1. REMOVAL OF TRUSTEES
The purpose of this paper is to examine the circumstances under which a Court will order the
removal of a trustee.
Obviously such an application to the Court must be brought by a party with standing to do so.
Under the provisions of the various State acts regulating the administration of trusts this
person is invariably a person interested beneficially in the estate the subject of the trust. A
beneficiary, although there are circumstances where an application may be brought by a
trustee or some other person concerned with the proper administration of the trust estate.
Issues of standing aside, the focus of this paper is the considerations which are relevant to the
Court exercising its discretion in the face of an application to remove a trustee.
POWER OF REMOVAL
The various state acts concerned with the administration of trusts confer power on the
Supreme Courts of the several States and Territories to deal with the removal of trustees. The
power is fairly uniformly couched in language of substitution as opposed to the express
removal of a trustee and the statutory provisions speak to some circumstances where the
Court will exercise its discretion in favour of substitution although not all jurisdictions set out
the same factors.
In Queensland for instance the relevant provision is section 80 Trusts Act 1973 which
provides in sub-section (1) that...
The court may, whenever it is expedient to appoint a new trustee or new
trustees, and it is found inexpedient, difficult or impracticable to do so
without the assistance of the court, make an order appointing a new trustee
or new trustees either in substitution for or in addition to any existing
trustee or trustees, or although there is no existing trustee.
Sub-section (2) provides guidance as to how that discretion is exercised as follows:
...the court may make an order appointing a new trustee in substitution for
a trustee who desires to be discharged, or who is convicted of a crime or
misdemeanour, or is a bankrupt, or is a corporation that is under official
management or is in liquidation or has been dissolved, or who for any other
reason whatsoever appears to the court to be undesirable as a trustee.
In New South Wales the relevant provision is section 70 Trustee Act 1925 which sets out in
simpler steps in subsections (1) and (2) that the Court has the power and in what
circumstances the power may be exercised as follows:
(1) The Court may make an order for the appointment of a new trustee or new
trustees either in substitution for or in addition to any existing trustee or trustees,
or although there is no existing trustee.

2. (2) The appointment may be made whenever it is expedient to appoint a new
trustee or new trustees, and it is inexpedient difficult or impracticable so to do
without the assistance of the Court.
Sub-section (3) then provides guidance as to the factors informing the exercise of the
discretion conferred.
(3) In particular and without prejudice to the generality of any other provision of
this section, the Court may make an order for the appointment of a new trustee in
substitution for a trustee who is convicted of a serious indictable offence, or is a
bankrupt, or being a corporation is in liquidation or is dissolved.
In Victoria the relevant provision is section 48 Trustee Act 1958 which confers the power to
appoint additional or substitute trustees in sub-section (1).
The Court may, whenever it is expedient to appoint a new trustee or new trustees,
and it is found inexpedient difficult or impracticable so to do without the
assistance of the Court, make an order appointing a new trustee or new trustees
either in substitution for or in addition to any existing trustee or trustees, or
although there is no existing trustee.
And having conferred the power goes on later in sub-section (1) to give guidance as to how
the discretion is to be exercised.
In particular and without prejudice to the generality of the foregoing provision,
the Court may make an order appointing a new trustee in substitution for a trustee
who is convicted on indictment of any offence, or is a patient within the meaning
of the Mental Health Act 2014, or is a bankrupt, or is a corporation which is in
liquidation or has been dissolved.
In South Australia the relevant section is section 36 Trustee Act 1936 which sets things out in
a more structured way:
(1) The Supreme Court may, on the application of a person referred to in
subsection (1c), make—
(a) an order removing one or more of the trustees of a trust; or
(b) an order replacing one or more of the trustees of a trust; or
(c) an order appointing a trustee or trustees, or an additional trustee
or trustees, of a trust; or
(d) any other order that in its opinion is necessary or desirable.
(1a) The Court may make the order if it is satisfied that the order is
desirable—
(a) in the interests of the persons (whether identified or not) who are
to benefit from the trust; or

3. (b) to advance the purposes of the trust.
(1b) There is no need for the Court to find any fault or inadequacy on the
part of the existing trustees before making an order under this section.
(1c) The following persons may apply for an order under this section:
(a) the Attorney-General; or
(b) a trustee of the trust; or
(c) a beneficiary of the trust; or
(d) in the case of a trust established wholly or partly for charitable
purposes the following persons may apply for an order in
addition to those referred to in the other paragraphs of this
subsection:
(i) a person who is named in the instrument establishing the
trust as a person who is entitled to, or may, receive money
or other property for the purposes of the trust; or
(ii) a person who is named in the instrument establishing the
trust as a person who must, or may, be consulted by the
trustees before distributing or applying money or other
property for the purposes of the trust; or
(iii) a person who in the past has received money or other
property from the trustees for the purposes of the trust; or
(iv) a person of a class that the trust is intended to benefit; or
(e) any other person who satisfies the Court that he or she has a
proper interest in the trust.
In Western Australia the relevant provision is section 77 Trustees Acct 1962 which provides
for the power of the Court to order the substitution of trustees in sub section (1) and gives
guidance as to the factors affecting the exercise of the discretion in sub-section (2).
In particular, and without limiting the generality of the provisions of subsection
(1), the Court may make an order appointing a new trustee in substitution for a
trustee who —
(a) desires to be discharged; or
(b) has been held by the Court to have misconducted himself in the
administration of the trust; or
(c) is convicted of an indictable offence; or

4. (d) is a person of unsound mind; or
(e) is bankrupt; or
(f) is a corporation that has ceased to carry on business, or is in
liquidation, or has been dissolved.
The Australian Capital Territory in section 70 Trustee Act 1925 adopts structured approach
similar to that of South Australia.
(1) The Supreme Court may, on application by a relevant person or on its
own initiative, make 1 or more of the following orders in relation to a
trust:
(a) an order removing a trustee;
(b) an order replacing a trustee;
(c) an order appointing a trustee, or an additional trustee.
(2) The Supreme Court may make any other order in relation to the trust the
court considers appropriate.
(3) The Supreme Court may make an order under this section only if
satisfied the order is appropriate—
(a) in the interests of the people (whether or not identified) who are
to benefit from the trust; or
(b) to advance a purpose of the trust.
(4) The Supreme Court need not find a fault or inadequacy on the part of a
trustee before making an order under this section.
(5) Each of the following is a relevant person to make an application under
subsection (1) in relation to a trust:
(a) the Attorney-General;
(b) a trustee of the trust;
(c) a beneficiary of the trust;
(d) for a trust established completely or partly for charitable
purposes—
(i) a person named in the instrument establishing the trust as
someone who must, or may, be consulted before the

5. distribution or use of property (including money) for the
purposes of the trust; or
(ii) a person who has received property (including money)
from the trustees for the purposes of the trust; or
(iii) a person in a class of people the trust is intended to
benefit;
(e) a person who satisfies the Supreme Court that the person has a
relevant interest in the trust.
The Northern Territory provides in sub-section (1) of section 27 Trustee Act.
The Supreme Court may, whenever it is expedient to appoint a new trustee or new
trustees, and it is found inexpedient, difficult, or impracticable so to do without the
assistance of the Court, make an order for the appointment of a new trustee or
new trustees, either in substitution for or in addition to any existing trustee or
trustees, or although there is no trustee. In particular, and without prejudice to the
generality of the foregoing provision, the Court may make an order for the
appointment of a new trustee in substitution for a trustee who is found guilty of
treason or felony, or has been adjudicated insolvent or made an assignment or
composition or arrangement with his creditors under any Act in force in that
behalf, and may remove such last-mentioned trustee.
In Tasmania the relevant statutory power comes from section 32 Trustee Act 1898 which in
subsection (1) provides
The Court may, whenever it is expedient to appoint a new trustee or new trustees,
and it is found inexpedient, difficult, or impracticable so to do without the
assistance of the Court, make an order for the appointment of a new trustee or
new trustees either in substitution for or in addition to any existing trustee or
trustees, or although there is no existing trustee. In particular and without
prejudice to the generality of the foregoing provision, the Court may make an
order for the appointment of a new trustee in substitution for a trustee who is
convicted of a crime of such a nature that the Court considers he should be
removed; or who is bankrupt, or is incapable, by reason of mental disorder, of
exercising his functions as trustee.
So, as can be seen from these provision each jurisdiction grants the Court a broad statutory
power to substitute trustees but the focus appears in most jurisdictions to be on the mental and
financial sturdiness of the individual trustee with the factors listed in the guiding provisions
focussed on mental and financial capacity and dealing with the consequences of conviction for
indictable offences and findings of positive misconduct.
Queensland is a little more expansive in its guidance with the addition of the “...who for any
other reason whatsoever appears to the court to be undesirable as a trustee.” discretion.
Importantly many of the provisions do not require positive findings of wrongdoing in order to
enliven the discretion.

6. In addition to the statutory jurisdiction to make orders removing trustees the Courts have the
inherent jurisdiction to make such orders with a broad range of discretionary factors informing
the exercise of the jurisdiction. See for example Porteous v Reinhart (1989) 19 WAR 495 at
p.507
“...the court has an inherent jurisdiction to remove trustees...”
The application in Porteous v Reinhart was brought under the Western Australian Trustees
Act referred to above.
THE DISCRETION
The remedy is, of course, discretionary both by the words of the various statutes conferring
jurisdiction. Without exception the statues are cast in terms of “the Court may...”.
The Court’s inherent jurisdiction in relation to the appointment or dismissal of trustees from
office is essentially an equitable remedy and as such the Court has a broad discretion in
exercising this jurisdiction. As broad as the discretion is it is exercised with great care.
Indeed in Letterstedt v Broers (1884) 9 AC 371 at 387 Lord Blackburn referred to the
jurisdiction to remove a trustee in the following terms which should illustrate just how
reluctant the Courts are to wade in and remove a trustee
“In exercising so delicate a jurisdiction as that of removing trustees...”
THE EXERCISE OF THE DISCRETION
Firstly, where there is positive misconduct by the trustee with respect to trust property or
amounting to an abuse of trust the Courts will more readily step in, however, the trustee
enjoys a great latitude and a broad indemnity such that in cases of neglect or omission short of
positive misconduct the discretion will not always be exercised to remove.
The passage at s.1289 of Story – Equity Jurisprudence appears in many of the judgments
dealing with applications of this kind across various State and Territory jurisdictions:
“But in cases of positive misconduct, Courts of Equity have no difficulty in
interposing to remove trustees who have abused their trust; it is not indeed every
mistake or neglect of duty, or inaccuracy of conduct of trustees; which will induce
Courts of Equity to adopt such a course. But the acts or omissions must be such as
to endanger the trust property or shew a want of honesty, or a want of proper
capacity to execute the duties, or a want of reasonable fidelity”
This passage was cited by Lord Justice Blackburn in Letterstedt v Broers (supra) and his
Lordship went on to say
“It seems to their Lordships that the jurisdiction which a Court of Equity has no
difficulty in exercising under the circumstances indicated by Story is merely
ancillary to its principal duty, to see that the trusts are properly executed. This
duty is constantly being performed by the substitution of new trustees in the place
of original trustees for a variety of reasons in non-contentious cases. And

7. therefore, though it should appear that the charges of misconduct were either not
made out, or were greatly exaggerated, so that the trustee was justified in
resisting them, and the Court might consider that in awarding costs, yet if satisfied
that the continuance of the trustee would prevent the trusts being properly
executed, the trustee might be removed. It must always be borne in mind that
trustees exist for the benefit of those to whom the creator of the trust has given the
trust estate.”
In exercising the discretion to remove a trustee the Court will have been persuaded that
“...either that the trust property will not be safe, or that the trust will not be
properly executed in the interests of the beneficiaries.”
Re Wrightson [1908] 1 Ch 789 at 803 per Warrington J
In Miller v Cameron [1936] 54 CLR 572 the applicable discretionary considerations were
described by Dixon J as follows:
“The jurisdiction to remove a trustee is exercised with a view to the interests of
the beneficiaries, to the security of the trust property, and to an efficient and
satisfactory execution of the trusts and a faithful and sound exercise of the powers
conferred upon the trustee. In deciding to remove a trustee the court forms a
judgment based upon considerations, possibly large in number and varied in
character, which combine to show that the welfare of the beneficiaries is opposed
to his continued occupation of the office. Such a judgment must be largely
discretionary. A trustee is not to be removed unless circumstances exist which
afford sound ground upon which the jurisdiction may be exercised.”
Accordingly it is apparent that the Court considers four [4] considerations to be high on the
list when exercising its discretion, these are:
 the welfare of the beneficiaries;
 the security of the trust property;
 the efficient and satisfactory execution of the trusts; and
 the faithful and sound exercise of the powers conferred upon the trustee.
Of course where a discretionary trust is the subject of the dispute and the beneficiaries do not
have a vested interest in the trust property but only an interest in the due administration the
welfare of the beneficiaries gives way to the welfare of the trust estate as a whole. See for
example Guazzini v Pateson (1918) 18 SR (NSW) 275 per Street CJ
“In considering the interests of the beneficiaries, I have to consider the interests
of all, not those of the plaintiff only, and I have to ask myself whether the facts
disclosed in the case establish that it is for the welfare of the trust estate as a
whole that the trustees should be removed.”
In the context of considering discretionary trusts then the concepts of the welfare of the
beneficiaries and the welfare of the trust estate are effectively the same thing.

8. The welfare of the beneficiaries has been said to be the “touchstone” of the exercise of the
discretion – See Brereton J at [10] Welker v Reinhart (No.10) [2012] NSWSC 1330, “the
dominant consideration” – See Latham CJ at p.575 in Miller v Cameron (supra) and “the only
guide” – See Starke J at p.579 in Miller v Cameron (supra).
In Guazzini v Pateson Street CJ in Eq considered what the welfare of the beneficiaries meant.
In the context of that case the trust from which the trustee was sought to be removed was a
discretionary trust. His Honour said:
“In considering the interests of the beneficiaries, I have to consider the interests
of all, not those of the plaintiff only, and I have to ask myself whether the facts
disclosed in the case establish that it is for the welfare of the trust estate as a
whole that the trustees should be removed.”
Clearly the Court will approach the question of the welfare of the beneficiaries from a global
viewpoint. This is consistent with the approach long taken by Courts that the Court will not
remove a trustee for the mere caprice of an individual beneficiary or without reasonable
cause. See for example O’Keeffe v Calthorpe (1739) 26 ER 12.
Indeed a Court will not necessarily order the removal of a trustee even when all of the
beneficiaries are supportive of the application. See for example Re Brock Bank [1948] Ch
206 and Guazzini v Pateson (supra).
The welfare of the beneficiaries goes hand in glove with the efficient and proper
administration of the trust estate. In this regard it is appropriate to recall the words of Lord
Blackburn in Letterstedt v Broers (supra)
“It must always be borne in mind that trustees exist for the benefit of those to
whom the creator of the trust has given the trust estate.”
Conduct prejudicial to the proper and effective administration of the trust estate has attracted
the exercise of the discretion
Consistent with the fact that the office of trustee is an office the discharge of which casts upon
a trustee a fiduciary duty not to cause the trustee’s personal interest to conflict with the
interests of the beneficiaries for whose benefit the trustee holds the trust property the Court
has viewed conflict of interest and duty as a significant consideration in determining whether
the trustee is capable of discharging his office for the benefit of the beneficiaries, efficiently
and effectively.
As with all fiduciary duties it is not a question of balancing the trustee’s interest against that
of the beneficiary but of eschewing the trustee’s interest in favour of the beneficiary’s interest
As with the acts and omissions of trustees in the administration of trust property it is not every
situation of conflict of interest or potential conflict of interest that will attract the exercise of
the discretion to remove a trustee.
Where the conflict of duty and interest give rise to a circumstance where the trust
property might suffer or there arises a situation of such acrimony that the efficient and

9. expeditious administration of the trust estate is prejudiced then the Court will generally
intervene to remove the trustee.
Circumstances of sufficient conflict of interest and acrimonious relationships between trustees
and beneficiaries as have justified removal of the trustee by the court were explored by
McMillan J in Wales v Wales [2013] VSC 569.
The Court has been persuaded that a trustee is not a satisfactory trustee by reason of
unwarranted delay in the administration of the estate particularly where that delay has
benefitted the trustee as was the case in:
Fysh v Coote [2000] VSCA 150 where the executrix was removed due to the delay
occasioned by her getting in the primary asset of the estate, a unit which she herself wanted to
acquire from the estate and in which she had been living rent-free. The delay was premised
on requiring one of the other beneficiaries to account for moneys had from the deceased
during his lifetime. The Court found that the requirement to account was an irrelevant pre-
condition to the realisation of the unit property and distribution of the proceeds, removed the
executrix and ordered that she account to the estate for the unpaid rental.
Manocchio v Wilson [2012] VSC 76 where the executor was the occupant of the primary asset
of the estate and despite agreeing to pay rent had not thus depriving the other beneficiaries of
the benefit of the income from the property. Further the executor was conflicted as to whether
to accept an offer to purchase the property – a circumstance which worked in his favour to the
detriment of the beneficiaries by allowing him to remain in occupation without paying rent.
Certainly the focus in these cases was the prejudice to the proper and timely administration of
the trust estates the prolongation of which was occasioned by the conflict of interest and duty
in the trustee.
In Hoxha v Hoxha (unreported, Supreme Court of Victoria 22 September 1975 per Jenkinson
J) His Honour took the view that unfitness
“...may be satisfied by demonstrated incapacity to perform the duties of the
executorial office within a reasonable time and it may be satisfied by
demonstrated unwillingness to perform those duties within a reasonable time.”
Conflicts of interest resulting in other than delay in the due administration of the estate have
also resulted in the removal of trustees for example the conflict between the duty of the
trustee who also asserts himself to be a creditor of the estate as was the case in Monty
Financial Services Ltd v Delmo [1996] 1VR 65 where the executor/trustee was charged with
accepting or rejecting his claim as a creditor on the estate and was thus charged with assessing
his own credibility and trustworthiness in his claim against the estate.
Situations of conflict of interest which have not resulted in the removal of the trustee include
where the trustee has recognised the conflict and taken steps to insulate the estate from its
consequences. An example of such a situation arose in Porteous v Reinhart where the issue
was whether the estate or a trustee personally was the owner of property. The trustee in those
circumstances agreed to abide the order of the Court as to the ownership of the asset avoiding
the consequences of the conflict of interest.

10. Similarly even though a conflict of interest arose between a trustee and the beneficiaries by
reason of the sale of trust property to a trustee in McKenna v Lowe (1878) 1 SCR (NSW) Eq
10 the transaction had been occasioned by a mistake and no immediate threat to the trust
property could be identified.
So with conflicts of interest as with circumstances of acrimony between the trustees and the
beneficiaries the focus is on the real and practical effect of those circumstances on:
 the welfare of the beneficiaries either themselves or by reason of its impact on
the trust estate or;
 the welfare of the beneficiaries as dictated by their right to and interest in a just
and expeditious administration of the trust estate.
In Wales v Wales itself the trustees were called to provide an account and during the course of
the preparation of the books of account discovered that one of the beneficiaries (since
deceased) had been underpaid income to which she was entitled during her lifetime. This
resulted in a debt by the estate to the estate of the now deceased beneficiary. The trustees
were trustees of both estates.
The Court found that the trustees found themselves in a conflict of interest situation with
actual consequences for the estates in that the trustees were required to judge their own
truthfulness in relation to contested transactions which needed to be assessed on their merits.
This placed the trustees in the position of being both claimant and adjudicator on the merits of
the disputed transactions.
In summing up the discretionary considerations as to the removal of trustees His Honour
McMillan J stated at paragraph [83]
“In exercising the jurisdiction to remove trustees, the general rule and guiding
principle is the welfare of the beneficiaries. Such a judgment is largely
discretionary.”
His Honour’s analysis of the relevant historical discussions of the application of the principle
show that the Court approaches the concept of the welfare of the beneficiaries in a wholistic
manner assessing their interest from the perspective of individual and class interests and in
having the trust estate preserved, if not maximised then optimised and properly and
expeditiously administered.
The cost of the appointment of new trustees was raised as an impediment to the exercise of
the discretion to remove the existing trustees to which His Honour remarked at para [119]
“Insofar as it was contended that the appointment of an independent trustee would
encompass a further financial cost, I accept that this would be the case because a
new trustee would need to familiarise himself or herself with the many issues. The
litigation thus far has already been costly. Although there will be extra cost in the
appointment of a new trustee, it may still be less than if the trustees were to
remain in their position. A new trustee will bring independence and objectivity
that are lacking at present to the issues. A new trustee might also assist in

11. resolving the issues by agreement or, at least, by substantially narrowing the
issues.”
SEQUELAE
The costs of the parties to the litigation loom large in considering whether or not to bring an
application to remove the trustee of a trust. Where there has been no positive misconduct by
the trustee it may be the case that bringing the application is a case of ‘burning the village to
save the village’ this is due to the general indemnity enjoyed by trustees for the costs of trust
related litigation properly brought or defended and that even if successful the ultimate fund
from which the costs of the parties will be paid is the trust itself.
In Wales v Wales the ultimate costs order (after an appeal of the original costs order)
was that
(a) The [Trustees] pay the [Beneficiaries’] costs of the proceeding;
(b) The [Trustees] be indemnified as to these costs from the trusts; and
(c) All parties be entitled to their costs to be paid out of the trusts on a solicitor-
client basis to 31 March 2013 and on the standard basis thereafter.
Per McMillan J Wales v Wales (No.3) [2015] VSC 151
This result will not always be the case particularly where there is some misconduct on the part
of the trustees. One such example is found in Saffron v Cowley & Anor; Estate of Saffron
[2012] NSWSC 1108
1. ...
2. Order that the [Trustees] pay the [Beneficiaries’] costs of the
proceedings number 305017 of 2011 on the indemnity basis and
without recourse to the assets of the Estate.
3. ...
4. Order that the Registrar provide to the Attorney-General for the
purposes of his considering what, if any, steps should be taken in the
interests of Eligible Charities in relation to the Marshin Trust, a copy of
these reasons for judgment, when available, together with the affidavits
and exhibits, read on this applicationand the application dealt with on 6
August 2012.
5. ...
In the final analysis whether or not to apply to remove a trustee other than for positive
misconduct is a question of economics and careful cost-benefit analysis.