The position according to case law is that the powers of a principal or appointor style role of a trust are fiduciary powers that must be exercised for the benefit of the beneficiaries.
Arguably the leading case in relation to the general prohibition is In re Skeats' Settlement (1889) 42 Ch D 552.
In this case it was relevantly held that:
- the ordinary power of appointing new trustees imposes upon the person who has the power of appointment the duty of selecting honest and good persons who can be trusted with the very difficult, onerous, and often delicate duties which trustees have to perform;
- there is a duty to select to the best of the appointor's ability the best people;
- there is a universal rule that a person should not be a judge in their own case; in other words a person should not decide that they are the best possible person, and say that they ought to be the trustee.
As set out in previous posts many modern trust deeds contain an exception to this rule.
The general prohibition is also removed by legislation in some states.
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** For the trainspotters, the title of today's post is riffed from the Kate Bush song ‘King of the mountain’.
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