Nestle v National Westminster Bank plc

Nestle v National Westminster Bank plc
Nestle v National Westminster Bank plc
Court Court of Appeal
Date decided 6 May 1992
Citation(s) [1993] 1 WLR 1260
Case history
Prior action(s) [2000] WTLR 795; Independent, July 4, 1988, (1996) 10(1) Trust law International 113, 115
Trustees, duty of care, investment

Nestle v National Westminster Bank plc [1993] 1 WLR 1260 is an English trusts law case concerning the duty of care when a trustee is making an investment.



A testator died in 1922 and named his widow, two sons and wives and one grandchild as the beneficiaries. The wife got the family home as a life interest and a tax free annuity. The two sons got annuities between age 21 and 25 and life interests in half the trust with a power to appoint income to their wives and Georgina, the grandchild, got the remainder. In 1922 there was £53,963 and in 1986 when Georgina became entitled, there was £269,203. She claimed that had the fund been invested properly there would have been £1.8m. The trust company had failed to conduct periodic reviews of investments. They invested in tax-exempt gilts because the sons were domiciled abroad, meaning exemption from inheritance tax.


High Court

Hoffmann J held that there was no breach of the duty of care. He pointed out that,[1]

modern trustees acting within their investment powers are entitled to be judged by the standards of current portfolio theory, which emphasises the risk of the entire portfolio rather than the risk attaching to each investment taken in isolation.

Court of Appeal

Staughton LJ held there was no breach of trust. Despite this the trust company fell ‘woefully short of maintaining the real value of the fund, let alone matching the average increase in price of ordinary shares’. The company had not acted ‘conscientiously, fairly and carefully’ and there was ‘not much for the bank to be proud of in its administration of the… trust’.

At times it will not be easy to decide what is an equitable balance’ between life tenants and remaindermen. Some regard for the facts should be had, ‘not necessarily by seeking the highest possible income at the expense of capital, but by inclining in that direction.[2]

He emphasised that ‘trustees’ performance must not be judged with hindsight: 'after the event even a fool is wise, as a poet said nearly 3,000 years ago…' and accepted evidence that equities were regarded as risky before 1959. ‘It was only in 1959 that [they became more popular].’

Dillon LJ and Leggatt LJ concurred.

See also

  • Re Chapman [1896] 2 Ch 763


  1. ^ [2000] WTLR 795
  2. ^ [1993] 1 WLR 1260, 1279


  • C Webb and T Akkouh, Trusts law (Palgrave 2008) 315 suggest Wednesbury unreasonableness is needed, because in Nestle failing to follow a ‘course which no prudent trustee would have followed’ was said to be the standard. It seems clear that the standard is now that in TA 2000 s 1.
  • Crawford, ‘A Fiduciary Duty to Use Derivatives’ (1995) 1 Stan JL Bus & Finance 307

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