Spread Trustee Company Ltd v Hutcheson
[2011] UKPC 13
Independent editorial summary — not the official judgment. Read the full judgment via the source link.
Ratio Decidendi
A trustee exemption clause that excludes liability for gross negligence is not contrary to public policy and is enforceable, though the court should construe such clauses strictly.
Facts
Beneficiaries of a trust brought claims against the trustee company for negligent management of trust assets. The trustee relied on an exemption clause in the trust deed.
Judgment Summary
The Privy Council held that the exemption clause was valid and enforceable. While acknowledging that trustee exemption clauses should be construed strictly, they are not inherently contrary to public policy.
Key Quotes
"But I think it improbable that they would be read as involving or giving rise to an absolutely inflexible rule, effectively one of public policy, precluding any trustee from exempting him, her or itself from liability for gross negligence not involving either subjective dishonesty or recklessness or dishonesty in the extended and partially objective sense recognised in this context in Walker v Stones ."
— Lord Clarke(verbatim, verified against the judgment)
Subsequent Treatment
Considered in Law Commission recommendations on trustee exemption clauses.
What To Do Next
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