Commentary on Sections Part 1 – Trusts Supervisors
81.Section 49 of the Act, which provides for the appointment of a supervisor, implements recommendation 71(1) to (4). The main task of a supervisor is to ensure the proper implementation of the trust purposes, from the standpoint of those who may benefit from or have an interest in the trust. By subsection (1), the truster has a choice as to whether to provide in the trust deed for the appointment of a supervisor (or, by subsection (4), two or more). Subsection (3) provides that the supervisor must not be a trustee, and vice versa. Importantly, the duties of the supervisor are fiduciary and the supervisor is subject to a duty of care (by subsection (2)); in this respect the supervisor is on a par with a trustee. There is flexibility for the law to develop in this area to cater for the way that supervisors may be used. Subsections (5) and (6) empower the Court of Session to appoint a supervisor where one is required by the trust deed but, for one of the specified reasons, the court’s assistance is considered necessary.
82.Section 50 of the Act, which is a default provision, implements recommendations 43, 45 and 71(5) and (6). Its aim is to grant the supervisor the rights and remedies which are needed for the supervisor to be able to perform the task properly. Subsections (1) to (3) provide the supervisor with the certain rights which a beneficiary and a trustee would have under the trust. Subsection (4) adds that, in the event of breach of trust, the remedies which would be available to a beneficiary are also available to the supervisor. This section applies irrespective of when the trust was created.
83.Section 51 of the Act provides that the power of a court to remove a trustee (section 7 of the Act) and the provisions on decision making (sections 13 and 14 of the Act) apply to supervisors as they apply to trustees. The provisions on decision making will only be relevant where there is more than one supervisor in office at any given time. In such a situation, supervisors’ decisions will be regulated in the same way as decisions to be taken by trustees.
84.Section 52 of the Act implements recommendation 71(7) and provides that all supervisors have power to resign office. The resignation must be by notice in writing sent to the trustees, which takes effect on receipt(17). The exception to the power of resignation in section 52(1) of the Act is where a purported resignation is in order to facilitate a breach of trust; in such a case any notice is of no effect. This is broadly similar to the position of trustees at common law, where a resignation in order to facilitate a breach of trust is likely to result in the trustee still retaining liability flowing from the breach.