Duty to Administer the Trust Personally

The Trustees’ duty to administer the trust personally dictates that Trustees must not permit others – the Employer-Sponsor, the beneficiaries or some third party – to dictate to them the manner in which their discretion ought to be exercised unless the trust instrument so requires {Re Brockbank [1948] Ch 206; Wilson v Wilson (1950) 51 SR (NSW); Walker v Walker VR 778 at 782; Quinton v Proctor [1998] 4 VR 469 at 471; Breadner v Granville-Grossman [2001] Ch 523 at 544-545}.

The terms of a Superannuation Trust will generally require the approval of the Employer-Sponsor and the Members (or the Fund Actuary) to amend the terms of the trust as well as that of the Trustee {refer to Section 59 of the Superannuation Industry (Supervision) Act 1993}.

Section 58 of the Superannuation Industry (Supervision) Act 1993 and Regulation 4.3 of the Superannuation Industry (Supervision) Regulations 1994 prescribed what “directions” an Employer-Sponsor can lawfully give to the Trustee of the Superannuation Fund.

Trustee must not fetter their discretion by committing themselves in advance as to their future conduct as trustees.

Trustees of non-charitable trusts must agree unanimously to any course of action {Luke v South Kensington Hotel Company (1879) 11 Ch d at 125-126; Pelham v Pelham [1955] SASR 53 at 57}, unless the Trust Instrument provides otherwise {Dawson v Dawson [1945] VLR 99 at 103; MEPC Australia Ltd v Commonwealth [1973] 2 NSWLR 848 at 855-856}.

For example if the terms of the trust require FIVE Trustees then another term may require FOUR Trustees to form a quorum to “to exercise all or any of the authorities, powers and discretions hereby vested in the Trustees generally“.

The practical consequence of the rule is that trust business can only be transacted at a meeting of all required trustees. Actions of one trustee taken independently of co-trustees are ultra vires. To this end, the object of appointing two or more trustees is a safeguard against any capricious exercises of trustee discretion {Pelham v Pelham [1955] SASR 53 at 57}

Trustees do however have the power to employ agents and to seek professional advice.

 

 

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