Lecture 10

Powers of attorney are mechanisms allowing individuals (trustees) to delegate their powers and responsibilities.
This topic encompasses the duties of trustees, the authority to delegate, the mechanisms for delegation, and liabilities associated with the delegation of authority.

The principle of duty implies that trustees must act personally in managing property for the benefit of others.
Key Phrase: ‘DELEGATUS NON POTEST DELEGARE’ - an individual to whom power is delegated cannot further delegate that power.
- Quote from Lord Langdale MR: "Trustees who take on themselves the management of property for the benefit of others have no right to shift their duty on to other persons."
- Case Reference: Turner v Corney (1841) 5 BEAV 515
- Quote from Viscount Radcliffe: "The law is not that trustees cannot delegate; it is that trustees cannot delegate unless they have authority to do so."
- Case Reference: Pilkington v IRC [1964] AC 612

Delegation Permitted by the Trust Instrument:
- Trustees may only delegate powers if explicitly allowed by the trust instrument.
Statutory Power to Delegate:
- Governed by various statutes, including:
- Trustee Act (TA) 2000, Part IV - collective delegation.
- Trustee Act 1925, s25 - individual delegation; amended by the Trustee Delegation Act 1999, s5(1).
- Agents employed in the ordinary course of business: covered under TA 2000, ss11-15.
- Lasting Power of Attorney established under the Mental Capacity Act 2005, ss9-14; superseding the enduring power of attorney.
- Trust in Land governed by the Trusts of Land and Appointment of Trustees Act (TOLATA) 1996, s9.
Policy Aim: Facilitate effective trust management rather than regulate.
Analysis: Discussion on whether modern trust management equates to a charter for fraud.

Can Delegate According to:
- TA 2000, Pt IV;
- Trust instrument provisions;
- Statutory provisions.
Cannot Delegate (as per TA 2000, s11(2)):
- Distribution of funds to beneficiaries under discretionary trusts.
- Decisions regarding payment of fees/charges from income/capital.
- Appointment powers relating to trustees.
- Powers to delegate or appoint nominees/custodians covered under TA 2000, ss16-20.
Terminology:
- Agents: Persons responsible for duties/powers of trustees, as noted in TA 2000, ss11-15.
- Nominee: Holds legal title to trust assets (found in TA 2000, s16).
- Custodian: Safeguards trust property (defined in TA 2000, s17).

Power of Attorney for Individual Trustees:
- TA 1925, s25 (as amended by Trustee Delegation Act 1999 s.5(1)) empowers trustees to delegate the execution of trusts and powers vested in them.
- Restrictions under TA 1925, s25: Limited to a period under one year; trustees must remain liable for delegated actions.

Trustee Obligations:
- Must comply with statutory duty of care when entering arrangements with agents or custodians (TA 2000, s23).
Individual Delegation:
- Authority for trustees to individually delegate under the regulations outlined in Trustee Act 1925, s.25, as substituted by the Trustee Delegation Act 1999, s.5.
Liability of Trustees:
- Trustees are liable for any acts or defaults of designated agents, nominees, or custodians.
- Agents may undertake any part of the trustee’s responsibilities, provided they are not limited by s11(2) of TA 2000.
- Cannot have overlapping responsibilities; each function must align with one agent (per s12(2)).
- Trustee Responsibilities:
- Must agree with agents on terms encompassing:
  - Permission for the agent to sub-delegate;
  - Restrictions on liability;
  - Circumstances of conflict of interest.

Trustees’ Authority:
- Delegation of investment discretion; core functions must still comply with existing laws (TA 2000, s15).
- Policy guidance and compliance obligations (s15(2)) must be adhered to, encouraging a duty of review concerning agents and investment strategies (s22(2)).

Key Case: Speight v Gaunt (1883) 22 Ch D 727.
Judicial Approach: Courts traditionally do not intervene to deter trusteeship but maintain strict standards against breaches.

TA 2000, s23:
- Trustees are not liable for the acts/errors of agents if:
- They adhered to the statutory duty of care in both appointing the agent and maintaining oversight of the arrangement.
- If a substitute appointee is permitted, liability does not extend unless due diligence in oversight was not maintained.
Reference Case: Fry v Tapson (1884) 28 Ch D 268.

TA 2000, s24:
- Non-compliance with statutory powers during the appointment of agents does not invalidate the appointment itself.
- Protects third parties from the need to interrogate the delegation instrument too closely.

Encompassed by the Mental Capacity Act 2005, sections 9-14.
- Covers aspects relating to:
- property;
- finances;
- health;
- welfare.
Registration Requirement: Must be registered with the Office of the Public Guardian to be valid.
Post-Incapacity: Once established, it survives the incapacity of the donor.

Governed by the Trustee Delegation Act 1999, ss1-4, which allows delegation concerning:
- Land;
- Proceeds from land sales;
- Income garnered from land.
Essential Criteria: The donor (trustee) should possess a beneficial interest in the property.
- Provides a mechanism for trustee-beneficiaries to utilize powers by circumventing prohibitive delegation laws.