Speight v Gaunt
A trustee must act as an ordinary prudent man of business would act in managing his own affairs, and may employ an agent where that is the ordinary course of business.
Facts
Mr Gaunt, a trustee, employed a stockbroker, Mr Cooke, to buy investments for the trust, following the usual practice. He paid the money to the stockbroker, who claimed that he had bought the investments, but in fact misappropriated the money and became bankrupt. The beneficiaries sued Mr Gaunt for the loss.
Legal principle
The House of Lords held that Mr Gaunt was not liable. Lord Blackburn said that 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. Since a prudent man of business would have employed a stockbroker and paid him in the ordinary way, Mr Gaunt had not been negligent. The rules on delegation by trustees are now in the Trustee Act 2000.
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
- Re Lucking's Will Trusts [1968] 1 WLR 866
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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.
