Can trustees be compelled to exercise their power or discretion? (Trustees)-fs Flashcards
(10 cards)
Can trustees generally be compelled by beneficiaries to exercise their powers or discretions?
No. Trustees’ powers and discretions are discretionary, and beneficiaries cannot compel their exercise in ordinary circumstances.
In what circumstance might a court intervene in the trustee’s exercise of discretion?
A court may intervene if the trustees have exercised their discretion improperly, such as by failing to appreciate their duty, acting irrationally, or breaching a duty.
What principle was established in the case of Tempest v Lord Kamois regarding trustee discretion?
The court held that judicial intervention in the exercise of a trustee’s discretion is limited to instances where the exercise is improper, not merely unwise or unpopular.
What question must be asked to determine if trustees have improperly exercised their discretion?
Whether the trustees have blindly followed the settlor’s wishes without recognising their own discretionary power or whether they have acted in an irrational or unreasonable manner.
When might a trustee’s decision be challenged on the grounds of fiduciary obligation?
When a trustee has breached a fiduciary duty, such as failing to act in the best interests of the beneficiaries, a beneficiary may seek judicial review of their action or omission.
Can beneficiaries compel trustees to act if there is a breach of a general trust duty?
Yes. If a trustee has breached a general trust duty (e.g., duty of care, loyalty, or impartiality), beneficiaries may apply to the court to compel or restrict certain actions
Can a trustee’s decision be set aside simply because it leads to an unfavourable outcome for a beneficiary?
No. The court will not interfere with a decision that is validly made within the bounds of discretion, even if the outcome is unfavourable to a beneficiary.
What role does the trust instrument play in determining whether trustees can be compelled?
If the trust instrument contains an express provision granting beneficiaries specific rights or controls, then this may provide a basis to compel trustee action.
Can a trustee be compelled if their decision results from simply following the settlor’s wishes?
Yes—if they do so without applying independent judgment, this may be considered a failure to exercise discretion, and the court may intervene.
If there is no impropriety, breach of duty, or special clause in the trust, can the court compel a trustee to act?
No. In the absence of impropriety, breach, or express provision, trustees cannot be compelled to exercise their discretion.
