Reviewing the actions of trustees
Indicative draft provisions
Supervision of trustees
Court’s review power
49 Court may review trustee’s act, omission, or decision
(1) The court may review an act, omission, or decision (including a proposed act, omission, or decision) of a trustee of an express trust on the ground that the act, omission, or decision was or is not reasonably open to the trustee in the circumstances.
(2) The court may review an act, omission, or decision under subsection (1) on the application only of—
(a) a beneficiary; or
(b) if a beneficiary does not have full legal capacity, his or her personal representative.
(3) The review must be conducted in accordance with section 50.
50 Procedure for trustee review
(1) An applicant for review under section 49 must adduce evidence that raises a genuine and substantial dispute as to whether the act, omission, or decision in question was or is reasonably open to the trustee in the circumstances.
(2) If the court is satisfied that the applicant has established a genuine and substantial dispute, the court must allow the trustee the opportunity, and may require the trustee, to appear before it to adduce evidence establishing that the act, omission, or decision was or is reasonably open to the trustee in the circumstances.
(3) If the court, after hearing the trustee, is satisfied on a balance of probabilities that the act, omission, or decision was or is not reasonably open to the trustee in the circumstances, the court may (but subject to subsection (4))—
(a) set aside the act or decision or direct the trustee to act in the case of an omission:
(b) restrain the trustee from acting or deciding in the case of a proposed act or decision, and direct the trustee to act in the case of a proposed omission:
(c) make such other orders as the court considers necessary.
(4) The court must not make an order that affects—
(a) a distribution of the trust property that has been made not in breach of trust and before the trustee had notice of the application; or
(b) any right or title acquired by a person in good faith and for value.
The terminology “a genuine and substantial dispute” is intended to signal that the decision or action under review is not a trivial or unimportant matter. The word “substantial” is used in its broadest sense to exclude trivial issues and to signal that the matter under review is one of importance for the trust’s beneficiaries. The intention is to exclude nuisance claims, but not to set the bar so high that any genuine matter of dispute that is important to a beneficiary cannot be reviewed.
The definition of beneficiary in clause 1 (Interpretation) of the Bill will apply. A beneficiary means a person who receives, or who will or may receive, a benefit under the terms of the trust; and includes a discretionary beneficiary; and may include the settlor or trustee.