Position in Malaysia

A variation has been made on an agreement intended to modify the current provisions of a
trust deed, but not to replace the existing trust entirely. Although the court does not have any
inherent general power to vary the terms of the trust deed, the court may, in certain situations,
approve the change. According to the Chapman v Chapman case, the court held that the
variation may be approved in its inherent jurisdiction. This includes, where a beneficiary
makes an application to vary a deed of trust to alter the nature of an infant’s property
interests, to pay maintenance out of accumulated income, to endorse a transaction with trust
property in order to ensure the survival of the trust or to carry into effect a compromise for
future beneficiaries.
There are four methods for how a trust can be varied in Malaysia. There are, the express
power to vary instrument, principle laid down in the case of Saunders v Vautier, inherent
jurisdiction and provision under Section 59 of the Trustee Act 1949.
In the case of Re Harari's Settlement Trust, the court held that the provision relating to
investment powers should be granted its usual sense without limitation with respect to the
express power to vary a trust as a means of variation. The dispute before the court relates to
the effect of a provision of the trust instrument on making investments as the trustee might
think fit.
In the other hand, the other form of variance followed in Malaysia is based on case law as
determined by the court in the case of Saunders v Vautier. In this case, it has been provided
that if a beneficiary with full legal ability is entitled to all the beneficial interest in the trust,
he or she may apply for the termination of the trust and the transfer of the properties, even if
the trust instrument allows the final payment of the capital to be delayed and spent in a
situation where there are many beneficiaries who are entitled together. In this case, the
testator, Vautier’s uncle, had left East India Stock in Trust for his nephew with the conditions
that the dividends were to be retained and subsequently, accumulated dividends and shares
had to be transferred to the petitioner when he obtained 25 years old. Before Mr. Vautier
reached the age of 25, he was about to get married and need the fund in order for him to
establish his own business. The Lord Chancellor had clearly decided that as Mr. Vautier had
obtained the aged of majority, thus, he was entitled to have trust terminated.
The other method of variance in Malaysia is that of inherent jurisdiction. This can further be
broken down into four small components, which are emergency, salvage, beneficiary
maintenance, and compromise. Maintenance and Compromise should be viewed as
exceptions to the requirement that the variation can only be made if it applies to trust
administration because the remoulding of advantageous interests involved these two inherent
jurisdictions. In the case of Re Collins, as regards the maintenance of the beneficiary, the
court permitted the trust to differ in order to distribute some money for the maintenance of
the beneficiary. In addition, Section 57 of the Trustee Act 1949 has specifically provided for
this amendment. In Chapman v Chapman, there was a conflict between beneficiaries causing
the court to remould the beneficial interest on the basis of the agreement.