RETIREMENT AND REMOVAL OF TRUSTEES

CONTENTS

1.0    Introduction

2.0    Objectives

• Main Content
• Retirement of Trustees
• Removal of Trustees

4.0    Conclusion

5.0    Summary

6.0    Tutor-Marked Assignment (TMA)

7.0    References/Further Readings

INTRODUCTION

It is important to examine issues of retirement and removal of trustees as a result   of the inevitable consequence of this. Not only is it essential for a trustee who is desirous of relinquishing his position as trustee to know what are the acceptable ways of doing so but to equally know when he could be removed against his wish as a trustee. Although death is a natural phenomenon that will bring an end to someone’s office, except the same is hereditary, the issue of death  has therefore  not been treated. This is based on the common knowledge that death terminates a trustee’s appointment and position cannot pass to another person by inheritance.

OBJECTIVES

In this Unit, you will learn about the retirement and removal of trustees, circumstances when they can retire or be removed. You will further learn that in some cases, a trustee may be required to fulfill certain conditions before his retirement could be approved. Also to be learnt in this unit is instances when trustees could be removed from office, irrespective of whether they are still willing to act or not. Some of the issues appeared to cross each other, but an examination  of the issues will enable you to lucidly difference them. At the end of this Unit,  you should be able to:

• Sufficiently state when a trustee can retire from his trusteeship
• Explain circumstances when a trustee has to fulfill certain conditions before his retirement could be consented
• State when trustees can retire without the need to satisfy any condition
• Give instances when trustees could be removed from trusteeship
• Acquire practical knowledge of how to apply what is learnt here in real life

MAIN CONTENT

Retirement of Trustees

A trustee may retire from his duties by being discharged from the same and this could be by express provision in the trust instrument, by statutory provisions or by an order of the court. A consideration of these issues will now be discussed as follows:

1.) By Trust Instrument

A trustee may retire by virtue of the provisions of the trust instrument and thereby relieve himself of the duties of the trust. In appropriate cases, the trust instrument may include provisions for retirement and resignation of a trustee. See Davis v. Richards and Wallington Industries [1990] 1 W.L.R. 1511.

However, where no such provision is included in the trust instrument, it has been held that the power to resign arises by implication and that a trustee could retire from his trusteeship by writing a letter of resignation to the secretary of the trust. See Davis v. Richards and Wallington Industries (supra).

2. By Statutory Provisions

A trustee may also retire under statutory provisions by virtue of Section 10 of the Trustee Act 1893 and Section 24 of the Trustee Law. Under those provisions, upon the appointment of new trustees, a trustee may cease such opportunity to retire. However, in the absence of new appointments, a trustee could still retire in accordance with Section 11 of the Trustee Act, provided that there is a trust corporation or at least two trustees remaining to perform the trust. The co-trustees or any other person vested with power to appoint new trustees must also consent to such retirement. The retirement must be done by deed and where this is done, the trustee is effectively discharged from the trust.

In cases where there is a Public Trustee remaining as the sole or one  of  the trustees, there is no need for the above conditions to be fulfilled before a trustee  can retire. In that case, a trustee can retire whether a new trustee is appointed or  not. See Section 9(2) of the Public Trustee Act and the Trustee Law.

3. By Consent of all Beneficiaries

A trustee can retire where all the beneficiaries of full age consent to  such retirement and they are also absolutely entitled to all the beneficial interests of the trust. This is based on the fact that the beneficiaries in such cases could validly terminate the trust as they are entitled to request the trustee to hand over the trust property to them, thereby putting an end to the trust.

4. By Order of the Court

It is also possible for a trustee to be discharged from his trusteeship both under Sections 25 of the Trustee Act and 28 of the Trustee Law and under the inherent jurisdiction of the court.

Where a trustee could not retire by any of the ways previously discussed above,   the court could exercise power conferred by statute or under its inherent  jurisdiction to discharge him from trusteeship and appoint another person to  replace him.

Furthermore, under its inherent jurisdiction, the court may impose such conditions as it may deem fit. The court may require for instance that there must be at least  one continuing trustee or that a suitable person must be available to act as trustee,  in order to ensure that the trust is not in any way prejudiced by the retirement.

SELF ASSESSMENT EXERCISE (SAE) 1

Mention and discuss two instances when a trustee could retire from his trusteeship.

Removal of Trustees

As it is with the case under retirement of trustees, trustees could also be removed  by virtue of the provisions to that effect in the trust instrument, under statutory provisions and by an order of the court. Some of the ways by which a trustee could be removed will now be examined briefly as follows:

i.) By express provisions in the trust instrument - a trustee could be removed for any reason which may be specified in the trust instrument.

ii.) On grounds of unfitness to act - a trustee can be removed if he found to be unfit to act by virtue of being declared bankrupt or where he has absconded.

iii.) On grounds of incapacity to act – a trustee may be removed from his trusteeship if he has become senile or can no longer exercise good judgment by reason of old age, etc. See Re East (1873) 8 Ch, App. 735.

iv.) By statutory provisions – a trustee could be removed from office under the following statutory grounds:

1. If a trustee remains out of Nigeria for more than twelve months
2. By refusing to act.
3. On grounds of incapacity to act
4. By an order of the court – where among others, the continued stay of the trustee in office will be prejudicial to the trust. See Adeseye v. Williams [1964] 2 All

N.L.R 37.

In respect of the above, see the provisions of Sections 10(1) and 25(1) of the Trustee Act and Sections 24(1) and 28(1) of the Trustee Law, Cap. 128, Laws of Oyo State 1978.

SELF ASSESSMENT EXERCISE (SAE) 2

State and discuss four grounds upon which a trustee could be removed from office.

CONCLUSION

Retirement of trustee is one that may become imperative by so many factors such  as old age or incapacity to act. A trustee could also be removed from office as may be laid down by law, trust instrument and by order of court. The trust may become difficult to perform if a deserving trustee cannot retire and a non performing one cannot be validly removed. It can therefore be seen that both elements of  retirement and removal serve useful purposes.

SUMMARY

In this Unit, you have learnt about the retirement and removal or trustees, the various sources of the right to retire and circumstances when conditions may be imposed for their retirement and when such conditions may be dispensed with.

You further learnt about the grounds upon which a trustee may be removed from office irrespective of whether he is willing to act or not, and the sources of the power to remove a trustee.  With our consideration of the issues, you should be  able to successfully navigate through problems bothering on whether a trustee can retire in a particular case or not, and whether a trustee could validly be removed from office. In the next Unit, you will learn about the administration of estate.

TUTOR-MARKED ASSIGNMENT (TMA)

1. Relate the possibility of a trustee to retire from a trust where the trust instrument did not provide for this and the statutory hurdles that a retiring trustee might face
2. A, B, C and D are trustees of the estate of XY and as a result of the American lottery that won by A, A travelled to the United States of America where he spent sixteen months before returning to Nigeria. Meanwhile, A has been removed as trustee before his arrival. B, absconded and could not be traced but surfaced three years later by which time D has commited a breach of trust by misappropriating trust funds for which the beneficiaries have sued A, B, C and D. C alleged that he has been validly discharged from the trust with the consent of all the beneficiaries and hence not liable for the breach of trust later committed by D. Discuss the legal issues involved and advice on the liabilities of A, B, C and D for the breach of  trust and the validity or otherwise of the removal of A as trustee and the alleged discharge or C from the trust by the beneficiaries

 REFERENCES/FURTHER READINGS

Banire, Muiz. (2002). The Nigerian Law of Trusts. Lagos: Excel Publications. Fabunmi, J.O. (2006). Equity and Trusts in Nigeria. Ile-Ife: Obafemi Awolowo

University Press Ltd.

Hayton, D.J. (2001). Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies. London: Sweet & Maxwell.

Jegede, M.I. (1999). Law of Trusts, Bankruptcy and Administration of Estate.

Lagos: MIJ Professional Publishers Limited.

Trustee Act 1893

Trustee Law, Laws of Western Nigeria, 1959.