Trustees’ performative obligations

Question 1

Scott v Occidental Petroleum (Caledonia) Ltd

Answer 1

1. “It is a fundamental rule that a trustee cannot delegate his trust … On the other hand it is equally clear that a trustee is entitled to employ persons to that which an ordinary man of business would employ an agent to do, since he is not bound to perform the whole duties of the trust personally … To this extent, therefore, delegation is not seen as being in conflict with the fundamental rule. The dividing line between these two propositions is … that the trustee must never surrender his own judgment in matters committed to his discretion, since the confidence of the truster was placed in his discretion and his alone” (per the Lord President (Hope))

Question 2

Ferguson v Paterson

Answer 2

1. “The first duty of the trustees was to preserve the trust fund under their own control … The trustees might properly employ their law-agent to receive the money from the mortgagees, but it was their duty to see that the money, when received, was immediately reinvested or placed on deposit in their own names and under their own control” (per Lord Davey)

Question 3

Clarke v Clarke’s Trs

Answer 3

1. When the trustees took office, the stocks and shares they invested in were worth a fair amount of money
2. In due course, they lost value and essentially became worthless
3. The court held that the duty as trustee is that the assets of the trust are properly administered
4. “Now it is the plain and undoubted duty of trustees who continue to hold shares of such a nature, or other kinds of assets, to keep a prudent and business-like eye upon them, and to revise the situation from time to time, instead of going to sleep upon the matter and continuing to hold either in blind confidence or without giving any such consideration to the matter as an ordinarily prudent man would give. In the present case I am afraid that the trustees failed to perform this plain duty”

Question 4

Melville v Noble’s Trs

Answer 4

1. “Trustees holding trust funds should invest them so as to yield an investment return. I cannot hold that they so invest them by placing them on deposit-receipt with a bank. It is true that many private individuals often keep large sums on deposit-receipt for long periods, but this cannot be called an investment in the usual sense of that term. There is no stipulated return. The interest to be paid may fluctuate at the will of the holders of the money, and it is never equal to the amount which ordinary and recognised investment yields”