This section is new. It has become general practice nowadays for debenture trust deeds to contain clauses absolving every trustee from liability for anything but his wilful negligence or default. Such a clause exonerates him unless he has done wrong, knowing that his act was wrong. This section regulates the extent to which such trustees can in future escape liability for failure to do their duty properly.
SECTION 93.
Question proposed : " That Section 93 stand part of the Bill ".
What is the position when you have an existing debenture and you have two trustees for it—there are certain old company debentures I know of in this city on that basis. There is no individual and the debenture contains an expressed provision that neither will be liable for the fraudulent act of the other. Does this mean to say that the innocent trustee now is going to be liable for the fraudulent act of his co-trustee, notwithstanding that he accepted the trust on the other's specific terms ? Surely that is wrong. Surely, if I have correctly understood it——
If he fails to show the degree of care and diligence required of him as trustee by deliberately turning a blind eye on the wilful neglect or default of the other, I suppose he should be liable. But subsection (3)——
This is a retrospective provision—or is it ?
Subsections (3) and (4) are of some importance in that connection. The effect of subsections (3) and (4)——
I have not made myself clear.
I think Deputy Sweetman is right. It is retrospective.
I have undertaken the job of being a trustee for debenture holders on certain terms expressed in the deed. The Minister is now declaring by this section retrospectively that I am still a trustee but I am to be a trustee hereafter under different terms.
More onerous terms.
Yes. It is not restrictive in so far as it does not punish me for anything prior to this measure. However, I am a trustee. I am bound to remain a trustee and I cannot cease to be a trustee without getting somebody else to take on the onerous terms, even though my contract has been changed. If the Minister deems it necessary for the public good to tighten up the scrutiny of trustees or debenture holders and, in so doing, to change the contract under which any trustee took that job, equally when a trustee says : " I took it on the terms A. The Act now says I must do it on terms B. I have the right to get out ", the Minister must provide the means by which the trustee can get out of the job.
I should think subsection (3) would protect such a trustee.
I do not think so.
Subsection (3) reads: Subsection (1) shall not operate—
(a) to invalidate any provision in force on the operative date so long as any person then entitled to the benefit of that provision or afterwards given the benefit thereof under subsection (4) remains a trustee. . . .
I misread the subsection.
Can Deputy Sweetman say whether there can be any constructive devolution of the trust ?
I read it as (a) and (b). It is (a) or (b).
Question put and agreed to.
SECTION 94.
Question proposed : " That Section 94 stand part of the Bill ".
Is this not retrospective also?
It repeats Section 103 of the 1908 Act.
I do not think there is any problem in it.
Question put and agreed to.