is an

English trusts law English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, and share a subsequent history with countries across the ...

case, concerning the duty of care owed by a trustee when exercising the power of investment.

Facts

Elizabeth Whiteley and her children sued the executors of Benjamin Whiteley's will (of 19 March 1874). The will contained a power to invest the fund on certain investments, including “real securities in England or Wales.” £5000 of the trust money had been lost. £3000 was invested in a mortgage at 5% return in the freehold of a ten-acre brick field near

Pontefract Pontefract is a historic market town in the Metropolitan Borough of Wakefield in West Yorkshire, England, east of Wakefield and south of Castleford. Historically part of the West Riding of Yorkshire, it is one of the towns in the City of Wake ...

, “with the engine-house, sheds, brick and pipe kilns, and buildings thereon, and all fixtures and fittings thereon.” £2000 was invested on mortgages at 5% in four small freehold houses, including a shop, in

Salford Salford () is a city and the largest settlement in the City of Salford metropolitan borough in Greater Manchester, England. In 2011, Salford had a population of 103,886. It is also the second and only other city in the metropolitan county afte ...

, Lancashire. The brickfield owners went bankrupt in October 1884 and the owner of the four houses filed for petition for liquidation. There was insufficient money to pay the trust fund.

Judgments

Chancery Court

Bacon VC held in the Chancery Court that the brickfield investment was unauthorised, and the trustees were responsible for its failure. The trustees failed to exercise sufficient caution, but they had done so in the case of the houses. The trustees appealed.

Court of Appeal

The Court of Appeal upheld Bacon VC's decision, that the trustees were liable for repayment of the £3000 invested in the brickfield. They held that a trustee must exercise the standard of care of an ordinary prudent businessman, applying any special knowledge he may have.

Cotton LJ Sir Henry Cotton (20 May 1821 – 22 February 1892) was a British judge. He was a Lord Justice of Appeal from 1877, when he was made a Privy Counsellor, until his retirement in 1890. Early life He was born in Leytonstone. His father Willi ...

stated,

Lindley LJ Nathaniel Lindley, Baron Lindley, (29 November 1828 – 9 December 1921) was an English judge. Early life He was the second son of the botanist Dr. John Lindley, born at Acton Green, London. From his mother's side, he was descended from Sir Ed ...

followed.

Lopes LJ Henry Charles Lopes, 1st Baron Ludlow, (3 October 1828 – 25 December 1899) was a British judge and Conservative Party politician. Background and education Ludlow was a younger son of Sir Ralph Lopes, 2nd Baronet, and the uncle of Henry Lopes, ...

concurred.

House of Lords

Lord Halsbury LC affirmed the Court of Appeal. Lord Watson held that in administering and managing trust property (distinguished from the investment sphere),

Lord Fitzgerald John David FitzGerald, Baron FitzGerald, PC, PC (Ire) (1 May 1816 – 16 October 1889) was an Irish judge and Liberal politician. Background Born in Dublin, he was the son of the merchant David FitzGerald and his wife Catherine, eldest daug ...