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Report No. 17

58. Section 47.-

This section is very important, as it lays down the conditions under which a trustee may delegate his office or any of the duties either to a co-trustee or to his agent. The principles which govern permissible delegation may be crystallised under four heads. Delegation is permissible if-

(1) the instrument of trust so provides, or

(2) it is in the regular course of business, or

(3) the delegation is necessary, or

(4) the beneficiary being competent to contract, consents to delegation.

After 1926 the law in England was considerably altered and the power c - delegation and the appointment of agents by trustees have been liberalised. this respect attention is drawn to sections 23 and 25 of the Trustee Act, 1925. Construing the provision, in section 23(1), Maugham, J., in Re Vickery, (1931) 1 Ch 572 (581) remarked:

"It will be observed that sub-section (1) has no proviso or qualification to it such as we find in relation to section 23 (3). It is hardly too much to say that it revolutionises the position of a trustee or an executor so far as regards the employment of agents. He is no longer required to do any actual work himself, but he may employ a solicitor or other agent to do it, whether there is any real necessity for the employment or not. No doubt, he should use his discretion in selecting an agent, and should employ him only to do acts within the scope of the usual business of the agent, but, as will be seen, a question arises whether even in these respects he is personally liable for a loss due to the employment of the agent unless he has been guilty of wilful default".

In another case, In Re City Equitable Fire Insurance Co.,(1925) 1 Ch 407 (434), it has been observed that a person is not guilty of wilful default "unless he knows that he is committing, and intends to commit, a breach of his duty, or is recklessly careless in the sense of not caring whether his act or omission is or is not a breach of duty".

From the statement of the law laid down by Maugham J., in Re Vickery's Case, (1931) 1 Ch 572 one is led to the conclusion that the power conferred by section 23 (1) of the Trustee Act, 1925, is very wide and the trustee is not responsible at all for the loss caused to the trust estate through the default of his agent so long as he satisfies the court that he acted in good faith in the matter of appointing an agent. The earlier law, therefore, as laid down in Speight v. Gaunt, 9 ACI 5 (19, 29) and embodied in section 47 of our Act, has been given the go-bye completely, and for the test of "regular course of business" and "moral necessity" which justified delegation under the old law the test of good faith has been substituted. If the trustee acts honestly, though foolishly, he will not be responsible for the acts and omissions and defaults of an agent appointed by him.

It may be observed that there is difference of opinion between text-book writers whether the interpretation of Maugham J., of section 23(1) of Trustee Act, 1925 is correct or not. It is no doubt true that the observations of the learned Judge are obiter in the case. The learned editor of the latest edition of Lewin on Trusts takes the view that the interpretation is correct1. Keeton thinks that the observations of the learned judge quoted above are too wide "in as much as they would render unnecessary section 23 (3) and perhaps section 25 of the Trustee Act".

If, however, they are to be regarded as the true interpretation of section 23(1), it has been suggested by an eminent critic that they would confer too great an immunity upon the trustee and leave the beneficiary insufficiently protected.2 A suggestion3 has been made that the object of section 23(1) is primarily declaratory, since it is only by such interpretation that any real significance can be attached to the language of section 23(1) and section 25. But as against this it may be pointed out that apart from other considerations, the language of section 23 seems to support the view taken by the editor of Lewin on Trusts.

The section says that the trustee may employ and pay an agent, whether a solicitor, banker, stockbroker, or other person to transact any business or do any act required to be transacted or done in the execution of the trust, or the administration of the testator's or intestate's estate, including the receipt and payment of money and shall be entitled to be allowed and paid all charges and expenses so incurred, and shall not be responsible for the default of any such agent if employed in good faith.

If, as contended by Keeton, the law is merely declaratory and does not in any manner alter or vary the previous law, there is no necessity for us to change section 47. If, on the other hand, the view taken by Lewin is right and the interpretation of Maugham J., is correct- which undoubtedly goes too far-the section leaves the beneficiarieS "insufficiently protected".

The Indian cases under this section do not indicate any difficulty in applying the section to the particular facts in each case; nor is there any suggestion anywhere that the language of the section should be amplified so as to enlarge the scope of the power of delegation by a trustee.

1. Lewin on Trusts, (15th Edn.), p. 185.

2. Keeton Law of Trusts, (2nd Edn.), p. 257.

3. Keeton: Law of Trusts (2nd Edn,), p. 257.

59. In order to exclude clearly a beneficiary, the expression "any other person" may be substituted for the words "a stranger".

Trusts Act, 1882 Back

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