Topic 14 slides - Trustees and Beneficiaries(1).pptx -...

Equity & Trusts 70517
Topic 14:
Trustees and Beneficiaries

Equity & Trusts 70517
Topic 1 - History and Nature of Equity
Topic 2 - Unconscionable Dealing and Undue Influence
Topic 3 - Introduction to Estoppel/ Proprietary Estoppel
Topic 4 - Promissory Estoppel
Topic 5 - Equitable Interests in Property/ Equit’l Assignment of Property
Topic 6 - Equitable Assignment of Property
Topic 7 - Fiduciary Obligations
Topic 8 - Accessorial Liability for Breach of Fiduciary Duty or Trust
Topic 9 - Tracing/ Account of Profits
Topic 10 - Equitable Compensation
Topic 11 - Constructive Trusts
Topic 12 - Resulting Trusts
Topic 13 - Express Trusts
Topic 14 - Duties, Powers, Rights and Liabilities of Trustees; Rights of
Beneficiaries

Topic 14 – Trustees and Beneficiaries
Equity & Trusts 70517
LECTURE SUMMARY:
A: APPOINTMENT RETIREMENT AND REMOVAL
B: RIGHTS OF TRUSTEES
C: DUTIES OF TRUSTEES
D: POWERS OF TRUSTEES
E: NATURE OF BENEFICIAL INTERESTS
F: RIGHTS OF BENEFICIARIES
G: BENEFICIARY’S REMEDIES FOR BREACH OF TRUST

Topic 14 – Trustees and Beneficiaries
Equity & Trusts 70517
INTRODUCTION
The duties, rights, powers and liabilities of trustees in
NSW are regulated by:
•
The terms of the trust instrument/ deed;
•
Equitable principles;
•
Trustee Act 1925 (NSW).

Topic 14 – Trustees and Beneficiaries
Equity & Trusts 70517
A: APPOINTMENT RETIREMENT AND REMOVAL
Appointment:
•
Trustees are appointed under the terms of the original instrument or pursuant
to a power in it for the appointment of new trustees by third party.
•
A trust will not fail for want of a trustee: Trustee Act s 70.
Removal:

Reasons for removal may include: being unfit for office; acting in a way inimical
to the trust: McLauchlan v Prince [2002] WASC 274; trustees fundamentally
misunderstand their duties and responsibilities; conflict of interest; incapable
of acting eg bankruptcy; disappearance.

Dominant consideration - interests of beneficiaries: Hancock v Rinehart [2015]
NSWSC 646 at [118]-[336].

Mere fact of disagreement with beneficiaries insufficient grounds for removal
Re Brockbank; Ward v Bates [1948] Ch 206, nor beneficiaries wishes.

Topic 14 – Trustees and Beneficiaries
Equity & Trusts 70517
B: RIGHTS OF TRUSTEES

Right of indemnity

Right of Contribution

Right to directions from the court

Topic 14 – Trustees and Beneficiaries
Equity & Trusts 70517
B: RIGHTS OF TRUSTEES
Introduction
 A trustee is personally liable in respect of debts incurred in carrying on the
business of a trust because the trust has no legal identity .

A trustee’s debts incurred in running the trust are his personally, so that if not
paid, the trustee may be bankrupted or the corporate trustee put into
liquidation.

Creditors have no direct proprietary claim against the trust assets – the
proceedings must be brought against the trustee.

Topic 14 – Trustees and Beneficiaries
Equity & Trusts 70517
B: RIGHTS OF TRUSTEES
Right of indemnity

Trustee has a right to be indemnified for expenses and liabilities
property incurred in the administration of the trust.