TABLE OF CONTENT

APPOINTMENT, RETIREMENT AND REMOVAL OF TRUSTEES

WHO MAY BE A TRUSTEE?

Individuals

It is generally said that the ability to be a trustee is co-extensive with capacity to hold property.
Anyone who can legally hold property and dispose of same can be appointed a trustee. An infant
cannot be appointed as a trustee in relation to any settlement or trust in the states comprising the
former Western Region for, Section 18 Property and Conveyancing Law provides:

"The appointment of an infant to be a trustee in relation to any settlement or trust shall be void,
but without prejudice to the power to appoint a new trustee to fill the vacancy."

This provision relates only to express trust as an infant can hold property other than a legal estate
in land. Anyone who can legally hold property and dispose of same can be appointed a trustee
upon resulting, implied or constructive trust.

Section 17(3) provides that a conveyance of a legal estate to an infant alone or to two or more
persons jointly both or all of whom are infants, on any trusts operate as a declaration of trust and
does not pass any estate. But if the conveyance of a legal estate in land to an infant is jointly with
one or more other persons of full age on any trusts, it shall operate as if the infant had not been
named therein, but without prejudice to any beneficial interest in the land intended to be thereby
provided for the infant."

The position in other states of Nigeria is that it is possible for an infant to be appointed as trustee,
as it was in England before the Trustee Act of 1925, though Keeton has suggested that the effect
of this varied in England and was not totally free from doubt, for judicial opinion is that an infant
lacks capacity as regards judgment and discretion. Touring

A married woman too may be a trustee of any property because the restriction on married woman
has been removed, by the Married Women Property Act 1882. This Act as modified by the
Married Women Property Act 1893 is accepted as a Statute of General Application in Nigeria''
except in the states comprising the former Western Region of Nigeria where the Married Women
Property Law is in force. Cestuis que trust can be appointed as trustees but such an appointment
is undesirable as there is a possibility of conflict between the beneficiary's interest and the
trustee's duty. 13 Also qualified to be appointed as trustees are the corporations if their charter or
memorandum of incorporation permits them to be so appointed, in this group are the trust
corporations of which Public Trustee is the most important.

The Public Trustee was established by the Public Trustee Act and Laws. Originally, the services
offered by the Public Trustee was restricted to colonial civil servants who had died in Nigeria.
The Act itself did not impose the restriction but because the natives could not afford it and
because there was adequate method of managing the estate of the deceased Nigerian16 the native
did not make use of it. In course of time, it became increasingly desirable for Nigerians to use the
services of Public Trustee.

A Public Trustee is a corporation sole under that name, with perpetual succession and an official
seal." He can act as a sole trustee or jointly with any other person or body of persons. It may act
as an ordinary trustee or custodian’s trustee and may in appropriate cases be appointed trustee by
court. 18 Public Trustee may decline to accept any trust but shall not do so on the ground only of
the small value of the trust property.

Any person beneficially interested may apply to court for appointment of Public Trustee in place
of all the existing executors or administrators or of the guardians of infants or committee or
receiver of a person incapable of managing his own affairs, if sufficient cause is shown. The Act
also provides further that "any person who is aggrieved by any act or omission or decision of the
Public Trustee in relation to any trust may apply to the court, which may make such order in the
matter as it thinks just.

In Re Wilson," the applicant had an order of divorce, certain amount was ordered to be paid to
her as maintenance. Her husband, who evaded personal service and substituted service had to be
ordered, did not appear in court. The husband was a beneficiary for life of an interest in a trust
fund established by his father. The husband disappeared and reappeared on two occasions before
he finally disappeared in June 1961. The arrears of the maintenance allowance were paid by the
Public Trustee up to June 30, 1961. The applicant obtained Writ of sequestration, against her
husband for compliance with order of maintenance. The Public Trustee exercising their
discretion refused to pay further maintenance allowance insisting that the applicant should
produce evidence that her husband was alive. The applicant demanded that the Public Trustee
should apply to court for direction. The Public Trustee refused on the ground that the amount
involved was so small that it would not be in the best interest of the trust to do so. The applicant
then applied to court. The court declined to give an order compelling the Public Trustee to pay
the maintenance allowance to her maintaining that it was her duty to establish that her husband
was still alive.

Judicial decisions reveal the interpretation, which the court has placed on the provision of the
Act. Section 14 of the Act was invoked in Re Williams Deceased" In that case, an application
was brought asking the court to appoint the Public Trustee for purposes of collecting funds from
a portion of the estate because the beneficiaries were unable to obtain their shares. Counsel for
the sole surviving executor opposed the motion contending that no grounds had been advanced to
show that the executor had in any way mal-administered his trust. The trial judge was of the view
that the question was not of misadministration but of undue delay and thought it was desirable in
the interest of the beneficiaries that the Public Trustee be appointed in place of existing trustee in
accordance with Section 14 of the Public Trustee Act. On appeal Baker Acting C.J., said that the
trial Judge could not in the circumstances make an order which would apply to the whole estate,
that he was wrong in making an order under Section 14 in the absence of any such application
and of any sufficient cause shown. Further, the omission to pay money owing to the estate, he
might not necessarily be due to default, especially since there was a complete absence of any
evidence, and the affidavit disclosed no cause whatever to justify either the removal of the
trustee or the appointment of the Public Trustee in his place. The appeal was therefore allowed. It
is submitted that the acting Chief Justice's interpretation of Section 14 of the Public Trustee Act
is unsatisfactory. It is not necessary to prove default on the part of the trustees before application,
provided sufficient cause is shown as required by the section and what amounts to a sufficient
cause depends upon the circumstances of the case. In this case, the fact that the beneficiaries
were unable to obtain their own shares of the Trust property within a reasonable time should be
sufficient cause to justify the application of the section and though default was not established it
might be inferred from the undue delay on the part of the trustees.

The Public Trustee cannot refuse to take over a trust simply because the trust property is small.
In Odekunle v. Williamson," the applicants who were trustees appointed by the will of the
deceased, applied to the court under Section 13 of the Public Trustee Act for an order to appoint
the Public Trustee as the Trustee of the Estate of the deceased on the ground that they could no
longer continue with the administration of the trust because they were so preoccupied with other
matters and lived so far away from the trust property that it is impossible for them to devote as
much time as necessary to the affairs of the trust. Counsel for the Public Trustee, opposing the
application, submitted that Section 13(1) of the Public Trustee Act should be read subject to the
provisions of Section 6(3) of the same Act. The trial judge rejected the counsel's submission and
held that the powers given to the court under Section 13(1) could not be abrogated by the
provision of Section 6(3) though he conceded that the Public Trustee should be consulted before
an order was made asking him to take over an estate. Satisfied that the trustees were incapable of
carrying out their duties, and realizing that a trust must not be allowed to fail because of lack of
trustees, the judge granted the trustees leave to retire and ordered that the Public Trustee be
appointed in their place.

The public trustee can charge fees for the duties performed by him to the trust and such fees are
by way of percentage or otherwise as the Executive council may fix. The calculation is based not
on the work done but on the value of the trust property. Because Public Trustee is a corporation
sole with perpetual succession 'the continuity of the management of trust is assured.
The State is liable to make good all sums required to discharge any liability which the Public
Trustee, if he were a private trustee, would be personally liable to discharge, except where the
liability is one to which neither the Public Trustee nor any of his officers has in any way
contributed, and which neither he nor any of his officers could by the exercise of reasonable
diligence have averted and in that case neither the Public Trustee nor the State is liable. In all
cases where the revenue of the State have to be utilized under the provisions of section 16 stated
above, it shall be lawful for the court if it appears that the person holding the office of Public
Trustee has acted honestly and ought fairly to be excused for the breach of trust or other act or
omission by which the liability was incurred, and for omitting to obtain the directions of the
court in the manner in which such liability was incurred to relieve such person either wholly or
partly from personal liability for the same.

Trust Corporation Trust Corporation can be appointed as a trustee but it must be empowered to
do so by its constitution or statute setting it up. Examples of Trust Corporations are banks and
insurance companies. They must comply with the statutory requirement relating to prescribed
share capital, which must not be less than a prescribed amount and must be incorporated under
the Companies and Allied Matters Act. Trust Corporations, being in business are certified to
charge fees for their services.

The public trustee can charge fees for the duties performed by him to the trust and such fees are
by way of percentage or otherwise as the Executive council may fix. The calculation is based not
on the work done but on the value of the trust property. Because Public Trustee is a corporation
sole with perpetual succession 'the continuity of the management of trust is assured.

The State is liable to make good all sums required to discharge any liability which the Public
Trustee, if he were a private trustee, would be personally liable to discharge, except where the
liability is one to which neither the Public Trustee nor any of his officers has in any way
contributed, and which neither he nor any of his officers could by the exercise of reasonable
diligence have averted and in that case neither the Public Trustee nor the State is liable. In all
cases where the revenue of the State have to be utilized under the provisions of section 16 stated
above, it shall be lawful for the court if it appears that the person holding the office of Public
Trustee has acted honestly and ought fairly to be excused for the breach of trust or other act or
omission by which the liability was incurred, and for omitting to obtain the directions of the
court in the manner in which such liability was incurred to relieve such person either wholly or
partly from personal liability for the same.

TRUST CORPORATION

Trust Corporation can be appointed as a trustee but it must be empowered to do so by its

constitution or statute setting it up. Examples of Trust Corporations are banks and insurance
companies. They must comply with the statutory requirement relating to prescribed share capital,
which must not be less than a prescribed amount and must be incorporated under the Companies
and Allied Matters Act. Trust Corporations, being in business are certified to charge fees for
their services.

One advantage of Trust Corporation is that being an it guarantees continuity in the administration
of trust institution.

APPOINTMENT OF TRUSTEES

Usually the initial trustees are appointed by the testator or settlor who creates the trust. Where a
trust is created by will, the trustees appointed may predecease the testator28 or the testator might
not have appointed any trustee at all? or that they all disclaimed the trust or are legally incapable
of acting." All these will not cause the trust to fail even though the will may not contain
provision for appointment of trustees. In such cases the Court will appoint trustees for the trust.
Meanwhile the personal representatives of the settlor will be deemed to be a constructive trustee
making the trust to be completely constituted.33

Once the trust is duly constituted, the settlor has no power to appoint new or additional trustees
unless he has reserved the power to do so in the will or settlement. Even the beneficiaries when
sui juris and entitled to the whole beneficial interest cannot do so in the absence of breach of
trust, though they can bring the trust to an end. The trust instrument may confer an express
power of appointing new or additional trustee on a named person or institution. In such a case,
the donee of the power can exercise it by appointing new or additional trustee when a vacancy
occurs. It is doubtful whether the donee of the power can appoints himself as Kay J. stated in Re
Skeats' Settlement as follows:

"A man should not be judge in his own case.... he should not decide that he is the best possible
person, that he ought to be the trustee. Naturally no human being and say can be imagined who
would not have some bias one way or the other as to his own personal fitness, and to appoint
himself among other people, or excluding them to appoint himself, would certainly be an
improper exercise of any power of selection of a fiduciary character such as this is"

The objection is based on the premise that someone who is given power to make an appointment
should not exercise the power in his own favour as this will be inequitable. But the Trustee Law,
on the other hand in making provision for the appointment of new Trustees makes it possible for
the person exercising the power of appointment to appoint himself by adding the words "...may
by writing appoint one or more other persons (whether or not being the persons exercising the
power) to be a trustee or trustees; whereas under the Trustee Act 1893 the person exercising the
power cannot appoint himself. However the donee of the power cannot appoint himself also
where it is intended to appoint an additional trustee or trustees.

Although Section 10 of the Trustee Act 1893 and Section 24 Trustee Law require the
appointment of Trustees to be made by writing, it is advantageous that the appointment be made
by deed because in this case the trust property automatically vests in the new trustees and this
makes a separate vesting instrument unnecessary." Trustees appointed by the settlor at the
creation of trust are called original trustees while those appointed subsequently are called new or
additional trustees. In the absence of someone to exercise the power of appointment of new or
additional trustees, the statutory provisions will apply.

STATUTORY PROVISIONS

Appointment of trustees is governed by the English Trustee Act 1893 which is a Statute of
General Application in force in all the states of Nigeria except in the states comprising the
former Western Region of Nigeria where the Trustee law is applicable and in other states that
have enacted their own Trustee Law. Section 24 (1) Trustee Law" provides:

"where a trustee, either original or substituted, and whether appointed by a court or otherwise, is
dead or remains out of Nigeria for more than twelve months, or desires to be discharged from all
or any of the trusts or powers reposed in or conferred on him or refuses or is unfit to act therein,
or is incapable of acting therein, or is an infant, then subject to the restrictions imposed by this
Law on the number of trustees:

(a) the person or persons nominated for the purpose of appointing new trustees by the instrument,
if any creating the trust; or

(b) if there is no such person or no such persons is able and willing to act then the surviving or
continuing trustee or trustees for the time being or the personal representatives of the last
surviving or continuing trustee may by writing, appoint one or more other persons (whether or
not being the persons exercising the power) to be a trustee or trustees in the place of the trustee
so deceased, remaining out of Nigeria, desiring to be discharged, refusing or being unfit or being
incapable or being an infant, as aforesaid."

Subsequent Trustees: The testator or settlor has appointed T1, T2 and T3 as trustees of his will or
settlement who are alive and willing to act. The legal title to the
trust property has been transferred to them. Then consider the following events, which occur.
DEATH OF A TRUSTEE

(a) T1 one of the trustees of the will dies. On the death of T1 the legal title to the trust property
devolves on T2 and T3 by reason of jus accrescendi since the property is held jointly. S.24 (1)
confers power on the existing trustees to appoint a new trustee or trustees but such power, exists
if there is no contrary provision in the will either expressly or impliedly excluding the section. If
the surviving trustees T2 and T3 decide to appoint T4 then provided that the appointment is
made by deed, (although S. 24(1) requires the appointment to be made in writing), the trust
property is authentically vested in the new trustee. But where a special mode of transfer of the
property is prescribed as for example shares in companies that special mode must be complied
with by the continuing trustees to vest the property in the new trustee. Upon the death of a sole or
last surviving trustee the trust property, devolves on his personal representatives. Such a personal
representative is free to accept or reject the office of a trustee.

Trustee Law has modified the law with regard to Ogun, Oyo, Osun, Ondo, Ekiti, Edo and Delta
States. S. 10(2) provides as follows:

"Until the appointment of new trustees, the personal representatives or the personal
representatives for the time being of a sole trustee... shall be capable of exercising or performing
any power or trust which was given to or capable of being exercised by the sole or last surviving
or continuing trustee or other trustees or trustee for the time being of the trust".

The proper interpretation of this section is that the trust property devolves on the personal
representatives44 of the last surviving trustee. It is pertinent to observe here that it is not
compulsory for the personal representative of the last surviving trustee to accept the trust in
Nigeria except in Ogun, Oyo, Osun, Ondo, Ekiti, Edo and Delta States where it is obligatory on
them to do so, at least until new trustee is appointed. This is however subject to the restriction
imposed in regard to receipts by a sole trustee not being a trust corporation.

b. Retirement

A Trustee may retire from the trust under Section 26(1) Trustee Law provided that there will
remain either a trust corporation or at least two individuals to act as trustees to perform the trust.
But such trustee must declare by deed that he is desirous of being discharged from the trust,47
and his co-trustees and the person empowered to appoint trustee, if any, consent by deed to the
discharge of the trustee and to the vesting in the co-trustees alone of the trust property. The
trustee is deemed to have retired from the trust and he is discharged there from by the execution
of a deed.
Under Section 24(1) a trustee desiring to retire from the trust may also do so. The other trustee or
trustees, or anyone nominated in the will or settlement may appoint a trustee to replace him.
Section 24(1) enables a trustee to retire and a new trustee to be appointed. However where there
are two trustees and one of them wishes to retire he can only do so under Section 24(1) and not
under Section 26(1) of the Trustee law.

c. Refusal to act

After the appointment as a trustee, if the trustee does not attend the meetings of the trust or
refuses to sign any document relating to the trust and he does not take part in any activities of the
trust, Section 24(1) provides that the other trustees may appoint a new trustee to replace him.
This power can then be exercised by the other trustee or trustees to appoint a new trustee to
replace the one that has refused to act.

d. Disclaimer.

A trustee, after his appointment may decide for a number of reasons not to accept the
appointment as a trustee. It may be that he has relocated to another town far away from the seat
of the trust. In such a case, the trustee may disclaim the trust since the trustee has not done
anything amounting to accepting the trusteeship as for example signing a document as a trustee,
notwithstanding that he has expressed his willingness to act as trustee before the appointment
was made. The Supreme Court had occasion to consider what amounted to a disclaimer by a
trustee/executor in the case of Nylander v. Thomas where a testator who died in 1947 appointed
T1 T2 and T3 as trustee/ executors of his will T1 and T2 did not take any action in respect of the
trust. T3 applied and was granted letter of probate and he completed the administration in 1949.
By virtue of his position as surviving trustee T3 executed a deed of conveyance in 1959 by
which he appointed the Plaintiff as a new trustee. After the death of T3 in 1963 the Plaintiff as
sole surviving trustee of the testator's estate sued the defendants, T3's co-executors for the return
of certain property of the testator. The defendants argued that the Plaintiff's appointment as a
trustee was not valid as there has been no refusal to act by Tl and T2 to justify a new
appointment under Section 10 of the Trustee Act 1893 and that the non participation of T1 and
T2 in obtaining probate of Testator's estate is not a sufficient evidence of refusal to act as trustee.
The Supreme Court rejected this argument and held that the action of T1 and T2 amounted to a
refusal of the trust. The disclaimer must be in writing or by deed, it may be oral or may be
inferred from.

REMOVAL OF TRUSTEES
If the person disclaiming is a sole trustee, the legal title to the property reverts to the settlor,
otherwise it vests in the remaining trustees
e. Additional trustee whenever the number of trustees does not exceed three provided none of the
three is a trust corporation, an additional trustee or trustees may be appointed by the persons
nominated in the trust instrument who may not appoint themselves or the continuing trustees.
But an appointment cannot be made however if it will bring the number of trustees above four.

f. Remaining out of Nigeria: A trustee who wishes to remain out of Nigeria continuously for a
period of more than 12 months for whatever reason must seek a discharge from the trust. Section
24(1) empowers the other trustees to appoint a new trustee to replace him.

g. Unfitness to act A trustee may be unfit to act as a trustee because he has been declared
bankrupt and has absconded even if he has not absconded, he may be unfit to act.

h. As a result of old age, a trustee may become senile, incapable of rational reasoning, unable to
form mature judgment, even unable to sign documents relating to the business of the trust. A
trustee who suffers from a mental disorder and who has been detained in a mental hospital is
incapable of acting as a trustee."

A corporation which is dissolved is deemed to be incapable of acting as a trustee from the date of
dissolution. In these circumstances, the other trustees can appoint a new trustee to replace the
trustee under. Section 24(1) of the Trustee Law. But it must be pointed out that the power of
appointment conferred by Section 24(1) of the Trustee Law is a mere power consequently there
is no duty on the existing trustees to appoint new trustee.

Under Express Power The Trust instrument may contain a clause, which empowers the

(a) trustee to remove a trustee for certain specified reasons as for example a clause
empowering the trustees to remove a trustee who relocates to another town. The trustees
can appoint a new trustee to replace him.

(b) Under Statutory Provisions

Under Section 10(1) Trustee Act 1893 and Section 24(1) Trustee Laws a trustee may be removed
against his will if he remains out of Nigeria for more than twelve months, refuses or is unfit to
act or is incapable of acting. Also under Section 25(1) Trustee Act 1893 and Section 28(1)
Trustee Law (Cap. 128) the court may on the appointment of a new trustee, remove an existing
trustee. Further, the court has an inherent jurisdiction to remove a trustee in the interest of the
beneficiaries.
The Privy Council observed in Letterstedt v. Broers that there was little authority to guide them
in deciding what circumstances justify the exercise of this jurisdiction and were not prepared to
lay down any general rule beyond the very broad principle that their guidance must be the
welfare of the beneficiaries. The principle is broad enough to include all the activities of the
trustee in relation to the trust so that any impropriety there from, in so far as it affects the welfare
of the beneficiaries, may justify the exercise of the inherent jurisdiction of the court.

In Adeseye v. Williams," it was held that a trustee will be removed by the court if the court is
satisfied that his continuance in office would be prejudicial to the due performance of the trust
and to the interest of the beneficiaries or if the trustee has disregarded his duties. While a trustee
will not be removed merely because of strained relations between him and the cestui que trust, it
is certainly a major factor for consideration in deciding whether a trustee should be removed or
not.

The circumstances which justify the exercise of the inherent jurisdiction of the court to remove
trustees was considered in Rennery Renner. In that case the respondent brought this action as
one of the executors and trustees of the will of M.A. Renner deceased, against the other
executors and trustees and the attorney for one of the trustees, for an account. He also sought the
removal of that trustee from his office and an injunction against the attorney to restrain him from
further interfering with the estate of the said M.A. Renner deceased.

The defendant argued that they were not trustees, as they had not assented in writing to the
vesting of the property in them. The trial judge held that the defendants were trustees of the
estate of the said M.A. Renner, that the trustee concerned was too ill to carry on as trustee and
that she be removed as such and that the account and injunction sought be granted. The
defendants appealed and it was argued for them before the Supreme Court that the trial judge
was wrong in dealing with the case on the basis that the respondent and the first and second
appellants were trustees because they had in their capacity as executors assented to the property
vesting in them as trustees.

Dismissing the appeal, Unsworth F.J. said that although the law governing vesting of real estate
in Western Nigeria is contained in Section 40(4) of the Administration of Estate Laws which
requires writing for the vesting of the real estate, this section did not apply to this case on the
ground that the administration was completed in 1954 and the law applicable then was the law in
force in England prior to the 1st of January 1900. The relevant law, he continued, was the Land
Transfer Act 1897 and concluded that the rules relating to the administration of personal estate
applied also to real estate and as such assent could be implied. He stated further that upon the
completion of an administration, executors who were trustees, though might remain personal
representatives were deemed to have become trustees and as such a formal written assent was not
necessary since the legal estate was already vested in them.
Approving the trial judge's decision that certain trustees be removed for protection and efficient
administration of the trust, the learned judge cited with approval a passage from the case of
Letterstedt v. Broers where the judicial committee of the Privy Council said:

"The jurisdiction of the court is merely ancillary to its principal duty to see that the trusts are
properly executed.

This duty is constantly being performed by the substitution of new trustees in place of the
original trustees for a variety of reasons in non-contentious cases. And therefore, though it
should appear that charges of misconduct were either not made out or were greatly exaggerated
so that the trustee was justified in resisting them and the court might consider that in awarding
costs, yet if satisfied that the continuance of the trustee would prevent the trust being properly
executed, the trustee might be removed. It must always be borne in mind that the trustees exist
for the benefit of those whom the creator of the trust has given the trust estate. In exercising so
delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down
any general rule beyond the very broad principle above enunciated that their main guide must be
the welfare of the beneficiaries. Probably it is not to lay down any more definite rule in a matter
so essentially dependent on details of great nicety".

In Honourable Justice Adenekan Ademola v. Chief Harold Sodipo & Ors. 62 an attempt to
remove a trustee on ground inter alia of misconduct failed. Ogundare J.S.C.63 said:
"Now, having recounted what I conceived to be the proper background to the whole case, I must
now decide on the submissions made by the Plaintiff's counsel as to whether or not the defendant
had been guilty of such misconduct as might lead the court to remove him. As I stated in my
judgment in the earlier case (exhibit 3) the court has inherent power to remove a trustee, and will
remove any Trustee found guilty of acts of misconduct or mis-management. See the case of
Renner & Ors. v. Renner (1961) All N.L.R. 233; E. Fregere v. M.A. Awosika (1957)
W.N.L.R.L. at page 156. But in my view the acts which would amount to misconduct vary from
case to case, but generally they would be those which go beyond mere inadvertence and come
within the reach of a criminal offence such as, embezzling the funds of the estate or using Trust
funds for the executor's personal affairs or conveying trust property to unauthorised persons.
Indeed, misconduct has always been associated with any act of moral turpitude, fraud and
dishonesty. The defendant herein may, in the course of his administration, have been guilty of
inaction, overzealous, or such similar conduct, but I do not think that the Plaintiffs have
succeeded in proving fraud or dishonesty against him".

DUTIES AND POWERS OF TRUSTEES

The duties and powers of trustees are distinct in nature but are in many instances closely linked.
While for example, a trustee has a duty to invest trust money, he has power to select investments
under the Trustee Investment Act 1961 or trust instrument. Power enables the trustees to carry
out his duties.'

The Duties of Trustees

Kekewich, J., speaking about the duties of the trustees observed thus:

"I think that when persons are asked to become new trustees, they are bound to inquire of what
the property consists that is proposed to be handed over to them and what are the trusts. They
ought also to look into the trusts documents and papers to ascertain what notices appear among
them of incumbrances and other matters affecting the trusts."

Later, Lindley L.J., speaking about the duties of the trustees remarked inter alia:

"The duty of a trustee is properly to preserve trust fund to pay the income and the corpus to those
who are entitled to them respectively and to give all his cestuis que trust, on demand, information
with respect to the mode in which the trust fund has been dealt with and where it is."

It emerges from the above quotations that in accepting the trust, the trustees have a duty to
administer the trust in accordance with the terms expressed in the trust instrument and the
principles of equity. The trustees must ascertain the trust property, ensure that they are vested in
them and distribute them according to the direction in the trust instrument. This means that the
trustee must locate the trust properties and bring them into his possession and get them vested in
himself. If the trust property consists of an equitable interest, the trustee must give appropriate
notice to the legal owner to preserve the priority of the beneficial owners. Similarly if the trust
property consists of shares in companies, the trustee must fill the necessary transfer forms and
file them with the Registrar of such companies in accordance with the provisions of the
Companies and Allied Matters Act 2004. He must ensure that trust fund is in his account at a
bank or in proper state of investment. Here a trustee's duty is a continuing one.

He must consider whether to sell an investment which has depreciated. Similarly, a trustee must
also consider whether or not to sell an investment which was originally authorised but later
became unauthorised but where an investment was originally authorised by law or trust
instrument a trustee will not be liable for holding such an investment."

(a) Duty of Investment: It is the duty of trustees to invest the trust funds within the range of
recognised trustee investments. The Nigerian legislation governing trustee investments consists
of Trustee Investment Act and the Administration of Estates Law. Trustee Investment Acts 1962
enlarges the range of investment in which trustees can invest trust funds. S. 3(1) of the Trustee
Investment Act 1957 authorises trustees to invest in certain securities which are set out in S. 2 of
the Act. They consist of all securities created or issued by or on behalf of the Government of the
Federation, securities created or issued by or on behalf of the Government of a State which are
declared by the Government by notice in the Gazette to be securities to which the Act applies,
being securities created or issued by companies or corporations incorporated directly by an Act
of the Federal legislature or by a law enacted by state legislatures. This power of investment is
subject to any y consent or direction required by the trust instrument. The Trustee Investment
Act 1957 empowers the trustee to invest the trust funds in any of the securities specified or
referred to in S. 2 of the Act" Section 2 of the Administration of Estate Law enables the
trustees of settlement who have not parted with all their land to invest in purchasing land. It is
also pertinent to mention that there is provision in the definition section of the Trustee Law by
which "authorised investment" means investment authorised by the instrument if any creating the
trust for the investment of fund subject to the trust or by law. It should be noted however that a
trustee will not be liable for breach of trust by reason only of his continuing to hold an
investment which at any time ceased to be an investment by the provision of the Trustee
Investment Act 1957.13 S. 1 (1) of the Trustee Investment Act 1962 extends the power of
Investment of Trustees to include power to invest in debenture and fully paid up shares of any
company incorporated and registered under the Companies and Allied Matters Act. However,
trustees can only invest in companies which satisfy the following conditions:

● the fully paid up shares issued by the company in question is not less than
N1,000,000.00;

● The price of the debentures, or shares of the class in question is

quoted in the Nigeria Stock Exchange;

● In the case of an investment in shares of a company, dividends have been paid during
each of the three calendar years immediately preceding the current year on all the shares
of the company i when the dividends became due and the aggregate amount of the
dividends paid during each of those years in respect of each share ranking for dividends
throughout that year was not less than five percent of the nominal value of the share.

But the trustees can only invest certain percentage of the trust fund. For the purpose of the above
provision, shares include stock and debenture includes debenture stocks. And if a trustee obtains
a valuation in writing of part of or of a trust fund from a person whom he reasonably believes to
be competent to make it, such a valuation is conclusive as to the value of that fund or part of it on
the date of the valuation. It is submitted that the wording of section 3 of the Act is permissive,
rather than mandatory because what subsection 1 of the section says is that a trustee "may under
this act invest" in the listed securities. The word "may" is an enabling word giving a
discretionary power to the trustees. But in exercising the power conferred by the Act, trustee
must obtain any consent or direction required by the trust instrument with respect to investment
of the trust funds.
(b) Duty of Impartiality

Trustees must maintain equality between the beneficiaries. They must neither favour one
beneficiary at the expense of the other, nor act partially. It is their duty to hold the scales evenly
among all the beneficiaries. In this regard, the trustees must convert wasting property, such as
leaseholds and hazardous investments in order to do justice to all the beneficiaries. The duty to
convert may arise in respect of residuary bequest contained in a will under the rule in Howe v.
Lord Dartmout which Wigram, V.C., explained in Hinves v. Hinves when he said:
Where personal estate is given in terms amounting to a general residuary bequest to be enjoyed
by persons in succession, the interpretation, the courts put upon the bequest is that the persons
indicated are to enjoy the same thing in succession; and, in order to effectuate that intention, the
court as a general rule converts² into permanent investment so much of the personalty as is of
wasting or an perishable nature at the death of the testator and also reversionary interests. The
rule did not originally ascribe to testators the intention to effect such conversions except in so far
as a testator may be supposed to intend that which the law will do; but the court, finding the
intention of the testator to be that the objects of his bounty shall take successive interests in one
and the same thing, converts the property, as the only means of giving effect to that intention."

The Judge acknowledging the power of the testator to negative the operation of the rule
concluded as follows:

"But if the will expresses an intention that the property as it existed at the death of the testator
shall be enjoyed in specie, although, the property be not in a technical sense specifically
bequeathed in such a case the rule does not apply."

The question may arise as to the respective rights of the tenant for life and the remainderman
where there is a bequest of the residuary personalty and the trustees do not convert the property
at once. In such a case, the second aspect of the rule22 in Howe v. Lord Dartmouth applies. The
property, as between tenant for life and the remainderman, is regarded as if it had been sold and
the proceeds re-invested in the proper investment, the life tenant is entitled to the fair
equivalent24 of the income he would have received if that had been done. Trustees who comply
with the statutory provisions relating to the distribution of the trust property are protected from
subsequent claims arising out of the trust after they have distributed the trust property to the
beneficiaries. Further, trustees are exonerated from liability incurred as a result of payment of
money in good faith under or in pursuance of any power of attorney.26 Moreover, a trustee is
entitled to an indemnity in respect of the administration of the trust and may in some cases obtain
an indemnity against the beneficiaries personally.

A trustee may not profit from his trust. This is "a principle founded on no technical rule of law
but on the highest principles of morality." The rule is derived from the principle that equity will
not permit a conflict of interest with duty as regards trustees. Because of the fiduciary position of
the trustees this is applied strictly. A trustee is therefore not entitled to remuneration. A wider
application of the rule is that a trustee is not permitted to make any indirect or incidental profit or
gain by reason of his position as a trustee unless there is express or implied authorisation by the
settlor, 30 As stated above a trustee is not entitled to remuneration for acting as a trustee. He
must not make any gain from the trust or receive any profit whatsoever from the trust. The
underlying reason is that such payment will not only diminish the value of the estate, it is also
difficult to estimate the value of the time and trouble of respective trustees. However a trustee
will be entitled to payment if the instrument creating the trust authorises that a trustee should
receive remuneration or where the court orders that a trustee should be paid because the trust is
unusually burdensome. Trustees may also receive remuneration where all the beneficiaries agree
that the trustees shall be paid. Public trustee has a statutory right to remuneration, so also does a
trust corporation which is appointed by court. A solicitor/trustee may under the rule in Cradock
v. Piper, chargé for the work done in litigation on behalf of the trust. Apart from this, a solicitor
has no better right to payment than an individual. The rule in Cradock v. Piper may be stated as
follows:

... where there is work done in a suit not on behalf of the trustee, who is a solicitor alone, but on
behalf of himself and a co-trustee, the rule will not prevent the solicitor or his firm from
receiving the usual costs, if the costs of appearing for and acting for the two have not increased
the expense: that is to say, if the trustee himself has not added to the expense which would have
been incurred if he or his firm had appeared only for his co-trustee"."

Cotton, L.J explaining the reason for the rule said:

...It is not the business of a trustee, although he is a solicitor, to act as solicitor for his co-trustee.
But the exception in Cradock v. Piper is limited expressly to the costs incurred in respect of
business done in an action or a suit and it may be an anomaly that that exception should apply to
such a case and should not apply to business done out of court by the solicitor for himself as
trustee and co-trustee. But there may be this reason for it that in an action, although costs are not
always hostilely taxed, yet there may be a taxation where parties other than the trustee-solicitor
may appear and test the propriety of the costs and the court can disallow altogether the costs of
any proceedings which may appear to be vicarious or improperly taken."

In spite of the criticism of this rule, it has been firmly established

but its scope will not be extended. 39 S. 21(2) Trustee Law provides that a trustee is entitled to
recover from the trust estate any out of pocket expenses. But this section does not give him the
right to receive these expenses from the beneficiary personally. The beneficiaries are only
personally liable when they have agreed to reimburse the trustees for their expenses. The right of
indemnity is a first charge on the trust estate both corpus and income, taking precedence over the
beneficiaries' interest and the trustee has a lien to enforce it.
Profit from Exercise of Trustees' Power

A trustee must not exercise his power to gain advantage to himself; any such advantage belongs
to the trust. In Sugden v. Croslana" a trustee received bribery from Z in order to exercise his
power as a trustee to retire and appoint Z as a trustee. It was held that the appointment was void
and the sum of money received belonged to the trust.

Trustee who uses trust shares to gain voting right and thereby secures his election as a director at
the annual general meeting of the company must pay over the fee received as a director to the
trust. The trustee/director holds the fee in trust for the beneficiaries. In Re Macadam, the trustee,
who elected themselves directors were held liable to account to the trust estate for the fees
received, as directors.

However, judicial decisions have shown that there are exceptions to the above rule. In some
cases, fee received by a trustee/director may be retained by him. In Re Gee, it was held that a
trustee who is elected a director may retain his director's fee even if his own votes was in fact the
predominant factor in his appointment. Again in Re Dover Coalfield Extension Ltd." where a
trustee's qualification as a director of a company depended on trust shares, it was held that the
trustee was under no obligation to account to the trust estate for his salary as a director since the
salary was paid to him for personal services and qualities and was not a profit from handling of
the trust shares.

There could even be an express or implied authorisation by the settlor as where the trust provides
that the trustees may use their shareholding to secure an appointment as directors.45 Further, a
trustee will be able to retain fee paid to him where the effort and skill required of him is over and
above what is ordinarily required of a director and the court exercising its inherent jurisdiction,
allowed it.46mm

Trustees must not profit from the use of knowledge they gain as trustees or from their position as
trustees. Because of their fiduciary position equity will not allow them to retain such a profit,
such profit is held by the trustee for the trust. In William v. Barton A broker/trustee engaged the
firm which employed him to value trust property, the court held that he was bound to account to
the beneficiaries for the commission the firm paid him on the work. This principle applies not
only to the trustee of the trust but also to an agent of the trust. In Boardman v. Phipps, as a 48
result of information gained by solicitor to the trust in relation to shares of a company in which
the trust, and solicitor had shares, both the solicitor and the trust made substantial profits as a
result of the reorganisation of the shares of the company. One of the beneficiaries sued the
solicitor to the trust claiming that he held the profit he has made for the trust. It was held that as
the reorganisation of the company would have been impossible without the information which he
received as solicitor to the trust, he held the profit he had made on trust for the beneficiaries. But
because of his honesty and openness during the course of the negotiation, the solicitor was
allowed some payment for his services and skill.

A trustee who derives personal benefit from his position as trustee

holds the benefit for the trust. This principle is known as the rule in Keech v. Sandford." The
facts were that a trustee of a trust which included a lease of property applied for a renewal of the
lease on expiry. The owner of the leased property refused to renew the lease to the trustee
contending that the beneficiary under the trust was not able to contract to observe the usual
covenants. The trustee therefore obtained the renewal of the lease for himself. It was held that
though the trustee had not acted fraudulently. he held the new lease on constructive trust for the
infant beneficiary. It might be argued that the rule is very harsh both on the trustee and the owner
of the leased property, in that the trustee acted honestly and that the owner of the leased property
did not wish to renew the property to the trust because the beneficiary suffered from some
disability. This can be explained on the ground that equity will not permit a conflict of interest
with duty as regards trustees.50 This rule is applied strictly." Accordingly in Margues v.
Edematie, a trust lease renewed by a trustee is always a 52 trust property even though he
intended to renew for his own benefit, in circumstances where there is no fraud upon the
beneficiary.

However, if the renewal of the lease is granted to a person who is not in a fiduciary position and
does not belong to a group of people interested in the expired lease, then the rule will not apply.
In Re Biss T was a yearly tenant of a shop. He died intestate and his widow was appointed
executrix. She carried on the business with her son and daughter who were adult. She applied for
the renewal of the lease of the shop and the landlord rejected her application but later granted a
new lease of the shop to her son. The widow sued asking for a declaration that the son held the
lease as a constructive trustee for the estate. It was held that the son was entitled to hold the lease
beneficially since the right of renewal had been extinguished by the refusal of the widow's
application. The son did not stand in fiduciary position to the other interested persons and did not
therefore abuse his position. Again in Savage v. Danningham, three people, A, B, C decided to
rent an unfurnished flat, which was eventually leased to A without a premium. All the three
contributed to the outgoing. Later the landlord decided to grant A, a long lease of the flat. A
informed Band C of the offer but said that he would not invite them to join in the lease. The
landlord then granted A, a lease for 62 years at a premium which was paid by A. They continued
to live in the flat until A decided to sell the flat and asked Band C to leave. Band C sued claiming
that A held the flat in trust for the three of them. The court held hat since Band C did not
contribute to the payment of the premium, then A did not hold the lease on implied trust. It was
held further that the rent paid by B and C was for the use of the property and not for the
acquisition of a capital asset, A therefore held the lease beneficially.
The rule that a trustee will not allow his private interest to conflict with his duties is applicable to
prevent the trustee from purchasing the trust property. But this is not an absolute prohibition as it
may be allowed when the sale is beneficial to the trust. The sale is beneficial to the trust when
the trustee is offering a price that is far above the market price for the trust property. Because of
the inherent danger involved in such sale, as it is possible that the trustee may use his inside
knowledge of the trust to his advantage, equity has therefore allowed the beneficiaries to set
aside such sale within a reasonable time of discovering the facts."

This right exists no matter, however fair the transaction may be, even if the trustee has paid
higher price than the market value of the property. For the same reason beneficiaries may recover
trust property where the trustee sells the property to a stranger and later repurchases it himself
while the original contract of purchase is still executory." If the trustee's repurchase takes place
after the completion of the original sale, the beneficiary may recover the trust property unless the
trustee can show that he has not abused his position." In Bishi v. Ipaye" trustees who used trust
money to buy properties which were considered valueless were found guilty of mismanagement
and were ordered to refund the money to the trust. After the refund, the beneficiaries then
brought an action demanding that the trustees should pay the profit to the trust. The court held
that the trustees were entitled to keep the profit, after refunding the trust money with which the
properties were originally purchased, the properties became theirs.
It is submitted that the trustees should not have been allowed to keep the profit since they traded
with trust money, any profit accruing from the transaction should belong to the trust. The rule is
sufficiently strong and elastic to cover various dealings with trust property by trustees in a way
that amounts to an abuse of office.

There are however instances where the beneficiaries cannot avoid the purchases by the trustees.
The purchase is not voidable if the trust instrument expressly permits such purchases, or such
purchases are sanctioned by court under its inherent jurisdiction or the court authorises a trustee
to bid at an auction nor can the beneficiaries avoid a purchase where the trustee had a contractual
right to the property before he became a trustee 62 or where the trustee has retired from the trust
a sufficiently long time before the purchase.63 Under the Settled Land Act 1893, a provision
exists by which a tenant for life may purchase or take a lease of settled land. The beneficiaries
may lose the right to avoid under the equitable doctrine of laches.

It may be asked whether it is permitted for a trustee to buy the beneficiary's interest in the trust
property. The amount of information that may be available to the trustee in respect of the trust
property and the beneficiary's interest therein and the abuse to which such information can be
used may appear to render the transaction void. For example a trustee who knows the market
value of the beneficiary's interest may offer to buy at a lesser price. It may be that if the
beneficiary's interest is not immediately sold, at a later stage it may attract higher price, yet
trustee may persuade the beneficiary to sell immediately. Equity treats these risks as insufficient
to prevent the sale but such sale is subject to the strict scrutiny of the court. Once the court finds
that there has been no fraud or concealment, or withholding of information, the transaction will
be endorsed.

DUTIES WHERE THE BENEFICIARY IS SOLELY AND BENEFICIALLY ENTITLED:

The trustees in exercising the powers vested in them, must be unanimous." Jessel, M.R., stated
this in Luke v. South Kensington Hotel Co." "There is no law that I am acquainted with which
enables the majority of trustees to bind the minority. The only power to bind is the act of them
all.

Unless it is permitted by the trust instrument, the exercise of the powers and discretions of
trustee must be joint otherwise the exercise will be invalid. For the same reason, only a receipt
by all the trustees will give a good discharge to a purchaser. And a decision of trustees in relation
to the trust property must be unanimous. In Re Mayo" where there was a statutory trust for sale,
one of the trustees wanted an immediate sale, the others favoured postponement and the court
held that there must be an immediate sale unless all the trustees favoured postponement. Trustees
must jointly control trust fund and must not allow one of them to have control over the fund, his
co-trustees will also be fully liable;" unless they can show that the sole trustee properly got
control of the fund and that they took prompt action to get the fund invested in their joint names.
In the case of charitable trust a majority decision is sufficient, a unanimous decision is not
essential.

DUTY TO DISTRIBUTE THE TRUST PROPERTY TO THOSE ENTITLED:

Trustees are required to distribute trust property to the beneficiaries. They must ensure that trust
property is not distributed to anyone who is not entitled to receive it. Trustees who comply with
the statutory provision" relating to the distribution of the trust property are protected from
subsequent claims arising out of the trust after they have distributed the trust property to the
beneficiaries. Further, trustees are exonerated from liability incurred as a result of payment of
money in good faith under or in pursuance of any power of attorney." Moreover, a trustee is
entitled to an indemnity in respect of the administration of the trust and may in some cases obtain
an indemnity against the beneficiaries personally.

DUTIES WHERE BENEFICIARIES ARE SUI JURIS AND ABSOLUTELY ENTITLED

TO THE TRUST PROPERTY:
A beneficiary who is absolutely entitled to the trust property and who is sui juris can request the
trustees to vest the trust property in him even if the trust instrument contains provision to the
contrary. By this the trust is then brought to an end. This principle was established in the case of
Saunders v. Vautie, where all the beneficiaries, if sui juris and are absolutely entitled to the trust
property may direct the trustees to transfer the trust property to them or their nominees. The facts
of Saunders v. Vauier were these: a trustee was directed to accumulate the income on a legacy
until a specified date.
The court held that as soon as the beneficiary became of age, since he was eventually entitled to
the income, he could call for the transfer to him of the capital sum at any time. Again in Re
Browne's Will personal representatives were directed to employ counsels in the purchase of a life
annuity for a woman to be held for her use without power of anticipation. It was held that the
woman, being unmarried at the time when the will took effect, the restraint was of no effect. She
was therefore entitled to the transfer to her of the consols.

However, in Re Brockband' where a Saunders v. Vautier situation arose, the court refused to
compel the trustee to exercise their discretion according to the discretion of the beneficiaries. In
that case all the beneficiaries being sui juris and one of two trustees in whom appointment of
new trustees resided, demanded appointment of new trustees. The other trustees resisted the
demand. The court refused to compel the recalcitrant trustee to concur in the appointment of the
new trustee. And in Re Marshall," the court held that where trustees are holding more personalty
in trust for sale with power to postpone sale, any beneficiary who is entitled to an absolute vested
interest in the proceed can in the absence of special circumstances demand the payment of the
share at once even though this necessitates the sale which the trustees unanimously agreed
should be postponed. This rule does not apply to the trust of sale of land as Cozens--Hardy
explained in Re Horsnaill "It is a matter of notoriety, of which the court will take judicial notice,
that an undivided share of real estate never fetches quite its proper proportion of the proceeds of
sale of the entire estate; therefore, to allow an undivided share to be elected to be taken as real
estate by one of the beneficiaries would be detrimental to the other beneficiaries."

DUTY NOT TO DELEGATE:

The basic rule is that a trustee may not delegate either his position as a trustee or any function in
the execution of the trust. However, under S. 16 Trustee Law," a trustee who intends to remain
out of Nigeria for more than one month may by power of attorney delegate his whole position as
trustee to anyone except a sole co-trustee who is not a trust corporation. Such a trustee is liable
for the acts and defaults of the agent as though they were his own. Trustees personal
representatives have wide powers to employ as agents, professional persons such as bankers,
solicitors and stockbrokers, if the services of such professionals are required by the trustees in
relation to the trust. In making the appointment the trustees must exercise their personal
discretion with the limitation that trustees are to appoint agents to do work within the scope of
the general business of the agent.Trustees in selecting and supervising their agents must be
prudent otherwise they render themselves liable for any loss that may arise from bad selection.

BREACH OF TRUST

What constitutes a breach?

The trustees have duties, powers and discretions to exercise. Thus when the trust estate suffers
any loss as a result of breach of duty by any of the trustees, that trustee must make good the loss.'
It is not necessary to show that he has acted negligently though if there has been no negligence it
may be that the court will excuse him. But if loss is caused to the estate as a result of the exercise
of the discretion and power vested in the trustees, and the trustees can show that they have acted
with absolute honesty and reasonable prudence they will not be liable for the loss.

Trustees are liable for breach of trust only for their own acts and omissions. There is no vicarious
liability between them. A trustee is only answerable for his own act and is not liable for any loss
unless the same happens through his willful default when he was conscious that in doing that act
he is guilty of breach of duty or he is reckless, not caring whether his act may be a breach or not.
The term willful default has been defined as either a consciousness of negligence or breach of
duty, or a recklessness in the performance of a duty."

Trustees must discharge the duties resulting from their acceptance of the trust. Failure to do so
whether due to a positive act, or a failure to act amounts to a breach of trust for which they are
held liable. The liability extends to all losses. A trustee will be liable for example, if he leaves a
matter in the hands of his co-trustee without inquiry or stands by while a breach of trust is being
committed by his co-trustee." or further still, if he allows the trust funds to remain in the sole
control of his co-trustee' and if in consequence of this, there is a loss to the trust estate. A trustee
who retires knowing fully well that a breach of trust is about to be committed by his co-trustee is
liable, if he retires so as to facilitate breach of trust notwithstanding that such a breach of trust is
committed after he has retired. Statutes have now limited the liability of the trustees in such
cases to where the loss results from the willful default of the trustec. S. 249 provides:

"A trustee should, without prejudice to the provisions of the instrument if any, creating the trust
be chargeable only for money and securities actually received by him notwithstanding his
signing any receipt for the sake of conformity and shall be answerable and accountable only for
his own acts, receipts, neglects or defaults, and not for those of any other trustee, nor for any
banker, broker or other person with whom any trust money or securities may be deposited nor for
the insufficiency or deficiency of any securities nor for any other loss, unless the same happens
through his own willful default and may reimburse himself or pay or discharge out of the trust
money, all expenses incurred of his trust or powers.

REMEDIES

Once there is a breach of trust, the beneficiaries can bring an action against the trustee in a law
court. The measure of liability is the loss caused to the trust estate as the result of the breach. The
trustees cannot, in the case of several distinct breaches of trust, set off the profits made from one
breach against the losses made in others so as to reduce the liabilities in damages. When
damages are awarded against the trustees because interest has been lost, the trustees are usually
required to pay 4% but the fact of the case may cause the court to award a higher rate of interest,
a fraudulent breach of trust may attract compound interest of 5% with yearly or half yearly
rests."

The court may order the beneficial interest in the trust property of a trustee, who is in breach of
trust to be impounded so as to make good the loss which the trustee/ beneficiary has caused the
other beneficiaries. Such an impounding order may be made even though the trustee/beneficiary
sells his interest before committing the breach of trust. But if a trustee is a trustee of two distinct
trusts, his beneficial interest under one trust cannot be impounded to make good a breach in the
other.

A beneficiary can also bring an action for an order of injunction restraining the trustees from
committing breaches of trust. He can even bring an action to prevent anticipatory breach of trust.

In addition to the personal remedy against the trustees for breach of trust a beneficiary has a
more powerful remedy of tracing trust property. Lord Millett said in Foskett v. Mckeown: that
following and tracing are both exercises in locating assets which are or may be taken to represent
an asset belonging to the claimants and to which they assert ownership. The processes of
following and tracing are however distinct. Following is the process of following the same asset
as it moves from hand to hand. Tracing is the process of identifying a new asset as the substitute
for the old."

His lordship drew a distinction between following and tracing of asset, a distinction which has
been suggested to be one of classification and technology rather than of substance it is submitted
that a distinction exists, following assets has to do with common law remedy where assets are
followed and are recoverable until they are converted and became unidentifiable but tracing in
equity continues until the property gets into the hands of a bona fide purchase of the legal estate
for valuable consideration without notice. At Common Law, a beneficiary cannot trace the trust
property into the hands of a third party as the common law does not recognize his equitable
interest in the trust property.

But he can, by joining the trustee, follow the trust property into the hands of a third party so long
as the property remains in its original and if converted in its converted form and as long as the
means of identifying the asset in its original or converted form continue to exist. 18 The right to
trace at common Law is not determined by a change in the form of the asset provided it can still
be identified.

This right applies not only to tangibles but also to choses in action such as banker's debt to his
customer. In Lipkm Gonnan (a firm) v. Karpnale Ltd." A partner in the firm of solicitors
withdrew substantial sums of money from the firms client account and used the money in
gambling in the club owned by the defendant. The partner had been convicted of theft, as the
partner was a man of straw, he was not sued. In a suit by the firm of solicitors, it was held that
the solicitor claimants could trace their original property, a chose in action, i.e. debt owned to
them by the bank into cash drawn from their clients account in the bank to the defendant. The
solicitor claimants were able to recover the money under the law of restitution which required
the defendant to pay equivalent money to the owner having not given full consideration for it and
thereby being unjustly enriched. The common law remedy has its limitation. For example,
common law was unable to identity money in a mixed fund. Thus when the money of A became
mixed with the money of B, identification in a physical sense became impossible and common
law was helpless. It should be noted that it was mixing that caused common law claims to fail in.
Agip (Africa) Ltd v. Jackson. It has been suggested that the inability of the common law to
follow money into a mixed fund is a myth and that mixing can only refer to mixing by prior
recipient and that mixing by the defendant himself is irrelevant for the cause of action for money
had and received is complete when the plaintiff money is received by the defendant. When a
previous recipient mixes the fund the claim becomes defeated since proving that the money
received by the defendant is the money paid by the plaintiff becomes difficult. But payment into
a bank account does not preclude identification. Similarly, a beneficiary under a trust could not
follow the trust property in the hands of the trustee. He can however take steps to compel the
trustee to follow the trust property into the hands of a stranger to the trust. In equity, the
beneficiary can follow trust property and claim it until the property comes into the hands of a
bona fide purchaser of the legal estate for value without notice provided the property is traceable
there is an equity to trace and tracing will not produce an inequitable result. When the property
can no longer be traced, the right to trace switches to the proceeds of sale which he may claim as
his property so long as these proceeds are identifiable. Any property bought with the proceeds of
trust money belongs to the beneficiary and if the proceeds are affixed with trustees own money
to purchase other property, the beneficiary has a first charge in the other property. Where one
asset is exchanged for another asset, the beneficiary can decide whether to follow the original
asset into the hands of the new owner or to trace the value of the new asset in the hands of the
original owner but the beneficiary cannot recover twice. If a trustee mixes trust moneys with his
own money in a bank account and then draws upon that bank account, in determining whether
the money left in the bank account is the trust money or the trustee's private money, the rule in
Hallett's Estate case will be applied. By this rule, withdrawal made from the mixed account by
the trustee are deemed to be the withdrawal of his own money until his money is exhausted, it is
then that he is deemed to withdraw trust moneys. But if he withdraws trust moneys under this
rule and then pays his own money into the account, there is no presumption that he has done so
in order to put right the breach. Where funds belonging to two trusts are mixed in a bank account
with trustee's own money and the trustee then draws upon the account, to determine whose
money remains in the account, the rule in Hallett's case is applied. By this rule withdrawals made
from the mixed account by the trustee are deemed to be the withdrawal of the trustee's own
money until his money is exhausted. When all the trustee's own money has been withdrawn and
he begins to withdraw trust money, the rule in Clayton's case determines which trust moneys has
been withdrawn. The rule in Clayton's case is that when money are withdrawn from a bank
account, the moneys withdrawn are those which are first paid in.

The right to trace entitles the beneficiaries to recover the trust property from an innocent
recipient unless the recipient can show that he bought without notice. Where an innocent
recipient is given trust money which he pays into his bank account, the operation of the bank
account is governed by the rule in Clayton's case. Where a trustee pays trust money into the
trustee's overdrawn account thereby reducing the overdraft, the repayment of the money but the
property will be regarded as having account and any property purchased with the money will be
charged with been purchased with the money advanced and not the trust money, so that the
beneficiaries cannot claim the properties or a share in them.
Tracing may be impossible if the property has been dissipated. Tracing is impossible if, for
example, the mixed fund is spent on a dinner.

Similarly, there is no tracing if the recipient has used the trust money to pay off secured or
unsecured loans or other identifiable debts because such payment purchases no assets but merely
extinguishes the debts. Because equities are unequal, the beneficiaries are entitled to a first
charge on the mixed fund or in any property purchased with the fund. If there has been an
increase in the value of the property purchased, the charge will cover the proportionate part of
the increased value. This is because trustees will not be allowed to benefit from their breach of
trust. Accordingly, if a trustee mixes fund of trust money and his own money in equal
proportion, if the property doubles in value, the profit will be shared equally between the trustee
and the beneficiary, parties are entitled to the mixed fund pari pasu, if the rule in Clayton's case
does not apply.

In a breach of trust involving two or more trustees, the liability of trustees is joint and several.
The beneficiaries can claim the entire loss from anyone of the trustees and a judgment obtained
against all of them may be executed against any of them. Each of the trustees is liable to make
good the loss. A trustee who makes good the loss is entitled to claim contribution from his co-
trustees. But the right of contribution does not apply in all cases. For example the right of
contribution will not arise where the trustee alone was fraudulent or morally guilty, or where he
was a solicitor and as a solicitor advised the breach; or where he has a beneficial interest in the
trust and he is responsible for the breach of trust to the extent of this interest, he indemnifies his
co-trustees before the normal rule as to contribution will be applied.

A retired trustee remains liable for breaches committed by him but is not normally liable for
breach of trust committed by his successor.

To make him liable it must be shown clearly that the very breach of trust, which was in fact
committed, was not merely the outcome of the retirement and new appointment but was
contemplated by the former trustee before such retirement and appointment took place. It will
not suffice to prove that the former trustees rendered easy or even intended, a breach of trust, if it
was not in fact committed. They must be proved to have been guilty as accessories before the
fact of the impropriety actually perpetuated. Similarly a new trustee is not liable for a breach of
trust committed by his predecessors as he can assume that his predecessors had acted properly."
But if he discovers any breach of trust, he must take prompt action against the old trustees.

DEFENCES FOR BREACH OF TRUST

Various defences are open to a trustee in proceedings for breach of trust. A trustee who might
otherwise be personally liable for breach of trust may be relieved either wholly or partly by the
court provided that he has acted honestly and reasonably.The burden lies on the trustee to prove
that he has so acted. The beneficiary's consent, even mere acquiescence in the breach affords a
defence to the trustee, so is a release or confirmation by the beneficiary. But such a release or
confirmation will only be binding if the beneficiary is sui juris and has full knowledge of the
fact. Under the Limitation Act an action for breach of trust is statute barred at the end of six
years from the breach but time does not run against a beneficiary who is under a disability nor
against the remainder man until his interest vests in possession. But time runs against a
beneficiary even though he is unaware of the breach.