Trustee Act 1898 (Tas)

Trustee Act 1898 An Act to consolidate enactments and amend the law relating to trustees [Royal Assent 29 October 1898] Be it enacted by His Excellency the Governor of Tasmania, by and with the advice and consent of the Legislative Council and House of Assembly, in Parliament assembled, as follows: PART I - Preliminary 1. Short title This Act may be cited as the Trustee Act 1898 . 2. Commencement This Act shall come into operation on 1st November 1898. 3. . . . . . . . . 4. Interpretation In this Act, unless the contrary intention appears – company includes any banking or mercantile or trading corporation, however created, and any company registered, incorporated, or constituted under or pursuant to any Act; contingent right, as applied to land, includes a contingent or executory interest, a possibility coupled with an interest, whether the object of the gift or limitation of the interest, or possibility, is or is not ascertained, also a right of entry, whether immediate or future, and whether vested or contingent; convey and conveyance, applied to any person, include the execution by that person of every necessary or suitable assurance for conveying, assigning, appointing, surrendering, or otherwise transferring or disposing of any property whereof he is seised or possessed, or wherein he is entitled to a contingent right, either for his whole estate or for any less estate, together with the performance of all formalities required by law for the validity of the conveyance; the Court means the Supreme Court or a judge; devisee includes the heir of a devisee and the devisee of an heir, and any person who may claim right by devolution of title of a similar description; financial institution means any authorised deposit-taking institution, or the manager of any authorised deposit-taking institution, authorised under this Act to receive fixed deposits from trustees; instrument includes Act; land includes incorporeal as well as corporeal hereditaments, and any interest therein, and also an undivided share of land; mortgage and mortgagee include and relate to every estate and interest regarded by law or in equity as merely a security for money, and every person deriving title under the original mortgagee; pay and payment, as applied in relation to stocks and securities, and in connection with the expression "into Court", include the deposit or transfer of the same in or into Court; possessed applies to receipt of income of, and to any vested estate less than, a life estate, legal or equitable, in possession or in expectancy, in any land; property includes real and personal property, and any estate and interest in any property, real or personal, and any debt and any thing in action, and any other right or interest, whether in possession or not, excluding only stock and choses in action in the construction and interpretation of section 33 ; representative includes – (a) the devisee or devisees, or the executor or executors, administrator or administrators, or the curator of the intestate estate of any person; (b) the heir of any person who died intestate before 1874; rights includes estate and interests; securities means – (a) debentures, stocks, shares, bonds, or notes issued or proposed to be issued; (b) any right or option in respect of any such debentures, stocks, shares, bonds, or notes; or (c) interests in a registered scheme within the meaning of the Corporations Act – and in particular, without limiting the generality of the foregoing, includes – (d) bills of exchange; (e) promissory notes; (f) certificates of deposit issued by an authorised deposit-taking institution; and (g) any money or securities for money paid into or deposited in Court to the credit of any cause, matter, or account; shares means shares in the capital of a body corporate; spouse, in relation to a person, includes the person who is in a significant relationship, within the meaning of the Relationships Act 2003 , with that person; stock includes fully paid-up shares, and, so far as relates to vesting orders made by the Court under this Act, includes debentures, shares in companies, and any fund, annuity, or security transferable in books kept by any company or society, or by instrument of transfer, either alone or accompanied by other formalities, and any share or interest therein; transfer, in relation to stock, includes the performance and execution of every deed, power of attorney, act, and thing on the part of the transferror to effect and complete the title in the transferee; trust does not include the duties incident to an estate conveyed by way of mortgage, but, with this exception, trust includes implied and constructive trusts, and cases where the trustee has a beneficial interest in the trust property and the duties incident to the office of representative of a deceased person; trustee includes – (a) any person seised or possessed of or entitled to any property subject to any trust as aforesaid; (b) any person who has also a beneficial interest in the trust property; (c) (d) any company, corporation, firm, or association authorized by law to act as trustee, executor, or administrator of the estate of any deceased person; (e) any representative in any way possessed of or entitled to any property subject to any trust express or implied; (f) any trustee whose trust arises by construction or implication of law, but does not include a mortgagee; and (g) joint trustees, executors, or administrators, where more than one person is acting in any of the said capacities; trustee company means a trustee company within the meaning of the Trustee Companies Act 1953 ; valuer means a person who is qualified to practise as a land valuer under section 4 of the Land Valuers Act 2001 . PART II - Investments 5. Application of Part This Part applies to trusts created before or after the commencement of this Part. 6. Power of trustee to invest A trustee, unless expressly forbidden by the instrument creating the trust, may – (a) invest trust funds in any form of investment; and (b) at any time, vary an investment or realise an investment of trust funds and reinvest money resulting from the realisation in any form of investment. 7. Duty of trustee (1) Subject to any provision to the contrary in an instrument creating a trust, a trustee, in exercising a power of investment – (a) if the trustee's profession, business or employment is or includes acting as a trustee or investing money on behalf of other persons, must exercise the care, diligence and skill that a prudent person engaged in that profession, business or employment would exercise in managing the affairs of another person; or (b) if the trustee is not engaged in such a profession, business or employment, must exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of another person. (2) A trustee, in exercising a power of investment, must comply with any provision of the instrument creating the trust that is binding on the trustee and requires the obtaining of a consent or an approval or a compliance with any direction with respect to trust investments. (3) Subject to the instrument creating the trust, a trustee must, at least once in each year, review the performance, individually and as a whole, of the trust investments. 8. Matters to which trustee may have regard (1) Without limiting the matters that a trustee may take into account when exercising a power of investment, a trustee, so far as is appropriate to the provisions of the trust, may have regard to any one or more of the following: (a) the purposes of the trust and the needs and circumstances of the beneficiaries; (b) the desirability of diversifying trust investments; (c) the nature of existing trust investments and other trust property; (d) the need to maintain the real value of the capital or income of the trust; (e) the risk of capital loss or depreciation; (f) the potential for capital appreciation; (g) the likely income and the timing of the income return; (h) the length of the term of the proposed investment; (i) the probable duration of the trust; (j) the liquidity and marketability of the proposed investment during, and on the determination of, the term of the proposed investment; (k) the aggregate value of the trust estate; (l) the effect of the proposed investment in relation to the tax liability of the trust; (m) the likelihood of inflation affecting the value of the proposed investment or other trust property; (n) the costs, including any commission, fee, charge or duty payable, of making the proposed investment; (o) the results of a review of any existing trust investments. (2) A trustee may – (a) obtain and consider independent and impartial advice reasonably required for the investment of trust funds or the management of the investment, from a person whom the trustee reasonably believes to be competent to give that advice; and (b) pay out of trust funds the reasonable costs of obtaining the advice. 9. Law and equity preserved (1) Any rule or principle of law or equity that imposes a duty on a trustee exercising a power of investment including, without limiting the generality of those duties, rules and principles that impose – (a) a duty to exercise the powers of a trustee in the best interests of all present and future beneficiaries of the trust; or (b) a duty to act impartially towards beneficiaries and between different classes of beneficiaries; or (c) a duty to take advice; or (d) a duty to invest trust funds in investments that are not speculative or hazardous – continues to apply except so far as it is inconsistent with this or any other Act, or the instrument creating the trust. (2) Any rule or principle of law or equity that relates to a provision in an instrument creating a trust that purports to exempt, limit the liability of, or indemnify a trustee in respect of a breach of trust, continues to apply. (3) If a trustee has a duty to take advice relating to the administration of a trust, the reasonable costs of obtaining the advice are payable out of trust funds. 10. Powers of trustee in relation to securities (1) If securities of a body corporate are subject to a trust, the trustee may concur in any scheme or arrangement – (a) for, or arising out of, the reconstruction, reduction of capital or liquidation of, or the issue of shares by, the body corporate; or (b) for the sale of all or any part of the property and undertaking of the body corporate to another body corporate; or (c) for the acquisition of securities of the body corporate, or of control of the body corporate, by another body corporate; or (d) for the amalgamation of the body corporate with another body corporate; or (e) for the release, modification or variation of rights, privileges or liabilities attached to the securities, or any of them – in the same manner as if the trustee were beneficially entitled to the securities. (2) The trustee may accept instead of, or in exchange for, the securities subject to the trust securities of any denomination or description of another body corporate party to the scheme or arrangement. (3) If a conditional or preferential right to subscribe for securities in a body corporate is offered to a trustee in respect of a holding in that body corporate or any other body corporate, the trustee may, as to all or any of the securities – (a) exercise the right and apply capital money subject to the trust in payment of the consideration; or (b) assign to any person, including a beneficiary under the trust, the benefit of the right, or the title to the right, for the best consideration that can be reasonably obtained; or (c) renounce the right. (4) A trustee accepting or subscribing for securities under this section is, for the purposes of any provision of this Part, exercising a power of investment. (5) A trustee may retain securities accepted or subscribed for under this section for any period for which the trustee could properly have retained the original securities. (6) The consideration for an assignment made under subsection (3)(b) must be held as capital money of the trust. (7) This section applies in relation to securities acquired before or after the commencement of this section but subject to the provisions of the instrument creating the trust. 11. Calls on shares Subject to the provisions of any instrument creating a trust – (a) a trustee may apply capital money subject to the trust in payment of calls on shares subject to the same trust; and (b) if the trustee is a trustee company, it may exercise the powers conferred by this section whether or not the shares on which the calls are made are shares in the trustee company. 12. Purchase of house for beneficiary (1) Subject to the provisions of any instrument creating a trust, a trustee may – (a) purchase a dwelling house for use by a beneficiary as a residence; or (b) enter into any other agreement or arrangement to secure for a beneficiary a right to use a dwelling house as a residence. (2) Despite the terms of the instrument creating the trust, a trustee may, if to do so would not unfairly prejudice the interests of other beneficiaries, retain as part of the trust property, a dwelling house for a beneficiary to use as a residence. (3) A dwelling house purchased, retained or otherwise secured for use by the beneficiary as a residence may be made available to the beneficiary for that purpose on such terms and conditions consistent with the trust and the extent of the beneficiary's interest as the trustee thinks fit. (4) The trustee may retain a dwelling house or any interest or rights in respect of a dwelling house acquired under this section after the use of the dwelling house by the beneficiary has ceased. (5) In this section, dwelling house includes – (a) any building or part of a building designed, or converted or capable of being converted, for use as a residence; and (b) any amenities or facilities for use in association with the use of a dwelling house. 12A. Power of trustee to retain investments A trustee is not liable for breach of trust by reason only of continuing to hold an investment that has ceased to be – (a) an investment authorised by the instrument creating the trust; or (b) an investment properly made by the trustee exercising a power of investment; or (c) an investment made under this Part as previously in force from time to time; or (d) an investment authorised by any other Act or law. 12B. Loans and investments by trustees (1) If a trustee lends money on the security of property, the trustee is not in breach of trust by reason only of the amount of the loan in comparison to the value of the property at the time when the loan was made, if – (a) it appears to the court – (i) that, in making the loan, the trustee was acting on a report as to the value of the property made by a person whom the trustee reasonably believed to be competent to give such a report and whom the trustee instructed and employed independently of any owner of the property; and (ii) that the amount of the loan did not exceed two-thirds of the value of the property as stated in the report; and (iii) that the loan was made in reliance on the report; or (b) the trustee is properly insured by an insurer carrying on the business of insurance against all loss that may arise by reason of the default of the borrower. (2) If a trustee lends money on the security of leasehold property, the trustee is not in breach of trust by reason only that the trustee dispensed, either in whole or in part, with the production or investigation of the lessee's title when making the loan. (3) This section applies to transfers of existing securities as well as to new securities and to investments made before or after the commencement of this section. 12C. Liability of trustee for loss on improper investments (1) If a trustee improperly lends trust money on a security that would have been a proper investment if the amount lent had been smaller than the actual amount lent, the security is to be taken to be a proper investment in respect of the smaller amount, and the trustee is liable only to make good the difference between the amount advanced and the smaller amount, with interest. (2) This section applies to investments made before or after the commencement of this section. 12D. Court may take into account investment strategy If a trustee has been charged with a breach of trust in respect of a duty under this Part relating to the trustee's power of investment, the court, when considering the question of the trustee's liability, may take into account – (a) the nature and purpose of the trust; and (b) whether the trustee had regard to the matters set out in section 8 so far as is appropriate to the circumstances of the trust; and (c) whether the trust investments have been made under an investment strategy formulated in accordance with the duty of a trustee under this Part; and (d) the extent to which the trustee acted on the independent and impartial advice of a person competent, or apparently competent, to give the advice. 12E. Set-off for gains and losses (1) The court, when considering an action for breach of trust arising out of, or in respect of, an investment by a trustee where a loss has been or is expected to be sustained by the trust, may set off all or part of the loss resulting from that investment against all or part of the gain resulting from any other investment, whether in breach of trust or not. (2) The power of set-off under subsection (1) is in addition to any other power or entitlement to set off all or part of any loss against any property. 12F. Transitional provision Any provision in an Act or any other instrument, whether or not creating a trust, that empowers or requires a person to invest money in the investments authorised by the Trustee Act 1898 , is to be read as if it empowered or required that person to invest that money according to the provisions of this Part as to the investment of trust funds. PART III - Various Powers and Duties of Trustees 13. Power of appointing new trustees (1) Where a trustee, either original or substituted, and whether appointed by the Court or otherwise, is dead, or remains out of Tasmania for more than twelve months, or desires to be discharged from all or any of the trusts or powers reposed in or conferred on him, or refuses or is unfit to act therein, or is incapable of acting therein – (a) the persons nominated for the purpose of appointing new trustees in such event by the instrument, if any, creating the trust; or (b) if there is no such person or no such person able and willing to act, the surviving or continuing trustees or trustee, or the personal representatives of the last surviving or continuing trustee – may, by writing, appoint another person or other persons to be a trustee or trustees in the place of the trustee dead, remaining out of Tasmania, desiring to be discharged, refusing, or being unfit, or being incapable, as aforesaid. (2) On the appointment of a new trustee for the whole or any part of trust property – (a) the number of trustees may be increased; (b) a separate set of trustees may be appointed for any part of the trust property, whether held on trusts distinct from those relating to any other part of the trust property or not, and notwithstanding that no new trustees are to be appointed for other parts of the trust property; and any existing trustee may be appointed or remain one of such separate set of trustees, or, if only one trustee was originally appointed, then one separate trustee may be so appointed for the first-mentioned part; (c) it shall not be obligatory to appoint more than one new trustee where only one trustee was originally appointed, or to fill up the original number of trustees where more than two trustees were originally appointed; but, except where only one trustee was originally appointed, a trustee shall not be discharged under this section from his trust unless there will be at least two trustees to perform the trust; and (d) any assurance or thing requisite for vesting the trust property, or any part thereof, jointly in the persons who are the trustees, shall be executed or done. (3) Every new trustee so appointed, as well before as after all the trust property becomes by law, or by assurance, or otherwise, vested in him, shall have the same powers, authorities and discretions, and may in all respects act as if he had been originally appointed a trustee by the instrument, if any, creating the trust. (4) The provisions of this section relative to a trustee who is dead include the case of a person nominated trustee in a will but dying before the testator, and those relative to a continuing trustee include a refusing or retiring trustee, if willing to act in the execution of the provisions of this section. (5) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and has effect subject to the terms of that instrument and to any provisions therein contained. (6) Nothing in this section shall give power to appoint an executor or administrator. 14. Retirement of trustee (1) Where there are more than two trustees, if one of them by deed declares that he is desirous of being discharged from the trust, and if his co-trustees and such other person, if any, as is empowered to appoint trustees by deed consent to the discharge of the trustee, and to the vesting in the co-trustees alone of the trust property, then the trustee desirous of being discharged shall be deemed to have retired from the trust, and shall, by the deed, be discharged therefrom under this Act, without any new trustee being appointed in his place. (2) Any assurance or thing requisite for vesting the trust property in the continuing trustees alone shall be executed or done. (3) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust, and has effect subject to the terms of that instrument and to any provisions therein contained. 15. Vesting of trust property in new or continuing trustees (1) Where a deed or instrument by which a new trustee is appointed to perform any trust contains a declaration by the appointor to the effect that any estate or interest in any land subject to the trust, or in any chattel so subject, or the right to recover and receive any debt or other thing in action so subject, shall vest in the persons who by virtue of the deed or instrument become and are the trustees for performing the trust, that declaration shall, without any conveyance or assignment, operate to vest in those persons, as joint tenants, and for the purposes of the trust, that estate, interest, or right. (2) Where a deed or instrument by which a retiring trustee is discharged under this Act contains such a declaration as is in this section mentioned by the retiring and continuing trustees, and by the other person, if any, empowered to appoint trustees, that declaration shall, without any conveyance or assignment, operate to vest in the continuing trustees alone, as joint tenants, and for the purposes of the trust, the estate, interest, or right to which the declaration relates. (3) This section does not extend to land conveyed by way of mortgage for securing money subject to the trust, or to any such share, stock, annuity, or property as is only transferable in books kept by a company or other body or in manner directed by or under any Act. (4) For purposes of registration of the deed or instrument in any registry, the person making the declaration shall be deemed the conveying party, and the conveyance shall be deemed to be made by him under a power conferred by this Act. 16. Power of trustee for sale to sell by auction (1) Where a trust for sale or a power of sale of property is vested in a trustee, he may sell or concur with any other person in selling all or any part of the property, either subject to prior charges or not, and either together or in lots, by public auction or by private contract, subject to any such conditions respecting title or evidence of title or any other matter as the trustee thinks fit, with power to vary any contract for sale, and to buy in at any auction, or to rescind any contract for sale and to re-sell, without being answerable for any loss. (2) This section applies only if and as far as a contrary intention is not expressed in the instrument creating the trust or power, and shall have effect subject to the terms of that instrument and to the provisions therein contained. 17. Power to sell subject to depreciatory conditions (1) No sale made by a trustee shall be impeached by any beneficiary upon the ground that any of the conditions subject to which the sale was made may have been unnecessarily depreciatory, unless it also appears that the consideration for the sale was thereby rendered inadequate. (2) No sale made by a trustee shall, after the execution of the conveyance, be impeached as against the purchaser upon the ground that any of the conditions subject to which the sale was made may have been unnecessarily depreciatory, unless it appears that the purchaser was acting in collusion with the trustee at the time when the contract for sale was made. (3) No purchaser, upon a sale made by a trustee, shall be at liberty to make any objection against the title upon the ground aforesaid. 18. Power to sell under section 37 of the Conveyancing and Law of Property Act 1884 A trustee who is either a vendor or a purchaser may sell or buy without excluding the application of section 37 of the Conveyancing and Law of Property Act 1884 . 19. . . . . . . . . 20. Power to authorize receipt of money by banker or Australian legal practitioner (1) A trustee may appoint a financial institution or Australian legal practitioner to be his agent to receive and give a discharge for any money or valuable consideration or property receivable by the trustee under the trust, by permitting the financial institution or Australian legal practitioner to have the custody of, and to produce a deed or instrument, having in the body thereof, or endorsed thereon, a receipt for such money, valuable consideration, or property, such deed or instrument being executed, or such endorsed receipt being signed by the trustee; and a trustee is not chargeable with breach of trust by reason only of his having made, or concurred in making, any such appointment; and the producing of any such deed or instrument by the financial institution or Australian legal practitioner has the same validity and effect as if the person appointing the financial institution or Australian legal practitioner had not been a trustee. (2) A trustee may appoint a financial institution or Australian legal practitioner to be his agent to receive and give a discharge for any money payable to the trustee under or by virtue of a policy of assurance, by permitting the financial institution or Australian legal practitioner to have the custody of, and to produce, the policy of assurance, with a receipt signed by the trustee; and a trustee is not chargeable with a breach of trust by reason only of his having made or concurred in making any such appointment. (3) Nothing in this section shall exempt a trustee from any liability which he would have incurred if this Act had not been passed in case he permits any such money, valuable consideration, or property to remain in the hands or under the control of the financial institution or Australian legal practitioner for a period longer than is reasonably necessary to enable the financial institution or Australian legal practitioner, as the case may be, to pay or transfer the same to the trustee. (4) Nothing in this section shall authorize a trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust. 21. Power to insure building or other property (1) A trustee may insure against loss or damage by fire any building or other insurable property to any amount, including the amount of any insurance already on foot, not exceeding 3 equal fourth parts of the full value of such building or property, and may pay the premiums for such insurance out of the income thereof or out of the income of any other property subject to the same trusts, without obtaining the consent of any person who may be entitled wholly or partly to such income. (2) This section does not apply to any building or property which a trustee is bound forthwith to convey absolutely to any beneficiary upon being requested to do so. (3) Nothing in this section shall authorize a trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust. 22. Power of trustees of renewable leaseholds to renew and to raise money for the purpose (1) A trustee of any leaseholds for lives or years which are renewable from time to time, either under any covenant or contract, or by custom or usual practice, may, if he thinks fit, and shall if thereto required by any person having any beneficial interest, present or future or contingent, in the leaseholds, use his best endeavours to obtain a renewed lease of the same lands on the accustomed and reasonable terms, and for that purpose may make or concur in making a surrender of the lease for the time being subsisting, and do all such other acts as are requisite: Provided that, when by the terms of the settlement or will the person in possession for his life or other limited interest is entitled to enjoy the trust property without any obligation to renew or to contribute to the expense of renewal, the consent in writing of that person must be obtained to the renewal on the part of the trustee. (2) If money is required to pay for the renewal, the trustee effecting the renewal may pay the same out of any money then in his hands in trust for the persons beneficially interested in the lands to be comprised in the renewed lease, and if he has not in his hands sufficient money for the purpose, he may raise the money required by mortgage of the lands to be comprised in the renewed lease, or of any other lands for the time being subject to the uses or trusts to which those lands are subject; and any person advancing money upon a mortgage purporting to be given under this power is not bound to see that the money is wanted, or that no more is raised than is wanted for the purpose. (3) Nothing in this section shall authorize a trustee to do anything which he is in express terms forbidden to do, or to omit to do anything which he is in express terms directed to do, by the instrument creating the trust. 23. Power