''Nestle v National Westminster Bank plc'' EWCA Civ 12
is an English trusts law">992
EWCA Civ 12
is an English trusts law case concerning the duty of care when a trustee is making an investment.

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 Life annuity, 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 it would have been worth well over £1m. 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.

Judgment

High Court

Hoffmann J Leonard Hubert "Lennie" Hoffmann, Baron Hoffmann (born 8 May 1934) is a retired senior South African–British judge. He served as a Lord of Appeal in Ordinary from 1995 to 2009. Well known for his lively decisions and willingness to break w ...

(as he then was) held that there was no breach of the duty of care. He said the following.

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WTLR 795

Court of Appeal

Staughton LJ Sir Christopher Stephen Thomas Jonathan Thayer Staughton, PC (24 May 1933 – 15 October 2014) was an English barrister and judge, who sat as a justice of the High Court of Justice, Court of Appeal of England and Wales and President of the Court o ...

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 hey became more popular’ Dillon LJ and Leggatt LJ concurred.

Notes

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References

*C Webb and T Akkouh, ''Trusts law'' (Palgrave 2008) 315 suggest '' Wednesbury'' unreasonableness is needed, because in ''Nestle'' failing to follow a ‘course which no prudent trustee would have followed’ was said to be the standard. It seems clear that the standard is now that in

TA 2000 The Trustee Act 2000c 29 is an Act of the Parliament of the United Kingdom that regulates the duties of trustees in English trust law. Reform in these areas had been advised as early as 1982, and finally came about through the Trustee Bill 2000 ...