Trust Corporations - Where Trustees can act by majority

Where there is an appointment of two lay persons and a trust corporation as trustees, and the trustees can act by majority, can the trust corporation be outvoted by the two lay persons?

Ian Partington
Horwood and James

Trustees must act unanimously, unless there is specific provision within the trust instrument to the contrary. If there is, then any such provision must be strictly adhered to if it is to be relied upon.

Where trustees may act by a majority, I would normally expect that any such provision would require any professional trustee (which would include a trust corporation) to be within the majority for the provision to be effective. If the lay trustees can bind the professional this could freeze the administration of the trust, especially should the lay trustees agree to do something that would be a breach of trust or conflict with other constraints upon the actions of the professional (such as breaching anti-money laundering regulations, for example).

If a professional trustee considers the actions of the majority are something that it cannot condone, it may have no option that to apply to the court for directions. If it seeks to retire, then it may be held to be liable for any wrong-doing, along-side the lay trustees, as by such retirement it has facilitated the action(s) in question.

The simple (?) answer to the question is “Yes” provided that the trust instrument permits trustees to act by a majority, without more.

If there are any restrictions on such power, the answer may be “No”, depending upon the nature of such restrictions.

Even if the answer is “Yes” and the trust instrument “requires” that all trustees must give effect to the majority decision, this is subject to the decision not being a breach of trust or giving rise to an illegal/criminal act. In which case the dissenting trustee can refuse and, if pressed to comply with the decision, apply to the court for directions.

The following might be of interest:

Paul Saunders

If there is no more wording than that, yes. Some clause give the trust corporation either two votes or a casting vote.

Iain Cameron
Acer Legal