Disabilities of Trustees: Complete Notes (Part E)

Part E covers Chapter V of the Act (Sections 46 to 54), which lists what a trustee cannot do. The disabilities flow from two ideas: the trust is a personal confidence, so the trustee cannot walk away or hand it to others; and the trustee is a fiduciary, so he cannot profit from or deal with the property for himself. This consolidated note covers Topics 23 and 24. Sections 48 (joint action) and 54 (no loans between co-trustees) are discussed with co-trustees in Topic 18, and Section 49 (control of discretion) in Topic 22.

1. The Personal Character of the Office

Rule	Content	Exceptions
No renunciation (Section 46)	A trustee who has accepted the trust cannot afterwards renounce it	Court permission; consent of a beneficiary competent to contract; a special power in the instrument
No delegation (Section 47)	A trustee cannot delegate his office or duties to a co-trustee or a stranger	The instrument provides; regular course of business (for example an auctioneer); necessity; consent of a competent beneficiary

Before acceptance an intended trustee may simply disclaim (Section 10); after acceptance he is bound, and leaves office through the routes in Sections 46, 71 and 72. Delegation of ministerial acts to agents is permitted in the regular course of business, but the trustee must keep the decisions, and must choose and supervise agents with ordinary prudence; if he does, he is not liable for their defaults (Section 30).

2. The Fiduciary Disabilities

The no-conflict rule and the no-profit rule apply strictly: honesty, fairness and absence of loss are no answer (Keech v Sandford, 1726; Boardman v Phipps, 1967). The Act expresses them in four sections:

No remuneration (Section 50): unless the instrument expressly directs it, or a contract is made with the beneficiary or the court at the time of accepting; not applicable to Official Trustees, Administrators General, Public Curators and holders of certificates of administration; expenses remain reimbursable (Section 32).
No use of trust property for own profit (Section 51): nor for any purpose unconnected with the trust; profits must be accounted for (Sections 23(f) and 88).
Trustee for sale may not buy (Section 52): applies to the trustee and his agent for the sale, directly or indirectly, for the property or any interest, on his own account or as agent for another; the sale is voidable at the beneficiary's instance.
No purchase, mortgage or lease without court permission (Section 53): applies to every trustee and to one who has recently ceased to be a trustee; permission only if manifestly for the beneficiary's advantage; a trustee for purchase may not take the property for himself.

Purchases of a beneficiary's own interest are not barred outright but are scrutinised closely: the trustee must show full disclosure, a fair price and no advantage taken of his position, or the transaction may be set aside or the advantage held on constructive trust (Sections 88 and 89).

⚠ Key point

Part E in one line: a trustee who has accepted cannot renounce without the court, competent beneficiaries or the instrument, and cannot delegate except as the instrument, business practice, necessity or a competent beneficiary allows; he serves without pay unless authorised, may not use trust property for himself, may not buy what he sells, and may not buy, mortgage or lease trust property without court permission given only where manifestly for the beneficiary's advantage.

3. The Topics of This Part

Topic 23: No renunciation and no delegation (Sections 46 and 47)
Topic 24: Fiduciary disabilities: no remuneration, no profit and no self-dealing (Sections 50 to 53)