Decided 6 May 1992 | End date May 6, 1992 | |
Citation(s) [1992] EWCA Civ 12, [1993] 1 WLR 1260 Prior action(s) [2000] WTLR 795; Independent, July 4, 1988, (1996) 10(1) Trust law International 113, 115 Judge(s) sitting StaughtonLJ, Dillon LJ, Leggatt LJ Court Court of Appeal of England and Wales Similar Speight v Gaunt, Learoyd v Whiteley, Bartlett v Barclays Bank Tru, Keech v Sandford | ||
Nestle v National Westminster Bank plc [1992] EWCA Civ 12 is an English trusts law case concerning the duty of care when a trustee is making an investment.
Contents
Facts
A testator died in 1922 and named his widow, two sons and wives and one grandchild as the beneficiaries. The wife got the family home as a life interest and a tax free annuity. The two sons got annuities between age 21 and 25 and life interests in half the trust with a power to appoint income to their wives and Georgina, the grandchild, got the remainder. In 1922 there was £53,963 and in 1986 when Georgina became entitled, there was £269,203. She claimed that had the fund been invested properly there would have been €1.8m. The trust company had failed to conduct periodic reviews of investments. They invested in tax-exempt gilts because the sons were domiciled abroad, meaning exemption from inheritance tax.
High Court
Hoffmann J held that there was no breach of the duty of care. He said the following.
Court of Appeal
Staughton LJ held there was no breach of trust. Despite this the trust company fell ‘woefully short of maintaining the real value of the fund, let alone matching the average increase in price of ordinary shares’. The company had not acted ‘conscientiously, fairly and carefully’ and there was ‘not much for the bank to be proud of in its administration of the… trust’.
He emphasised that ‘trustees’ performance must not be judged with hindsight: 'after the event even a fool is wise, as a poet said nearly 3,000 years ago…' and accepted evidence that equities were regarded as risky before 1959. ‘It was only in 1959 that [they became more popular].’
Dillon LJ and Leggatt LJ concurred.