Chapter 1 – Appointment, assumption, resignation, removal and discharge of trustees
Appointment or assumption
15.Section 1 of the Act implements recommendation 1 in the Report on Trust Law. It is not a default provision and so cannot be overridden by the trust deed. Subsection (1) allows for the appointment of trustees by the court in two situations: first, where it is deemed necessary(4) for the administration of the trust or, secondly, where no capable trustee exists or is traceable. In the latter case, the court appointment also removes any existing trustee from office (subsection (3)). References to a trustee not being capable or traceable are to be read with sections 83 and 84 respectively. In section 81(1) and (3) of the Act, “the Court” is defined as meaning the Court of Session and the appropriate sheriff court. Section 1 of the Act replaces the common law (by subsection (2)) and the existing statute law (which is in section 22 of the Trusts (Scotland) Act 1921 (the “
16.Section 2 of the Act implements recommendation 2 in the Report on Trust Law and puts the current common law rule into statute. Subsection (1) sets out the circumstances in which the truster (the person who creates a trust) may appoint a new trustee. It applies irrespective of when the trust was created but does not apply as respects a public trust (subsection (3)), and operates as a default provision. Where subsection (1) applies, the effect of an appointment is also to remove any existing trustee from office (subsection (2)). References to a trustee not being capable or traceable are to be read with sections 83 and 84 respectively.
17.Section 3 of the Act is a default provision and allows trustees (but not executors dative; see section 81(1) of the Act) to assume additional trustees (subsection (1)). It essentially restates the current law, which is in section 3(b) of the 1921 Act. Subsections (2) and (3) cater for specific circumstances in which a protector has been appointed; they provide that any direction by the protector that an additional trustee be assumed must be carried out. (Protectors are governed by Chapter 7 of Part 1 of the Act.) This provision applies irrespective of when the trust was created (subsection (4)).
18.Section 4 of the Act, which implements recommendation 4 in the Report on Trust Law, deals with the situation where trust property requires to be conveyed to new or additional trustees following their appointment or assumption. Subsection (1) provides that the appointment of a trustee by the court or the assumption of a trustee by the trustees operates as a general conveyance of the trust property by the existing body of trustees in favour of themselves and any additional trustee jointly. Subsection (2) provides that in the case of the appointment of a new trustee in circumstances where there is no existing capable or traceable trustee, there will be a general conveyance from the former trustee (who is incapable or untraceable) in favour of the new one. Subsection (3) addresses the particulars of the appointment of a trustee on the application of an ex officio trustee under section 66. This section applies irrespective of when the trust was created, but only as respects an assumption or an appointment taking place after the section comes into force (subsection (4)).
Resignation and removal
19.Section 5 of the Act allows trustees (other than executors dative; see section 81(1) of the Act) to resign office. Section 5 implements recommendation 5 in the Report on Trust Law and is a default provision. Under the present law, in section 3 of the 1921 Act, all trusts are held to include a power to any trustee to resign the office of trustee; however, in certain cases, for example where a trustee has accepted a legacy, or is appointed on a remunerated basis, the trustee is not entitled to resign. These exceptions to the general rule are not re-enacted, meaning that, where this default rule applies, any trustees (other than executors dative) are able to resign. Subsections (2), (3) and (4) provide for the special case where a sole trustee wishes to resign and stipulate the conditions which must be satisfied before an effective resignation can be given. Subsection (2) also provides that a sole trustee must have accepted office with no requirement as to the form of acceptance (for example, acceptance of office may be done verbally, impliedly, or in writing). Subsection (5) provides for the resignation to be effective from the date when intimation is given to all of the other traceable trustees and the judicial factor (if any). Section 5 applies irrespective of when the trust was created but only as respects resignations given after the section comes into force (subsection (6)).
20.Section 6 of the Act provides that the resignation power in section 5 may be exercised on an incapable trustee’s behalf by their guardian. But it precludes that power being exercised by the guardian if the incapable trustee is the sole trustee or there is no other trustee who is both capable and traceable. The assessment of whether the remaining trustees are incapable or untraceable is to be made by the guardian of the resigning trustee. In such circumstances, the guardian would be able to resign on the trustee’s behalf only after an additional trustee is assumed or appointed, or a judicial factor is appointed to administer the trust. Subsection (2)(b)(ii) enables the guardian to appoint an additional trustee in these circumstances. References to a trustee not being capable or traceable are to be read with sections 83 and 84. Section 6 applies irrespective of when the trust was created but only as respects resignations given after the section comes into force (subsection (7)).
21.Section 7 of the Act implements recommendation 6 in the Report on Trust Law. Replacing the common law (subsection (2)) and section 23 of the 1921 Act (which is repealed by section 87 and schedule 2), it provides that a trustee may be removed by the court if any of the general grounds in subsection (1) are satisfied. The power conferred on the court is deliberately framed in general terms, and confers a degree of discretion. References in paragraphs (d) and (e) of subsection (1) to a trustee who is incapable or untraceable are to be read with sections 83 and 84 respectively. In section 81(1) and (3) “the court” is defined as meaning the Court of Session and the appropriate sheriff court. This provision applies irrespective of when the trust was created (subsection (3)) and cannot be overridden by the trust deed.
22.Section 8 requires a trustee who is either an executor of a deceased person’s estate, or a trustee of a testamentary trust, to be regarded as unfit to carry out their duties for the purposes of section 7(1)(a) in certain circumstances. The circumstances are where the trustee has been convicted of, or is being prosecuted for, the murder or culpable homicide of the deceased, or an equivalent offence in a different jurisdiction. This section will apply regardless of whether the person has been convicted before this section comes into force. By virtue of subsection (4), the section does not affect the determination of whether an executor or testamentary trustee is unfit to carry out their duties by reason of any other involvement or suspected involvement in the deceased’s death.
23.Section 9 of the Act implements recommendation 8 in the Report on Trust Law. Subsection (1) provides that a trustee may be removed from office by a majority of the other trustees if any of the specified grounds for removal are satisfied. These grounds are confined to certain easily provable fact-based situations; this is in contrast to the more subjective grounds found in section 7. Subsections (2) to (4)(5) allow for the removal of a professionally regulated person who was appointed or assumed as a trustee to provide professional input in relation to the managing of the trust but has now ceased to be a regulated person (or hold the relevant authorisation to provide professional services). When two or more professional trustees are each no longer a member of the regulated profession or are not entitled to practise, neither of those trustees is able to participate in a decision to remove them. Subsections (5) and (6) cater for specific circumstances in which a protector has been appointed in respect of the trust, in which case any direction by the protector that a trustee be removed from office must be carried out. (Protectors are governed by Chapter 7 of Part 1.) Subsection (7) requires that a person removed as a trustee by their co-trustees be given notice of that decision as soon as practicable after the decision was made. Section 9 applies irrespective of when the trust was created but paragraphs (b) to (d) of subsection (1) do not apply to convictions, sentences or imprisonments before the section comes into force; on the principle that a person should not be subjected to a heavier penalty than the one applicable at the time the offence was committed. A trustee who considers themselves unfairly removed by their co-trustees may be able to raise legal proceedings to challenge that decision(6).
24.Section 10 of the Act implements recommendation 9 in the Report on Trust Law. It enacts what is considered to be an implied part of the current common law rule found in Miller’s Trustees(7) and Yuill’s Trustees.(8) It provides that a trustee may be removed from office by the beneficiaries provided that (i) the beneficiaries are absolutely entitled to the trust property, all at least 18 years old, capable (as defined in section 83 of the Act), and are unanimous; and (ii) there is no continuing trust purpose which cannot be secured without the retention of some or all of the trust property (subsections (1) and (2)). Subsection (3) requires that a person who has been removed as a trustee by the beneficiaries be given notice of that decision as soon as practicable after the decision to remove them was made. Section 10 does not apply to private purpose trusts, within the meaning given by section 81(1), but applies to other trusts irrespective of when they were created (subsection (4)). The exclusion of private purpose trusts (which are the subject of Chapter 6 of Part 1) is because the nature of such a trust makes it impossible to determine who the whole beneficiaries are. Moreover, one of the provision’s pre-conditions is that there is no surviving trust purpose, but with a private purpose trust this can never be the case (unless the trust purposes become impracticable, in which case section 48 of the Act is relevant).
Saving as respects liability of trustees
25.Section 11 of the Act re-enacts – with modification – the current law, which is in the final sentence of section 3 of the 1921 Act. Under the current law, the resignation or removal of a trustee does not affect any liability which had been incurred prior to that event. Section 11 puts that beyond doubt. It also provides that, where a new trustee is assumed or appointed, any liability which had been incurred by the trustee body as constituted immediately prior to that event is unaffected.
Discharge
26.Section 12 essentially restates the current law relating to the discharge of trustees in sections 4(1)(g) and 18 of the 1921 Act, which provide a power for trustees who resign – and the representatives of trustees who have died – to be discharged, either by the remaining trustees or by the court. As a former trustee may continue to have trust liabilities arising from the trustee’s acts and intromissions (i.e., the trustee’s dealings with the trust property) even after leaving office, discharge is important as it brings any such liabilities to an end. Subsection (1) provides for discharge by either the remaining trustees or the beneficiaries; where this cannot be done, subsections (2) and (3) permit the Court of Session to grant a discharge.
The SLC recommendation was “where it was deemed ‘expedient’ for the administration of the trust” but this was changed to “necessary” by amendment at stage 2 of parliamentary proceedings.
Which were added by amendment and do not reflect an SLC recommendation.
Depending upon circumstances an action could be by declarator or special case (section 27 of the Court of Session Act 1988). It may be possible for a trustee to seek directions from the court (see section 69 of the Act). Removal might also be an ultra vires breach of trust in terms of section 9 or where there has been a breach of fiduciary duty. The rules of natural justice may provide the right to make representations. Other remedies may also be available.
Miller’s Trustees v Miller (1890) 18 R 301.
Yuill’s Trs v Thomson (1902) 4 F 815.
