Australian Trust law Case study 2022

Running head: CASE STUDY
CASE STUDY
Name of the Student
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Author’s Note

CASE STUDY2
Australian Trust law is the law of trusts applied in Australia. The provisions are mainly
derived from the English Trust System especially the Trustee Act 1925(NSW)1 and it has then
been modified as per the requirements of state and federal legislation.
A trustee can be terminated or removed. However, resignation is a preferred option for
removal of a trustee. Trustee acts as an agent of the trust. When the trust is terminated, the
property is transferred to the beneficiary. However, trustee can only be removed on certain
statutory grounds which are as follows:
 If the trustee is physically and mentally not fit to continue to hold the office as the trustee.
 If the trustee carries out his duties inconsistent with his or her fiduciary duties.
 If the trustee has neglected his or her duties.
 If the trustee of untraceable or incapable.
However, the group of trustees may choose to remove a trustee from his or her person and the
same can be done on following grounds:
 Physically and mentally unfit.
 Untraceable
 If the person has been proved guilty of an offence in the court of law regarding matters of
dishonesty.
 If the person has been sentenced to jail for the conviction of an offence.
 If the person has been imprisoned or charged with the contempt of court or failure of
payment of fine.
1 Trustee Act 1925 (NSW) s 81.

CASE STUDY3
Other than the mentioned statutory grounds, the trustees can also be removed at the will of the
beneficiary. In such cases, the ex-officio trustee can also be validated. Ex officio trustee means
the trustee holding the position in another office by the virtue of his or her position. On the other
hand, Australian Law Reform Commission 452 states that if a provision in the trust deed permits
the removal of the company as a trustee or any grounds for such removal, it shall have no effect.
The exception to the rule is if the deed permits the liquidators or the administrators to cause the
company to resign, then the company shall be deemed to have been removed from its position as
a trustee to its beneficiary. The same benefit has not been extended to the natural persons as the
beneficiaries. It is only applicable to the situation involving legal persons that is the corporations.
Such trustee have all the duties of any other trustee under normal circumstances3.
First is the duty of loyalty which means that the trustees have fiduciary duty towards their
beneficiaries. In other words, trustees must act only in the sole interest of the beneficiary
and cannot conflict his or her personal interest with that of the beneficiary. This means
that the role of the trustees is to act on behalf of the beneficiary and their benefits without
the inclusion of personal benefits from any transaction related to the trust property.
Secondly, duty to manage trust efficiently. This means that the trustee must be well versed
with the terms and conditions of the trust, along with its assets and liabilities and other
detailed information and purpose of the trust. in other words, the trustee owes the duty to
know the complete detailed information about the trust deed, its terms and conditions and
the details of the properties and other assets along with the liabilities to avoid disputes
about non-disclosure of information. Thirdly, Duty to act personally meaning that trustees
are the main decision making authority with respect to the trust. I means that the decision
2 ALRC 45 para 258
3 Ghahramani, Salar. "Fiduciary Duty and the Ex Officio Conundrum in Corporate Governance: The
Troublesome Murkiness of the Gubernatorial Trustee's Obligations." Hastings Bus. LJ 10 (2013): 1.