Trustee Act 1893

The Act defines a range of central concepts in section 82. The expression “trust” does not include the duties incident to an estate conveyed by way of mortgage, or to the estate or interest of a mortgagee under the Land Title Act 2000, but otherwise includes implied and constructive trusts, cases where the trustee has a beneficial interest, and the duties incident to the office of representative of a deceased person. “Trustee” includes a representative of a deceased person. “Property” includes real and personal property, and any estate and interest in any property, real or personal, and any debt, and any thing in action, and any other right or interest whether in possession or not.

The concept of “investment” is central to Part I. The Act gives a trustee a broad power to invest in any form of investment unless expressly forbidden by the trust instrument (s 5). This replaces the old “legal list” approach. The duty to invest is qualified by the preservation of law and equity (s 7). The rules and principles of law or equity that impose a duty on a trustee exercising a power of investment continue to apply except so far as they are inconsistent with the Act or the trust instrument. These include the duty to exercise powers in the best interests of all present and future beneficiaries, the duty to invest only in investments that are not speculative or hazardous, the duty to act impartially, and the duty to take advice (s 7(1)). The reasonable costs of obtaining advice are payable out of trust funds (s 7(3)).

Section 8 lists eighteen non-exhaustive matters to which a trustee must have regard when exercising a power of investment, so far as they are appropriate to the circumstances of the trust. These include the purposes of the trust and the needs and circumstances of the beneficiaries, the desirability of diversifying trust investments, the nature of and risk associated with existing trust investments, the need to maintain real value of capital or income, the risk of loss or depreciation, the potential for capital appreciation, the likely income return and its timing, the length of the proposed investment term, the probable duration of the trust, liquidity and marketability, the aggregate value of the trust estate, the effect on tax liability, the likelihood of inflation, costs of making the investment, and the results of a review of existing trust investments (s 8(1)(a)-(r)).

The concepts of “vesting order” and “new trustee” are critical in Parts III and IV. A vesting order is an order of the Supreme Court that vests land, stock, or choses in action in a person without the need for a formal conveyance (ss 28, 35, 37). It has the same effect as if the trustee had executed all proper conveyances (s 35). The Court may also appoint a person to convey land if that is more convenient (s 36).

The Act uses “contingent right” extensively in Part III. It includes a contingent or executory interest, a possibility coupled with an interest (whether or not the object is ascertained), and a right of entry whether immediate or future, and whether vested or contingent (s 82). This concept is relevant to vesting orders that release or dispose of contingent rights (ss 28, 29, 30).

Another key concept is the “person of unsound mind”. The Act defines it as any person, not an infant, who, not having been found to be a lunatic, is incapable from infirmity of mind of managing his or her own affairs (s 82). A “lunatic” is a person found to be a lunatic upon inquiry by the Supreme Court or upon a commission in the nature of a writ de lunatico inquirendo (s 82). These definitions determine when the Court may make vesting orders in respect of trustees or mortgagees who are of unsound mind.

The concept of “settlement” appears in section 69 for settled land. It means an Act of Parliament, deed, agreement, will or other instrument under or by virtue of which any hereditaments stand limited to or in trust for any persons by way of succession. Under the Act, future interests in settled land take effect as equitable, not legal, interests, and a person who holds an equitable interest is taken to be a beneficiary (s 69(2)(c)-(d)).

“Bank” is defined as an ADI permitted under the Commonwealth Banking Act 1959 to use the word bank, banker or banking (s 82). “Valuer” has the same meaning as in the Valuation of Land Act 1963 (s 82). These definitions are important for the operation of sections 17 (receipt of money by banker or legal practitioner) and 10C (protection for loans based on valuation reports).

The Act primarily affects trustees of all descriptions, whether appointed by a trust instrument, by the court, or by operation of law. It applies to both individual trustees and corporate trustees (including trustee companies). The definition of “trustee” in section 82 is broad, encompassing a representative of a deceased person (i.e. executors and administrators), and extends to implied and constructive trustees as well as trustees who have a beneficial interest in the trust property. The Act therefore catches personal representatives administering deceased estates, as well as persons who become trustees by operation of law such as resulting trustees.

Beneficiaries are directly affected. The Act confers rights on beneficiaries to apply to the Court for orders relating to the appointment of new trustees (s 39), for vesting orders (s 39), for declarations as to the validity of dispositions under the rule against perpetuities (s 21A), and for the Court to authorise dealings with trust property (s 50A). Beneficiaries may also require a trustee to file an annual account in the Supreme Court under the Trustee Act 1907 (s 8). The Act protects beneficiaries by preserving the equitable duties of trustees (s 7) and by giving the Court power to make a beneficiary indemnify a trustee for breach of trust at the beneficiary’s instigation or with the beneficiary’s written consent (s 50).

Settlors and testators are affected because the Act gives default powers that apply unless a contrary intention is expressed in the trust instrument. Many provisions operate “only if and as far as a contrary intention is not expressed” (e.g. ss 11(5), 12(3), 14(3), 21(3), 24(3)). This means a settlor or testator who wishes to exclude or modify the statutory default rules must do so expressly.

The Supreme Court is a central actor under Part III. The Court exercises extensive supervisory and remedial powers, including appointing trustees (s 27), making vesting orders (ss 28-38), relieving trustees from liability (s 49A), impounding beneficiaries’ interests (s 50), reforming dispositions invalid for perpetuity (s 50AA), authorising dealings with trust property (s 50A), and allowing remuneration to trustees (s 78). The Court may also direct commissions of inquiry concerning persons of unsound mind (s 66).

The Registrar-General is affected by Part IV and other provisions relating to land under the Land Title Act 2000. The Registrar-General registers memoranda of appointment of new trustees (s 56), and must give effect to court orders relating to land by registering transfers, leases or other documents on the land register (s 50A(9)). Section 63 preserves all powers of the Registrar-General under the Land Title Act 2000.

Legal practitioners and banks are affected by section 17, which permits a trustee to appoint a legal practitioner or bank as agent to receive money and give discharges. The section protects trustees from liability for making such appointments, but does not exempt a trustee from liability if the money remains in the agent’s hands longer than reasonably necessary (s 17(4)). Banks are also affected by section 5 of the Trustee Act 1907, which allows trustees to authorise a bank to honour cheques drawn by any one or more trustees or their attorneys.

Mortgagees fall within the scope of certain provisions. Although “trust” expressly excludes a mortgagee’s estate or interest under the Land Title Act 2000 (s 82), mortgagees are entitled to pay money into court under section 44, and the Court has power to make vesting orders in place of a conveyance by an infant or lunatic mortgagee (s 30) and in place of a conveyance by the heir or devisee of a deceased mortgagee (s 31).

The Crown may be affected by section 73, which empowers the Court to sell the Crown’s interest in real estate on the application or with the consent of the Minister, with the net proceeds paid into the Northern Territory Government Account.

The Act imposes a clear hierarchy of duties on trustees exercising a power of investment. Section 6(1) establishes a duty of care that is professional or lay depending on the trustee’s occupation. A trustee whose profession, business or employment is or includes acting as a trustee or investing money on behalf of others must exercise the care, diligence and skill that a prudent person engaged in that profession would exercise. All other trustees must exercise the care, diligence and skill that a prudent person of business would exercise. Section 6(2) requires compliance with any provision of the trust instrument that requires consent, approval, or compliance with directions about investments. Section 6(3) imposes a statutory duty to review the performance of trust investments individually and as a whole not less than once each year.

Section 8(1) lists the matters to which a trustee must have regard when exercising a power of investment. This is a mandatory checklist, not merely a suggestion: the trustee shall, so far as appropriate, have regard to the enumerated factors. The factors cover risk, return, diversification, liquidity, tax, inflation, costs, and the results of a review. The trustee may obtain and consider independent and impartial advice and pay the reasonable costs out of trust funds (s 8(2)). Section 10E allows a Court to take into account whether the trustee had regard to the section 8 matters, whether investments were made pursuant to an investment strategy, and whether the trustee acted on independent advice, when considering liability for breach of trust.

Section 9 gives a trustee extensive powers in relation to securities of a body corporate. The trustee may concur in schemes for reconstruction, reduction of capital, liquidation, sale, acquisition, amalgamation, or modification of rights, in the same manner as if the trustee were beneficially entitled. The trustee may accept new securities, exercise preferential rights (including by applying capital money), assign the right for best consideration, or renounce it. Securities acquired under section 9 are treated as an exercise of the power of investment.

The Act provides a statutory right for a trustee to retain investments that have ceased to be authorised. Section 10B provides that a trustee is not liable for breach of trust by reason only of continuing to hold an investment that has ceased to be authorised by the trust instrument, by a proper exercise of the investment power, by the Part as previously in force, or by any other Act or the general law.

Section 10C gives a trustee a defence in respect of loans on security if the trustee acted on an independent valuation report and the loan did not exceed two-thirds of the value stated in the report, or if the trustee is insured against loss by default of the borrower. Section 10D limits a trustee’s liability where an improper loan would have been proper if the sum were smaller: the trustee is only liable for the difference between the sum advanced and the smaller proper sum, with interest.

Section 10F confers a right on the Court to set off gains and losses arising from investments when considering an action for breach of trust, whether or not the other investment was itself a breach. This power is in addition to any other power of set-off.

Outside Part I, the Act confers important rights on trustees to administer trusts efficiently. Section 14 gives trustees for sale a broad power to sell by auction or private contract on any terms they think fit, with power to buy in and resell without liability. Section 18A permits a trustee to insure a building or other insurable property against loss or damage, or against any risk or liability a prudent person would insure against. The amount must not exceed the full value of the property, which may include replacement cost and loss of rent.

Section 21 gives two or more trustees acting together, or a sole trustee if authorised, the right to accept compositions, compromise debts, allow time for payment, and settle claims in good faith without responsibility for loss. Section 22 gives a trustee the right to distribute trust property after giving prescribed notices, and to apply to the Court for directions on what notices to give.

Section 24 gives trustees a discretionary power to pay or apply the income of property held for an infant for the infant’s maintenance, education, or benefit, with any residue to be accumulated. Section 24A gives a power to apply capital for a beneficiary’s advancement or benefit up to $2,000 or half the capital, whichever is greater, or with court consent a greater amount.

Section 49A of Part III gives a trustee a right to seek relief from personal liability for breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. The Court may grant relief wholly or partly.

The Act does not create criminal penalties. Its enforcement mechanisms are principally civil and remedial, operating through the Supreme Court’s supervisory jurisdiction and through the liability of trustees for breach of trust. A breach of trust exposes the trustee to personal liability to compensate the trust for loss. The Act provides several qualifications and protections.

Section 7(2) preserves any rules and principles of law or equity that relate to a provision in a trust instrument that purports to exempt, limit the liability of, or indemnify a trustee in respect of a breach of trust. This means an exculpation clause in a trust deed remains effective subject to equitable principles.

Section 49A gives the Supreme Court a broad power to relieve a trustee wholly or partly from personal liability for breach of trust. The conditions are conjunctive: the trustee must have acted honestly and reasonably, and the Court must consider that the trustee ought fairly to be excused for the breach and for omitting to obtain the directions of the Court. The provision applies whether the breach occurred before or after commencement of the section. This is a powerful discretionary remedy.

Section 50 empowers the Court to impound all or part of a beneficiary’s interest in the trust estate by way of indemnity to the trustee where the beneficiary instigated, requested, or consented in writing to the breach. This applies to breaches committed both before and after the commencement of the Act.

Section 10E allows the Court, when considering a trustee’s liability for breach of a duty under Part I, to take into account the nature and purpose of the trust, whether the trustee had regard to the section 8 matters, whether investments were made pursuant to an investment strategy, and the extent to which the trustee acted on independent advice. This gives the Court a structured discretion to moderate liability.

Section 10F gives the Court power to set off all or part of a loss from one investment against all or part of a gain from any other investment, even if the other investment was also in breach of trust. This is an important mechanism for reducing a trustee’s net liability where an investment strategy has mixed results.

Section 10D limits liability where a trustee improperly lends trust money on a security that would have been a proper investment for a smaller sum. The security is treated as a proper investment for the smaller sum, and the trustee is liable only for the difference with interest. This prevents a trustee from being liable for the entire loss when the error is one of quantum rather than the nature of the investment.

Section 26 establishes the default rule that a trustee is chargeable only for money and assets actually received, and is answerable only for the trustee’s own acts, receipts, neglects, or defaults, and not for those of any other trustee (the “no liability for co-trustee” rule), nor for loss from a banker, broker, or other depositary, unless the loss happens through the trustee’s own wilful default. This is a significant limitation on the strict liability that might otherwise apply.

For trustees who breach the duty to review investments annually under section 6(3), the Court may consider that failure in assessing liability, but the Act does not impose an automatic penalty.

There are also protections for persons dealing with trustees. Section 20 provides that a trustee’s receipt in writing is a sufficient discharge and exonerates the person paying from seeing to the application of the money. Section 25 protects a trustee who acts or pays money in good faith under a power of attorney, even if the donor was dead or had revoked the power, provided the trustee lacked knowledge. Section 80 gives a complete indemnity to all companies and persons for any acts done pursuant to an order purporting to be made under the Act, without requiring them to inquire into the propriety of the order or the Court’s jurisdiction.

The Act also contains a provision protecting purchasers from trustees. Section 15(2) provides that a sale by a trustee shall not be impeached as against a purchaser after execution of the conveyance unless the purchaser was acting in collusion with the trustee at the time of the contract.

Section 67 expressly provides that the provisions of the Act are in addition to those of any enactment not repealed by it. This means the Act supplements existing law, including the general law of equity.

Section 7(1) expressly preserves the rules and principles of law or equity that impose duties on a trustee exercising a power of investment, except so far as they are inconsistent with the Act or the trust instrument. The preserved duties include the duty to act in the best interests of beneficiaries, the duty to avoid speculative or hazardous investments, the duty of impartiality, and the duty to take advice. This means the equitable framework continues to apply alongside the statutory regime.

Section 7(2) preserves the law and equity relating to exculpation clauses in trust instruments.

The Act interacts with the Land Title Act 2000 in several places. Section 81 provides that despite the Land Title Act 2000, the Trustee Act applies to land subject to the Torrens system, but only to the extent necessary for carrying out the purposes of this Act. Section 13(3) provides that the vesting provisions for new trustee deeds do not extend to land under the Land Title Act 2000, meaning Torrens land requires registration rather than relying solely on a deed declaration. Part IV (ss 51-64) contains special provisions for appointment of new trustees under the Land Title Act 2000, including prescribed forms (s 54), registration of a memorandum of appointment (s 56), and the effect of registration to vest estates in new trustees (s 57). Section 50A(9) requires a court order relating to land to be produced to the Registrar-General for registration.

The Act interacts with the Law of Property Act 2000. Section 50AA(3)(b) allows the Supreme Court, when reforming a disposition that violates the rule against perpetuities, to specify the perpetuity period in accordance with section 187 of the Law of Property Act 2000. Section 18A (power to insure) was inserted by the Law of Property (Consequential Amendments) Act 2000. Section 49 (power to sanction sale of land or minerals separately) was also amended by that Act.

The Act deals with settled land in sections 68 and 69. Section 68 provides that all powers and provisions in the Act relating to appointment, discharge and retirement of trustees apply to trustees for the purposes of the Settled Estates Act 1880 (now repealed) whether before or after its repeal. Section 69(2) provides that if there is settled land to which the Settled Estates Act 1880 applied in the Territory, and the land is not held on trust, the tenant for life is taken to be a trustee and the Act applies accordingly; future interests in the land take effect as equitable rather than legal interests.

The Act interacts with the Public Trustee Act 1979 through the definition of “representative” in section 82, which includes the Public Trustee when administering an estate under section 35 of that Act.

Section 10G contains a transitional provision: any Act or instrument of a legislative or administrative character (whether or not creating a trust) that empowers or requires a person to invest money in the investments authorised by this Act is to be read as if it empowered or required that person to invest according to the provisions of Part I as to the investment of trust funds. This ensures that old references to “authorised investments” are updated to refer to the modern prudent person regime.

The Act interacts with the Corporations Act (Commonwealth) via references to shares, securities, and calls on shares (s 10). Section 10(b) allows a trustee company to exercise the power to pay calls even if the shares are in the trustee company itself.

The Act also interacts with the Valuation of Land Act 1963 through the definition of “valuer” in section 82, which is relevant to section 10C (loans based on valuation reports).

The Trustee Act 1893 was originally enacted as an Act of the Parliament of South Australia (Act No. 586 of 1893) and commenced on 14 February 1894. The Trustee Act 1907 (Act No. 944 of 1907) was incorporated with it. These Acts were received as part of the law of the Northern Territory and were subsequently amended by a series of Northern Territory ordinances and Acts.

The first major NT amendment was the Trustee Ordinance 1969 (Act No. 56, 1969), which made various changes including to sections 21, 22, 73, 78, 82 and the Second Schedule. The Trustee Ordinance 1972 (Act No. 41, 1972) replaced the original Part I (investments) which had contained a list of authorised investments. The new Part I introduced section 4 and section 4A, and repealed old sections 6-8. The Trustee Ordinance (No. 2) 1972 (Act No. 69, 1972) continued the process.

The Trustee Ordinance 1976 (Act No. 58, 1976) inserted new sections 6, 7, and 8 into Part I, introducing the requirement for trustees to have regard to specified matters when investing. Further amendments followed through the Transfer of Powers (Self-Government) Ordinance 1978 and the Statute Law Revision Act (No. 2) 1978.

The Trustee Act 1979 (Act No. 99, 1979) repealed section 3A and amended section 4 (which was later substituted). The Trustee Amendment Act 1981 (Act No. 57, 1981) inserted section 24A (power to apply capital for advancement) and section 49A (relief from liability for breach of trust), and amended section 82.

The Trustee Amendment Act 1988 (Act No. 59, 1988) inserted section 50A (power of Court to authorise dealings with trust property). The Trustee Amendment Act 1991 (Act No. 69, 1991) and the Trustee Amendment Act 1992 (Act No. 72, 1992) made further changes including to Part IV (special provisions for appointment of new trustees). The Trustee Amendment Act (No. 2) 1994 (Act No. 36, 1994) inserted section 21A (declaration as to validity under the rule against perpetuities) and sections 50AA and 50B (cy-pres modification and vesting orders arising from resulting trusts).

The most significant modernisation occurred with the Trustee Amendment Act (No. 2) 1995 (Act No. 60, 1995), which came into operation on 26 February 1996. This Act completely rewrote Part I. It substituted sections 4, 5, 6, 7, 8, 9, and 10, and inserted new sections 10A through 10G. The old list of authorised investments was abolished and replaced with the broad power to invest in any form of investment (s 5), the graduated duty of care (s 6), and the extensive list of matters to be taken into account (s 8). The amendment also introduced the dwelling house power (s 10A), the power to retain investments (s 10B), the protection for loans based on valuations (s 10C), the limitation of liability for over-lending (s 10D), the court’s power to consider investment strategy (s 10E), the set-off power (s 10F), and the transitional provision (s 10G).

The Land Title (Consequential Amendments) Act 2000 (Act No. 45, 2000) and the Law of Property (Consequential Amendments) Act 2000 (Act No. 46, 2000), both commencing 1 December 2000, updated references to the new Land Title Act 2000 and Law of Property Act 2000. They amended sections 13, 18, 49, 50AA, 50A, 54, 59, 60, 63, 68, 69, 81, 82, and inserted section 18A (power to insure).

The Supreme Court Amendment (Associate Judges) Act 2017 (Act No. 18, 2017) commenced on 22 November 2017 and amended section 22 to update the reference to an Associate Judge.

The endnotes show that subsequent general amendments of a formal nature were made by the Interpretation Legislation Amendment Act 2018 (Act No. 22, 2018) to sections 1, 13, 50AA, 50A, 54, 59, 60, 63, 68, 81 and 82, but those amendments are not included in the version as in force at 22 November 2017.

The text of the Act as provided does not cite any specific cases. However, several provisions of the Act have been the subject of judicial consideration by the Supreme Court of the Northern Territory and other Australian courts. The Court’s power to relieve a trustee from liability under section 49A is frequently litigated. The condition that the trustee “acted honestly and reasonably and ought fairly to be excused” mirrors provisions in other Australian trustee acts and has been interpreted in the context of the trustee’s state of mind and the reasonableness of the conduct.

Section 50A, which allows the Court to authorise dealings with trust property where the trustee has no power under the trust instrument or a law in force, has been used by trustees to obtain court approval for transactions that would otherwise be beyond their powers. The requirement in section 50A(4) that an application relating to property subject to a life interest must be made with the consent of all persons having a beneficial interest, and of all trustees on behalf of an unborn child, has been the subject of court practice.

Section 21A, allowing an application for a declaration as to validity under the rule against perpetuities, and section 50AA, providing for cy-pres modification of dispositions invalid for perpetuity, have been used in estates litigation in the Territory.

The investment provisions in Part I, particularly the duty to review annually (s 6(3)) and the matters to be considered (s 8), have been referenced in proceedings concerning alleged breaches of trust where trustees have been criticised for failing to diversify or for making speculative investments. The Court’s power under section 10F to set off gains and losses has been considered in cases where a trust has both profitable and unprofitable investments.

Section 10C, protecting trustees who lend on the security of property based on a valuation report, and section 10D, limiting liability for over-lending, have been litigated in mortgage lending contexts, particularly where a valuer’s report was negligent.

The provisions on appointment and removal of trustees (ss 11, 27), and vesting orders (ss 28, 37), are regularly the subject of uncontested applications in the Supreme Court. The Court has established practice directions for such applications.

The power to approve remuneration under section 78 (up to 5%) is exercised by the Court on application, and the Court may take into account the size and complexity of the trust, the time spent by the trustee, and the results achieved.

It should be noted that the Act has been in force in its current form for many decades, and there is a body of case law from the Supreme Court of the Northern Territory and from other Australian jurisdictions interpreting equivalent provisions. However, because the Act is an early consolidation (1893) with modern amendments, older decisions on the pre-1995 investment provisions may have limited relevance.

Several provisions contain traps for the unwary trustee. Section 10C provides that a trustee lending on the security of property is not in breach of trust by reason only of the loan amount in comparison to value if the trustee acted on a report from a person the trustee reasonably believed to be competent and whom the trustee instructed and employed independently of the property owner. The loan must not exceed two-thirds of the value stated in the report. This is a specific safe harbour: if the trustee fails to obtain an independent valuation, or the valuation is by a valuer connected to the borrower, the protection is lost even if the loan was otherwise prudent.

Section 10D limits liability where a loan on a security would have been proper if the sum were smaller, but only to the extent that the security is taken to be a proper investment for the smaller sum. The trustee remains liable for the excess plus interest. The trap is that the security must be of a kind that would have been a proper investment for the smaller sum: if the security itself was improper (e.g. unsecured), the section does not apply.

Section 24A caps the amount that can be advanced for a beneficiary’s benefit at $2,000 or half the capital, whichever is greater, without court consent. This is a small amount in modern terms, meaning trustees dealing with significant capital will almost always need court approval for any substantial advancement. The section also only applies to trust property that consists of money or securities or property held on trust for sale, calling in and conversion, and where the proceeds are not by statute or equity considered as land. A trust of real property (not held on trust for sale) may not qualify.

Section 18A allows a trustee to insure a building or other insurable property, but the amount must not exceed the full value of the property. The trustee must not over-insure. The value may include replacement cost and loss of rent, but the full value remains a cap. A trustee who insures for more may be in breach of trust.

Section 25 protects a trustee who acts or pays money in good faith under a power of attorney, even if the donor had died or revoked it, provided the trustee had no notice. However, the protection does not affect the right of the person entitled to the money against the person who received payment. The person receiving payment remains liable, so the trustee may still be sued by the entitled person if the money cannot be recovered from the recipient.

Section 26 gives a trustee a broad indemnity for expenses, but it also limits liability to wilful default. The trap is that the section protects against loss unless caused by the trustee’s own wilful default. This is a high threshold, but it is not an absolute shield: if a court finds the trustee did act with wilful default, the full liability may apply. The phrase “wilful default” covers deliberate recklessness.

Section 49A relief for breach of trust requires the Court to be satisfied that the trustee acted honestly and reasonably and ought fairly to be excused. The omission to obtain the directions of the Court must also be excused. A trustee who deliberately ignores a known risk or fails to review investments cannot rely on this section.

Section 78 allows the Court to allow remuneration out of trust property not exceeding 5%. A trustee who takes remuneration without court approval is in breach of trust. The section does not override the trust instrument - if the trust instrument provides for remuneration, the statutory cap does not apply, but if the instrument is silent, the court order is required.

Section 80 provides a complete indemnity to companies and persons for acts done pursuant to an order purporting to be made under the Act, without requiring inquiry into propriety or jurisdiction. However, this only protects persons acting pursuant to an order. A trustee who acts without obtaining a needed court order (e.g. for a transaction requiring consent under s 50A) cannot rely on this indemnity.

Section 22 allows a trustee to distribute trust property after giving notices, but the notice period is not specified in the Act. The trustee must apply to the Court for directions on what notices are proper and the mode of service (s 22(4)). A trustee who sets an inadequate time or gives insufficient notice remains liable to claimants who later appear.

Section 23 provides that where a power or trust is given to two or more trustees jointly, the survivor or survivors may exercise it. But this only applies to trusts created by instruments coming into operation after the commencement of the Act (21 October 1862). Older trusts may require all trustees.

A trustee subject to the Trustee Act 1893 should adopt a systematic approach to compliance, focusing on the duties imposed by Part I and the procedural requirements in Part II.

First, the trustee should carefully examine the trust instrument. Many provisions apply only if a contrary intention is not expressed. The instrument may restrict the power of investment, limit the types of investments permitted, or impose conditions such as requiring the consent of a protector or beneficiary. If the instrument expressly forbids a particular investment, the trustee must comply (s 5, s 6(2)). If the instrument conflicts with a default power, the instrument prevails.

Second, the trustee should develop and maintain an investment strategy. Section 8(1) lists eighteen matters to which the trustee must have regard, so far as appropriate. A prudent trustee should document the consideration of each factor, explaining why particular matters are relevant or irrelevant. The strategy should be tailored to the purposes of the trust and the needs of the beneficiaries. The trustee should consider diversification (s 8(1)(b)), the nature and risk of existing investments (s 8(1)(c)), the need to maintain real value (s 8(1)(d)), and the liquidity of proposed investments (s 8(1)(k)). The trustee must review the performance of investments at least once each year (s 6(3)), and the review should be documented.

Third, the trustee should obtain and consider independent and impartial advice where reasonably required (s 8(2)). The cost is payable out of trust funds (s 7(3)). This is particularly important for professional trustees, but non-professional trustees should also seek advice when investing in complex or illiquid assets. Section 10E gives the Court power to take into account whether the trustee acted on advice in a breach of trust action.

Fourth, the trustee should keep proper records of all investment decisions, including the rationale for each investment, the consideration of the section 8 factors, the results of annual reviews, and any advice obtained. These records will be critical if a beneficiary challenges the trustee’s conduct.

Fifth, for loans secured by property, the trustee must ensure compliance with section 10C if the safe harbour is to be relied upon. This means obtaining a valuation report from a person whom the trustee reasonably believes to be competent (a valuer as defined in the Valuation of Land Act 1963), instructing and employing the valuer independently of the property owner, and ensuring the loan does not exceed two-thirds of the value stated in the report.

Sixth, where the trustee wishes to make a capital payment for the advancement or benefit of a beneficiary, the trustee must check whether the amount exceeds $2,000 or half the capital (whichever is greater) and if so, obtain court approval (s 24A). The trustee must also ensure that no prior life or other interest is prejudiced unless the holder consents in writing (s 24A(6)).

Seventh, if the trustee needs to sell trust property, the trustee should comply with the requirements of ss 14 and 15. The trustee may sell by auction or private contract, and with any conditions respecting title, provided the consideration is not inadequate (s 15(1)). After conveyance, the sale cannot be impeached against a purchaser unless collusion is shown (s 15(2)).

Eighth, when appointing new trustees, the trustee should follow the process in s 11 (out-of-court) or s 27 (court appointment). For land under the Land Title Act 2000, the appointment should be registered under Part IV using the prescribed form (Third Schedule) to vest the estate in the new trustees without a separate conveyance (ss 54, 56, 57).

Ninth, if the trustee is uncertain about any aspect of administration, the Court may provide directions. The trustee may apply for directions under s 50A (dealing with trust property), s 21A (validity under perpetuities), s 22(4) (notices for distribution), or s 49A (relief from liability). The Court may also authorise a trustee to sell property to himself or herself if it is advantageous to beneficiaries (Trustee Act 1907, s 7).

Tenth, the trustee should consider insurance under s 18A. The amount must not exceed full value but may include replacement cost and loss of rent. Premiums may be paid out of income from the insured property or any other property subject to the same trusts.

Finally, the trustee should file accounts if required by a beneficiary. Under section 8 of the Trustee Act 1907, every executor and trustee must, if required by and at the cost of any beneficiary, file annually in the Supreme Court an account of the administration. The Public Trustee may audit the accounts at the request of a majority or half of the beneficiaries.