Commonly trustees are appointed and removed pursuant to the terms of the deed of trust. Some trustees are happy to be removed, or retire of the own volition, others less so.
However, what of the trustees who are unable to elect to retire? What to do where a trustee has, for example, lost capacity, but cannot be removed as a trustee?
Both the Trustee Act 1956, s 51 and the High Court’s inherent jurisdiction provide for the appointment and removal of trustees. Where the court acts in accordance with its inherent jurisdiction a trustee can be removed and not necessarily replaced: In the Matter of the Borrich Family Trust.
In the event a trustee is removed and replaced by consent under s 51 of the Trustee Act, conditions attaching the appointment could be made by the Court in the exercise of its inherent powers within the Court’s supervisory jurisdiction over trusts: Eggink v Eggink. Note that in this case the appointment of trustee was as an “independent trustee”, which is somewhat curious given that there is no recognition of categories of trustee for trust law purposes.
When a trustee can no longer act as a trustee due the effects of dementia, the appropriate course of action is the removal of the trustee, and if necessary the appointment of a replacement trustee. Such applications can be made by way of originating application. However, it is important that there are no competing positions or interests. In the case of Neverman v Hudson the Court raised the question as to whether (given that all of the discretionary beneficiaries had consented to the application) the consent of “any issue of any final beneficiary” should also be required. In this regard the court decided that the consent of that class of beneficiary was not required.
Also see the following examples of recent applications on incapacity of a trustee:
Simultaneous vesting orders
It can be appropriate to also obtain vesting orders at the same time a trustee is removed and a new trustee appointed. See Neverman v Hudson where an originating application was made for the removal of an incapacitated trustee, the appointment of a new trustee and a vesting order in respect of the trust’s assets. Note that the court has regard to the fact that the application was uncontroversial in deciding whether to allow it to proceed byway of originating application. Also see Estate re Kett .
Where an appointment of trustee is made by an appointor who is subject to undue influence the appointment of trustee is void. The appointment of a trustee by executors of a will that is the product of undue influence will also be void. See Green v Green, Fisher & Ors
Refusal to act
A trustee who will not acquit the trustee’s responsibilities can be removed. See Wright v Wright.
Trustees of Friendly Societies can be removed in accordance with s 28(3) Friendly Societies Act 1909. See Pritchard v Evans
Where a trustee retires but will not complete the requisite formalities a vesting order can be required even if there is no dispute regarding the retirement. See re Kleiman
Whether a retiring trustee is entitled to its own costs in a proceeding where the trustee seeks discharge as a trustee depends on the circumstances of the case. See Attorney-General v Murdoch. As noted Cambridge Trustees Limited v Brandon as in general rule, a trustee is not to be deprived of its costs unless it has acted unreasonably.