| TRUSTS ― Trustee ― Duty of trustee ― Whether trustee under a duty to review the diversification of trust fund ― Trustee Act 2000, s 4(2)
Gregson v HAE Trustees Ltd and Others [2008] EWHC 1006 (Ch); [2008] WLR (D) 146
Ch D: Robert Miles QC sitting as a Deputy High Court Judge: 8 May 2008
The duty in s 4(2) of the Trustee Act 2000 (‘the Act’) was a separate and independent duty, which was not restricted to exercises of the power of investment.
Mr Robert Miles QC, sitting as a deputy judge, so held in the Chancery Division when, inter alia, ruling that shares held under a discretionary trust were investments of the trust for the purposes of s 4(2) of the Act. The claim was brought by Caroline Susan Gregson against HAE Trustees Ltd and others.
S 4(2) provides “a trustee must from time to time review the investments of the trust and consider whether, having regard to the standard investment criteria, they should be varied.”
MR MILES said that the natural reading of s 4(2) was supported by the words in parenthesis in para 1 of Sch 1 of the Act, where the contrast was drawn between duties relating to the exercise of powers of investment and those relating to the review of investments. The words “the investments of the trust” within s 4(2) were not deliberately narrower than, for example, “the assets of the trust” or “the trust fund”. On their natural reading, “the investments of the trust” comprised any asset that was invested, whether it was in that state when originally invested or came into that state of investment at a later date. The relevant context in which “the investments of the trust” appeared was the imposition of the statutory duty of review under s 4(2). There appeared no good reason why that duty of review should not apply equally to an investment settled on a trustee and to one bought by a trustee in the exercise of his powers of investment. The purpose of the statutory duty was self-evident; it was imposed on trustees for the protection of trust beneficiaries, whether the investment was part of an original settlement or was acquired at a later date. The statutory purpose was achieved by applying the duty to all property of the trust held as an investment and there was nothing in the statutory wording to suggest that the duty was to be limited to investments acquired at a later date.
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