Nestle v National Westminster Bank plc [1992] EWCA Civ 12 is an English trusts law case concerning the duty of care when a trustee is making an investment.
The two sons got annuities between age 21 and 25 and life interests in half the trust with a power to appoint income to their wives and Georgina, the grandchild, got the remainder.
"This is an extremely flexible standard capable of adaptation to current economic conditions and contemporary understanding of markets and investments.
But Mr Wright submitted that in the conditions which prevail a century later, the trustees were under an overriding duty to preserve the real value of the capital.
This brings me to the second principle on which there was general agreement, namely that the trustee must act fairly in making investment decisions which may have different consequences for different classes of beneficiaries.
It would be an inhuman law which required trustees to adhere to some mechanical rule for preserving the real value of the capital when the tenant for life was the testator's widow who had fallen upon hard times and the remainderman was young and well off.Staughton LJ held there was no breach of trust.
Despite this the trust company fell ‘woefully short of maintaining the real value of the fund, let alone matching the average increase in price of ordinary shares’.
[2]He emphasised that ‘trustees’ performance must not be judged with hindsight: 'after the event even a fool is wise, as a poet said nearly 3,000 years ago…' and accepted evidence that equities were regarded as risky before 1959.