INTRODUCTION TO THE TRUSTEE ACT 1949

➔ The substantive Malaysian trusts law is governed primarily by the equity jurisprudence
developed and administered over the centuries by the English Courts ▶ CONFIRMED by
S3 of Civil Law Act 1956.
➔ The Trustee Act 1949 is based almost exclusively on the English Trustee Act 1925.

➔ APPOINTMENT OF TRUSTEES
➔ The initial trustees
➔ May be referred as ‘first’ trustees or ‘original trustee’

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➔ A trustee must be someone who can hold property in his name at law or a company

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which specialise in acting as trustee
➔ Phua Chui Har v Amanah Raya Bhd
◆ Trustee is appointed by the creator of the trust (settlor) - who can best decide
who would be suitable trustees

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◆ The court will not inquire into the reasons for that particular appointment.
➔ The trust property must be vested in the trustee ▶ thus, they must have the capacity in
law to hold legal title to property; ie: of full age.
➔ Re Tempest (1866)

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◆ Principle governing appointment of trustee
● The wishes of the persons by whom the trust was created
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● The interest of all the beneficiaries as a whole
● The efficient management of the trust.
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➔ 3 factors to be consider
◆ Never choose a trustee who may favour one beneficiary at the expense of
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another
◆ The trustee so choose must advance the cause of the trust rather than impede it
◆ Person who appointed as trustee have to be within jurisdiction of the court ▶ The
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court is reluctant to appoint persons out of jurisdiction- Re Whitehead’s Will

Trusts Burke v Burke and Others
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➔ The court WILL NOT appoint a person who is;

◆ relative to one of the beneficiaries - Re Parsons
◆ relative whom was on bad terms with the testator -Re Tempest
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◆ Solicitors to either the trust or one of the beneficiaries -Re Spencer’s Settlement
Trust

➔ EXPRESS V IMPLIED
◆ It is common for the settlor to expressly name the initial trustee in the trust
instrument ▶ But, appointment may also take place impliedly.
● Paul v Constance
 ○ Statements by a man to his mistress that “the money in his bank
account was as much as hers as his” - were held to constitute a
declaration of an express trust with himself as trustee.
○ His self-appointment as trustee was implied from his statements
and all other surrounding circumstances.

➔ LIMITATION ON THE NUMBER OF TRUSTEES

➔ REFER S39 OF TA - shall not exceed 4
➔ Moey Yoke Lai v Ivan Ho Tiong Yin & 4 Ors
◆ The deceased has appointed 5 executors and trustees over her estate.

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◆ This contravened S4(1) of Probate and Administration Act 1959 and S39 of TA

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1949.
◆ The 5th def was removed as executor and trustee because the facts showed that
the first 4 def were the main persons who administered the deceased’s estate
and that 5th def did not play a prominent role in that regard.

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➔ It is generally UNWISE to appoint only 1 natural person as trustee = there will be
inherent risk of fraud or maladministration.
➔ S18(3) of TA = Disposition on trust for sale of land shall not be paid to or applied by the

corporation.
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direction of fewer than 2 persons as trustee, except where the trustee is a trust

➔ But it is generally unwise to appoint too many persons as trustees ▶ trustees are under
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duty to act unanimously = there is no need to appoint an odd number of trustees since
there is no question of trustees being able to act based on a majority decision.
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➔ TYPES OF TRUSTEE
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➔ ACCEPTANCE OF OFFICE
➔ The mere naming of a person as trustee in the trust instrument is not sufficient to legally
constitute that person as trustee ▶ That person MUST ACCEPT THE APPOINTMENT to
be legally constituted a trustee.
➔ The acceptance may be expressed or implied.
◆ Express = inter vivos trust ▶ taken place by the named trustee executing the trust
instrument that names him as trustee
● Can accept office by some other writing or oral (Doe d Chidgey v Harris)
● Oral expression of acceptance must be unequivocal - or else cannot bind
the trustee.

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◆ Implied = 2 ways;

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1. Trustee de son tort = when the person interferes or intermeddles with +
and acts without the authority of the properly constituted trustee ▶ trustee
in relation to trust property will be deemed to be a trustee impliedly.
2. A person named as executor and trustee in a will is deemed to be trustee

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if he proves the will and obtains probate thereof.

➔ Milroy v Lord

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◆ A trust is not properly constituted until the trust property is vested in the trustee.

➔ CONCLUSION: TO BE LEGALLY CONSTITUTED AS TRUSTEE, IT MUST FOLLOWS

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THAT;
◆ Must be named as trustee
◆ Trustee named must accept the appointment
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◆ The trust property is vested in him
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➔ FAILURE OF ORIGINAL APPOINTMENT

➔ Maxim = A trust will not fail for want of a trustee
➔ Where;
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◆ The trust instrument does not provide for the appointment of trustees; or
◆ All the trustees disclaim; or
◆ All the trustees either predecease the settlor or have died before the acceptance
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of the office
THE TRUST DOES NOT GENERALLY FAIL ▶ By operation of law - the property will
revest in the settlor or their personal representative in their capacity as trustees of the
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property - UNTIL REPLACEMENT TRUSTEES IS APPOINTED.

➔ Mallot v Wilson
◆ Fact: there were the named trustee of a settlement disclaimed
◆ The settlor then executed a deed declaring that the trust of the settlement had
failed due to the trustee’s disclaimer.
◆ Then, the settlor executed a 2nd trust deed which included the same property
that had been the subject of the earlier trust
◆ Held: when the trustee had disclaimed, the trust property had automatically
reverted to the settlor, it did not fail.
 ◆ The trust purported to be created in the 2nd trust deed was not effective.

➔ APPOINTMENT OF NEW TRUSTEES

1. Under S40 of TA (without a court order)
a. When is the power to appoint new trustees exercisable? ▶ When the original
trustee;-
i. Is dead (S40(8))
ii. Remains out of Msia for more than 12 months
1. Re Walker= the absence must be a continuous period of 12
months. If the trustee had returned for one week, then this

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provision cannot be applied.

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iii. Desires to be discharged from any of the trust conferred on him (eg:
retirement, etc)
iv. Refuses or is unfit to act = relates to some defend in character of the
trustee (eg: bankrupt, old age, disclaimer, etc)

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v. Is incapable of acting
1. Incapability of a dissolved corporate trustee = See S40(3)
2. Re East= refer incapable of acting in respect of the trustee of

vi.
unsound mind.
Is a minor
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b. Who may exercise the power? ▶ 3 Groups of persons = REFER S40(1)(a) & (b)

c. How is the power exercisable?

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i. S40 = must be in writing +
ii. When the power of appointment is not vested in the court, the person may
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make the appointment without the court’s assistance or approval.

1. Re Higginbottom = the court refuses to intervene when the
majority of the beneficiaries of a will trust sought to oppose an
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appointment made by the personal representatives of the last

surviving trustee.
2. However, if the person entitled to make such appointment seeks
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the court’s approval for such appointment, the court will then
enquire into the suitability of the intended trustee.
iii. 2 or more trustees CAN replace a single trustee, BUT a single trustee
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CANNOT be appointed to replace 2 trustees.

1. Adam Co International Trustees Ltd v Theodore Goddard
a. 2 trustees wished to retire.
b. The settlor makes a substitute appointment by executing a
deed appointing a corporation as sole trustee.
c. Held: a single trustee cannot replace the 2 trustees.
iv. S40 will be of no avail if there is no one who fits into the categories of
persons who are entitled to appoint new trustees under S40(1)(a) and (b).
2. Appointment by the Court
a. REFER S45 OF TAA
b. Re Tempest ▶ provides guidance as to when the court would exercise its
statutory power of appointment of trustees
i. The wishes of the settlor ▶ the court would not appoint a person “filling a
particular character” whose appointment was forbidden by the settlor.
ii. The interest of the beneficiaries ▶ the court would not appoint a person
who may have a bias in favour of some beneficiaries or who may have an
interest in opposition to some beneficiaries ▶ “every trustee is in duty
bound to look to the interests of all, and not of any particular member or

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class of members of his cestuis que trusts”

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iii. The effective administration of the trust ▶ the question to be considered by
the court = “whether his appointment will promote or impede
(menghalang) the execution of the trust, for the very purpose of the
appointment is that the trust may be better carried into execution”,

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➔ REMOVAL OF TRUSTEES
A trustee may be removed against his will in several ways;

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1. Under an express power in the trust instrument
a. Contained in the trust instrument = ▶ may expressly grant a power to the settlor
to remove 1 or more trustees = FIDUCIARY POWER
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b. Must be exercised in Bona fide to promote the interests of the beneficiaries
c. The settlor must strictly comply with the terms of such power when exercising it.
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2. Under S40(1) without a court order provided the trustee who has been removed is
replaced
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a. Refer S40(1)(a) and (b) - a trustee may be removed if he remains out of

Malaysia for more than 12 months; or refuses to act; or incapable to act; or is a
minor
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3. By a court order under S45(1) provided the trustee who is removed is replaced;
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a. The court may remove a trustee against his will when exercising its power to
appoint a new trustee in the prescribed circumstances.
b. Titterton v Oates
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i. The power to appoint in substitution for an existing trustee may be

intended to simply authorise the court to replace a trustee who has
resigned or is disqualified from continuing in that role.

4. By a court under the court’s inherent (natural) jurisdiction

a. In situation where a trustee cannot be removed with a replacement or against his
will ▶ the court may use its inherent jurisdiction if it is minded to remove a trustee
b. The inherent jurisdiction is based on the overarching duty of the court to see that
trusts are properly executed
c. The court may remove a trustee on application by the beneficiaries or of its own
volition during any proceedings before it.
d. To preserve the trust property + promote the interest of the beneficiaries whose
welfare is of paramount importance.

e. Re Wrightson, Wrightson v Cooke

i. The pff, who were some of the beneficiaries, applied to remove trustees
who had been guilty of breach of trust but had since remedied the breach.
ii. However, a large proportion of other beneficiaries opposed the application
for removal

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iii. Held: the court refused the application for their removal.

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iv. “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”
v. Is that so here, and is it for the welfare of the trust generally, and not

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merely of the pff, that these trustees should be removed? - the court
thinks it’s not for the welfare of the trust
vi. The trustees were undoubtedly guilty of breach of trust BUT the court
view that

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1. The trust was properly executed when they remedied the breach
2. A large proportion of beneficiaries oppose the removal of the
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trustee
3. The change of trustee will cause extra expenses and loss to the
trust estate
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vii. THUS, THE REMOVAL OF THE TRUSTEES WOULD NOT BE FOR THE
WELFARE OF THE BENEFICIARIES + NOT NECESSARY TO
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PROTECT THE TRUST ESTATE.

f. Scott v Scott
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i. 2 brothers Andrew and Martin, were the principal beneficiaries of a trust

created by their mother and eventually came to be the 2 trustees of the
trust.
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ii. The relationship between the brothers broke down and became hostile.
iii. Andrew applied to have Martin removed as trustee whilst Martin
counterclaimed to have Andrew removed.
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iv. Held: Andrew was removed as trustee on the ground Andrew’s hostility to
Martin has had and is continuing to have a deleterious effect on the
administration of the trust.
v. Andrew’s attitude throughout the proceeding including the allegation that
he has made which have proved unfounded have convinced me that
Andrew’s hostility is affecting the welfare of the beneficiaries.
5. Death
a. The trust CAN STILL be administered
b. REFER S23 OF TA = provides for the surviving trustee to continue performing
the trust.
c. Even though a person ceases to be a trustee on his death, his estate may remain
subject to liabilities incurred during his trusteeship.

6. Disclaimer of the office (refusal/denial)

a. A trustee may disclaim the office to serve as trustee at any time BEFORE the
acceptance of office.

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b. Disclaimer is NOT POSSIBLE AFTER the acceptance of office

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c. Re Martinez’ Trusts = Once disclaimed ▶ CANNOT retain the legal title to the
trust property (As to the WHOLE property, cannot only to the part of the property)
d. No formal instrument is necessary to effect disclaimer - but
e. A disclaimer by deed is convenient and proper to furnish evidence of such

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disclaimer
f. Can also disclaim in court in legal proceedings relating to the trust

➔ RETIREMENT OF TRUSTEES

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➔ Retirement by a trustee discharges him from future responsibility and liability under the
trust
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➔ However, a retired trustee remains liable for breaches of trust occurred during his
trusteeship ▶ unless he is released from liability by all beneficiaries and all of whom
must be sui juris and who must be aware of all material facts
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➔ 5 ways to retire;
1. Under an express power in the trust
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a. A settlor may make provision in the trust instrument allowing a trustee to retire
upon such terms as may be set out in the trust instrument.
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2. Without a court order under S40(1) provided the retiring trustee is replaced by a
new trustee
a. If no new trustee is appointed to replace, then the trustee continues in office.
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3. By a court order under S43(1) without a new appointment

a. A trustee may be discharged from a trust without appointing new trustee but must
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fulfil certain conditions;

i. The trustee must declare in writing that he is desirous of being discharged
ii. Either a trust corporation or at least 2 individuals remain as trustees to
perform the trust
iii. His co-trustee must consent to his discharge in writing and to the trust
property being vested in the remaining trustees.
b. The trustee’s retirement must be voluntary ▶ The court may set aside the
retirement if it is shown to have been induced by undue influence.
 c. Daniel v Drew =
i. Facts: a trustee had been persuaded by her nephew to retire in writing.
ii. Held: the court set aside the retirement of the trustee on the grounds of
undue influence by her nephew.

4. With the consent of all beneficiaries without a court order

a. A trustee may retire if all the beneficiaries who are of full age and are sui juris
consent to his retirement.

5. By a court order under S45 provided the trustee is replaced or under the court’s

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inherent jurisdiction without replacement.

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