Grade: A+ Course Prize Winner
Power of court to appoint new trustees
Download 0.79 Mb.
|
- Navigate this page:
- Rights and powers of new trustees
- Power of new trustees to transfer stock or chose in action
- New trustees in place of persons convicted of indictable offence
- Persons who may apply for orders
- Old trustees not discharged from liability
Power of court to appoint new trustees31 If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees. Rights and powers of new trustees32 The persons who, on the making of an order under section 31, are trustees have the same rights and powers as they would have had if appointed by a decree or judgment in a proceeding. Power of court to vest land in new trustees33 The court, on making an order appointing a new trustee, may, by that order or a subsequent order, direct that land subject to the trust vests in the person or persons who on the appointment are trustees for the estate that the court directs and the order has the same effect as if the persons who before the order were the trustees, if any, had duly executed all proper conveyances of the land for the estate. Power of new trustees to transfer stock or chose in action34 The court, on making an order appointing a new trustee, may, by that order or a subsequent order, vest the right to call for a transfer of a stock subject to the trust, or to receive the dividends or income of it, or to sue for or recover a chose in action subject to the trust, or any interest in respect of it, in the person or persons who on the appointment are trustees. New trustees in place of persons convicted of indictable offence35 (1) If a person is jointly or solely seised or possessed of land, or entitled to stock on a trust, and the person has been or is convicted of an indictable offence, the court may, on proof of the conviction, appoint a person to be a trustee in the place of the convict, and make an order for vesting the land, or the right to transfer the stock, and to receive the dividends or income of it, in the person appointed. (2) An order made under subsection (1) has the same effect with respect to land as if the convict trustee had been free from any disability, and had duly executed a conveyance or assignment of his or her estate and interest in it. Persons who may apply for orders36 (1) An order under any of the above provisions for the appointment of a new trustee, or concerning land, stock or a chose in action subject to a trust, may be made on the application of any person beneficially interested in the land, stock or chose in action, whether under disability or not, or on the application of a person duly appointed as a trustee of it. (2) An order under any of the above provisions concerning land, stock or a chose in action subject to a mortgage may be made on the application of any person beneficially interested in the equity of redemption, whether under disability or not, or of any person interested in the money secured by the mortgage. Old trustees not discharged from liability37 The appointment by the court of new trustees, and any conveyance, assignment or transfer mentioned above, operates no further or otherwise as a discharge to a former or continuing trustee than an appointment of new trustees under a power for that purpose contained in an instrument would have done. In Re Tempest Ratio: How does a court find and appoint an appropriate Trustee? Test: The court will have regard to the wishes of the author of the trust, expressed in or plainly deduced from the trust document The court will not appoint a person with a view to the interest of some of the beneficiaries in opposition to others The court will have regard to the question whether the appointment will promote or impede the execution of the trust Re Helliwells Trusts Facts: The settlor, established a trust with two of his acquaintances as trustees. One of the trustees died and made Morse the administrator of his estate. Part of his estate of course included the trusteeship, and by virtue of the vesting provisions, Morse became both the settlor and trustee of his own estate (note this is actually fine). However, he had no intention of being his own trustee and there was no contemplation of this occurring such that the trust instrument did not considering appointing new trustees Issue: Will the court relieve Helliwell of his trusteeship? Ratio: In the event that a trustee unwittingly becomes one against their will, the trustee may seek court orders removing him as trustee without cost. Should they take on the mantle of trustee and simply change their mind, the court may force them to pay costs in order to abdicate their responsibility. Analysis: As there were no mala fides and the beneficiary assented (Helliwell), the court relieved the settlor of his position with cost only to the estate. Holding: Dismissed Merry Estate v Plaxton Facts: Paul Meredith was the surviving executor/trustee of Maureen Merry’s estate. The trust paid income to the daughter (Jill) until her death, with the residue divided into equal shares for her children to be paid income until age 25 at which time they would gain the capital. The will didn’t account for replacement trustees. Meredith was in poor help and wanted to resign and make the son of one of the original trustees the new trustee. Basically everyone rejected this in lieu of making the beneficiaries children the trustees. Meredith was concerned that Jill’s influence would prevent the preservation of capital for all beneficiaries should Jill’s children be appointed trustee. Issue: In the event that a document contains no replacement provisions, is the court authorized to appoint a replacement? Must the replacement be agreed upon by all parties? Ratio: While the court has discretion to approve or disapprove of new trustees, deference should be shown to a trustee in whom they announce to replace. Analysis: The court via statute has the right to appoint or approve the appointment of new trustees. Due to the distrust shown towards Seagram, the court agreed that he should not be appointed, but this was without prejudice to Meredith’s ability to appoint a new trustee. It was argued that, by virtue of the original appointment, the testator wanted to have an impartial trustee. This was not upheld but the desire to clearly maintain capital for the remaindermen was such that the judge felt compelled to let Meredith make the choice he felt best. Note: [11] Waters points out that the legislation is a gap-filling invention such that, historically, many people left out express provisions due to how good the legislation was. As this was a gap-filling exercise, the court had no problem stepping in. Holding: Appoint a new trustee soon Conroy v Stokes (CA) Facts: An application was brought by trustees of the Conroy will who had been removed and replace by a new trustee. Two of the beneficiaries brought the application and the majority of the beneficiaries were fine with the job the original trustees were doing but they got kicked out regardless. The original judge kicked them out due to the disagreements they were having in relation to selling a house. The judge found it would be more prudent to hire an independent administrator even though no they found no misconduct, breach of duty or risk against the estate. Issue: Under what circumstances (however acrimonious) should a judge remove a trustee? Ratio: Mere disagreement is not grounds enough to remove a trustee. In order for a trustee to be removed, the acts or omissions must be such as to endanger the trust property or to show a want of honesty, or a want of proper capacity to execute the duties or a want of reasonable fidelity Analysis: The standard must be higher than disagreement as not only do people argue and bicker like a bunch of dolts all the time regardless, a lower standard would allow a beneficiary to effectively always have a veto right. The main guide is the welfare of all of the beneficiaries and here, most of them were happy (although 2 were not). The property in question here was a family property and the sale would result not in danger to the estate, but basically hurt feelings over loss of nostalgia. The trustees were given the full power to sell at their discretion and exercised this faithfully. They arguable had a lower threshold as they had no duty to consult with the beneficiaries as well, although this may but heads with the benefit of the beneficiary principle Holding: Reappointment. Gonder v Gonder Estate Facts: Marge and Graeme Evans were removed as trustees but were not replaced. Pearl Gonder died leaving a house and some cash. The brother Allen claimed he was the beneficial owner of the estate and brought suit. Marge and her husband were named executors. Tax arrears were owing and Marge had to fight off Allens suit so they took out a mortgage on the house. Marge and Evan wanted to be removed as trustees due to ill health and due to becoming creditors of the estate via the mortgage. Issue: Does a replacement trustee need to be appointed before another trustee can be removed? Ratio: Not only can a trustee be removed without replacement, there need not be any trustees at all for someone to be allowed to be discharged from their duties. Analysis: Marge and Evan by virtue of the pending litigation and mortgage basically couldn’t do anything to benefit the estate at all. The matter needed to go back down as administration of the estate must be considered in order for there to be no trustees. Here however it was better for the court to administrate as the pending litigation would help to determine which money was owed where and all assets were accounted for. While it may be comparatively rare, as long as the three certainties are set out, the court is more than capable of administering the estate. Clearly they would like to avoid this, but as the court is ill suited to find replacement trustees, it may be necessary from time to time. Note: the court of appeal recommended two courses of action due to the wasting that was occurring by lack of upkeep and the deterioration of the estate by virtue of litigation. One was to remove the pending litigation charge in order to sell the house and pay the money into court, or they could seek a judicial order for the sale of the property. Note: The court always seeks the orderly administration of a trust, especially in an instance of a major dispute between respondents and appellants. This is perhaps why the CA recommended ways of resolving the dispute, in order to save what value they could from the estate Holding: Funnel back down for SC for resolution Re Bartel Estate Facts: Gertrude Bartel appointed her 3 sons as executors. She had 3 daughters as well. Walter and Arny were on one side whereas Helmut and the three sisters were on the other. Upon arguing, Helmut was ditched, the sisters appealed. Helmut originally wanted everyone ditched in favour of the public trustee. The first instance judge felt that the testatrix’ wishes were best served by keeping the trustees originally selected who could work together (IE: the two brother team). Issue: When there is acrimony amongst trustees, how should the court decide who stays and who goes? Ratio: In the event that there is a disagreement amongst trustees that cannot be settled, all trustees should be removed in favour of a new trustee. Analysis: There is no such thing as majority rule for trustees (unless the TI says so). All trustees must agree and work together. But in the event that the interests of the beneficiaries are endangered (the ever present judicial lodestar) or the administration of the estate is in jeopardy, it is better to avoid crippling the estate with legal fees and just turfing all three trustees. The judge was less than charitable here as there was ample evidence to show Helmut was being diligent and was willing to do his job. The public trustee was willing to step in (Especially given the simplicity of the trust) and this was preferable to allowing the impossible administration of the estate to continue Note: Walter was an undischarged bankrupt, but this did not prevent him from being a trustee Note: Misconduct on the part of a trustee is not required for removal Holding: All three sacked. Duties of the Trustee Fiduciary’s Overarching Duty of Loyalty and Good Faith Keech v Sanford Fact: A lease on behalf of an infant beneficiary (Romford Market – originally established for sheep sales) was generating income for said beneficiary but came time for renewal. The landowner did not want the infant beneficiary to be involved so was unwilling to renew. The trustee smelled a good deal and renewed it for himself. When the child grew up, he sued Sandford for the profit he had been making since renewing the lease all those years ago. Issue: Where an beneficiary is unable to take advantage of an opportunity, is a trustee allowed to take it in their stead? Ratio: A trustee may not pursue a business opportunity that their beneficiary is entitled to, even if the beneficiary is no longer able to take the opportunity for themselves. Any position that puts a trustee in a conflict of interest situation must be avoided Analysis: The clear problem here is that to allow the trustee to pursue the opportunity puts them in a conflict of interest situation. This situation incentivizes them to not try very hard in pursuing the renewal of a lease in the event that they might benefit instead. The rule is strictly espoused to the point where Lord Chancellor King stated that the trustee may be the “only person of all mankind who might not have the lease.” There is a strict duty of loyalty such that any attempt to renew the lease on his own behalf would breach the duty of loyalty de facto. Note: Keech was a seminal case and occurred in a time in which a stock market crash had been occasioned by speculators who used trusts illicitly. The result of this case made its way into business association law such that it funnels into the management of companies. Note: No element of fraud was detected here on the facts as the owner was apparently quite happy to let the trustee continue the lease. Holding: Disgorgement of all profits via resulting trust. Duty of Care Fales v Canada Permanent Trust Co Facts: CPTC and Wohlleben failed to sell trusts of the limited company forming part of the estate. The result was that the company’s shares were rendered worthless due to the insolvency of the company (Inspiration). The beneficiaries are suing CPTC, CPTC sued W who counter claimed for the deprivation of her life interest. Inspiration which was a joinder from Boyle Bros did not have a necessarily rosy outlook and was considered a speculative stock in an industry known for its volatility. The trust instrument foisted a duty to sell received property and invest via conversion, but this duty was never exercised as the trustees had the power to postpone conversion. Issue: What is the standard of care of a trustee? Was it breached in this event? Ratio: The standard of care for a trustee is a person of ordinary prudence. This applies to both professional and non-professional trustees. In the event of a loss of funds, the trustees have the burden of showing they acted reasonably and properly. Analysis: There were a number of guiding factors in finding CPTC liable in this case. Primarily, the fact that they never turned their mind to the merits and dangers of retaining such volatile shares which made up such a large part of the estate was especially damning. Furthermore, they allowed the shares to decline in value, even with the knowledge that the company’s outlook was the pits (year over year losses minus one year of gains with accompanying depreciation of stocks). Even the CPTC’s own investment committee recommended at least some liquidation, but nothing was ever sold. They thought that the parent company of Inspiration (Power Co), wouldn’t allow them to tank and used them as a kind of backstop. Of course, when it did tank, it was obvious that they should have been more prudent with the investment and should have converted a long time ago. S.96 provided discretionary relief to the widow as she was kept in the dark about everything and even attempted to learn more but was denied the opportunity to help. She had no financial literacy and relied on CPTC for the administration of the estate (and was never informed of the report to sell even though the committee told the trustee to inform her). She came to equity with clean hands and was treated as such. Note: The judge at first instance adopted a higher standard of care akin to the UK for fee taking trustees, this was overturned. Holding: CPTC sued big time (average share price over time), mom off the hook (although she didn’t get her income and interest from the estate as the original merger of shares was not negligent) Duty Not to Delegate and Requirement of Unanimity Trustee Act – S.7, 14 Directory: wp-content -> uploads -> gravity forms -> 1-7d6c8355b7f07846e8789d85deabdb60 -> 2016 gravity forms -> Earl E. Klein Jr gravity forms -> Narrative of how the entry meets the award criteria – July 28, 2016 gravity forms -> Revonda M. Baldwin gravity forms -> Air Atlanta Icelandic November 2006 – Current 2016 -> Ip master Guide 1-7d6c8355b7f07846e8789d85deabdb60 -> Insurance Law can Download 0.79 Mb. Share with your friends:
|