Whether the letter served as a notice required under section 12 of the PTCA
The High Court held that the letter did not amount to a notice under section 12(5) of the PTCA, as it did not contain a “
direct and definite statement” that HSBC Trustee intends to appoint ARB as the replacement trustee. The OS was therefore premature. Section 12(5) and (6) of the PTCA provides:
“(5) Notice of any proposed appointment of the Corporation either as a new or additional trustee shall, where practicable, be given to all persons beneficially interested who are resident in Malaysia and whose addresses are known to the person proposing to make the appointment, or, if such beneficiaries are minors, to their guardians.
(6) If any person to whom such notice has been given applies to the Court within twenty-one days from the receipt of the notice, the Court may, if having regard to the interest of all the beneficiaries it considers it expedient to do so, make an order prohibiting the appointment being made:
Provided that a failure to give any such notice shall not invalidate any appointment made under this section.”
In contrast, the High Court found that the Letter merely served to inform the Appointor that it would be in the best interest of the Trust for HSBC Trustee to seek directions from the court to resolve the issues pertaining to the appointment of a new trustee, and that such an application could potentially result in ARB’s appointment if allowed by the court. The Appointor’s action under section 12(6) of the PTCA was thus deemed premature as the Letter was not a section 12(5) notice.
Whether HSBC Trustee was empowered to appoint a new trustee
The High Court referred to
M'Ewan v Drummond [1857] D 936 where it was held:
“... It has been said, in a case reported by Lord Hailes, that "trustees must not imagine that whenever they are tired of their office they can slip their necks out of the collar and leave the trust to be extricated by the Court;" and it is an old principle, that if once a trustee accepts office, he cannot get rid of it by mere caprice. Now, a judicial factor is just a trustee, and if he accepts office he must assign reasonable cause for resigning ...”
The High Court further held that HSBC Trustee was entitled to retire and appoint a new trustee pursuant to section 40(1) of the Trustee Act 1949 and the provisions of the trust deed. This finding was premised on the Appointor’s inability and unwillingness to appoint a new trustee, as well as HSBC Trustee’s explanation that it is exiting from the “
trustee services business” being accepted by the Court as a reasonable cause and sufficient reason for its retirement.
Comment
Whilst the Court recognised that Section 40 of the Trustee Act 1949 allows a trustee to be discharged and the trust instrument gives express power to the trustee to appoint new trustee, the Court nevertheless also considered the reasons behind the resignation. By doing so, the Court acknowledged that the role of trustee carries serious responsibilities, and it is important to maintain the continuity and effective administration of the trust. This decision underscores the flexibility built into trust law to ensure trusts can be managed efficiently even as trustees change.
Our Ms Claudia Cheah (Partner) and Cik Aufa Radzi (Partner) acted as counsel for HSBC Trustee in this case.