Power to Appoint Agents

The Power to Appoint Agents is very important for Superannuation Funds, since the size and scope of a typical Government Regulated Superannuation Fund requires the appointment of many agents such as:

  • Accountants
  • An Auditor
  • An Actuary
  • Lawyers
  • A Fund Administrator
  • Investment Advisers
  • A Banker

Statutory Legislation provides for the Power to Appoint Agents in addition to the general law as well as an implied indemnity for Trustees who engage agents.

  • NSW ss 53,59
  • Vic ss 28, 36
  • Qld ss 54, 71
  • SA ss 35 {The general law applies to the appointment of agents}
  • WA ss 53, 70
  • Tas ss 27 {The general law applies to the appointment of agents}
  • NT {The general law applies to the appointment of agents}

At general law, independently of the statutory provisions as to the appointment of agents, and any provision in the trust instrument to this effect, a trustee may appoint agents to perform his or her duties and powers where it is in the ordinary course of business to employ those agents, provided in  doing so the trustee runs no needless risk.

Re Speight, Speight v Gaunt (1883) 22 Ch D 727 at 762-3 per Bowen Lj at 739-40 per Jessel MR, at 756-60 per Lindley LJ. CA. (Affirmed Speight v Gaunt (1883) 9 App Cas 1;50 LT 330).

Under the general law Trustees are not liable for the torts of their agents unless they do not engage that agent in good faith or in some cases if they are grossly negligent in the selection of that agent who is not qualified for the role {Robinson v Harkin [1896] 2 Ch 415}.

In Fry v Tapson (1884) 28 Ch D 268 it was stated at 280:

Speight v Gaunt (1883) 22 Ch D 727 did not lay down any new rule, but only illustrated a very old one, viz, that a trustee acting according to the ordinary course of business, and employing agents as a prudent man if business would do on his own behalf, are not liable for the default of an agent so employed. But an obvious limitation of that rule of that rule is that an agent must not be employed out of the ordinary scope of his business. If a trustee employs an agent to do that which is not the ordinary business of such an agent, and performs that unusual duty improperly, and loss is thereby occasioned, the trustee would not be exonerated”.

The Implied indemnity of trustees was first introduced into the English Law ofPproperty Amendment Act 1859 and was copies in all Australian States.

Lord Selborne L.C. of the 1859 Act said in Re Brier (1884) 26 Ch D 238 at 243:

“The statute incorporates, generally, into instruments creating trusts the common indemnity clause which was usually inserted in such instruments. It does not substantially alter the law as it was administered by courts of equity, but gives it the authority and force of statute law, and appears to me to throw the onus probandi on those who seek to charge the executor or trustee with loss arising from the default of an agent, when the propriety of employing the agent has been established”



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