The pursuer, a Conservative member of the defender Council, with others, challenged a policy introduced at the behest of the majority Labour section to disinvest Council assets from South Africa because of their repugnance at apartheid policies.
Held: The councillors had failed in their fiduciary duty because they had not undergone due process and taken proper advice. However, the policy might have been lawfully implemented if they were following professional advice. The judge said: ‘I accept that the most profitable investment of funds is one of a number of matters which trustees have a duty to consider. But I cannot conceive that trustees have an unqualified duty . . simply to invest trust funds in the most profitable investment available. To accept that without qualification would, in my view, involve substituting the discretion of financial advisers for the discretion of trustees.’
Lord Murray held that ‘trustees have a duty not to fetter their investment discretion for reasons extraneous to the trust purpose, including reasons of a political or moral nature’.
Lord Murray
[1989] PLR 10, [1988] SLT 329, [1989] Pens LR 9
Scotland
Updated: 30 August 2021; Ref: scu.518932