A settlement was constituted by deed in $1968.$

Curtis and Mrs$.$ Curtis were the trustees and the trusts were discretionary trusts in favour of their children and remoter issue. The trustees were given an appointment over the trust assets and the trust deed incorporated the statutory power of appointing new trustees.

In $1982$ Curtis and Mrs$.$ Curtis by deed appointed Investment Bank of Gibraltar Ltd$,$ a non$-$resident company, and Mr$.$ Thornton a non$-$resident person, as trustees and purported to resign. Their intention was to leave Investment Bank of Gibraltar Ltd$.$ As the sole trustees.

Curtis died in $1983.$ A series of purported appointments of new trustees $($all non$-$resident$)$ followed and the trustees also exercised their power of appointment over the trust assets to postpone the vesting of interests in possession.

The trusts of the settlement were administered outside the UK$.$ Mrs$.$ Curtis died in $1996.$ Concerns over the effectives of the $1982$ deed arose.

In $2002$ the first and second claimants $($who were not non$-$resident$)$ were appointed as trustees. The Inland Revenue raised assessments to capital gains tax against the first and second claimants for the tax years $1989-1990$ to $1996-97$; the assessments included a charge to tax on the trustees becoming non$-$resident in $1996$ on the death of Mrs$.$ Curtis.

Proceedings for professional negligence were brought by the first and second claimants and the settlement beneficiaries against the firms of attorneys who had drawn up the various deeds.

Reference was made to section $37(1)($ c$)$ of the Trustee Act, which provided:

$(1)$ on the appointment of a trustee for the whole or any part of trust property $$

$($ c$)$ it shall not be obligatory, save as hereinafter provided, to appoint more than one new trustee where only one trustee was originally appointed, or to fill up the original number of trustees where more than two trustees were originally appointed, but, except where only one trustee was originally appointed, and a sole trustee when appointed will be able to give valid receipts for all capital money, a trustee shall not be discharged from his trust unless there will be either a trust corporation or at least two individuals to act as trustees to perform the trust.

Discuss whether Mr$.$ and Mrs$.$ Curtis were relieved of their duty as trustees; if they were not relieved what role did the subsequent appointees play and what powers did, they exercise over the trust.

Answer rating: 100% (QA)

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