Investments authorized by other Acts or regulations
26. If a provision of another Act or the regulations under another Act authorizes money or other property to be invested in property in which a trustee is authorized to invest and the provision came into force before section 16 of Schedule B of the Red Tape Reduction Act, 1998, the provision shall be deemed to authorize investment in the property in which a trustee could invest immediately before the coming into force of section 16 of Schedule B of the Red Tape Reduction Act, 1998.
27. (1) In investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.
(2) A trustee may invest trust property in any form of property in which a prudent investor might invest.
Mutual, pooled and segregated funds
(3) Any rule of law that prohibits a trustee from delegating powers or duties does not prevent the trustee from investing in mutual funds, pooled funds or segregated funds under variable insurance contracts, and sections 27.1 and 27.2 do not apply to the purchase of such funds.
Common trust funds
(4) If trust property is held by co-trustees and one of the co-trustees is a trust corporation as defined in the Loan and Trust Corporations Act, any rule of law that prohibits a trustee from delegating powers or duties does not prevent the co-trustees from investing in a common trust fund, as defined in that Act, that is maintained by the trust corporation and sections 27.1 and 27.2 do not apply.
(5) A trustee must consider the following criteria in planning the investment of trust property, in addition to any others that are relevant to the circumstances:
1. General economic conditions.
2. The possible effect of inflation or deflation.
3. The expected tax consequences of investment decisions or strategies.
4. The role that each investment or course of action plays within the overall trust portfolio.
5. The expected total return from income and the appreciation of capital.
6. Needs for liquidity, regularity of income and preservation or appreciation of capital.
7. An asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.
(6) A trustee must diversify the investment of trust property to an extent that is appropriate to,
(a) the requirements of the trust; and
(b) general economic and investment market conditions.
(7) A trustee may obtain advice in relation to the investment of trust property.
Reliance on advice
(8) It is not a breach of trust for a trustee to rely on advice obtained under subsection (7) if a prudent investor would rely on the advice under comparable circumstances.
Terms of trust
(9) This section and section 27.1 do not authorize or require a trustee to act in a manner that is inconsistent with the terms of the trust.
(10) For the purposes of subsection (9), the constating documents of a corporation that is deemed to be a trustee under subsection 1 (2) of the Charities Accounting Act form part of the terms of the trust.
Trustee may delegate functions to agent
27.1 (1) Subject to subsections (2) to (5), a trustee may authorize an agent to exercise any of the trustee’s functions relating to investment of trust property to the same extent that a prudent investor, acting in accordance with ordinary investment practice, would authorize an agent to exercise any investment function.
Investment plan or strategy
(2) A trustee may not authorize an agent to exercise functions on the trustee’s behalf unless the trustee has prepared a written plan or strategy that,
(a) complies with section 28; and
(b) is intended to ensure that the functions will be exercised in the best interests of the beneficiaries of the trust.
(3) A trustee may not authorize an agent to exercise functions on the trustee’s behalf unless a written agreement between the trustee and the agent is in effect and includes,
(a) a requirement that the agent comply with the plan or strategy in place from time to time; and
(b) a requirement that the agent report to the trustee at regular stated intervals.
(4) A trustee is required to exercise prudence in selecting an agent, in establishing the terms of the agent’s authority and in monitoring the agent’s performance to ensure compliance with those terms.
(5) For the purpose of subsection (4),
(a) prudence in selecting an agent includes compliance with any regulation made under section 30; and
(b) prudence in monitoring an agent’s performance includes,
(i) reviewing the agent’s reports,
(ii) regularly reviewing the agreement between the trustee and the agent and how it is being put into effect, including considering whether the plan or strategy of investment should be revised or replaced, replacing the plan or strategy if the trustee considers it appropriate to do so, and assessing whether the plan or strategy is being complied with,
(iii) considering whether directions should be provided to the agent or whether the agent’s appointment should be revoked, and
(iv) providing directions to the agent or revoking the appointment if the trustee considers it appropriate to do so.
Duty of agent
27.2 (1) An agent who is authorized to exercise a trustee’s functions relating to investment of trust property has a duty to do so,
(a) with the standard of care expected of a person carrying on the business of investing the money of others;
(b) in accordance with the agreement between the trustee and the agent; and
(c) in accordance with the plan or strategy of investment.
No further delegation
(2) An agent who is authorized to exercise a trustee’s functions relating to investment of trust property shall not delegate that authority to another person.
Proceeding against agent
(3) If an agent is authorized to exercise a trustee’s functions relating to investment of trust property and the trust suffers a loss because of the agent’s breach of the duty owed under subsection (1) or (2), a proceeding against the agent may be commenced by,
(a) the trustee; or
(b) a beneficiary, if the trustee does not commence a proceeding within a reasonable time after acquiring knowledge of the breach.
Protection from liability
28. A trustee is not liable for a loss to the trust arising from the investment of trust property if the conduct of the trustee that led to the loss conformed to a plan or strategy for the investment of the trust property, comprising reasonable assessments of risk and return, that a prudent investor could adopt under comparable circumstances.
Assessment of damages
29. If a trustee is liable for a loss to the trust arising from the investment of trust property, a court assessing the damages payable by the trustee may take into account the overall performance of the investments.
30. The Attorney General may make regulations governing or restricting the classes of persons or the qualifications of persons who are eligible to be agents under section 27.1 and establishing conditions for eligibility.