invest. They have to exercise the discretion asThey have to exercise the discretion as ““ an ordinary prudent man of business wouldan ordinary prudent man of business wouldtake in managing single affairs on its own. Buttake in managing single affairs on its own. Buthe can not choose speculative invstmenthe can not choose speculative invstment
    • 21. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) Speight v Gaunt (1993) 9 AC 1Speight v Gaunt (1993) 9 AC 1 Act honestlyAct honestly Must take into account while managing theMust take into account while managing theaffairs ;affairs ; ““ all those precautions which an ordinaryall those precautions which an ordinaryprudence man of business would take inprudence man of business would take inmanaging similar affairs of businessmanaging similar affairs of business
    • 22. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) Followed by Bartlett v Barclays bank TrustFollowed by Bartlett v Barclays bank TrustCo Ltd (1980 ) Ch 515Co Ltd (1980 ) Ch 515 Bank is the trusteeBank is the trustee Beneficiaries : the settlor’s family and issueBeneficiaries : the settlor’s family and issue Bank on the advise of the merchant bankersBank on the advise of the merchant bankersinvested into two projects : one was sucessfulinvested into two projects : one was sucessfuland the other was not.and the other was not. Held :Bank was liableHeld :Bank was liable
    • 23. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) The bank as trustee was bound to act inThe bank as trustee was bound to act inrelation to the shares and to the controllingrelation to the shares and to the controllingposition which they conferred in the sameposition which they conferred in the samemanner as a prudent man of business.manner as a prudent man of business.
    • 24. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) 2 ways:2 ways: If facts come to his knowledge which tell himIf facts come to his knowledge which tell himthe company’s affairs are not conducted asthe company’s affairs are not conducted asthey should be, he will take appropriate actionthey should be, he will take appropriate action What the prudent man of business will not doWhat the prudent man of business will not dois to content himself with the receipt of suchis to content himself with the receipt of suchinformation on the affairs of the company as ainformation on the affairs of the company as ashareholder ordinarily receives at annualshareholder ordinarily receives at annualmeetingmeeting
    • 25. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) Re Whitely (1886) 33 Ch. D 347Re Whitely (1886) 33 Ch. D 347 Lindley LJ : the standard required of a trustee inLindley LJ : the standard required of a trustee inexercising his power of investment is that he must “exercising his power of investment is that he must “take such care as an ordinary prudent man would taketake such care as an ordinary prudent man would takeif he were minded to make an investment for theif he were minded to make an investment for thebenefit of other people for whom he felt morallybenefit of other people for whom he felt morallybound to provide.”bound to provide.”
    • 26. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)iii) Trustee’s personal views andiii) Trustee’s personal views andinvestmentinvestment Trustee may have a strong health, social andTrustee may have a strong health, social andpolitical view.political view. What is important is the interest of the trustWhat is important is the interest of the trustproperty and beneficiaries.property and beneficiaries. Trustee will have to invest althoughTrustee will have to invest althoughinvestment may contradict his personal viewsinvestment may contradict his personal views
    • 27. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) COWAN V SCARGILL (1985) CH 270COWAN V SCARGILL (1985) CH 270 Megarry VC : they must exercise their powers in theMegarry VC : they must exercise their powers in thebest interest of present and future beneficiaries.best interest of present and future beneficiaries. If the purpose of the trust was the provision ofIf the purpose of the trust was the provision offinancial benefit, the best interest of the beneficiariesfinancial benefit, the best interest of the beneficiariesnormally meant their best financial interest. Thenormally meant their best financial interest. Theduties to the beneficiaries was paramount. The trusteeduties to the beneficiaries was paramount. The trusteemust exercise their powers so as to yield the bestmust exercise their powers so as to yield the bestreturn, putting aside personal interest and social andreturn, putting aside personal interest and social andpolitical viewspolitical views
    • 28. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)DUTIES OF TRUSTEE ASDUTIES OF TRUSTEE ASFIDUCIARYFIDUCIARY Not to take renumeration as trustee-directorNot to take renumeration as trustee-director Not to purchase trust propertyNot to purchase trust property Not to compete with trustNot to compete with trust
    • 29. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Duties towards beneficiaries.Duties towards beneficiaries.1)1) Duty to maintain equalityDuty to maintain equality2)2) Duty to render account and informationDuty to render account and information3)3) Duty to distributeDuty to distribute
    • 30. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)DUTY TO MAINTAIN EQUALITYDUTY TO MAINTAIN EQUALITYBETWEEN BENEFICIARIESBETWEEN BENEFICIARIES There are 2 sets of beneficiaries:There are 2 sets of beneficiaries: 1) life tenant1) life tenant 2) remainderman : those who inherit after the2) remainderman : those who inherit after thedeath of tenant for lifedeath of tenant for life Need to strike a balance between the provisionNeed to strike a balance between the provisionof income for the life tenant and preservationof income for the life tenant and preservationof capital for the remainderman.of capital for the remainderman.
    • 31. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) Tenant for life takes all the incomeTenant for life takes all the income The remainderman’s interest is in the capital.The remainderman’s interest is in the capital. So long as those rules are observed, a trustee isSo long as those rules are observed, a trustee isusually under no duty to rearrange investmentusually under no duty to rearrange investment– to balance equality.– to balance equality. If not, they the trustee will have the duty toIf not, they the trustee will have the duty toconvert or reinvest in authorised investmentsconvert or reinvest in authorised investmentsdepends on the terms of the trust.depends on the terms of the trust.
    • 32. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) HOWE V EARL OF WARMONTH (1802) 7HOWE V EARL OF WARMONTH (1802) 7VES JR. 137.VES JR. 137. The rule is that the direct conversion of anThe rule is that the direct conversion of anasset to take place where there is no directionasset to take place where there is no directionin trust instrument.in trust instrument. Need to follow certain conditions;Need to follow certain conditions;a)a) Trust must be created by willTrust must be created by willb)b) There must be at least two beneficiaries areThere must be at least two beneficiaries areentitled to successionentitled to succession
    • 33. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) 3) Property consist of residuary personalty3) Property consist of residuary personalty 4) The assets are vesting revisionary or of an4) The assets are vesting revisionary or of anunauthorised characterunauthorised character There is no contrary intention in the will.There is no contrary intention in the will.
    • 34. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) In other words trustee should convert all partsIn other words trustee should convert all partsof trust which consist of future revisionaryof trust which consist of future revisionarynature or unauthorised securities intonature or unauthorised securities intoauthorised investments,authorised investments,
    • 35. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)DUTY TO RENDER ACCOUNTDUTY TO RENDER ACCOUNTAND INFORMATIONAND INFORMATION Account :Account : The trustee must keep accounts and beThe trustee must keep accounts and beconstantly ready to produce them for theconstantly ready to produce them for thebeneficiariesbeneficiaries Information :Information : Beneficiary are entitled to be informed aboutBeneficiary are entitled to be informed aboutmatters currently affecting the trust.matters currently affecting the trust.
    • 36. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Halsbury’s Laws of MalaysiaHalsbury’s Laws of Malaysia Vol 5 at p 720:Vol 5 at p 720: ““A trustee must furnish to a beneficiary, or to a personA trustee must furnish to a beneficiary, or to a personauthorised by him, on demand, information or the means ofauthorised by him, on demand, information or the means ofobtaining information as to the mode in which the trustobtaining information as to the mode in which the trustproperty or his share in it has been invested or otherwise dealtproperty or his share in it has been invested or otherwise dealtwith, and as to where it is and full accounts respecting it,with, and as to where it is and full accounts respecting it,whether the beneficiary has a present interest in the trustwhether the beneficiary has a present interest in the trustproperty or only a contingent interest in remainder, or is onlyproperty or only a contingent interest in remainder, or is onlyan object of a discretionary trust. If the trustee neglects or failsan object of a discretionary trust. If the trustee neglects or failsto do so, he is liable for the costs of proceedings to compelto do so, he is liable for the costs of proceedings to compelproduction of information or accounts. He must also allow aproduction of information or accounts. He must also allow abeneficiary to inspect the trust accounts and all documentsbeneficiary to inspect the trust accounts and all documentsrelating to the trust, and has a duty to explain to a beneficiaryrelating to the trust, and has a duty to explain to a beneficiarywhat his rights are.” (Quoted in the case ofwhat his rights are.” (Quoted in the case of DR CHAN CHINDR CHAN CHINCHEUNG PLAINTIFF v CHAN CHAK CHEUNG and others[2005] 2CHEUNG PLAINTIFF v CHAN CHAK CHEUNG and others[2005] 2CLJ 405 )CLJ 405 )
    • 37. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)Unclear as to disclosureUnclear as to disclosure RE LONDONERY’S SETTLEMENT [1965]RE LONDONERY’S SETTLEMENT [1965]Ch 918Ch 918 Trustees bought a summons to determine theTrustees bought a summons to determine thenature and extent of their duties in relation tonature and extent of their duties in relation todisclosures.disclosures. COA defined what kind of trust documentsCOA defined what kind of trust documentsthat a beneficiary had a right to see.that a beneficiary had a right to see.
    • 38. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) Salmon LJ : The categories of trust documentSalmon LJ : The categories of trust documentcould not be defined. They have however thesecould not be defined. They have however thesecharacteristic in common.characteristic in common. 1) They are documents in the possession of the1) They are documents in the possession of thetrustees as trusteetrustees as trustee 2) Contain information about the trust which2) Contain information about the trust whichthe beneficiaries are entitled to knowthe beneficiaries are entitled to know 3) Beneficiary have a proprietary interest in3) Beneficiary have a proprietary interest inthe documents and accordingly are entitled tothe documents and accordingly are entitled tosee them.see them.
    • 39. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) ““If any parts of a document containIf any parts of a document containinformation which beneficiaries are notinformation which beneficiaries are notentitled to know, I doubt whether such part canentitled to know, I doubt whether such part canbe truly said to be integral part of a trustbe truly said to be integral part of a trustdocument.”document.”
    • 40. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)DUTY TO DISTRIBUTEDUTY TO DISTRIBUTE Failure to distribute is a Breach of TrustFailure to distribute is a Breach of Trust If the trustee made payment to person notIf the trustee made payment to person notentitled, the beneficiary can take action toentitled, the beneficiary can take action torecover the payment backrecover the payment back The only limitation in the case is as regards toThe only limitation in the case is as regards tobona fide purchaser for value without notice :bona fide purchaser for value without notice :Ministry of Health v Simpson [1951] AC 251Ministry of Health v Simpson [1951] AC 251
    • 41. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) If the trustee is not clear on his duty the trusteeIf the trustee is not clear on his duty the trusteemaymay 1) Seek direction from the court1) Seek direction from the court 2)Made payment to the Court2)Made payment to the Court 3)Benjamin Orders3)Benjamin Orders 4) Advertisement.4) Advertisement.
    • 42. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)BENJAMIN ORDERSBENJAMIN ORDERS Taken from the case of In Re Benjamin [1902]Taken from the case of In Re Benjamin [1902]723723 The court has power to authorise distributionThe court has power to authorise distributionof the whole of assets although not allof the whole of assets although not allbeneficiaries or creditors have madebeneficiaries or creditors have madethemselves known so as to be ablethemselves known so as to be able A typical situation is where the whereabouts ofA typical situation is where the whereabouts ofcertain beneficiary is not knowncertain beneficiary is not known The procedure is known as Benjamin OrderThe procedure is known as Benjamin Order
    • 43. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali) RE GREEN’S WILL TRUST [1985] 3 All ERRE GREEN’S WILL TRUST [1985] 3 All ER455455 Testatrix left her property to her son providedTestatrix left her property to her son providedthat it should go to charity if he did notthat it should go to charity if he did notclaim.The son had disappeared on a bombingclaim.The son had disappeared on a bombingraid in 1943 but the mum believed that he wasraid in 1943 but the mum believed that he wasnot dead.not dead. Benjamin order was made.Benjamin order was made.
    • 44. 06/14/13 Equity & Trust II (Dr. Zuraidah Ali)AdvertisementAdvertisement Section 32 of the Trustee ActSection 32 of the Trustee Act To protect themselves form BOT failure toTo protect themselves form BOT failure todistribute.distribute. Trustee(s) may advertise in the Gazette andTrustee(s) may advertise in the Gazette andother notices including notices outsideother notices including notices outsideMalaysia.Malaysia. Those who are interested should make theirThose who are interested should make theirclaim and he should be given 2 months to sendclaim and he should be given 2 months to sendin their particulars.in their particulars.

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