Nestle v NatWest Bank [1994]

Remainderman of trust created in 1922 claimed fund
would have been worth much more had it been properly invested.
Trustees had failed to seek legal advice regarding
meaning of investment clause and as such believed their investment options were
much narrower than they actually were.
Court of Appeal stated that trustee’s actions between
1922 and 1960 could not be judged by modern standards, as the modern ‘portfolio
theory’ favouring equity investment was not applied until after 1960.
However if trust fund after this date loses
significant real value this may indicate a prima facie failure to invest
properly, unless there were countervailing factors (as in present case)
[NB At first instance Hoffman J had said ‘Modern
trustees acting within their investment powers are entitled to be judged by the
standards of current portfolio theory, which emphasises the risk level of the
entire portfolio rather than the risk attaching to each investment taken in