Passing bull 304- More on flirting with trusts

A colleague referred me to a decided case in Chancery on the point of mixing politics and trusts in England – Cowan v Scargill [1985] I Ch 270.

 Back then, the English coal industry was desperate to save itself – as is the Australian coal industry now.  But English coal miners were led by a frightful firebrand named Arthur Scargill – who turned out to be as crooked as Norm Gallagher, and who was a one-man raison d’être for Mrs Thatcher.  

The coalminers had a pension scheme set by the National Coal Board.  The union was represented on the managing trustee.  The union wanted the investment policy of the trust to reflect the overwhelming wish of the union and members of the fund to save the coal industry.  They wanted to stay out of oil and gas.  (Sound familiar?)  Scargill was stupid and egotistical enough to appear in person in Chancery.  That did not help the judge, Sir Robert Megarry, VC.  The court was dead against the trustees acting for union motives that conflicted with their investment duties.  It ruled that they were wrong to put union policy directives above their duty to act in the best financial interests of the trust members generally.

That would not have surprised lawyers, but it looks to bear directly on the issues raised in the previous note.  Except that here the trustees are not just being pushed in one direction – that looks prima facie to place them is a position of conflict between duties and interests – they are being told by a government regulator – the kind of outfit that attracts the term ‘tame’ – that it will act like Lord Nelson if the trustees at least try to look decent.

That would not go down so well in court.

Two things.  The argument took nine days.  The judge said Mr Scargill had put the case with ‘courtesy and competence’ – but judges hate having to sort out the arguments of litigants in person.  The judge gave judgment eight days after the hearing concluded.  It covered twenty pages.  You can pick your own multiplier for what might unfold now.

And it is curious that the role of Arthur Scargill is now played by Rupert Murdoch, Barnaby Joyce, and ‘conservative’ think tanks.  Arthur was hardly their pin-up boy.  Which is sad.  They would have deserved each other.  And they would have escaped the curse of our children and grandchildren.

Companies – directors improper purposes – politics at the board level.

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