Nestle v National Westminster Bank Plc
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE STAUGHTON,LORD JUSTICE LEGGATT |
| Judgment Date | 06 May 1992 |
| Judgment citation (vLex) | [1992] EWCA Civ J0506-4 |
| Docket Number | 92/0433 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 May 1992 |
[1992] EWCA Civ J0506-4
Lord Justice Dillon
Lord Justice Staughton
Lord Justice Leggatt
92/0433
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE HOFFMANN)
Royal Courts of Justice
MR MICHAEL LYNDON-STANFORD Q.C. and MR JAMES CLIFFORD, instructed by Messrs Wood Awdry Wansbroughs (Devizes, Wiltshire), appeared for the Appellant (Plaintiff).
MR EDWARD NUGEE Q.C. and MR ANTHONY MANN, instructed by Messrs Wilde Sapte, appeared for the Respondents (Defendants).
This is an appeal by the plaintiff in the action, Miss Nestle, against a judgment of Hoffmann J., given as long ago as 29th June 1988, whereby, at the end of the trial of the action, he dismissed all Miss Nestle's claims against the defendant in the action, National Westminster Bank Plc.
The Bank was sued by Miss Nestle as the trustee of the will of her grandfather, William David Nestle ("the testator") who died on 29th April 1922. By his will which was proved on 17th June 1922 the testator appointed the National Provincial Bank to be his sole executor and trustee. The National Provincial Bank merged with the Westminster Bank in 1968 to constitute the National Westminster Bank which thereupon succeeded to the trusteeship of the testator's will. In this judgment I use the term "the Bank" to designate whichever of the National Provincial Bank Limited and the National Westminster Bank Plc was for the time being the trustee of the testator's will.
The appeal is concerned with the investment policies followed by the Bank from time to time in relation to the funds subject to the trusts of the testator's will, from the time of the testator's death in 1922 to the death of Miss Nestle's father, John Nestle, in 1986, when Miss Nestle became solely and absolutely entitled to the capital of the funds then still held on trust. Those funds were then worth £269,203, but it has been Miss Nestle's contention that if the funds had been properly managed by the Bank and proper investment policies had been followed by the Bank throughout they would have been worth well over £lm. The argument on the appeal has therefore necessarily covered matters of general importance in relation to the investment of private trust funds, though the outcome must depend on the particular circumstances at any particular time of this trust.
The primary relief sought by Miss Nestle in the re-amended statement of claim and by the notice of appeal is (1) an inquiry as to what would be the value of the trust funds at the date of the conclusion of the inquiry if the trust funds had been invested and managed by the Bank with proper care and skill and a proper balance had been maintained between capital and income and (2) an inquiry as to the value of the actual trust funds at the conclusion of inquiry (1), and (3) payment by the Bank to Miss Nestle, by way of compensation or damages, of a sum equal to the excess of the amount certified under inquiry (1) over the amount certified under inquiry (2).
The testator gave his widow, Mrs Barbara Nestle, a life interest in the family home, Winterbourne, Brighton Road, Sutton, Surrey and an annuity of £1500 free of tax during her widowhood. He directed the Bank, as trustee, to set aside a fund sufficient by its income to satisfy the annuity, with power to have recourse to the capital of the annuity fund if in any year there was a shortfall of income. Any surplus in any year of the income of the annuity fund was to be applied as income of residue. On the death of the widow, Winterbourne, or the property then representing it, and the capital of the annuity fund would fall into residue.
As to residue, each of the testator's two sons, George and John, was from the age of 21 to the age of 25 to have an annuity of £250 out of the income of residue. From the age of 25, each son was to have a life interest in one-half of the residue, with power to appoint the income of his share to a surviving widow for her life. The Bank was given power to pay the whole or any part of the capital of either son's share to that son for his absolute use or otherwise to apply it for his benefit. Subject to the foregoing, the capital of each son's share was to be held on trust for his children, with an accruer between the sons' shares if either should die without issue. In the event George Nestle had no children and John Nestle had only the one child, Miss Nestle; accordingly Miss Nestle, who was born in January 1942, became in due course solely and absolutely entitled to the capital of George's share and of John's share, save in so far as the capital was paid out to George or John or otherwise applied for their benefit during their respective lifetimes.
Mrs Barbara Nestle, the testator's widow, was 24 years younger than the testator and she did not die until 1960. Winterbourne was sold during 1959 and the proceeds were invested.
George Nestle, born in 1903, was 18 years old when his father died and had just gone up to Cambridge. In 1933 he emigrated to Tanganyika and settled there. He bought a farm there, and to assist him in doing so the Bank, while the widow was still alive, advanced to him the whole of the capital of his share in the residue, other than the annuity fund and Winterbourne. In 1963 he left Tanganyika and moved to Malta where he lived for the rest of his life. He died in September 1972, leaving surviving him his widow Mrs Elsie Nestle who died in September 1982. Despite initial doubts on the part of the Bank, it was accepted that by his will he had validly appointed the income of his share to his widow Elsie.
John Nestle was born in 1912 and was nine years old when the testator died. He was married once only, but parted acrimoniously from his wife in 1945 and the marriage was dissolved. He was domiciled and resident in England until 1969, when he went to live in Cyprus and he died there in 1986.
By clause 11 of his will the testator gave the Bank power to retain any investment comprised in his estate, not withstanding that it might be of a wasting speculative or reversionary nature or be subject to any liability for calls outstanding thereto attached.
By clause 13 he gave the Bank powers of investment as follows:
"And I declare that all moneys liable to be invested under this my Will may be invested in and upon any securities or investments of the same or a similar nature to any which shall be held by or belong to me at the time of my decease or in or upon any stocks funds or securities of or guaranteed by the Government of the United Kingdom or any British Colony or Dependency or any Foreign State or the stocks shares bonds debentures or securities of any Railway or other Company or of any Municipal or other Corporation or Local Board or public Body established in any part of the United Kingdom or in any British Colony or Dependency or on Mortgage on any real or heritable or leasehold property in Great Britain or in any British Colony or Dependency And the Bank may alter vary and transpose all such stocks funds securities and investments from time to time as often as occasion shall require or as they shall deem expedient."
It is clear that the opening words of that clause, authorising investment "in and upon any securities or investments of the same or a similar nature to any which shall be held by or belong to me at the time of my decease" authorised investment in the purchase of ordinary shares in any company in which the testator had held ordinary shares at the time of his death, even though the testator's holding of ordinary shares in that company had been sold in order to pay his debts and funeral and testamentary expenses and had therefore not been retained by the Bank.
It is also now common ground, though not immediately clear on a first perusal of the clause, that the words in the clause "the stocks shares bonds debentures or securities of any Railway or other Company" authorised investment in the purchase of ordinary shares in companies incorporated in the United Kingdom. See Re Sharp XLV Ch.D. 286, a decision of this court, where Cotton L.J. said at page 289 in relation to a power to invest "upon the debentures or securities of any railway or other public company":—
"It is true that he refers to railway companies, but he also adds, 'or any other public company…'; and I think it would be a wrong interpretation of the will to say that those words, because they follow the reference to railway companies, must be confined to companies similar to them or to companies incorporated in the same way as railway companies are, namely, by special Act of Parliament."
It was the duty of the Bank to acquaint itself with the scope of its powers under the will. It is understandable that the Bank had doubts, on a mere perusal of clause 13, as to its powers to invest in ordinary shares. It is inexcusable that the Bank took no step at any time to obtain legal advice as to the scope of its power to invest in ordinary shares. Instead the Bank administered the trusts, until the enactment of the Trustee Investments Act 1961, on the basis that while it could continue to retain ordinary shares which had been held by the testator at the date of his death, the power it had to invest in further ordinary shares was limited to investment in further ordinary shares in the companies in which it still retained ordinary shares which had been held by the testator at the date of his death, or ordinary shares in "similar companies" e.g. ordinary shares in a further insurance company at a time when the Bank still...
To continue reading
Request your trial
-
Target Holdings Ltd v Redferns (A Firm) and Another
...immediate loss, no inquiry is necessary: the causal connection is obvious. 74Mr. Mann relied on the decision of this Court in Nestlé v National Westminster Bank plc [1993] 3 W.L.R. 1260. That was a case where the will trustee misconstrued the will's investment clause and failed to review in......
- Re O'halloran
-
Ermineskin Indian Band and Samson Indian Band v. Canada (Minister of Indian Affairs and Northern Development) et al., 2006 FCA 415
...188 (Ont. Surr. Ct.), refd to. [para. 235]. Nestle v. National Westminster Bank plc (1988), 10 Trust Law International 112, affd. [1993] 1 W.L.R. 1260 (C.A.), refd to. [para. 237]. Carley Estate, Re (1994), 2 E.T.R.(2d) 142 (Ont. Gen. Div.), refd to. [para. 237]. Myran et al. v. Long Plain ......
-
Friends' Provident Life Office (A Firm) v Hillier Parker May & Rowden; Estates & General Plc and Others, third parties
...See e.g. Bartlett v. Barclays Bank Trust Co. Ltd. (Nos 1 and 2) [1980] Ch. 515; In re Dawson [1966] 2 NSWR 211; and Nestle v. National Westminster Bank Plc [1993] 1 WLR 1260—a case where a will trustee misconstrued the will's investment clause and failed to review investments regularly —se......
-
History Repeating: A Trustee De Son Tort In Jersey
...to include some diversification of investments (as was accepted by the English Court of Appeal in Nestle v. National Westminster Bank (1993) 1 WLR 1260) it is generally accepted that some diversification of trust investments would ordinarily be expected of a trustee of a Jersey law trust (s......
-
History Repeating: A Trustee De Son Tort In Jersey
...to include some diversification of investments (as was accepted by the English Court of Appeal in Nestle v. National Westminster Bank (1993) 1 WLR 1260) it is generally accepted that some diversification of trust investments would ordinarily be expected of a trustee of a Jersey law trust (s......
-
AN ACCOUNT OF ACCOUNTS
...1 Ch 162 at 172; National Trustees Executors and Agency Co of Australia Ltd v Dwyer(1940) 63 CLR 1 at 22. 107[1992] EWCA Civ 12; [1993] 1 WLR 1260. 108Hotson v East Berkshire Area Health Authority[1987] 1 AC 750; Wilsher v Essex Area Health Authority[1988] 1 AC 1074. 109(1997) 188 CLR 449. ......
-
Can Complex Contracts Effectively Replace Bankruptcy Principles? Why Interpretation Matters.
...Oxford Hart 2002); see also Bristol & W. Bldg. Soc'y v. Mothew, [1998] Ch 1 (CA). But see Nestle v. Nat. Westminster Bank pic [1994] 1 All ER 118. (93) It is therefore consistent with the trustee's discretion. See Nestle v Nat'l Westminster Bank pic Chancery Division, 29 June 1988 (Hoff......
-
Equitable compensation for breach of trust: off Target.
...Richard Kindersley V-C). (114) See Robinson v Robinson (1851) 1 De G M & G 247, 259-61; 42 ER 547, 551-2 (Lord Cranworth LJ). (115) [1993] 1 WLR 1260. (116) Ibid (117) Ibid; see also at 1280 (Staughton LJ). (118) Ibid. (119) Heydon, Leeming and Turner, above n 11, 802 [23-030]. (120) (1......
-
English fiduciary standards and trust law.
...2 All E.R. 1054, 1055 (Ch.). (4.) See Bartlett v. Barclays Bank Trust Co., [1980] Ch. 515, 525; Nestle v. National Westminster Bank, [1994] 1 All E.R. 118, 140 (5.) See, e.g., Cowan v. Scargill, [1985] Ch. 270, 289; Nestle, [1994] 1 All ER at 125-26, 140. (6.) In re Whiteley, 33 Ch. D. 347,......
-
Trustee Act (Northern Ireland) 2001
...position at common law where a trustee is obliged to keep investments under review: see Nestle v National Westminster Bank plc No (2) [1993] 1 WLR 1260. Section 4(3) defines the standard investment criteria. The definition is modelled on section 6(1) of the Trustee Investments Act 1961 and ......
-
Trustee Act 2000
...power of investment must undertake periodic reviews of the investments held by the trust’:Nestle v National Westminster Bank plc (No 2) [1993] 1 WLR 1260, 1282G, per Leggatt 25. The definition of the standard investment criteria in section 4(3) is closely modelled on section 6(1) of the Tru......