DEFINITION OF A TRUST

A trust is an equitable obligation binding a person (eg: a trustee) to deal with property over
which he has control (eg: the trust property) for the benefit of persons (eg: the beneficiaries, of
whom the trustee may himself be one), any one of whom may enforce the obligation.
Difference between trust and power:
 Trust: the trustee is under a duty to act in accordance with the terms of the trust deed and
should he fail to act, any potential beneficiary may apply to the court and force the trustee to
act. The trustee is under an equitable obligation to exercise his power in favour of the
beneficiaries in accordance with the terms of the trust and the court will see to it that the
terms of the trust are carried out.

 Power: basically, a power of appointment gives the donee of the power the right to allocate
property (which he does not himself own) in such manner as he may direct. A power of
appointment is discretionary and should the donee not exercise it, the objects of the power
(i.e potential beneficiaries) can do nothing, nor can the court force the donee of the power to
act. If there is no gift over in default of the power of appointment, then there will be a
resulting trust in favour of the donor’s estate.

REQUIREMENT OF A VALID TRUST

3 requirements:
i. 3 certainties: intention, subject matter, object [refer Equity 1 notes]

ii. Formalities:
Under the English law, evidence in writing is necessary to create a trust in respect of land-
Law of Property Act 1925 (England), Section 53(1)(b). In West Malaysia, an oral declaration
is sufficient. Where statute of Fraud continues to be relevant, no action could be sustained
unless the agreement, or some memorandum or note thereof is in writing and signed by
lawfully authorized. Lee Pek Choo v Ang Guan Yan [1975] 2 MLJ 146 (Sarawak)

iii. Capacity of parties:

 Settlor: s.3 of Wills Act 1959;
 Trustee: capable of owning property; Able to deal with the property;
 Beneficiary:
APPOINTMENT OF TRUSTEES

Initial Appointments
The general rule is that any person capable of holding property in law could be made a trustee. It
is for the settler/testator to decide the basis on which a person is chosen. In Phua Chui Har v
Amanah Raya, the court is under no duty or obligation to determine the reason for the
deceased’s appointment of the defendant as the trustee of her estate. Besides, the trust
instrument may specify someone to appoint the trustee. The settler may also reserve for
him/herself the power of appointment. A person could also be a trustee by implication of law,
exemplified by resulting trusts or by operation of law, as illustrated by constructive trusts.
Furthermore, where the trust instrument/the will makes no provisions for the appointment of
trustees, the court will make the necessary appointments in order to save the trust because equity
will not allow a trust to fail for want of trustees. There is one exception to this: it will not apply
where, as explained by Buckley J in Re Lysaght “if it is of the essence of the trust that the trustee
selected by the settler and no one else shall act as the trustees of it and those trustees cannot/will
not undertake the office, the trust will fail.” This means that where the settler has expressly stated
that no one else should be the trustee apart from the ones he had chosen, and those trustees
cannot/will not undertake the office, the trust will fail.

Subsequent Appointments
The subsequent appointment of trustees may be made in a number of ways:

Pursuant to express provision

The trust instrument/the will may contain express provisions for the subsequent appointments of
trustees; nevertheless, this is unnecessary given the statutory power that exists for the purpose
under the TA 1949.
 Pursuant to s.40 of TA 1949
S.40(1) makes provisions in respect of the appointment of new/additional trustees in the
following circumstances, namely when the trustee:
a) dead,
b) out of M’sia for 12 months,
c) doesn’t want to be trustee anymore,
d) refuse or unfit to act (incapable individuals eg mental illness, old age and infirmity,
bankruptcy
e) incapable of acting (corporations) refer s.40(3)
f) minor
Where a trustee has been removed pursuant to power conferred by the trust instrument, s.40(2)
provides that a new trustee/trustees may be appointed subject to the number of trustees as
provided under the Act.

Pursuant to power of court

For the purpose of appointing new/additional trustees under s.40(1), the power may be exercised,
in writing, by the following persons as provided under s.40(1)(a) and (b).
i. S.40(1)(a): by the instrument
ii. S.40(1)(b): by the surviving/continuing trustees/trustee for the time being/personal rep of last
surviving trustee
In the case of sole trustee, not being a trust corporation, that is or has been originally appointed
to act in a trust, or where there are not more that 3 trustees in any trust and none being a trust
corporation, refer s.40(6). It is also not obligatory to appoint any additional trustee save where
the trust instrument/any written law provides to the contrary, nor shall the number pf trustees
exceeds 4 by virtue of any such appointments.
iii. Appointment by Court
- Under s.45(1)(a)(b) TA 1949
- Re Tempest: in this case, the principles governing appointment of trustees are;
 The court will have regard to the wishes of the persons by whom the trust has been
created, if expressed in the instrument creating the trust, or clearly be collected from it
 The court will not appoint a person interested under the trust, in opposition either to the
wishes of the testator or to the interest of the other cestuis que trust… it is of the essence
of the duty of every trustee to hold an even hand between the parties interested under a
trust
 The court in appointing a trustee will have regard to the question, whether his
appointment will promote/impede the execution of the trust, for the very purpose of the
appointment is that the trust may be better carried into execution.
 In Re Tempest, one of the 2 appointed trustees in a family settlement predeceased the
testator. Those with whom the power of appointment were vested could not reach a
consensus on a selection. One Mr.Petrie was named for the purpose but this was objected by
a beneficiary on the ground that it was the testator’s wish to exclude the same. The court held
that he should not be appointed given the testator’s wish as well as the likelihood of his bias
to the prejudice of some beneficiaries.

RETIREMENT OF TRUSTEES
Express provision
The trust instrument may make specific provisions in respect of the retirement of trustees.

Statutory provision
- S.40(1) TA
- S.43(1) TA

Consent of all beneficiaries

A trustee who secures the consent of all the beneficiaries who are of full age and sui juris
(meaning: of legal age and capable of managing one’s own affairs; independent) may retire.

Court order
- S.45 TA

REMOVAL OF TRUSTEES
Express provision
The trust instrument may contain express provisions authorizing the removal of trustees.

Statutory Powers
- S.40(1) TA
- S.45 TA
- Q: May a trustee be removed when the court appoints a new trustee/trustees under this
section? This matter was considered by the Supreme Court of the Australian Capital
Territory in Titterton v Oates, in respect of s.70 of the TA 1925 which reads: (1) the court
may make an order for the appointment of a new trustee/ees either in substitution for or in
addition to any existing trustee/ees, or although there is no existing trustee; (2) the
 appointment may be made whenever it is expedient to appoint a new trustee/ees, and it is
inexpedient difficult or impracticable so to do without the assistance of the Court.

Court’s inherent power

In addition to statutory powers, the court enjoys an inherent jurisdiction to remove trustees in the
execution of the trust. This inherent power, available it may be, has been used cautiously. More
is required than a mere friction between the trustees and the beneficiaries to justify the removal
of trustees. In Re Wrightson, it was said that “you must find something which induces the court
to think either that the trust property will not be safe or that the trust will not be properly
executed in the interest of the beneficiaries.”
In Titterton v Oates, consequent upon the death of Mr.Titterton, his daughter (1st df) became the
sole trustee of his estate. Her sister (pf) applied to have the 1st df removed as trustee on account
that she had not distributed income efficiently, that she was guilty of a conflict of interest and
that she had failed to understand the nature of the discretion conferred in dealing with the 2nd df,
a brother who was intellectually disabled. To the argument that the court ought not to exercise
the discretion to remove the 1st df since the father must have come to a considered conclusion in
appointing her, the court agreed that this factor was relevant; that the consideration nevertheless
ought not to be taken as limiting the courts’ jurisdiction for primacy must be given to the welfare
of the beneficiaries. On the evidence, the court found the following considerations to be
particularly relevant:

(1) that the trusts had not been executed in a efficient and satisfactory manner;
(2) that the 1st df did not appear to fully appreciate that she was to make judgment about
the extent to which income and capital were to be applied to promote the welfare and
happiness of the brother;
(3) that emotions attributable to family conflict would colour the exercise of her
discretion in respect of the provisions to the brother;
(4) that the brother might reasonably fear that the 1st df’s judgment may be influenced by
self interest, including concern for the interest of the 1st df’s children;
(5) that there exists appreciable risk that future breaches of trust would take place;
(6) the family relation would be clouded with bitterness and suspicious.

The general law is that breaches of trust may or may not lead to removal. There is no rule of law
that a breach would necessarily result in a removal. Halsbury’s Laws of Malaysia puts the law
this way: “The court will remove a trustee where he refuses to execute the trust, or has
mismanaged the trust or has disqualified himself by circumstances or conduct from continuing to
hold the office and may perhaps do so if his continuance in office would be likely to be
detrimental to the trust owing to his being out of sympathy with its objects or with the
beneficiaries. However, a trustee will not be removed against his will on account of a pecuniary
embarrassment which has ceased to exist and which does not appear to have imperiled the
interest of the beneficiaries. When a trustee is removed, he is usually ordered to pay the costs of
his removal.”

Besides, the test of Sir Owen Dixon in Miller v Cameron states that jurisdiction must be
exercised with a view of the following:
(1) interest of all the beneficiaries;
(2) the security of the trust property;
(3) the efficient and satisfactory execution of the trusts;
(4) faithful and sound exercise of the trustee’s power.

Death
- S.23(1) TA
- S.40(1) TA

Disclaimer of Trusteeship
A person nominated as a trustee is under no obligation to accept the trusteeship, and he/she may
thus disclaim it. On the other hand, once he/she has accepted the office, there can be no
disclaimer, as stated in the case of Re Lister. Disclaimer of trusteeship can be done by:
(1) Deed
(2) Oral application
(3) Inference by conduct

NUMBER OF TRUSTEES
- S.39 TA