Dundee General Hospitals Board v Walker [1952] 1 All ER 896

A testator provided a legacy for a hospital but made payment depend on its remaining outside state control. The will entrusted the trustees with deciding the relevant question and allowed them to withhold payment if they entertained the specified doubts. The arrangements arose during the transition to national health services, when legislation bearing on control of the hospital was under consideration. The trustees sought legal advice and concluded that the condition was not satisfied. The hospital challenged their decision, asking the court to intervene in the exercise of the discretion conferred by the will.

When may a court interfere with trustees' assessment of a condition which the testator expressly committed to their judgment and discretion?

The House of Lords dismissed the challenge to the trustees' decision. Lord Normand emphasised the scope of the discretion given by the will and the grounds upon which the trustees had acted. Their doubts about state control were supported by the legislative position, and they had sought counsel's advice. The court did not simply substitute its preferred answer. Judicial intervention remained possible if trustees addressed the wrong question, failed genuinely to consider the correct one, ignored the facts perversely, or acted dishonestly or in bad faith. On the evidence, those faults were not established. The decision upheld this exercise of discretion; it did not make trustees' decisions immune from supervision.

A court respects a trustee's discretion within the terms of the trust but can intervene for defects such as bad faith, failure to consider the proper question or perverse disregard of relevant facts. It does not merely substitute its own preferred decision.

This Scottish appeal is frequently used to illustrate the limits of judicial supervision of trustees. The important point is how the discretion was exercised, rather than a blanket rule that subjective wording resolves every uncertainty. Compare the separate questions whether a power is valid, what it permits and whether its holder has exercised it properly. Modern challenges must also consider the relevant jurisdiction's legislation and later decisions on trustee decision-making.