Cowan v Scargill
Trustees of a pension fund must exercise their powers of investment in the best financial interests of the beneficiaries, and cannot refuse investments for political or moral reasons.
Facts
The mineworkers' pension scheme was managed by ten trustees, five appointed by the National Coal Board and five by the National Union of Mineworkers, including its president, Arthur Scargill. The union trustees refused to approve an investment plan unless it was amended to prohibit any increase in overseas investment, and to withdraw investments in energy industries that competed with coal. The other trustees applied to the court for directions.
Legal principle
Megarry V-C held that the union trustees were in breach of their duties. He said that the power of investment must be exercised so as to yield the best return for the beneficiaries, judged in relation to the risks of the investments in question, and that trustees must put aside their personal interests and views. In the case of a pension fund, the benefit of the beneficiaries normally means their financial benefit. Trustees may not refrain from making an investment for social or political reasons if it would be more beneficial to the beneficiaries than other investments.
Related cases on trustees: duties, powers and variation of trusts
- Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515
- Butler-Sloss v Charity Commission for England and Wales [2022] EWHC 974 (Ch), [2022] Ch 371
- Chapman v Chapman [1954] AC 429
- Goulding v James [1997] 2 All ER 239
- Harries v Church Commissioners for England [1992] 1 WLR 1241
- Learoyd v Whiteley (1887) 12 App Cas 727
- Re Lucking's Will Trusts [1968] 1 WLR 866
- Nestle v National Westminster Bank plc [1993] 1 WLR 1260
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
