Core Duties of a Trustee: Executing the Trust and Protecting the Property (Sections 11 to 14)

Chapter III of the Act (Sections 11 to 30) sets out the duties and liabilities of trustees. It opens with four foundational duties: to carry out the trust according to its terms (Section 11), to get to know the trust property and get it in (Section 12), to protect the title to it (Section 13), and never to set up a title adverse to the beneficiary (Section 14). Every other duty in the Act builds on these. This note explains each of them.

1. Duty to Execute the Trust (Section 11)

Fulfilling the purpose and obeying directions

The trustee's first duty is fidelity to the trust. He must carry out its purpose and follow the directions the author gave at the time of creation, usually in the deed or will. Directions given later by the author, after the trust is constituted, do not bind the trustee unless the author reserved a power to give them; once the trust exists, the author has no more control than the instrument gives him. An illustration to the section shows a trustee directed to sell by public auction: he may not sell by private contract instead, even if he thinks it would be better.

Modification by beneficiaries

The directions may be modified by the consent of all the beneficiaries, provided all are competent to contract. This reflects the principle (developed further in Section 56) that the beneficiaries, acting together, are the persons for whose benefit the trust exists. Where a beneficiary is a minor or otherwise incompetent, the principal Civil Court of original jurisdiction may consent on his behalf, so the trust is not frozen merely because one beneficiary cannot agree.

When the trustee need not obey

The trustee is not required to obey a direction where obedience would be:

• Impracticable: circumstances have changed so that the direction can no longer be carried out, for example a direction to invest in a security that no longer exists;
• Illegal: obedience would break the law, for example a direction to invest in a form now prohibited; or
• Manifestly injurious to the beneficiaries: following the direction would obviously harm the very persons the trust serves. One illustration shows trustees authorised to lend on a firm's personal security, who should not do so once the firm's credit has become doubtful.

The exception is narrow. A trustee who departs from the terms because he simply prefers another course commits a breach of trust. Where the position is unclear, the prudent course is to seek the court's opinion under Section 34 (Topic 20).

Trusts for payment of debts

An Explanation to Section 11 supplies default rules for a trust to pay the author's debts. Unless a contrary intention is expressed, the trust extends only to debts existing and recoverable at the date of the instrument (or, for a will, at the testator's death), and debts not bearing interest are paid without interest.

2. Duty to Inform Himself and Get In the Property (Section 12)

Section 12 contains three distinct obligations, each to be performed as soon as possible after acceptance:

The illustrations show that a trustee who lets a debt due to the trust remain uncollected, without good reason, until the debtor becomes insolvent is liable for the loss; and that co-trustees must not allow one of them to keep trust money longer than the circumstances require. A new trustee is not liable for his predecessor's defaults (Section 25), but once in office he must review the position and act on what he finds.

3. Duty to Protect Title (Section 13)

Because the trustee is the legal owner, only he can ordinarily sue to recover the property or defend title to it. Section 13 makes that a duty. It requires him to:

• Bring and defend suits that are needed to assert or protect title, for example suing a trespasser before adverse possession ripens into title;
• Take other reasonable steps, such as registering an unregistered instrument of title (as an illustration to the section shows), paying property taxes, renewing leases, maintaining insurance, and recording the trust's interest in public registers;
• Act proportionately, having regard to the nature and value of the property: a trustee need not spend more on litigation than the property is worth.

The duty to protect is reinforced by the trustee's right to reimbursement of properly incurred expenses (Section 32) and his general authority to do all reasonable and proper acts for realising, protecting or benefiting the property (Section 36).

4. No Adverse Title (Section 14)

Section 14 expresses the trustee's loyalty. Having accepted the property on trust, he cannot turn round and claim it, or help anyone else to claim it, against the beneficiary. The rule operates in several ways:

• No claim in his own right: a trustee cannot assert that he owns the property beneficially, or that he acquired an independent title (for example by purchase at a tax sale engineered through his own default).
• No help to strangers: he cannot assist a third party's adverse claim, for example by admitting it in litigation or failing to defend.
• No adverse possession against the beneficiary: a trustee's possession is the beneficiary's possession. Consistently, Section 10 of the Limitation Act, 1963 provides that no period of limitation bars a suit against an express trustee to follow trust property in his hands (Topic 39).
• Estoppel: the rule operates as a form of estoppel; a trustee who has acknowledged the trust cannot later deny it.

5. Related Topics and Provisions

• Standard of care (Topic 14): Section 15
• Rights of trustees (Topic 20): reimbursement and the court's opinion under Sections 32 and 34
• Powers of trustees (Topic 21): the general authority in Section 36
• Rights of the beneficiary (Topic 25): consent and Section 56