Learoyd v Whiteley
Encyclopedia
Learoyd v Whiteley 12 AC 727 is an English trusts law
case, concerning the duty of care owed by a trustee when exercising the power of investment.
, “with the engine-house, sheds, brick and pipe kilns, and buildings thereon, and all fixtures and fittings thereon.” £2000 was invested on mortgages at 5% in four small freehold houses, including a shop, in Salford, Greater Manchester
. The brickfield owners went bankrupt in October 1884 and the owner of the four houses filed for petition for liquidation. There was insufficient money to pay the trust fund.
Lindley LJ followed.
Lopes LJ concurred.
English trusts law
English trusts law is the original and foundational law of trusts in the world, and a unique contribution of English law to the legal system. Trusts are part of the law of property, and arise where one person gives assets English trusts law is the original and foundational law of trusts in the...
case, concerning the duty of care owed by a trustee when exercising the power of investment.
Facts
Elizabeth Whiteley and her children sued the executors of Benjamin Whiteley's will (of 19 March 1874). The will contained a power to invest the fund on certain investments, including “real securities in England or Wales.” £5000 of the trust money had been lost. £3000 was invested in a mortgage at 5% return in the freehold of a ten acre brick field near PontefractPontefract
Pontefract is an historic market town in West Yorkshire, England. Traditionally in the West Riding, near the A1 , the M62 motorway and Castleford. It is one of the five towns in the metropolitan borough of the City of Wakefield and has a population of 28,250...
, “with the engine-house, sheds, brick and pipe kilns, and buildings thereon, and all fixtures and fittings thereon.” £2000 was invested on mortgages at 5% in four small freehold houses, including a shop, in Salford, Greater Manchester
Greater Manchester
Greater Manchester is a metropolitan county in North West England, with a population of 2.6 million. It encompasses one of the largest metropolitan areas in the United Kingdom and comprises ten metropolitan boroughs: Bolton, Bury, Oldham, Rochdale, Stockport, Tameside, Trafford, Wigan, and the...
. The brickfield owners went bankrupt in October 1884 and the owner of the four houses filed for petition for liquidation. There was insufficient money to pay the trust fund.
Chancery Court
Bacon VC held in the Chancery Court that the brickfield investment was unauthorised, and the trustees were responsible for its failure. The trustees failed to exercise sufficient caution, but they had done so in the case of the houses. The trustees appealed.Court of Appeal
The Court of Appeal upheld Bacon VC's decision, that the trustees were liable for repayment of the £3000 invested in the brickfield. They held that a trustee must exercise the standard of care of an ordinary prudent businessman, applying any special knowledge he may have. Cotton LJ stated,Lindley LJ followed.
Lopes LJ concurred.
House of Lords
Lord Watson held that in administering and managing trust property (distinguished from the investment sphere),See also
- UK company law, s.174
- Harvard College v. Armory 9 Pick (26 Mass) 446, 461 (1830)
- Speight v GauntSpeight v GauntSpeight v Gaunt LR 9 App Cas 1 is an English trusts law case, concerning the extent of the duty of care owed by a fiduciary.-Facts:...
(1882) 22 Ch D 727, 739, Sir George Jessel MR, 'It seems to me that on general principles a trustee ought to conduct the business of the trust in the same manner that an ordinary prudent man of business would conduct his own, and that beyond that there is no liability or obligation on the trustee.'