Legal Principles and Key Points
- In the case of Dundee Hospitals Board v Walker 1952 1 all er 896, situations where the court will intervene in the exercise of the trustee’s powers were laid down.
Facts of the Case
- The testator in this case gave money to a hospital so long as it is not to be taken over by the state.
- The will therefore provided that the trustees in their discretion could determine whether a hospital had been taken over by the state or not.
Issues in Dundee Hospitals Board v Walker 1952 1 all er 896
- Can the trust be held as valid
Held by House of Lords (Scotland)
- Trust held to be valid.
- Here it was held that the court will intervene if it can be shown that the trustees: considered the incorrect question, they did not apply their minds to the correct question, perversely shut their eyes to the facts or did not act honestly or in good faith.
- “The legacy was only to be payable if the trustees entertained no doubts on the control question. Even if all the above matters are excluded, I am unable to say that there was no evidence on which the trustees might reasonably entertain doubts thereon. At the testator’s death the Scottish Bill had been before Parliament for over five months. It contained a clause (clause 9 (8)) with retroactive effect, which has already been read to your Lordships and which might well raise doubts in the trustees’ minds as to whether at the date of the testator’s death the infirmary was free from the control of the Department of Health. These doubts would be reinforced by the fact that a similar clause had been included in the English Act, which had already been passed by Parliament.
- Having regard to the nature of the discretion conferred on the trustees, it seems to me impossible to hold that they had exceeded the bounds placed by the testator on the exercise of that discretion.
- It seems to me still more impossible to say that they acted un reasonably. As I have already said, I think the provisions of clause 9 (8) might give rise to reasonable doubts, but the trustees did not act on their own unaided judgment. They consulted counsel, and their final decision was in accordance with his advice. Reading the evidence as a whole, I think their conduct throughout was eminently reasonable. For these reasons I agree that the appeal should be dismissed.” Pg96