Unit 4 cases

• Nestle v Nat West (1993)


  Must have balance between life tenant’s and remainderman’s interests

  • claim failed - not due to lack of balance but because she couldn’t prove that a different investment policy would have increased the capital value of the fund
  • harsh decision - esp since Trustee Act 2000
  • both should see growth
• Cowan v Scargill (1985)


  Don’t take non-financial considerations into account

  • pension fund investing in overseas coal where the purpose of the trust is the production of financial benefits, the duty is to ensure the trust creates the greatest financial benefits
  • morality/ethics considerations shouldn’t come into account
• Re Clore’s S T [1966]

  The advancement must be for the benefit of your he beneficiary

  • court approved an advancement to an independently wealthy beneficiary allowing him to make a charity donation he felt morally obligated to make, the advancement meant that he didn’t have to pay as much tax as if he had paid from his regular income
• X v A [2006]

  Advancement has to be for the benefit of the beneficiary

  • much stricter than Re Claire’s ST (esp since trustees act 2000?)
  • wife had wanted trust money to donate to charity but she didn’t have the money otherwise and her had very strong links to the charity
• Re Dover Coalfield Extension Ltd [1908]

  Where there is no link between a person‘s position as a trustee and the profit/opportunity, they cannot be held liable

  • the trustee was already a director before he became a trustee
• Bray v Ford (1896)

  Lord Herschell - “it is an inflexible ripe of the court of equity that a person in a fiduciary position, such as the plaintiff’s, is not unless expressly provided, entitled to make a profit; be is not allowed to put himself in a position where his interest & duty conflict.”
• Boardman v Phipps [1967]

  Where a fiduciary‘s personal interest does or might conflict with their duty to the principal, the principal‘s interest must always always come first

  • there was conflict, defendants were liable to account for the shares and profits to the trust beneficiaries
• Re Gee [1948]

  Trustees who use their position to appoint themselves to directorship of a company were held liable to account to the trust for all the fees they received as directors
• Armitage v Nurse [1997]

  Trustee exemption of liability clauses are valid for negligence but not actual fraud - good faith and honesty are irreducible trustee obligations
• Armitage v Nurse [1997]

  Trustee exemption of liability clauses are valid for negligence but not actual fraud - good faith and honesty are irreducible trustee obligations

  • appeal dismissed in case; clause 15 of the deed operated to exclude trustee liability for negligence
• Re Paulings S T [1964]

  Relief from liability

  • where the beneficiary participates in and/or consents to a breach of trust