The Trustees Act provides several circumstances under which a trustee can be removed and a new trustee appointed. One notable provision, S40(1), allows for removal due to mental incapacity. In the case of Lavender, who has been hospitalized with a mental illness, this provision allows for her removal. Lemon, who is the continuing trustee, has the power to appoint a new trustee under S40(1)(b), since there is no nominated person by Blue to act in such events. Furthermore, Lemon can exercise this power without seeking permission from the beneficiaries due to the rights vested in him as a trustee by virtue of S40 of the Trustees Act, as highlighted in Re Brockbank & Re Power's Settlement .

Trustees possess both the rights and responsibilities to act independently of beneficiaries' wishes to an extent, ensuring the trust is managed according to its terms rather than personal interests. In Lemon's case, he does not need to consult the beneficiaries when appointing a new trustee, as per Re Brockbank & Re Power's Settlement, because his right to appoint trustees is expressly granted by S40 of the Trustees Act. This independence ensures a trustee can make decisions that uphold the trust's purpose and adhere to legal requirements, while simultaneously balancing the need for oversight and responsibility in their role .

The concept of a continuing trustee, as seen in Lemon's case, is critical in maintaining the continuity of trust administration. S40(1)(b) of the Trustees Act empowers the continuing trustee to appoint a new trustee when none has been nominated by the trust instrument for such instances. Lemon, as the continuing trustee, can make subsequent appointments when Lavender, an original trustee, becomes unable to act due to mental illness. This ensures that the administration of the trust can proceed without significant disruption .

Mental illness can severely impact a trustee's ability to fulfill their duties, as it affects their capacity to make decisions and manage the trust effectively. In Lavender's case, her mental illness following an accident renders her unfit to act as a trustee. This situation allows for her removal under S40(1) of the Trustees Act due to mental infirmities. Consequently, the remaining trustee, Lemon, is given the responsibility to appoint a new trustee to ensure the continued management and administration of the trust .

The general rule is that any person capable of holding property under the law can be a trustee. In the case where Blue created a trust naming Lavender and Lemon as trustees, initially, Lavender was capable of acting as a trustee. However, after suffering a mental illness due to an accident, Lavender can be removed as a trustee under S40(1) of the Trustees Act, which allows removal due to mental infirmities. Lemon, as a continuing trustee, then has the power to appoint a subsequent trustee under S40(1)(b), because no nominated person was specified by Blue for such appointment when an original trustee becomes unfit to act .

The wishes of the settlor play a significant role in court decisions concerning the appointment of trustees. In cases where there are specific restrictions outlined by the settlor, such as Blue's clause restricting the appointment of trustees to those selected by him, the court takes into account these wishes. However, when restrictions interfere with the practical administration of the trust, the court may override these stipulations to ensure the trust's objectives are met. Under S45(1), the court can appoint new trustees in substitution for the existing ones, considering the settlor's intentions while also ensuring effective trust management .

Restrictive clauses in the trust instrument, such as those requiring that only individuals chosen by the settlor may be appointed as trustees, can create significant challenges. These issues include a lack of flexibility to address unforeseen circumstances such as incapacitation or unwillingness of named trustees, potentially leading to a standstill in trust management. In such cases, as seen with Blue’s trust, if Lavender becomes incapacitated, the clause might hinder the appointment of new trustees needed to maintain trust operations. Legal intervention under S45(1) can help resolve such rigidity by allowing the court to appoint trustees to ensure uninterrupted trust administration .

Specific clauses in a trust instrument can significantly restrict a trustee's power. In the trust created by Blue, a clause states that no one will be a trustee apart from those appointed by him, which effectively restrains Lemon from exercising his power to appoint a new trustee. However, Lemon can seek the assistance of the court to make an appointment under S45(1)(b) if required, since the court has the authority to appoint new trustees when such restrictions are imposed, or when it is impractical to do so without court intervention .

According to S40(6)(b) of the Trustees Act, it is not mandatory for a trustee to appoint additional trustees unless it is required by the trust instrument or any applicable written laws. In the case of Lemon, unless there is a provision within the trust created by Blue that requires the appointment of additional trustees, or any law specifically mandating it, he is not obligated to appoint new trustees, even in the absence of Lavender's participation due to her mental illness .

The court plays a crucial role in appointing new trustees when the powers granted by a trust instrument or the existing trustees are insufficient. According to S45(1)(a) and S45(1)(b) of the Trustees Act, the court can appoint new trustees either in substitution for or in addition to existing trustees. This statutory power is particularly important when clauses in the trust, like Blue’s restriction, prevent current trustees from appointing new ones. The court may intervene when it's inexpedient, difficult, or impractical for trustees to appoint a successor without assistance, ensuring the trust can continue to function effectively .