Applications By Trustees For The Court's ‘Opinion, Advice Or Direction'

The Courts of Equity have always recognized the right of trustees to approach the Court for directions. Under the laws of The Bahamas, express provision is made for trustees to apply for guidance with respect to the administration of trusts under Section 77 of the Trustee Act 1998 ("Section 77").

When Will It Be Appropriate To Apply For Directions?

In the leading English case of Public Trustee v Cooper [2001] W.T.L.R. 901 (Ch D), Mr Justice Hart quoted from a judgment of Robert Walker J in an unnamed 1995 case wherein Walker J. said that when the court has to adjudicate on a course of action proposed or actually taken by trustees, there are at least four distinct situations (and there are no doubt numerous variations of those as well):-

The first category is where the issue is whether some proposed action is within the trustees' powers; The second category is where the issue is whether the proposed course of action is a proper exercise of the trustees' powers where there is no real doubt as to the nature of the trustees' powers and the trustees have decided on how they want to exercise such powers but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action on which they have resolved and which is within their powers; The third category is that of surrender of discretion properly so called. There the court will only accept a surrender of discretion for a good reason, the most obvious good reasons being either that the trustees are deadlocked or because the trustees are disabled as a result of a conflict of interest; and The fourth category is where trustees have actually taken action, and that action is attacked as being either outside their powers or an improper exercise of their powers. Cases of that sort are hostile litigation to be heard and decided in open court. Key Principles Underpinning Trustee Directions Applications

- The Trustee should ensure that it has done its homework and take proper expert advice

In the decision of the Supreme Court of New South Wales in Re Appln of NSW Trustee & Guardian - BC201402504 it was stated that:

"In applying to the court for judicial advice, the trustee is not abrogating or delegating its obligation to apply its own judgment in deciding whether to do (or not do) something in execution of the trust. The trustee must actively and honestly bring its mind to bear on any particular problem confronting it. Where necessary, it is entitled to do...

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