CIVIL AND COMMERCIAL LITIGATION AND DISPUTE RESOLUTION LAWYERS AND SOLICITORS FOR BRISBANE, THE GOLD COAST, AND THE SUNSHINE COAST, QUEENSLAND
In Queensland, a trustee of a trust may be removed by:
A trust instrument may contain an express term which provides for the removal of a trustee under certain circumstances. The term may outline who is capable of appointing and removing trustees, the grounds upon which a trustee may be removed, and the procedure which must be followed to remove or appoint a trustee.
s 12(1) of the Trusts Act 1973 (Qld) provides that where a trustee:
A new trustee may be appointed by writing:
s 80(1) of the Trusts Act 1973 (Qld) provides that whenever it is expedient to appoint a new trustee or new trustees, and it is inexpedient, difficult or impracticable to do so without the assistance of the court, the court may make an order appointing a new trustee or new trustees. This power may be exercised either in substitution for or in addition to any existing trustee or trustees, or where there is no existing trustee.
Particular circumstances in which the court may make an order appointing a new trustee include:
Every trustee appointed by the court has the same powers, authorities and discretions as if the trustee had been originally appointed a trustee by the instrument creating the trust.
The Supreme Court of Queensland retains an inherent power to appoint a trustee in substitution to an existing trustee. This power may be exercised on the court’s own initiative or upon request by a co-trustee or beneficiary of the trust.
In deciding whether to exercise this power, the court’s primary consideration is the “welfare of the beneficiaries” test set out in Miller v Cameron (1936) 54 CLR 572:
“The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In deciding to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office.”
The court will not exercise its inherent power to remove a trustee unless the trustee’s conduct gives ground upon which the power may be exercised (for example, where the trustee’s misconduct has jeopardised the trust property, or where the relationship between the trustee and the beneficiaries has deteriorated to the point of impeding the trustee’s ability to perform its duties).
If there has been a breach of trust by a trustee leading to loss, the trustee may be liable to pay equitable compensation. Alternatively, if a trustee has profited from a breach of trust (for example, where the trustee has made an unauthorised profit from the use of its position, property or confidential information), then an account of those profits may be sought.
In the recent Queensland Supreme Court case of Smith v Kennedy [2025] QSC 27, the applicant sought to have the respondent (the brother of her deceased ex-husband) removed as trustee of a trust set up for her two minor children. The applicant contended that the respondent had failed to consider the children’s best interests when making decisions which would bear upon their welfare, and that he had failed to exercise his powers consistent with his appointment as trustee.
The court found that the respondent’s management of the trust had been primarily focused on preserving and enhancing the value of the trust assets; he therefore approached requests for financial support for the children from the position that approving such requests would erode the value of their inheritance.
Although the respondent’s management of the trust had resulted in a significant increase in the value of the trust assets, the court noted that this should not have been his primary consideration:
“[W]here the beneficiaries of the Trust are children and cl 7(b) of the will conferred a discretionary power on Mr Kennedy to apply Trust funds towards the maintenance, education, benefit or advancement in life of those children, the interests of the beneficiaries cannot be considered solely by reference to the value of the assets that will pass to them when the Trust ultimately vests. Consideration must also be given to the children’s need for financial support in the period before the Trust vests.”
The court found that the respondent had refused to pay for expenses, including school fees and financial support for learning difficulties suffered by one of the children, which objectively were in the children’s best interests.
The strained relationship between the parties led the respondent to ignore or dismiss what the applicant told him about the best interests of the beneficiaries. This was of particular concern to the court as the applicant was the sole parent of the beneficiaries, and therefore the central knowledge of relevant information about their best interests.
The court ultimately held that the welfare of the beneficiaries was opposed to the respondent remaining as trustee and exercised its inherent power to replace him with an impartial trustee.
Our Litigation & Dispute Resolution Team have significant experience with trust disputes. Contact us if you are the beneficiary of a trust and believe it would be in your interest to have a trustee removed, you are a trustee and would like advice on administering a trust, or if you would like to establish a trust in your Will or draft a Trust Deed.
Aitken Whyte Lawyers can assist you with all trust matters and disputes.
Brisbane
Aitken Whyte Lawyers Brisbane
2/414 Upper Roma Street
Brisbane QLD 4000
