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
Lord is an appellation for a person or deity who has authority, control, or power (social and political), power over others, acting as a master, chief, or ruler. The appellation can also denote certain persons who hold a title of the Peerage ...
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 ...
concurred.
See also
*
UK company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...
,
Companies Act 2006
The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law.
The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...
, s 174
*''
Speight v Gaunt
''Speight v Gaunt'' 883UKHL 1is an English trusts law case, concerning the extent of the duty of care owed by a fiduciary.
Facts
Mr John Speight, a Bradford industrialist, had appointed Mr Isaac Gaunt and Mr Alfred Wilkinson as trustees for his ...
'' (1882) 22 Ch D 727, 739, Sir George Jessel MR, 'It seems to me that on general principles a trustee ought to conduct the business of the trust in the same manner that an ordinary prudent man of business would conduct his own, and that beyond that there is no liability or obligation on the trustee.'
*''
Belchier v Parsons
''Belchier v Parsons'' (1754) 96 ER 908 is an English trusts law case, which stands as one of the earliest formulations of the prudent person rule.
Facts
Mr Holden had gone bankrupt, owing money to a range of creditors. Mrs Parsons was chosen ...
'' (1754) 96 ER 908
Notes
{{reflist, 2
English trusts case law
Lord Lindley cases
House of Lords cases
1886 in case law
1886 in British law