PART I -
Preliminary
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Short title |
1. |
This
Act may be cited as the Trustee Act. |
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Interpretation |
2. |
(1) |
In this Act-
"authorised investments" mean
investments authorised by the instrument, if any,
creating the trust for the investment of money subject to the trust, or by
law;
"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" as applied to any person include the execution by that person
of every necessary or suitable assurance (including an assent) for
conveying, assigning, appointing, surrendering, or otherwise transferring or
disposing of land whereof he is seized 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;
"Court" means
the High Court or a Judge thereof;
"income"
includes rents and profits;
"land"
includes land of any tenure, houses and other buildings, mines and minerals,
and other corporeal hereditaments; also a rent and other incorporeal
hereditaments, and an easement, right, privilege, or benefit in, over, or
derived from land, and also an undivided share in land; and in this
definition "mines and minerals" include any strata or seam of minerals or
substances in or under any land, and powers of working and winning the same;
and hereditaments mean real property which under an intestacy devolve on the
next of kin;
"mortgage" and
"mortgagee" include a charge or chargee by way of mortgage and relate to
every estate and interest regarded in equity as merely a security for money,
and every person deriving title under the original mortgagee, and also
include and relate to an encumbrance under the Title by Registration Act;
"pay" and
"payment" as applied in relation to stocks and securities and in connexion
with the expression "into court" include the deposit or transfer of the same
in or into court;
"personal
representative" means the executor or administrator for the time being of a
deceased person;
"person
resident in the Territory" means a person who ordinarily resides within the
Territory or carries on business from an office or other fixed place of
business within the Territory but does not include a company incorporated
under the International Business Companies Act;
"possession"
includes receipt of rents and profits or the right to receive the same, if
any; and "possessed" applies to receipt of income of and to any vested
estate less than a life interest in possession or in expectancy in any land;
"property"
includes real and personal property, and any estate, share 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;
"rights"
include estates and interests;
"sale"
includes an exchange;
"securities"
include stocks, funds, and shares; and so far as relate to payments into
court have the same meaning as in the enactments relating to funds in the
Court; and "securities payable to bearer" include securities transferable by
delivery or by delivery and endorsement;
"settlor"
includes a person who transfers property by way of gift or who makes a
testamentary disposition on trust or to a trust;
"stock"
includes fully paid up shares, and so far as relates to vesting orders made
by the Court under this Act, includes 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 or securities, includes the performance and execution of
every deed, power of attorney, act, and thing on the part of the transferor
to effect and complete the title in the transferee;
"trust for
sale" in relation to land means an immediate binding trust for sale, whether
or not exercisable at the request or with the consent of any person, and
with or without power at discretion to postpone the sale;
"trustees for
sale" means the persons (including a personal representative) holding land
on trust for sale. |
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(2) |
For the
purposes of this Act the term "trust" refers to the legal relationship
created, either inter vivos or on death, by a settlor when assets have been
placed under the control of a trustee for the benefit of a beneficiary or
for a special purpose. |
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(3) |
A trust has the following characteristics: |
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(a) |
the assets constitute a separate fund and are not part of
the trustee's own estate; |
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(b) |
title to the trust assets stands in the name of the
trustee or in the name of another person on behalf of the trustee; and |
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(c) |
the trustee has the power and the duty in respect of
which he is accountable to manage, employ or dispose of the assets in
accordance with the terms of the trust and the special duties imposed on him
by law. |
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(4) |
The reservation by the settlor of certain rights and
powers, and the fact that the trustee may himself have rights as a
beneficiary, are not necessarily inconsistent with the existence of a trust. |
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(5) |
A trust does not include the duties incident to an estate
conveyed by way of mortgage but it does extend to |
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(a) |
implied trusts; |
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(b) |
constructive trusts; and |
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(c) |
the duties incident to the office of a personal
representative. |
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TOP |
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Authorised Investments. |
3. |
Subject to any provision contained in the instrument creating the trust, a
trustee may at any time invest any portion of the trust funds in any kind of
investment |
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(a) |
wherever the investment is situate; and |
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(b) |
whether or not at the time the funds are already in a state of investment; |
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and he may vary the investment or retain it in its original state as long as
he exercises the diligence and prudence that a reasonable person would be
expected to exercise in making an investment as if it were his own money. |
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Investment in bearer securities |
4. |
(1) |
A trustee may, unless expressly prohibited by the instrument creating the
trust, retain or invest in securities payable to bearer, which, if not so
payable, would have been an authorised investment, except that securities to
bearer retained or taken as an investment by a trustee shall, until sold, be
retained in safe custody. |
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(1A) |
A direction that investments be retained or made in the
name of a trustee shall not, for the purposes of subsection (1), be deemed
to be an express prohibition. |
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(2) |
A trustee shall not be responsible for any loss incurred
by reason of such deposit, and any sum payable in respect of such deposit
and collection shall be paid out of the income of the trust property. |
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Discretion of trustees. |
5. |
Every power conferred by the preceding sections shall be
exercised according to the discretion of the trustee, but subject to any
consent or direction required by the instrument, if any, creating the trust
with respect to the investment of the trust funds. |
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Power to retain investment which has ceased to be authorised. |
6. |
A trustee shall not be liable for breach of trust by
reason only of his continuing to hold an investment which has ceased to be
an investment authorised by the trust instrument or by the general law. |
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Loans and investments by trustees not chargeable as breaches
of trust. |
7. |
(1) |
A trustee lending money on the security of any property
on which he can properly lend shall not be chargeable with breach of trust
by reason only of the proportion borne by the amount of the loan to the
value of the property at the time when the loan was made, if it appears to
the Court - |
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(a) |
that in making the loan the trustee was acting upon a
report as to the value of the property made by a person whom he reasonably
believed to be an able practical surveyor or valuer instructed and employed
independently of any owner of the property, whether such surveyor or valuer
carried on business in the locality where the property is situate or
elsewhere; and |
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(b) |
that the amount of the loan does not exceed two-third
parts of the value of the property as stated in the report; and |
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(c) |
that the loan was made under the advice of the surveyor
or valuer expressed in the report. |
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(2) |
A trustee shall not be chargeable with breach of trust
only upon the ground that in effecting the purchase, or in lending money
upon the security, of any property he has accepted a shorter title than the
title which a purchaser is, in the absence of a special contract, entitled
to require if in the opinion of the Court the title accepted be such as a
person acting with prudence and caution would have accepted. |
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(3) |
This section applies to transfers of existing securities
as well as to new securities and to investments made before as well as after
the commencement of this Act. |
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Liability for loss by reason of improper investment. |
8. |
(1) |
Where a trustee improperly advances trust money on a
mortgage security which would at the time of the investment be a proper
investment in all respects for a smaller sum than is actually advanced
thereon, the security shall be deemed an authorised investment for the
smaller sum, and the trustee shall only be liable to make good the sum
advanced in excess thereof with interest. |
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(2) |
This section applies to investments made before as well
as after the commencement of this Act. |
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Powers supplementary of powers of investment. |
9. |
(1) |
Trustees lending money on the security of any property on
which they can lawfully lend may contract that such money shall not be
called in during any period not exceeding seven years from the time when the
loan was made, provided interest be paid within a specified time not
exceeding thirty days after it becomes due, and provided there be no breach
of any covenant by the mortgagor contained in the instrument of mortgage or
charge for the maintenance and protection of the property. |
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(2) |
On a sale of land for an
estate in fee simple, trustees may, where the proceeds are liable to be
invested, contract that the payment of any part, not exceeding two-thirds,
of the purchase money shall be secured by a charge by way of first mortgage
of the land sold, with or without the security of any other property, such
charge or mortgage, if any buildings are comprised in the mortgage, to
contain a covenant by the mortgagor to keep them insured against loss or
damage by fire to the full value thereof.
The trustees shall not be bound
to obtain any report as to the value of the land or other property to be
comprised in such charge or mortgage, or any advice as to the making of the
loan, and shall not be liable for any loss which may be incurred by reason
only of the security being insufficient at the date of the charge or
mortgage. |
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(3) |
Where any securities of a company are subject to a trust,
the trustees may concur in any scheme or arrangement- |
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(a) |
for the reconstruction of the company, |
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(b) |
for the sale of all or any part of the property and
undertaking of the company to another company, |
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(c) |
for the amalgamation of the company with another company,
or |
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(d) |
for the release , modification, or variation of any
rights, privileges or liabilities attached to the securities or any of them, |
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in like manner as if they were entitled to such
securities beneficially, with power to accept any securities of any
denomination or description of the reconstructed or purchasing or new
company in lieu of or in exchange for all or any of the first-mentioned
securities; and the trustees shall not be responsible for any loss
occasioned by any act or thing so done in good faith, and may retain any
securities so accepted as aforesaid for any period for which they could have
properly retained the original securities. |
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(4) |
If any
conditional or preferential right to subscribe for any securities in any
company is offered to trustees in respect of any holding in such company,
they may as to all or any of such securities, either exercise such right and
apply capital money subject to the trust in payment of the consideration, or
renounce such right, or assign for the best consideration that can be
reasonably obtained the benefit of such right or the title thereto to any
person, including any beneficiary under the trust, without being responsible
for any loss occasioned by any act or thing so done by them in good faith:
Provided that
the consideration for any such assignment shall be held as capital money of
the trust. |
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(5) |
The powers conferred by this section shall be exercisable
subject to the consent of any person whose consent to a change of investment
is required by law or by the instrument, if any, creating the trust. |
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(6) |
Where the loan referred to in subsection (1), or the sale
referred to in subsection (2), is made under the order of the Court, the
powers conferred by those subsections respectively shall apply only if and
as far as the Court may by order direct. |
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Power to deposit money at bank and to pay calls. |
10. |
(1) |
Trustees may, pending the negotiation and preparation of
any mortgage or charge, or during any other time while an investment is
being sought for, pay any trust money into a bank to a deposit or other
account, and all interest, if any, payable in respect thereof shall be
applied as income. |
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(2) |
Trustees may apply capital money subject to a trust in
payment of the calls on any shares subject to the same trust. |
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PART III -
General Powers of Trustees and Personal Representatives
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Power of trustees for sale to sell by auction or private
contract |
11. |
(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
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. |
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(2) |
A trust or power to sell or dispose of land includes a
trust or power to sell or dispose of part thereof, whether the division is
horizontal, vertical, or made in any other way. |
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Power to postpone sale. |
12. |
(1) |
A power to postpone sale shall, in the case of every
trust for sale of land, be implied unless a contrary intention appears. |
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(2) |
Where there is a power to postpone the sale then (subject
to any express direction to the contrary in the instrument, if any, creating
the trust for sale) the trustees for sale shall not be liable in any way for
postponing the sale, in the exercise of their discretion, for any indefinite
period; nor shall a purchaser of a legal estate be concerned in any case
with any directions respecting the postponement of a sale. |
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(3) |
The foregoing provisions of this section apply whether
the trust for sale is created before or after the commencement of this
Act. |
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(4) |
Where a disposition or settlement coming into operation
after the commencement of this Act contains a trust either to retain
or sell land the same shall be construed as a trust to sell the land with
power to postpone the sale. |
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Trust for sale of mortgaged property where right of
redemption is barred |
13. |
(1) |
Where any property, vested in trustees by way of
security, becomes, by virtue of any enactment relating to the limitation of
actions, or of an order for foreclosure or otherwise, discharged from the
right of redemption, it shall be held by them on trust for sale. |
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(2) |
The net proceeds of sale, after payment of costs and
expenses, shall be applied in like manner as the mortgage debt, if received,
would have been applicable, and the income of the property until sale shall
be applied in like manner as the interest, if received, would have been
applicable; but this subsection operates without: prejudice to any rule of
law relating to the apportionment of capital and income between tenant for
life and remainderman. |
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(3) |
This section does not affect the right of any person to
require that, instead of a sale, the property shall be conveyed to him or in
accordance with his directions. |
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Power to sell subject to depreciatory conditions |
14. |
(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. |
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(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. |
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(3) |
No purchaser, upon any sale made by a trustee, shall be
at liberty to make any objection against the title upon any of the grounds
aforesaid. |
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(4) |
This section applies to sales made before or after the
commencement of this Act. |
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Power of trustees to give receipts |
15. |
(1) |
The receipt in writing of a trustee for any money,
securities, or other personal property or effects payable, transferable, or
deliverable to him under any trust or power shall be a sufficient discharge
to the person paying, transferring, or delivering the same and shall
effectually exonerate him from seeing to the application or being answerable
for any loss or misapplication thereof. |
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(2) |
This section applies notwithstanding anything to the
contrary in the instrument, if any, creating the trust. |
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Power to compound liabilities |
16. |
A personal representative, or two or more trustees acting
together (or in the case of a trust created on or after the date on which
section 3 of the Trustee (Amendment) Act, 2003 comes into force, a personal
representative or a trustee) may, if and as he or they think fit - |
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(a) |
accept any property, real or personal, before the time at
which it is made transferable or payable; or |
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(b) |
sever and apportion any blended trust funds or property;
or |
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(c) |
pay or allow any debt or claim on any evidence that he or
they think sufficient; or |
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(d) |
accept any composition or any security, real or personal,
for any debt or for any property, real or personal, claimed; or |
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(e) |
allow any time of payment of any debt; or |
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(f) |
compromise, compound, abandon, submit to arbitration, or
otherwise settle any debt, account, claim, or thing whatever relating to the
testator's or intestate’s estate or to the trust; |
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and for any of those purposes may enter into, give,
execute, and do such agreements, instruments of composition or arrangement,
releases, and other things as to him or them seem expedient, without being
responsible for any loss occasioned by any act or thing so done by him or
them in good faith. |
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Power to raise money by sale, mortgage, or otherwise |
17. |
(1) |
Where trustees are authorised by the instrument, if any,
creating the trust or by law to pay or apply capital money subject to the
trust for any purpose or in any manner, they shall have and shall be deemed
always to have had power to raise the money required by sale, conversion,
calling in, or mortgage of all or any part of the trust property for the
time being in possession. |
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(2) |
This section applies notwithstanding anything to the
contrary contained in the instrument, if any, creating the trust. |
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Validation of appointment where objects are excluded or take
illusory shares |
18. |
(1) |
No appointment made in exercise of any power to appoint any property among
two or more objects shall be invalid on the ground that |
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(a)< |
