Commentary on Sections Part 1 – Trusts Powers: general
31.Section 15 implements recommendation 15 in the Report on Trust Law. Subsection (1) sets out that the trustees have, in relation to the trust property, all the powers of a natural person beneficially entitled to the property. It is a default provision, applying to trustees unless the trust deed expressly provides otherwise, the context requires or implies otherwise in a case where there is no trust deed, or there are other statutory restrictions or exclusions (by subsections (1) and (2)(c), respectively). Trustees are given very broad powers, which are essentially those which they would have if they owned the trust property for their own benefit rather than for the benefit of the beneficiaries. This replaces the current list of specific powers set out in section 4(1) of the 1921 Act. Importantly, however, subsection (2) provides that all powers which a trustee enjoys are subject to a number of duties, notably the trustee’s fiduciary duty and duty of care. The Act makes further provision on both of these: for example, section 34 specifies the narrow extent to which fiduciary duties may be limited, and section 31 provides for duty of care.
32.Section 16 implements recommendation 17 in the Report on Trust Law. It allows the Court of Session to grant trustees additional powers of administration or management of the trust property where satisfied that that would be of benefit to the future administration or management of the trust property. Given the breadth of the default general power set out in section 15, this provision will not generally be needed. It will, however, be useful where, for example, the truster has decided to restrict the trustees’ powers and it subsequently becomes clear that additional powers of administration or management would be expedient. Subsection (1) provides that the trustees may apply to the court, and the application must be intimated to such other people as provided by subsections (3) to (5). If the court is satisfied as to the benefit of the power which is sought it may grant it, subject to such conditions as it may choose to impose under subsection (6).
33.Section 17 of the Act implements recommendation 56 in the Report on Trust Law. In order to provide clarity which the current law lacks, this section provides that trustees may insure themselves, at the trust’s expense, against personal liability arising from their actions as a trustee. To avoid any doubt, subsection (2) states that an intentional decision not to act is to be treated equally with an action for these purposes. This is a default provision and applies to a trust unless the trust deed provides otherwise.