Trustee’s duties

Trustees duties:

(1) it owes its members a duty to act in the members’ best interests: see Cowan v Scargill [1984] 2 All ER 750 at 760 per Sir Robert Megarry VC:

“The starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between the different classes of beneficiaries. This duty of the trustees towards their beneficiaries is paramount. They must, of course, obey the law; but subject to that, they must put the interests of their beneficiaries first. When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interest of the beneficiaries are normally their best financial interests.”

(2) it owes a duty to act impartially, excluding from consideration matters which are irrelevant and giving proper consideration to matters which are relevant: see Edge v Pensioners Ombudsman [1999] EWCA Civ 2013; [1999] 4 All ER 546 at 567.

(3) it owes members of the Fund a duty to exercise reasonable care, and it has been said that this duty will be discharged if it “takes in managing trust affairs all those precautions which an ordinary prudent man of business would take in managing similar affairs of his own”: Speight v Gaunt (1883) 9 App Cas 1 at 19 per Lord Blackburn, adopted in Austin v Austin  [1906] HCA 5 ;  (1906) 3 CLR 516  at 525, see also Elder’s Trustee and Executor Company Limited v Higgins [1963] HCA 48; (1962) 113 CLR 426 at 448; “a trustee is not a surety, nor is he an insurer”: see In re Chapman [1896] 2 Ch 763 at 775 per Lindley LJ.

(4) it must act honestly and in good faith: see J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (7th ed, 2006), LexisNexis Butterworths, Sydney (“Jacobs”) at [1608] and the cases there cited.

(5) it must take an informed view of whether or not to exercise its discretion and not act irresponsibly, capriciously or wantonly: see Jacobs supra;

(6) it must exercise its power with due consideration for the purpose for which the power was conferred and not some ulterior purpose: see Jacobs supra.

From Manglicmot v Commonwealth Bank Officers Superannuation Corporation [2010] NSWSC 363