Buttle v Saunders [1950] 2 All ER 193

Facts

  • The case involved trustees who had accepted an offer for the sale of property without thoroughly considering or seeking other bids.
  • Claims were brought against the trustees for breach of trust due to their failure to explore potentially higher offers and secure the best price for the beneficiaries.
  • The dispute required the court to examine whether the trustees had properly fulfilled their fiduciary duty by actively seeking to maximize value for beneficiaries.

Issues

  1. Whether fiduciaries are obligated to act in good faith and prioritize beneficiaries' interests over their own in transactions.
  2. Whether the trustees were required to take active steps to seek and consider alternative offers to ensure the best price for the beneficiaries.
  3. Whether a failure to secure the best possible price can amount to a breach of trust.

Decision

  • The court held that fiduciaries, such as trustees, must act in good faith and have a duty to obtain the best possible price for the beneficiary.
  • It was determined that fiduciaries are required to actively seek and consider all viable offers, not merely accept the first one available.
  • The judgment established that a lack of diligence or failure to act in the beneficiaries’ best interests can result in liability for breach of trust.

Legal Principles

  • Fiduciaries must act with honesty, integrity, and complete loyalty to the beneficiaries, avoiding conflicts of interest.
  • The obligation to secure the best price requires active efforts, including seeking and evaluating competing offers before concluding a transaction.
  • Passive conduct or superficial procedures by fiduciaries do not meet the standard expected in managing beneficiaries’ interests.
  • Failure to fulfil these duties can give rise to liability for breach of trust and potential redress for affected beneficiaries.

Conclusion

Buttle v Saunders [1950] 2 All ER 193 clarified that fiduciaries must act in good faith and make active efforts to secure the best price in transactions, reinforcing the high standard of care and loyalty required in fiduciary relationships and establishing clear grounds for liability in cases of breach.

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