Critically discuss the actual purpose and practical application of section 59 of the Trustee Act 1949 in Malaysia with relevant case law support. Include in your research assignment whether the said section is equitable and fair taking into view the different judicial approach adopted in other common law jurisdictions.
“Equity is a roguish thing: for law we have a measure, know what to trust to; equity is according to the conscience of him that is chancellor, and as that is larger or narrower, so is equity. This all one as if they should make the standard for the measure we call a foot a chancellor’s foot; what an uncertain measure would this be! One chancellor has a long foot, another a short foot, a third an indifferent foot. This is the same in the chancellor’s conscience.”
by John Selden, English jurist, antiquary and author (1584 – 1654)
It must be understood that it is well-known that the source of one version of “equity” is the concept that can be found in Aristotle’s Nichomachean Ethics, where the idea is explained in terms of the difficulty of making general definite rules cover the indefinite range of possible factual situations. Thus, “Equity” is then like the lead ruler allegedly invented in ancient Lesbos, which adapts the fixed measurements in the terms of the law to the irregular stone. This concept was picked up by Aquinas and was a commonplace of medieval legal thought. In Sir John Fortescue’s De Natura Legibus Naturae (1460s) it is linked with the idea that a king ruling “politically”, i.e. under law, must or may at some times rule regally or in simple terms “by absolute power.” 
As far as the the research assiginmnet is concerned, we will expplain the actual purpose and practical application of section 59 of the Trustee Act 1949 in Malaysia with relevant case law support. However, the question whether this section is equitable and fair, it is then a commonplace argument, as “the equity of the statutue” in the modern common law courts.
Therefore, the applictaion of the said section deals with the power of court, whereby the court would have the rights or power and discreation to vary a trust. Dworkin describes the thesis as follows:
“If someone’s case is not clearly covered by such a rule … then that case cannot be decided by “applying the law.” It must be decided by some official, like a judge, exercising his discretion,which means reaching beyond the law for some other sort of standard to guide him in manufacturing a fresh legal rule or supplementing an old one.”
The idea here is that judges cannot decide hard cases merely by applying law. Thus, to decide such cases, judges must reach beyond existing law to make new law in the exercise of discretion. On this view, there are gaps in the content of the law, because we have adopted this practice into a domestic legislation, which allows and judges are authorised to fill “by exercising a limited law-creating discretion” againts the general rule, i.e. a court does not have the inherent general jurisdiction to vary the terms of the trust.
Chapter I : The Position in Malaysia
Variation has been held to an arrangement designed to alter existing terms of a trust deed, but not a scheme to completely replace the existing trust. Even though court does not have any inherent general power to vary the terms of trust deed, but in certain situations the court might approve the variation. As in the case of Chapman v Chapman the court held that, it may in its inherent jurisdiction, approve of variation includes: where a beneficiary makes an application to vary a deed of trust to alter the nature of an infant’s property interests; to pay maintenance out of accumulated income; to endorse a transaction with trust property in order to ensure the survival of the trust, or to carry into effect a compromise for future beneficiaries. In Malaysia, there are four methods on how a trust can be varied which are; express power to vary (instrument), principle laid down in the case of Saunders v Vautier, inherent jurisdiction and provision under Section 59 of the Trustee Act 1949.
As regards to the express power to vary a trust as a method of variation, in the case of Re Harari’s Settlement Trust the court held that the clause regarding investment powers should be given its ordinary meaning without restriction. The issue before the court is pertaining to the effect of a clause in the trust instrument, to make such ‘investments as the trustee may think fit’.
On the other hand, the other method of variation adopted in Malaysia is based on the case law as was decided by the court in the case of Saunders v Vautier. in this case, it was established that if a beneficiary with full legal capacity is entitled to all the beneficial interest in the trust, he or she may apply to have the trust terminated and the assets transferred, even though the trust instrument call for final payment of the capital to be delayed and this had been expended to the situation where there are several beneficiaries who together are entitled to all the beneficial interest, are in agreement about the termination of the trust, and have full legal capacity. In this case, the testator, Vautier’s uncle, had left East India Stock in Trust for his nephew with the conditions that the dividends were to be retained and subsequently, accumulated dividends and shares had to be transferred to the petitioner when he obtained 25 years old. Before Mr. Vautier reached the age of 25, he was about to get married and need the fund in order for him to establish his own business. The Lord Chancellor had clearly decided that as Mr. Vautier had obtained the aged of majority (21 years old), thus, he was entitled to have trust terminated.
The other method of variation in Malaysia is through the inherent jurisdiction. This can further be break down into four small parts which are emergency, salvage, maintenance of beneficiary and compromise. Maintenance and Compromise can be regard as the exceptions to the rule that the variation can only be made as it relates to administration of trust as these two inherent jurisdictions involved the remolding of beneficial interests. As regards to the maintenance of beneficiary, in the case of Re Collins the court allowed the trust to be vary as to allocate some money for the maintenance of beneficiary. Besides, Section 57 of the Trustee Act 1949 has also expressly allowed this variation. In Chapman v Chapman, dispute between beneficiaries occurred, thus, the court allowed the remolding of beneficial interest under the compromise.
The local view on the power of court
In relating to the power of the court, in the case of PP v. Tan Kah Pin, The Accused was charged under section 15(1)(a) of the Films (Censorship) Act 1952 whereby it is an offence to exhibit any film without a certificate of approval. Counsel for the Accused raised a preliminary objection on the ground that there was no regulation to prescribe the issue of the certificate. The learned Magistrate accepted the argument of Counsel and discharged the Accused. The prosecutor appealed against the discharge, contending that the Magistrate by doing so, had indirectly declared section 15(1)(a) of the said Act void and therefore acted in excess of jurisdiction.
Therefore, the ration laid down in the above case is that, The court has no authority to limit a statute or put upon the words of a statute a limitation not in accordance with the ordinary meaning of the word.The courts function is to ascertain the plain meaning of the words used in the statute. It must also bear in mind that the court’s duty is to give effect to these words even if no subsidiary legislation exists providing for the application of such a certificate. Otherwise, the Act would be rendered ineffective and pointless.
Application of Section 59 Trustee Act 1949
On contrary, in the field of Equity and Tust, the variation of trust conferred to the court is applicable in Malaysia is provision under Section 59(1) of the Trustee Act 1949. In Re Estate of Yong Wai Man ; Ex parte: Yong Khai Min, This was an application by the administrator of an estate for the money of the said estate which had been held in trust for three minor beneficiaries to be reinvested. Counsel for the administrator proposed that a sum of RM200,000 be reinvested in MBF First Fund or such other unit trust fund as the administrator deemed fit with power to sell and reinvest from time to time and the balance to be put in a financial institution that offered the highest interest rate to earn deposits to meet the living and education expenses of the beneficiaries.
In deciding the application, it was necessary for the court to determine what an administrator could do with the assets of an estate with infant beneficiaries. The court declined to exercise its discretion under section 59 of the Act to permit the administrator to invest in the MBF First Fund as it did not qualify as an approved investment under section 5(3) of the Act which required the company, inter alia, to have been paying dividends for the past five years.
Likewise, in the case of Ramasamy & Ors. V Thayalan S.K. Psalaniyandy & Ors, This is an application by Trustees for orders under section 59 of the Trustee Act 1949. The case dealed with an agricultural land. The first trustee used funds advanced by some twenty-five people who then increased the number of participants in the scheme to sixty-three. It is alleged that the first Trustee procured his name alone to be registered as the apparent beneficial owner.
Plaintiffs application allowed without prejudice to any claims that the beneficiaries may have against the trustees.The costs of the application to be taxed and payed by the defendants. The major discussion in the above circumstances it is the opinion of this Court that it must step in to save the situation subject to the protection of the rights of the recalcitrant beneficiaries but only so far as is practicable, section 59 comes in to mitigate the losses to assure justice and fairness is done.
Similarly, in the old case of Tan Tat Hock v Chow Hon Thiam, this is an appeal case relating to a former married couple, whereby the appellant’s counsel invoked sectin 59 of the Trustee Act, to appeal to court to practice inherent jurisdiction in the issue. The facts dealed with a property whereby the appellant contended that the proceeds of sale shall thereafter be distributed in equal shares between the husband and the wife. However, the husband later made a declaration and undertake and agree to pay one-half of the proceeds of sale of the said property to appellant when the same is sold or otherwise disposed of by both of us jointly. He also agree not to sell or dispose of this property without the written consent of the wife.
The cousel cited the English case of Re Beale’s Settlement Trust Huggins v. Beale whereby Maugham J observed that,
“In my opinion, the court has Jurisdiction under section 30 of the Law of Property Act, 1929, and section 57 of the Trustee Act 1925, to direct a sale by trustees for sale where the necessary consent cannot be obtained by reason of the refusal of the person who is the one to give it.”
However, the court was in the opinion that there is unjust and it served no purpose of emergency and necessary of practicing the general inherent jurisdictin as stipulated in section 59 of Trustee Act 1949 because the issue is unlikely a legal matter but more on personal grudges, the court then dismissed the case.
Furthermore, in the case of British & Malayan Trustees Ltd v Abdul Jalil bin Ahmad & Ors, The plaintiffs are the trustees of a settlement. They applied for an order authorizing the sale of land and premises belonging to the trust. The reasons for this were that the rental income from the property produced a very low rate of return, there were rising maintenance costs of the property, and as the property was relatively underdeveloped, there was also a strong possibility of compulsory acquisition. The plaintiffs were thus of the opinion that the property should be sold and the proceeds reinvested in first-class residential and/or commercial property. The second, third, seventh and eighth defendants opposed the making of the order. The issue was whether the court has power to order the sale of the property under section 4 of the Settled Estates Act.
The court could rely under section 59 of the Trustees Act confer on the trustees power to dispose of trust property, but this power was limited by section 2(2) of this Act. Clauses 7 and 16 showed a contrary intention expressed in the trust instrument such that the power of the court to order a sale under section 59 of the Trustees Act could not be invoked.Therefore, it must understood that the court can never varied a trust if it is againts the statutory order.
Section 59 (2) of the Trustees Act also conferred the power to the court on the below matters: (a) authorize the trustees to make any investments in or upon titles to immovable property which are not authorized by paragraph 4(1) 1)(c) (c); (b) authorize any trustees who are chargees of land to buy in any such land at any auction of such land held under an order of Court or in exercise of a power of sale vested in the trustees; (c) authorize the trustees to raise any funds for the improvement of lands or houses which are vested in or belong to the trust; or (d) authorize the doing by the trustees of any act which appears to the Court to be beneficial to the trust estate or to the beneficiaries.
Further more, under Section 59 (3), the Court may, from time to time, rescind or vary any order under this section, or may make any new or further order and Section 59(4) also allowed an application to the Court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.
We could concluded that the application of Section 59 of the Trustee Act 1949 is meant to serve an equitable purpose. In the following chapter, the method of variation will further being explained together with other commonwealth jurisdiction in order to determine whether the said section is equitable and fair after taking into view the different judicial approach adopted in other common law jurisdictions.
Chapter II : The Position in Australia
As one of the country who adopted common law jurisdictions, the courts in all jurisdictions now have the power to vary the terms of a trust deed where it is expedient, because of the absence of an express provision in the trust deed. Provisions under Section 89 of the Trust Act 1962 (WA), Section 95 of the Trusts Act 1973 (Qld), Section 59c of the Trustee act 1936 (SA), Section 13 & 14 Variation of Trusts Act 1994 (Tas) and Section 63A of the Trustee Act 1958 (Vic) as being compared with Section 59 of the Trustee Act 1949 are not identical but similar.
The similarities between the provisions stated above and Section 59 of the Trustee Act 1949 can be noticed as the court have the power to vary the trust in event of expediency and the expediency provisions will only apply to variations relating to the management and administration of the trust. But exception must be made to the provision in New South Wales where the statutory power given to the court to authorize transactions that are expedient “in the management or administration of any property vested in trustees” includes the power to authorize “adjustment of the respective rights of beneficiaries” and, consequently, the power to authorize “alteration… of the trusts”.
Besides, the word use under the New South Wales does not expressly empowering the court the power to vary the trust but merely the authorization to alter the trust that involved transactions that are expedient which subsequently constitute variation of trust by the power of court.
In the case of Perpetual Trustee Co Ltd v Godsall when the variation can be prove to in the best interest of the beneficiaries, thus a variation can generally be considered as expedient. For the judicial endorsement of variation in Western Australia and Queensland, the best interests of the beneficiaries are specified as an alternative ground. In both Tasmania and Western Australia legislations expressly sets out that the court does have the power to vary a trust deed, notwithstanding anything to the contrary contained within the trust deed.
We must bear in mind that, not all the states in Australia require the court to establish best interest of beneficiary. For example in Western Australia, when there is detriment of the beneficiaries the court does not has the power to approve the variation. As in the case of Palmer v Mc Allister, it was established that if detriment can be shown to exist, it must be proven that the advantages to the variation outweigh the disadvantages. The other unique feature as to the power of the court to vary the trust in Western Australia was decided by the court in the case of Chipper v Perpetual Executors Trustee and Agency Co (WA) Ltd where the court in time to time may vary he payment made to any beneficiary, provided satisfied that it just and equitable to do so. If the variation cannot be proven as to be just and equitable, the expressed intention of the settlor will still be enforcing.
If a proposed variation will ordinarily benefit the beneficiaries as a whole, and not merely those whose interests are to be altered, but there exists a risk that this beneficent result may not ensue, the court will accept the risk and approve the proposed variation. This English principle had been adopted in most of the Australian States.
In Australia, the categories of persons on whose behalf the court may vary the trust are not mutually exclusive. As in Section 95 of the Trusts Act 1973 (Qld) provides:
95. (1) Where Property, whether real or personal, is held on trusts arising,…
(a) any person having directly or indirectly…
(b) any person (whether ascertained or not)…
(c) any person unborn; or
(d) any person in respect of any discretionary interest..
In re Suffert’s Settlement Buckley J held that order approving the application of beneficiary under a trust to reform that trust could not bind two of the applicant’s first cousins who, if the applicant was to be deemed to have died on the date of application, would have been members of her statutory next-of-kin. Because they were thus deemed to be the applicant’s statutory next kin at the date of the application, they were deemed to be persons with present, and not future, entitlements, and the court could not make an order approving the proposed arrangement on their behalf.
In conclusion, in most of the states in Australia the provisions of their statute as regards to the court power to vary the trust are similar to Section 59 of the Malaysian Trustee Act 1949. Thus, ironically it can be say that the provision under the said act as equitable and fair as other jurisdictions have also adopting the same approach.
Chapter III : The position in the United Kingdom
In the United Kingdom, the court is also given inherent jurisdiction to sanction a departure from the terms of a trust. One of the reasons why the inherent jurisdiction is so nebulous is that it has been largely superseded by section 57 of the Trustee Act 1925 which is based on a concept wider than emergency. However this inherent jurisdiction is limited only to the management or the administration of the trust and not available for the purpose of remoulding beneficial interest.
Section 57 of the Trustee Act 1925
Section 57 of the Trustee Act 1925 is almost similar to section 59 of our Malaysian Trustee Act 1949. It enables the court to have wider powers to authorize specific dealings with trust property which might not have been able to do on the basis of salvage or emergency. In other words it is based on a concept wider than ‘emergency’ or ‘salvage’ as it is based on expediency. This section provides:
“ (1)Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument, if any, or by law, the court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions, if any, as the court may think fit and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.
(2) The court may, from time to time, rescind or vary any order made under this section, or may make any new or further order.
(3) An application to the court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.
(4) This section does not apply to trustees of a settlement for the purposes of the Settled Land Act, 1925.”
Expediency is defined in the Compact Oxford Dictionary as advantageous. However in the case of Re Caven’s Estate, the court was in view that they will not authorize the variation of trust merely because it is advantageous to one beneficiary but it must benefit the whole trust. The object of this section was also considered in the conjoined appeals in case of Re Downshire’s Settled Estates; Re Chapman’s Settlement Trust and Re Blackwell’s Settlement Trusts where according to Lord Evershed M.R.,
“ The object of section 57 was to secure that trust property should be managed as advantageously as possible in the interest of the beneficiaries and with that object in view to authorize specific dealings with the property which the court might have felt itself unable to sanction under the inherent jurisdiction, either because there was no actually emergency or because of inability to show that the position which called for intervention was one which the creator of the trust could not reasonable have forseen but it was no part of the legislative aim to disturb the rule that the court will not rewrite a trust”
Although section 57 does not seems to confer on the court to any general jurisdiction to vary beneficial interest, it has been effectively used in various situation in the United Kingdom to authorize the sale of land where consent has been refused, to authorize partition, to authorize purchase of a residence for the tenant for life and the sale of reversionary interest which the trustee had no power to sell until it fell into possession.
In the case of Re Thomas, the will contained a wide power of appropriation empowering the trustees, with the consent of the majority in number of the testator’s adult children and grandchildren to deal with the trust. The trustees and adult beneficiaries all agreed a scheme for the partition of the property. However doubt arose whether the trustees, seeing that they now held on the statutory trusts, could carry the agreement into effect. The trustees contended that they had power to do so under section 28(3) of the Law of Property (Amendment) Act, 1926. The court in this case held that as the proceeds of sale were vested only in life tenants section 28(3) did not apply. Therefore a case where partition cannot be effected under any power vested in the trustees by the trust instrument or by law, then the court is entitled to consider whether it is expedient and ought to be carried into effect. Hence by looking at the section 57 authorize the trustee to partition the land.
Another example where the court uses its inherent jurisdiction to allow variation of trust on the grounds of expediency is in the case of Richards v Doxat where one of the beneficiary was in debt. The trustee created a scheme to raise capital sums out of the residuary estate to enable her to pay the debt. The issue before the court was whether this would amount to the forfeiture of the life interests of the beneficiary. The court held that an order of the Court under section 57 of the Trustee Act, 1925, giving power to trustees to raise capital moneys for benefit of life tenants will not cause a forfeiture of protected life interests.
Besides, the court had also varied the trust to allow the sale of a reversionary interest which the trustee had no power to sell. This can be seen in the case of Re Cockerell’s Settlement Trust where the trustee has no power to sell the land until it fell into possession. However it was now desired that the trustees should sell to F the half-share of the plaintiff’s reversionary interest which was subject to the trusts of the settlement in order to save estate duty which would otherwise be exigible on F’s death. The court authorise the transaction under s 57(1) of the Act of 1925, since it was for the benefit of the trust.
In 1990, the powers of the court under section 57 were used to enable efficient investment management of a trust. In Anker-Petersen v Anker Petersen, the trustee was given power to invest in assets of any kind as if they were beneficial owners subject to obtaining advice from an ‘Investment Adviser”. This means that the trustee’e investment powers are extended. In short, the position in United Kingdom is almost same, or we would say similar as we have adopted the same provision.
Chapter IV : Conclusion
In conclusion, a variation of trusts under the Act, as empowered the court to vary defeats to a greater or lesser extent the intention of the settlor as expressed in the trust instrument under a good cause. As Harris points out, “fidelity to the settlor’s intention ends where equitable property begins”. The rule in Saunders v Vautier , so far as it can be used by beneficiaries, enables them to ignore settlor’s intentions completely.
The relating sections practise in the commonweath countries too enables a settlor’s express intentions to be overridden though the necessity for any variation to maintain the substratum of the old trusts . The extent of the power that we wish to confer on the judiciary to approve variations of trusts outside the scope of Saunders v Vautier or the Trustess Act must depends ultimately upon the priority we attach to the competing interests of fidelity to settlors’ intentions.
In short, the section 57 of the UK Trustee Act 1925 rested the jurisdiction on expediency which is similar to our Malaysian section 59 of the Trustee Act 1949 and the rules of trust in the commonweath countries. However, it must be noted that the word expediency is not defined under the Act but it can be said that the court has power to deal with the trust property when it is advantageous in the interest of the beneficiaries. In Re Downshire, the court held that they can only sanction arrangements which ensure that the trust property is managed as advantageously as possible in the interest of the beneficiaries.
Throughtout the research, we realized that those sections which open the door for the court to interefere the terms of trust, however is limited to the managerial supervision and control of the trust property by the trustee and cannot be stretched further than that. It does not give the court the power to allow for the rewriting of the trust. Thus, we are convinced that Section 59 is equitable and fair taking after we have taken into view the different judicial approach adopted in other common law jurisdictions.
 F.W. Maitland, Equity, also the Forms of Action at Common Law ,Cambridge: Cambridge University Press, 1929) at 1. See further below, text at nn 24-27.
 St Thomas Aquinas Summa Theologiae vol. 28 , Cambridge: Blackfriars 1966, at p.138-41.
 N. Doe, Fundamental Authority in Late Medieval English Law , Cambridge: Cambridge University Press, 1990, at
 Mike MaCNair, Equity and Conscience, Oxford Journal of Legal Studies, Oxford University Press, 2007 ,2(659).
 R.M. Dworkin,Taking Rights Seriously ,Cambridge: Harvard University Press, 1977, at p. 17.
 Re Ball’s Settlement Trust  1 WLR 899
  A.C 429.
 (1841) 4 Beav 115
  1 All ER 430
 (1841) 4 Beav 115
 Jeffrey Bruce Berryman, Mark R. Gillen & Faye Woodman, “The Law of trusts: A Contextual Approach”, 2nd Edition, Toronto: Emond Montgomery, 2008. p 196.
 In Re New  2 Ch 534 Romer LJ explained the situation where the variation as regards to emergency arise when something not forseen or anticipated by the settlor, and alteration is considered to be in the best interests of the trust as a whole.
 In Re Jackson (1882) 21 Ch D 786 the court held that salvage arise when the situation is more extreme than emergency. In Conway v Fenton (1988) 40 Ch D 512 the court had explained that the jurisdiction is very narrow and useful where expenditure is necessary to save building from being collapse.
(1977) 72 Cal. App. 63,139 Rprt.644
 Pari Materia, Section 53 Trustee Act 1925
  1 CLJ 83
  3 MLJ 514
  4 CLJ 281
  1 LNS 540
  2 Ch 15,  All ER Rep 637
  1 MLJ 465
 Samantha J.Hepburn,’ Principles of Equity and Trusts’, 2nd Edition, UK: Cavendish Publishing Limited, 2001. p
 Ku- Ring-Gai Municipal Coucil v Attorney General (1954) 55 SR (NSW)
 Section 81(1)(a) of the Trustee Act 1925 (NSW)
 Ibid. Section 81 (2)
  2 NSWLR 785: 300
 In Victoria, Tasmania, and Queesland, courts had adopted the broad approach in assessing the beneficiaries’ interests, which includes a consideration of the financial, social, educational and family interest of beneficiaries as decided in the case of Re Weston’s Settlement  1 Ch 223
 Samantha J.Hepburn,’ Principles of Equity and Trusts’, 2nd Edition, UK: Cavendish Publishing Limited, 2001. p 375(this one also supra ok 😉 )
 (1991) 4 WAR 206
  WAR 136
 Re Cohen’s Will Trust  All ER 523.
 Denis S.K. Ong, ‘Trust Law in Australia’, 3rd Edition, Sydney: The Federation Press, 2007. p 305.
  1 Ch
 A.J. Oakley, Parker and Mellow: The Modern Law of Trust, Eighth Edition, London Sweet &Maxwell, 2003, p 742
 Section 57, Trustee Act 1925
  Ch. 431
  Ch. 218
 David Hayton, Charles Mitchell, Commentary and Cases on the Law of Equity and Ttust and Equitable Remedies, Twelfth Edition, London Sweet and Maxwell, 2005, p 603
  1 Ch. 194
  Ch. 562
  Ch. 372
  W.T.L.R 581
 Re Ball  1 WLR 899
 Peter Luxton, An Unascertainable Problem in Variation of Trusts, The New Law Journal, Vol 136 No. 6279 p.
  Ch. 218
 A.J. Oakley, Parker and Mellow: The Modern Law of Trust, Eighth Edition, London Sweet &Maxwell, 2003, p