Trusts are often established when someone passes away by their Will. These trusts are often referred to as testamentary trusts. Other types of trusts include discretionary trusts, unit trusts and hybrid trusts which may be established by a trust deed.
The relationship between trustees and beneficiaries is a fiduciary one. A fiduciary has no positive legal duty to act in the interests of the beneficiary. A fiduciary duty is proscriptive, forbidding a conflict of interest and duty, and any unauthorised profit from use of position, property or confidential information.
In addition to the no-conflict and no-profit rules, a trustee also has other specific duties including:
There are two powers conferred upon the Court whereby the Court can remove a trustee:
The Supreme Court of Queensland has an inherent power to appoint a trustee in substitution to an existing trustee. The Court’s inherent jurisdiction is exercised when it is in the best interests of the beneficiaries and the administration of the trust.
Section 80(1) of the Trusts Act 1973 (Qld) provides:
The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult or impracticable to do so without the assistance of the Court, make an Order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.
An Order for the removal of a trustee will be made where it is for the welfare of the trust estate as a whole that the trustee should be removed.
If the Court finds that the trust property will not be safe or that the trust will not be properly executed, in the interest of the beneficiaries the trustee can and should be removed.
Justice Ball in Crowle Foundation -v- NSW Trustee & Guardian  NSWSC 647 decided to remove a trustee on the basis that:
If there has been a breach of trust by a trustee leading to loss then the trustee may be liable to pay equitable compensation.
Alternatively, if a trustee has profited from a breach of trust (e.g. made an unauthorised profit in breach of the no-profit rule), then an account of those profits may be sought.
Court proceedings are often necessary to remove trustees.
You do not necessarily need to establish that the trustee is in a conflict of interest to remove a trustee from acting.
However, you will need to establish that it is in the interests of the beneficiaries that the trustee be removed and another trustee appointed.
The evidence of an independent accountant in the form of an expert’s report to the Court will be crucial to satisfy the Court that it is in the interests of beneficiaries.
If the Court agrees to remove a trustee, then it will appoint another independent trustee.
Our lawyers and solicitors have experience in acting for beneficiaries of trusts, and for trustees, in disputes and at Court in litigation.
Contact us today for specific trust advice or for assistance in acting on your behalf in a trust dispute.
Proper experience in dealing with trusts and the removal of trustees is essential. Aitken Whyte Lawyers are focused on results. Our dispute resolution team will advise you on the proper course to take if you are the beneficiary of a trust and believe it would be in your interest to have a trustee removed, you are a trustee and would like advice on administering a trust, or if you would like to establish a trust in your Will or draft a Trust Deed.
Aitken Whyte Lawyers can assist you with all trust matters and disputes.
Aitken Whyte Lawyers
11/8 Pikki Street,
Maroochydore Qld 4558
Ph: +617 5408 0655
Fax: +617 3211 9311