Commentary on Sections Part 1 – Trusts Delegation and the appointment of agents and nominees
40.Section 22 of the Act empowers trustees to appoint agents and to delegate certain of their functions. It is a default provision.
41.Section 22(1) implements part of recommendation 19 in the Report on Trust Law and restates the existing power enjoyed by trustees to appoint an agent. In addition, subsection (1) says that trustees may authorise an agent to execute a document on their behalf; this may be of particular assistance if the trustees are geographically spread out or if it is otherwise inconvenient for them all to sign. (An alternative is for a majority of the trustees to execute the document, as provided by section 43.)
42.Section 22(2) and (6) restate section 4C of the 1921 Act. Although covered by the general power in subsection (1), the provision serves to remind trustees of the option of engaging appropriate financial assistance.
43.Section 22(3) implements part of recommendations 19 and 54(1) and allows the trustees as a body to appoint one of their number as agent, either to sign a document on behalf of the body or for other purposes. By subsection (4), which implements part of recommendations 19 and 54, the trustees may pay reasonable remuneration to an agent.
44.Section 22(5) implements recommendation 20 and sets out four specific types of power which trustees may not delegate to an agent unless the trust deed expressly provides that they may do so. The types of power which trustees may not delegate to an agent are (i) powers relating to the distribution of trust assets; (ii) power to decide whether payments due to be made out of the trust funds are to be out of capital or income, (iii) power to appoint a person to be a trustee, and (iv) power under statute, or the trust deed itself, which allow the trustees to delegate any of their functions or to appoint a person to act as a nominee in relation to the trust property (to prevent the person to whom functions are delegated by a trustee from, in turn, further delegating those functions and passing them on to a third person). This subsection is modelled on section 11(2) of the Trustee Act 2000 in England and Wales.
45.Section 23 of the Act implements recommendation 21. It is a default provision which applies to a trust unless the trust deed provides otherwise, and is modelled on section 4B of the 1921 Act. However, while that section applies only to the appointment of nominees for the purposes of the trustees’ power of investment, section 23 allows nominees to be appointed in respect of any of their powers. The reference to investment management functions in subsection (2) is an express reminder that the option of using a nominee for such purposes is open to trustees. Subsections (3) and (4) make clear that trust assets held by a nominee are, in turn, held on trust; this applies in particular to client money held by a nominee such as a solicitor or other professional agent. One effect is that, in the event of the nominee’s insolvency, the assets held on the trustees’ behalf will be protected as they will not be available to the nominee’s personal creditors. These subsections implement recommendation 21(2). Subsections (5) to (11) re-enact subsections (2) to (6) of section 4B of the 1921 Act. They provide safeguards against imprudent, excessive or unnecessary appointments of nominees and require trustees to retain supervision of the activities of their nominees. Subsection (12) confers on the Scottish Ministers, by regulations, power to specify circumstances that may constitute a good cause for the purposes of subsection (8). For example, regulations might be made to provide reassurance that sub-nominees may, in appropriate circumstances, be appointed to hold property in safe custody. The regulations are subject to the negative procedure.