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In forceUpdated to 1 Dec 2011Read it in Bahasa Malaysia
Contents

Part IV · Trustees of Labuan Trusts

42. Liability for breach of trust

(1)

Subject to the provisions of this Act and to the terms of the trust, a trustee who commits or concurs in a breach of trust shall, without prejudice to any other liability, be liable for—

(a)

any loss or depreciation in value of the trust property resulting from the breach; and

(b)

any profit which would have accrued to the trust had there been no such breach.

(2)

(Deleted by Act A1368).

(3)

(Deleted by Act A1368).

(4)

A trustee shall not be liable for a breach of trust committed prior to his appointment, if such breach of trust was committed by some other person, but the trustee shall take all reasonable steps to remedy the consequences or any loss arising from such breach.

(5)

A trustee shall not be liable for breach of trust committed by a co-trustee unless—

(a)

he becomes or ought to have become aware of the breach or the intention of the co-trustee to the breach;

and

(b)

he actively conceals such breach or such intention or fails within a reasonable time to take proper steps to protect or restore the trust property or prevent such breach.

Labuan Trusts 53

(6)

Subject to the terms of the trust, a trustee shall not be liable—

(a)

for the default of a co-trustee unless he—

(i)

concurs in the default of that trustee; or

(ii)

fails to take reasonable care to prevent it;

(b)

for any loss to the trust property, unless such loss is due to—

(i)

his wilful default, act or concurrence; or

(ii)

his neglect or failure to exercise reasonable care to prevent such loss.

(7)

Where there are two or more breaches of trust, a trustee shall not set off a gain from one breach of trust against a loss resulting from another breach of trust.

(8)

Where two or more trustees are liable in respect of a breach of trust, their liability shall be joint and several.

(9)

A beneficiary may, in respect of a liability to him for a breach of trust already committed, relieve a trustee of, or indemnify him against, such liability, if the beneficiary—

(a)

has legal capacity;

(b)

has full knowledge of all material facts; and

(c)

has not been improperly induced by the trustee to give the relief or indemnity.

(9A)

A term of a trust relieving a trustee from liability for breach of trust is unenforceable to the extent that it—

(a)

relieves the trustee from liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries; or

54 Laws of Malaysia ACT 554

(b)

was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.

(9B)

Subject to subsection (9C), a trustee is not liable to a beneficiary for breach of trust if the beneficiary—

(a)

consented to the conduct constituting the breach;

(b)

relieved the trustee from liability for the breach as provided in subsection (9); or

(c)

ratified the transaction constituting the breach, unless—

(A)

the consent, release or ratification by the beneficiary was induced by improper conduct of the trustee; or

(B)

at the time of the consent, release or ratification, the beneficiary has no knowledge of the beneficiary’s rights or of the material facts relating to the breach.

(9C)

Nothing in the terms of a trust shall relieve, release or exonerate a trustee from liability for breach of trust arising from his own fraud, willful misconduct or gross negligence.

(10)

The Court may relieve the trustee either in whole or in part from liability for a breach of trust if it is satisfied that the trustee has acted honestly and reasonably and ought in fairness to be excused in the circumstances.

(11)

(Deleted by Act A1368).

Report

Read on from s 42A

Part V

Miscellaneous

Read on from Part V