Trustee Powers Cases

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Cowan v Scargill [1985] Ch. 270

Facts: The defendant was president of the mineworker’s union and trustee of the miner’s pension fund (which had an investment plan including investments in South Africa and the oil industry). The defendant felt investing the miner’s pension fund in oil companies, which were in direct competition with the coal industry, would not be in beneficiary’s best interest, so he proposed to withdraw this investment.

Held: The trustee has a duty to maximise returns on the trust fund and it was not up to the defendant to reject the investment advice on the basis that he had personal/moral objections to the investment; the defendant therefore lost the case and had to take the advice from the miner’s pension fund investment plan

  • Megarry held: the duty of trustee is to generate the best available return on the trust fund regardless of other considerations

Harries v Church Commissioners [1993] 2 All ER 300

Facts: The plaintiff (i.e. claimant) claimed the Commissioners, whose purpose was to promote the Christian faith through the Church of England, should not invest in a manner incompatible with that purpose even if this involved a risk of significant financial detriment. The Commissioners had an ‘ethical investment’ policy which prohibited certain investments

Held: It was held the trustees could take non-financial considerations into account as long as this didn't hinder the profitability of investments

  • So charitable trustees must maximise returns on the trust, but can avoid making investments where there are ethical considerations (an exception to Cowan v Scargill) so long as that does not affect the trust’s profitability

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