Trusts and Equity: Trustee Duties

Learoyd v Whiteley

Held: It is the duty of a trustee to confine himself to the class of investments which are permitted by the trust, and likewise to avoid all investments of that class which are attended with hazard. the duty rather is to take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide. That is the kind of business the ordinary prudent man is supposed to be engaged in; and unless this is borne in mind the standard of a trustee's duty will be fixed too low.

Re Power

Jenkins J HELD an investment must produce income of a financial nature and that the appreciation of benefits-in-kind is not sufficient. "There is a distinction between purchasing freehold property for the income one is going to get from it and purchasing freehold property for the sake of occupying it." Therefore, the provision of a house for a beneficiary to live in produced no income and so could not amount to an investment.

Bartlett v Barclays Bank Trust Co (No 1)

Qualifying Learoyd v Whiteley, that does not mean that the trustee is bound to avoid all risk and in effect act as an insurer of the trust fund. No doubt it is the duty of a trustee, in administering the trusts of a will, to deal with property entrusted into his care exactly as any prudent man would deal with his own property. But the words in which the rule is expressed must not be strained beyond their meaning. Prudent businessmen in their dealings incur risk. That may and must happen in almost all human affairs. The distinction is between a prudent degree of risk on the one hand, and hazard on the other.

Re Harari's Settlement Trust

The investments allowed under an express term of a trust are not otherwise restricted to those authorised by statute. Where there is an express clause modifying or excluding the application of the general law, the plain meaning of that clause should be given.

Cowan v Scargill

Trustees must put the interests of their beneficiaries first. When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests... In considering what investments to make trustees must put on one side their own personal interests and views.... I am not asserting that the benefit of the beneficiaries which a trustee must make his paramount concern inevitably and solely means their financial benefit, even if the only object of the trust is to provide financial benefits.