Trustees Delegates and Agents

Trustees Delegates and Agents

An agent and a delegate are not the same thing.

The authority being delegated (eg, in an instrument of delegation) must accurately reflect the relevant power or duty in the fund’s governing rules.

Ensure that the delegate is properly exercising the delegated power or duty through proper training and supervisory measures such as regular reporting and compliance checks.

Ratification is not required unless the agent or delegate has acted improperly, eg, has acted outside the authority given to them by the trustee.

Under general law it is recognized that it is often impracticable for trustees to perform every act in the conduct of the trust themselves. It is more important that the trust be operated properly than that the trustee perform every action related to the trust.

However, under the general law, there is a distinction between:

Mere ‘ministerial’ acts for which the trustee may engage an agent, and

Acts relating to the execution of the trust or exercise of the trustee’s powers and discretion which cannot be given to another without some express power under a trust deed or statute.

Whether a person is (as a matter of law) an agent or a delegate depends on whether the person has the ability to make decisions which relate to the execution of the trust or the exercise of the trustee’s powers and discretion. An agent, in general, carries out only administrative functions. In contrast, a delegate is able to exercise the trustee’s powers and discretion which have been properly delegated. It is usually said that an agent is ‘appointed’ and a power is ‘delegated’.

Trustees and Delegates

Some entities, such as an administrator, may act as an agent in certain capacities and as a delegate in other capacities. Often the terms ‘agent’ and ‘delegate’ are used interchangeably but they are not synonymous and each word has different implications legally. The Trustee laws recognize that a trustee might be compelled to use agents in the performance of its duties. Unless the governing rules of the fund expressly prohibit the use of agents,a trustee is often able to appoint an agent.

Where a trust is created by a trust deed, the powers of a trustee are derived primarily from that trust deed. In that circumstance, the general law and statute have a residual function (ie they ‘fill in’ any gaps in the trust deed); they are not a source of power in themselves.

A trustee does not have the power to appoint a delegate under general law and cannot do so unless the trust deed expressly allows. A trustee who appoints a delegate without the authority of the trust deed will generally have breached its duty to act personally.

Under a valid delegation, the delegate has, within the scope of the delegation, the same powers, authorities, discretion and responsibilities as if he or she were the trustee. Generally, an effective decision of a delegate is taken to be a decision of the trustee. However, ultimate accountability to beneficiaries rests with the trustee (rather than its delegates).

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Trustees Delegates and Agents
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  Brother Gregory
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