LAI KIAT YEONG v HSBC (MALAYSIA) TRUSTEE BERHAD

Case Significance

Addresses an appointor's attempt to restrain a retiring trustee from appointing a replacement, holding that the prohibitory relief sought under the Specific Relief Act 1950 and the Public Trust Corporation Act 1995 was not available.

This High Court decision concerns an attempt to prevent a retiring trustee from appointing a replacement trustee of a family trust. The plaintiff, the appointor of a long-established family trust whose assets consisted principally of shares in investment-holding companies, filed an originating summons under sections 12(5) and 12(6) of the Public Trust Corporation Act 1995, read with sections 51 and 52 of the Specific Relief Act 1950, seeking injunctions to prohibit the defendant, the sole trustee, from appointing another corporate trustee, or from commencing any proceedings to have another trustee appointed, to replace itself. The defendant, which had informed the beneficiaries of its intention to exit the trustee-services business, wished to retire and pass the trusteeship to a successor. The Court observed that the real impasse lay in the question of who would bear the real property gains tax and other incidental costs if the trust's assets were to be vested in a new trustee pending the eventual termination of the trust. Having scrutinised the evidence and the parties' submissions, and having regard to authority in which a similar attempt to restrain the appointment of a replacement trustee had failed, the Court held that the plaintiff was not entitled to the prohibitory relief sought. It dismissed the originating summons with costs. The judgment is significant for its treatment of an appointor's ability to restrain a trustee from retiring and appointing a successor, and the limits of injunctive relief under the Specific Relief Act 1950 in that context. The decision is a useful statement of the limits on an appointor's control over a professional trustee, confirming that the appointor cannot use the court's injunctive power to freeze a retiring trustee in place, and that disputes over the tax and costs of vesting trust assets in a successor are to be resolved rather than used to block the succession. It leaves the trustee free to arrange an orderly handover of the trust.