Commentary on Clauses Part IV: Agents, Nominees and Custodians
Sections 11to 27 form Part IV of the Act. Firstly, sections 11 to 15 set out powers of collective delegation – that is powers to appoint agents to act on their behalf - that trustees have in default of wide express powers being conferred by the trust instrument. These new provisions are not concerned with the possibility of delegation by an individual trustee, which continues to be governed by section 26 of the Trustee Act (Northern Ireland) 1958. Secondly, sections 16 to 20 confer on trustees powers to appoint nominees and custodians in cases where the trust instrument contains no express power to do so. In this context, a nominee is a person nominated to hold trust property in his own name on behalf of the trustees. A custodian is a person who undertakes the safe custody of trust assets or documents. The mechanism of appointing nominees or custodians is valuable because it facilitates dealings with the trust assets. Thirdly, sections 21 to 23 provide for the review by trustees of the activities of their agents, nominees and custodians and the liability of trustees for their actions. Lastly in this Part of the Act, sections 24 to 27 deal with supplementary matters.
These powers of delegation and appointment of nominees and custodians are subject to the statutory duty of care (see section 2 and paragraph 3 of Schedule 1). They will operate as a default provision applicable to all trusts apart from the special cases of pension trusts, authorised unit trusts, and common investment schemes for charities as set out in sections 39 to 41.
Under the present law trustees cannot, as a collective body, delegate their dispositive duties to distribute the trust property or their fiduciary discretions (that is powers implying a personal discretion such as the selection of trust investments or the decision whether or not to sell trust property) without express authority in the trust instrument. In view of the increasingly specialised nature of the tasks that have to be undertaken by trustees, some of these restrictions are seen as a serious impediment to the administration of trusts. It is no longer desirable to prohibit delegation of powers of investment and management. In general terms the policy of the Act is that the proper distinction to be drawn for the purpose of ascertaining whether a particular function ought to be delegable or not is between administrative powers (which should be delegable) and distributive powers (which should not be delegable). That approach is reflected in section 11.
In relation to charitable trusts different provision is required. The purpose here is to allow charitable trustees to delegate functions relating to the generation of funds but not the carrying out of the charitable purpose of the trust.