A trustee does not have an unfettered right to resign. The office carries fiduciary obligations and the court retains supervisory control over its proper administration. As such, resignation must be justified by what the law recognises as reasonable cause.
This principle originates from M’Ewan v Drummond 1857 D 936 and has been applied in Malaysia, including in Lai Kiat Yeong v HSBC (Malaysia) Trustee Berhad [2025] CLJU 418. The inquiry is an objective one. The question is whether the circumstances justify the trustee’s release from office.
The Legal Position
In M’Ewan v Drummond , the court recognised that a trustee may be permitted to retire where the continuance of the trusteeship is no longer consistent with the proper administration of the
trust. The focus is not on convenience, but on whether the trustee can continue to discharge its duties in accordance with its fiduciary obligations.
This approach has been adopted locally. The Malaysian courts have consistently treated reasonable cause as the controlling threshold. A trustee who seeks to resign must demonstrate that the circumstances have reached a point where continuation is no longer tenable.
Decision of the High Court
In a recent matter before the High Court in Kuala Lumpur, our Client, a professional trustee, sought to resign on the basis that the surrounding circumstances no longer permitted the proper discharge of its duties.
The court accepted that the position of the trustee had been sufficiently affected such that continuation was no longer viable. The requirement of reasonable cause was therefore satisfied.
Observations
The decision reaffirms that resignation is not a matter of choice but of justification. The court will examine whether the trust can continue to be properly administered with the trustee remaining in office.
Where the position of the trustee has been compromised, the court is prepared to permit resignation. At the same time, the court may grant further orders to protect the trust property and preserve the integrity of the arrangement.
Conclusion
The requirement of reasonable cause remains central to any application by a trustee to resign. It reflects the balance between the duties owed by the trustee and the reality that, in appropriate cases, continuation is no longer possible.
A trustee who seeks to step down must therefore be able to demonstrate that the circumstances justify that course.
