Re Lucking's Will Trusts
A trustee who holds a controlling shareholding in a company must supervise its management, and is liable for losses caused by failing to do so.
Facts
A trust held a majority of the shares in a family company. Mr Lucking, one of the trustees, was a director of the company, and appointed his friend, Mr Dewar, as managing director. Mr Dewar drew large sums from the company's bank account, in excess of his salary, and later became bankrupt, so the company lost the money. The beneficiaries sued the trustees.
Legal principle
Cross J held that Mr Lucking was liable for the loss. He said that a trustee who holds a controlling interest in a company should take steps to ensure that he receives adequate information about the company's activities, and should act on that information to protect the trust's interests. Mr Lucking had failed to supervise Mr Dewar properly, despite having the means to do so, and was therefore in breach of his duty as a trustee.
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
- Cowan v Scargill [1985] Ch 270
- 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
- Nestle v National Westminster Bank plc [1993] 1 WLR 1260
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