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TRUSTEES DUTY

TO KEEP ACCOUNT
PRESENTED BY
NUR AMALINA BINTI
MUHAMAD
012012110222
SITI NURLIYANA BINTI AZIZAN
012012110221
SUBJECT :
EQUITY AND TRUST II
DLW 3053

INTRODUCTION
One

of the most important mechanisms in a trust is the


trustee. Trustees have a lot of duties. Among the most
important duties are duty to act in accordance with trust deed,
duty on appointment, duty to convert, duty to apportion, duty
to distribute, duty to provide information to beneficiaries, duty
to keep account, and duty to not delegate his duties. All of
these duties are protected and govern by the statutes, legal
principles, decided cases and legal maxims.
In Malaysia, trustee duty to keep or render account is not
stated in the statute. However, it is back by the decided cases.
In all of this cases, it clearly state that it is important; it is the
trustee duty to keep account on all the transaction that occur
within the trust. Trustees are required by law to keep and
maintain accurate accounts. The accounts must be made
available for the beneficiaries inspection on demand. The
beneficiaries have the power to check and inspect the accounts
keep by the trustees pertaining to the matter of the trust.

INTRODUCTION

Trustees are obliged to account to beneficiaries concerning the


administration of trust assets. This obligation includes, firstly,
maintaining documents and records concerning the trust and
transactions implicating it and, secondly, making information about
the trust and its transactions available to beneficiaries.
It may be argued that trustees have failed in their duty to keep
accurate records if they do not keep sufficiently detailed minutes in
support of the basis for their decisions. This may be because the duty
to account:

requires trustees not simply to maintain records but requires those


records to be a sufficient and accurate reflection of the transactions in
which the trustees have been involved and minimalistic minutes may
offer insufficient explanation of the basis or nature of those
transactions, and/or
may extend further than making available documents that provide
direct evidence as to the accuracy of the financial statements or trial
balance made available by the trustees to the beneficiaries.

CASES
Pearse v Green (1819) the court state
that the first duty of an accounting party
whether an agent, trustee, a receiver or an
executor to be constantly ready

In

with his accounts.

It is important
that at the end of every transaction that
take place in the trust, it must be recorded
in the accounts.

CASES
Chan Chin Cheung v Chan Chak
Cheung [2005], the plaintiff was one of the
beneficiaries of an estate. The defendants
were the trustees. At all material times the
defendants resided in Singapore. The plaintiff
was not satisfied with the defendants '
conduct of the affairs of the estate. So he filed
an action in the KL High Court to obtain an
order for an investigative audit of the
accounts of the estate. The court held that a
trustee is obliged to render accounts of the
trust property to a beneficiary.

In

CASES
Shorga

SDN BHD v Amanah Raya BHD,


this case is a part of much bigger case which
involves the late Raja Nong Chik will. Although
the big famous case was a dispute between the
first and second wife family, but this case were
disputed on the ground of trustee duty on the
duty to keep accounts. It was argued that the
account that were kept by defendant contain
the element of fraud. The court held that, the
trustee has the duty to keep legitimate real
accounts that is free from fraud and must be
made available at the beneficiaries need.

PROVISIONS
Section

27 does not particularly state that it


is the duty of the trustee to keep account,
however, section 27 (4) did state that the
trustee from time to time have the
discretionary power to take the accounts of
the trust property to be inspected or
audited or examined by an independent
accountant. Here it shows that though it is
not particularly mention in the statute, the
trustee must keep account of all transaction
that occurred within the trust property.

EXPLANATION

Halsbury's Laws of Malaysia Vol 5, the author state


that "A trustee must furnish to a beneficiary, or to a
person authorized by him, on demand, information or
the means of obtaining information as to the mode in
which the trust property or his share in it has been
invested or otherwise dealt with, and as to where it is
and full accounts respecting it, whether the beneficiary
has a present interest in the trust property or only a
contingent interest in remainder, or is only an object of
a discretionary trust. If the trustee neglects or fails to
do so, he is liable for the costs of proceedings to compel
production of information or accounts. He must also
allow a beneficiary to inspect the trust accounts and all
documents relating to the trust, and has a duty to
explain to a beneficiary what his rights are."

EXPLANATION

"One of the remedies available against the


personal representative of a deceased person for
those seeking information about the deceased
person's estate is to be supplied with an account
of it. It is the imperative duty of the personal
representative to keep proper accounts from the
time he begins to administer the estate so as to
render proper account to any beneficiary who
demands
the
same
throughout
the
administration of the estate."

CONCLUSION
It is required by law for trustees to keep accounts of
the trust property. This is because managing a
property that does not belong to us is a very tough
job. It requires patient and honesty which nowadays
not everyone possesses. Keeping account on the trust
property shows all the transaction that the property
undergo.
The reason behind this duty is to protect the trustees
itself. If there were any doubt on the transaction on
the trust property or miscommunication, the accounts
keep will speaks for itself. The court will take it as
evidence. It can help clear the trustees name.

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