Cowan v Scargill

[1984] 2 All ER 750
[1985] Ch 270

---

(Judgment by: Sir Robert Megarry)

Cowan and others
versus; Scargill and others

Court:

Judge:
Sir Robert Megarry VC

Hearing date: 26, 27, 28, 29, 30 March, 2, 3, 4, 5 April 1984
Judgment date: 13 April 1984

---

Judgment by:
Sir Robert Megarry

I have before me an originating summons, issued on 1 December 1983, which raises certain questions on the exercise of the powers and duties of investment of the trustees of an employees' pension scheme, together with certain other questions. The parties to the originating summons are the ten trustees of the Mineworkers' Pension Scheme. The five plaintiffs are the trustees appointed by the National Coal Board ('the board' or 'the NCB'). The five defendants are the trustees appointed by the National Union of Mineworkers ('the union', or 'the NUM'). Mr Stamler appeared on behalf of the plaintiffs, and the first defendant, Mr Arthur Scargill, appeared in person. He had, I think, dispensed with the services of a Chancery silk and junior some days before the case began, but he had retained the services of a solicitor, who was able to sit with him in court and assist him. The other four defendants took no part in the argument, but Mr Scargill told me that he was presenting his argument on behalf of them as well as on his own behalf. I should say at the outset that Mr Scargill argued his case throughout with both courtesy and competence. I wish to emphasise this, particularly in view of the number of occasions on which I found it necessary to interrupt his submissions, usually because he was going too fast for coherent note-taking, or because I wished to be sure that I had correctly understood his submission, or that he was not overlooking some point which tended against him.

The main issue (and I put it very shortly) is whether the defendants are in breach of their fiduciary duties in refusing approval of an investment plan for the scheme unless it is amended so as to prohibit any increase in overseas investment, to provide for the withdrawal of existing overseas investments at the most opportune time, and to prohibit investment in energies which are in direct competition with coal. The investment plan in question is the 'Investment Strategy and Business Plan 1982', which I shall call the '1982 plan'. The 1982 plan was first presented to a meeting of the trustees on 9 June 1982 as a replacement for a similar plan approved in 1980 (the '1980 plan'), and it has never been approved. The 1980 plan replaced a plan made in 1976, the first of its kind.

Before I go any further, I must say something about the Mineworkers' Pension Scheme. This was established under the Coal Industry Nationalisation (Superannuation) Regulations 1950, SI 1950/376, made under the Coal Industry Nationalisation Act 1946, s 37; and I shall call it 'the scheme'. It has been amended from time to time under the powers conferred by cl 37 of the scheme. This allows amendments to be made by agreement between the board and the union, with a provision in cl 38 for resolving matters in default of agreement. Both the scheme and the rules made under it are of considerable complexity, but I need not explore these. Provision is made for the payment of pensions and lump sums on retirement, injury and certain diseases, and for payments to widows and children of members. The funds of the scheme are provided by contributions from members and by payments made by the board.

The scheme covers all industrial employees of the board, and there is a parallel scheme for the board's non-industrial staff, called the NCB Staff Superannuation Scheme (the 'staff scheme'). The two schemes work together in various ways. There is a joint investment sub-committee (the 'JISC') composed of representatives of the committees of each of the schemes, some being representatives of both committees; and the JISC deals with much of the detail of the investment of the funds of the two schemes, with some investments being made with moneys provided by both schemes. The funds of each scheme are large, each being worth something in the region of £3,000m, with some £200m being available for investment each year under the scheme. An advisory panel of investment experts assists the JISC, and Mr H R Jenkins, the board's director-general of investments, is the secretary of the JISC. He heads a large staff which carries out most of the work of managing the funds. The practical operation of this organisation for some years now has been that the trustees have approved the general strategy for investment in the form of the 1976 and 1980 plans, while the JISC, which meets more frequently, has dealt with problems that arose when some proposed investment was very large, or did not fall within the guidelines laid down by the plan, or were in some other way a matter that should be discussed. Apart from that, Mr Jenkins and his staff have a wide discretion in making investments in accordance with the plan, and they do all the detailed work.

As I have mentioned, there are ten trustees under the scheme. They form a committee of management (the 'committee') which is in control of the fund. Five of the ten are appointed and removable by the board and five are appointed and removable by the union, with provision in each case for alternates. From the members of the committee appointed by the board, the board appoints a chairman and a joint deputy chairman, and from the members appointed by the union, the union appoints the other joint deputy chairman. At all material times Mr J R Cowan, the deputy chairman of the board, has been chairman of the committee, and Mr F B Harrison the joint deputy chairman appointed by the board. He is also chairman of the JISC. Until April 1982, Mr (now Lord) Gormley was the joint deputy chairman appointed by the union; but when he retired as president of the union, Mr Scargill became president in his place, and he also became the union's joint deputy chairman of the committee. The members of the committee are expressly made trustees of the funds of the scheme, though they are given power to act by a majority; but there is also an express provision that the chairman of a meeting of the committee is not to have a second or casting vote. The powers of investment are very wide, and there are also very wide provisions for appointing agents and for delegation. The scheme is fully funded. Members and the board make basic contributions which are very approximately the same total amount, and the board also makes deficiency payments in accordance with actuarial valuations. In addition, the board has been making further voluntary contributions so that pensions may keep pace with inflation. The net result, I understand, is that something of the order of two-thirds of the payments come from the board and one-third from the members.

In earlier years, no formal plans or schemes for investment were made. However, in 1976 a four years' business plan was approved by the JISC and the committee, and in May 1980 this was replaced by the 1980 plan. Investment has been made since then on the basis of this plan. Under this, there were three main categories of investment, namely marketable securities (both gilts and equities); land; and 'industrial finance', which includes equities in small quoted companies, project finance for industry, and investment in agricultural operations. All three heads include overseas investment, and the first two include oil and gas. 'Targets', in the form of percentages, were set for various categories of investment.

The 1982 plan was a revised plan that was intended to replace the 1980 plan. It was submitted to the JISC on 11 May 1982, and was approved as being a very satisfactory plan for the next two years, 'provided good use was made of the flexibility which it afforded for further overseas equity investment'. The JISC accordingly submitted it to the committees of management of the two schemes with a recommendation for approval. The committee of the staff scheme approved it at its meeting on 8 June 1982; but it met a different fate at the forty-fifth meeting of the committee for the mineworkers' scheme held the next day, 9 June.

Apart from the replacement of Mr Gormley by Mr Scargill, the composition of the committee had remained unchanged for some years; and for many years the members had worked together with little dissension. There had been a sharp division about the way in which the scheme's shares should be voted at an annual general meeting of one company, but, subject to that, a consensus had always emerged after discussion. At the meeting on 9 June 1982 Mr Scargill, almost at the outset, said that an important principle had to be discussed, and that he was concerned about the rights of trustees to determine where the fund's resources were invested. This arose on a question of unionisation in a company in which the fund had a minority shareholding. It was agreed that there should be a special meeting to consider this and other matters of policy affecting the investments of the fund.

After certain other items had been considered, Mr Jenkins presented the 1982 plan, and went through it in detail. Mr Scargill then raised objections to the plan. He subsequently, in a letter of 19 August 1982, questioned the accuracy of the draft minutes of that meeting, and put forward his own versions of certain parts of those minutes; and it is from Mr Scargill's versions that I shall quote. His opening objection was to say that--

'while he approved of the remainder of the proposals, his organisation raised objections to investments in oil, investments overseas and the acquisition of land overseas.'

He said that there should not be any future investment in these three areas, and moved reference back of the business plan for 1982. He also said that in the long term all investments 'should be withdrawn from these areas'. When Mr Cowan suggested that the plan should stand until the next meeting of the JISC and that the alterations should be raised then, Mr Scargill said that he--

'could not accept Mr. Cowan's recommendation as he considered it would negate the meeting and would mean the Committee of Management was no more than a reporting body. He said that the three areas of investment were in direct conflict with the policy decision of N.U.M. Conference, and he suggested that investments in these three areas should not take place. He proposed that a special separate meeting should be held to discuss the principles, and again moved a reference back to that part of the Plan dealing with these three items.'

The upshot was that the meeting was adjourned so that the discussion could be resumed at an early date.

I pause there to say that although there have been minor variations in the wording of Mr Scargill's objections, they have remained substantially in this form throughout. 'Oil' has been replaced so as to become 'energies which are in direct competition with coal', so as to exclude, for instance, petrol and lubricating oil. Further, a distinction seems to have emerged between overseas investments, where not only must there be no increase in the percentage but also the existing investments are to be disposed of as is opportune, and, on the other hand, competing energies, where no new investments are to be made, but there is no requirement to dispose of existing investments. However, I do not think that these variations matter much.

Immediately after the meeting of 9 June, Mr Cowles, the legal adviser to the board, who had been in attendance at the meeting, wrote to all members of the committee, summarising the oral advice that he had given at the meeting. The thrust of this was that the suitability of investments was to be judged almost exclusively by reference to financial criteria rather than their acceptability for political or other extraneous reasons, and that it was improper to place an embargo on certain classes of investments regardless of the financial consequences. On 17 June Mr Scargill wrote to Mr Cowan about the letter from Mr Cowles, saying that the union had taken legal advice, and that it was 'on the basis of this advice that we raised our objection' to the investments in oil and overseas investment. (For brevity, I shall use 'oil' as referring to energy industries in competition with the British coal industry.) The letter referred to Mr Cowles's statement that the suitability of investments was to be judged 'almost exclusively by reference to financial criteria rather than their acceptability for political or other extraneous reasons', and continued 'My colleagues and I do not accept that this interpretation is correct'. The letter quoted a sentence from the legal advice that the union had obtained; it now appears that this sentence came from an 18-page memorandum by a well-known firm of London solicitors dated 29 April 1982, as, indeed, Mr Scargill made plain in addressing me. I shall return to this later. At this stage I need only say that Mr Scargill had from time to time refused various requests to produce this memorandum. However, on day 4 of the hearing it was pointed out to him that if he asserted that he was supported by a legal opinion but he still refused to produce it, questions might then arise about how far the opinion did in fact support him; and he thereupon said that he would put the opinion in evidence, which he did a few days later. At no stage has there been any suggestion that the defendants had relied on any other legal advice.

On 25 June 1982 Mr Cowles addressed another note to all members of the committee. He pointed out that the legal advice mentioned in Mr Scargill's letter was concerned with the right of trustees to opt for one particular investment as against a viable alternative (a view that was not questioned), and said that this was not the issue under discussion. The committee's duty, he said, was to manage the funds in the best interests of the beneficiaries; and he then said:

'What is improper is for the Committee of Management to fetter the way they exercise their discretionary powers as trustees in the future by imposing an embargo on a wide range of investments regardless of the financial consequences.'

Mr Scargill's reply, on 30 June, was to state that the legal opinion obtained by the NUM covered all aspects of the scheme and the trustees' responsibilities, so that it was incorrect to draw the conclusion that the advice was not directed to the issue under discussion. He went on:

'We are advised that we can refuse to invest abroad or in oil and other energy industries, and it may be that, in the final analysis, the difference of opinion between you and ourselves will have to be resolved elsewhere!'

This was in substance repeated in subsequent letters to others.

On 5 July Mr Cowles wrote to Mr Scargill, seeking to discuss the difference of opinion with the solicitors who had advised the union; and he said that he assumed that they had seen the opinion obtained from two Chancery silks on the obligations of the committee in relation to the scheme's investments, and his own recent advice. He also said that it was difficult to comment on the union's request for legal advice and on the advice itself without seeing them, and said that it would be helpful to be supplied with copies. Mr Scargill's reply was that 'we ourselves have been counselled that it is wiser not to supply you with copies of the legal advice given us at this point'.

Then, on 21 September, Mr Scargill wrote to Mr Cowan, reiterating the 'total opposition' of the NUM trustees to investment overseas and in oil, seeking agreement to withdraw overseas investments, and seeking other changes in the operation of the scheme. These included making future investments require the approval of the 'Chairman and Vice-Chairman', and providing for the chairmanship to alternate between Mr Cowan and the president of the NUM. The adjourned forty-fifth meeting of the committee had not yet been held: on 15 June Mr Cowan had proposed three dates in June and July before the holiday season, but Mr Scargill had promptly replied that he was committed on all three dates, and he suggested no alternatives. Mr Cowan then became gravely ill, and did not return until early in January 1983. He then wrote to Mr M McGahey, one of the union trustees, to suggest that he and Mr Scargill should meet him (Mr Cowan) and Mr Harrison to discuss the fund's problems. The meeting was held on 25 January 1983, and a letter from Mr Scargill sets out the changes sought by him and Mr McGahey. A number of further changes were added to those that had already been sought. Instead of alternating chairmen, there were to be joint chairmen; there were to be quarterly meetings of the committee; the JISC was to be composed of trustees only; there was to be an investigation of all expenses paid for the past two years; there were to be fortnightly meetings of the two joint chairmen with Mr Jenkins so that the trustees could be involved in the actual decision-taking; and no investments above a certain level (eg £2m) should be made without agreement between the two joint chairmen and the professional fund managers. The letter stated that 'our legal advisers are satisfied that we are acting within the law'.

On 28 February 1983 two meetings of the committee took place. In the morning there was the forty-sixth meeting, and in the afternoon there was a resumption of the adjourned forty-fifth meeting. At the morning meeting, the minutes of the original forty-fifth meeting on 9 June 1982 were considered. They had been revised in the light of Mr Scargill's proposed corrections, but the joint secretary, after consulting his and his assistants' notes, had been unable to agree all of Mr Scargill's corrections. At the meeting, the committee, after discussion, accepted that no agreement could be reached on the minutes. After certain other points, the committee turned to the minutes of the scheme's investment sub-committee. The practice was for the JISC to meet as a body and reach its conclusions, and then for the meeting to split into two investment sub-committees, one for the mineworkers' scheme and the other for the staff scheme, and then for each sub-committee to adopt the decisions of the JISC. The committee had before it the minutes of its investment sub-committee for 17 August 1982 (mistakenly stated to be for 24 August), 24 November 1982 and 24 February 1983. Mr Scargill moved the rejection of the minutes on the ground that they contained points about investments which were contrary to the union's position as raised at the meeting of the committee on 9 June 1982. Mr Cowan pointed out that the meetings had taken place and the minutes had been agreed as a true record. (The minutes of the meeting of 17 August, I may say, had been duly signed at the meeting of the JISC on 24 November, and similarly on 24 February 1983 the minutes for 24 November had been duly signed.) Mr Scargill, however, said that the committee, as trustees of the scheme, were entitled to reject any minutes put before them; and in the event it was accepted that no agreement could be reached on the acceptance or rejection of the minutes in question.

After certain other matters, the committee turned to the draft report and accounts for the year ended 30 September 1982. There was a substantial discussion of various items, and then Mr Scargill said that he was 'not prepared to accept the Report and Accounts since they contained items which were contrary to Union policy'; and he then referred to a particular item. After Mr Cowan had said that the accounts stated what had been done, and that trustees could not reject the facts because they did not agree with the policy, Mr Chadburn, one of the union trustees, said that they could not agree to something which they had disagreed with for nine months. A vote was taken on the acceptance of the report and accounts, and five voted for and five against, the board's nominees voting for and the union's nominees against. I am glad to say that the minutes of this meeting were duly accepted and signed at the forty-seventh meeting on 14 November 1983.

In that state of affairs, the resumed forty-fifth meeting was held that afternoon, on 28 February; and I am glad to say that the minutes of this meeting too were duly accepted and signed on 14 November 1983. Mr Cowan said that the board had an interest in investment strategy because they were responsible for two-thirds of the contributions, and if the committee became at cross-purposes in that strategy, and investment income was impaired, the board might find it impossible to continue to pay additional contributions in order to finance cost-of-living increases to pensions. This referred to the voluntary payments that the board made without being required to do so by the scheme. Mr McGahey replied that it was the members who provided the wealth which allowed the board to pay contributions, and 'as such the Union had a unilateral right of disposal of these resources'.

Mr Jenkins then introduced the 1982 plan. This is set out in a document some 30 pages long. After Mr Jenkins's introduction, Mr Cowles reminded the trustees that the investment power must be exercised solely for the benefit of the trust. Mr Scargill said that there was no difference in the arguments from those presented in June. 'They rejected the legal opinion that had been given and they also rejected the investment plan presented by Mr Jenkins.' He said that one investment 'raised moral questions about investment in private health care and proposals should not be merely based on commerce'. Continued investment abroad and in oil 'would be to the detriment of coal and would be against the interests of the Scheme's beneficiaries'. He then put forward his proposals for change, and asserted that the legal advice received by the NUM trustees 'was contrary to what had been received that day'. Mr Cowan said that he could not understand why the NUM trustees were determined that money should not be invested overseas. This had not been the case until the previous June, and he wondered what had happened to change the situation. Mr Scargill then said that he believed that all the money available for investment could be invested in Britain. 'The policy of the N.U.M. was being carried out, although before June it was not.' After enumerating his proposals, he said that lawyers advising the NUM said that trustees could not be criticised for not investing in certain areas. The position of the NUM trustees 'was not negotiable and their objection to these three areas of investment were matters of principle'. There was then another vote on the approval of the 1982 plan, with a five to five decision as before. The 1982 plan was therefore not approved. Finally, it was agreed that there should be a meeting between senior representatives of the board and the union to discuss investment overseas and in oil and gas, with a committee meeting as soon as possible thereafter.

There then followed a number of discussions and a series of resultant memoranda which Mr Scargill and Mr Cowan in turn put forward. These set out different forms of wording for some or all of the changes which Mr Scargill sought. Mr Scargill began, with his memorandum dated 10 May 1983; and this became known as memorandum A, with the others in sequence. In view of Mr Scargill's sustained criticisms of Mr Jenkins, I think I ought to read the last paragraph of his memorandum. It runs:

'We wish to place on record our deep appreciation of our Investment Fund Manager, Mr Hugh Jenkins, and his staff for all the work they have done and continue to do on behalf of the Mineworkers' Pension Scheme.'

Mr Cowan replied with memorandum B on 5 July, and memorandum C on 17 August. 18 August saw Mr Cowan's memorandum D and Mr Scargill's memorandum E. Then there came, also on 18 August, memorandum F, which became a matter of controversy. It stated most, if not all, of the points that Mr Scargill wished to have established. He relied on it as showing that agreement had been reached between Mr Cowan and Mr Harrison on the one hand, and Mr Scargill and Mr McGahey on the other. However, the covering letter and Mr Cowan's evidence make it clear that memorandum F was intended not for the committee but as the basis for a presentation to the board for alterations in the scheme which some (but not all) of the provisions of the memorandum would require. Mr Scargill strongly contended that in some way this memorandum bound the committee as regards the parts which did not require the board's approval, because, he said, if there had been a meeting of the committee, Mr Cowan and Mr Harrison would have voted with the five NUM members, and so the memorandum would have been carried by seven votes to three, or by six to four, if only Mr Cowan felt bound. Mr Scargill did not explain how a binding decision could be produced by a meeting which had not been held merely because a note had been prepared after discussion by four of the ten members; and in any case Mr Cowan's covering letter stated that the document is 'not to be read as an agreement binding or in any way restricting the present Trustees in the discharge of their duties'. Plainly the document decided nothing. In addition, Mr Scargill wrote on 5 September with a further document, memorandum G, which differed in certain minor respects from memorandum F. His letter stated that memorandum F had departed in some degree from the document prepared by him and Mr McGahey. Clearly he was not accepting memorandum F.

In October 1983 Mr Cowan wrote to Mr Scargill to say that there ought to be a meeting of the committee as Mr Jenkins had said that it shortly would be practicable no longer to invest on the basis of the 1980 plan; and he sought agreement to proceeding on the basis of the 1982 plan pending the committee meeting. Mr Scargill replied, agreeing that there should be a meeting, but refusing to agree to any investments being made on the basis of the 1982 plan, bearing in mind his 'total opposition' to investments overseas and in energy in direct competition with coal. On 14 November there was the forty-seventh meeting of the committee. This time a shorthand writer was present in order to avoid any difficulty about minutes. The result is some 45 pages long.

At an early stage Mr Cowan told the committee that the board had decided that it would no longer make up any deficiency in the income from the fund if that income did not suffice for increasing pensions in line with the rate of inflation. He had given warning of this possibility at the afternoon meeting of the previous 24 February. The reason, he said, was that the board was concerned at the delays in implementing the 1982 plan, and was also of the opinion that this might well diminish the income from the fund. To this statement Mr Scargill took 'the strongest possible exception', and rejected the criticism that the scheme had suffered in any way. Before me, Mr Scargill was critical of Mr Cowan's statement as showing that Mr Cowan was speaking not as a trustee but as a representative of the board, and also that it was an attempt to put pressure on the trustees. I can see nothing wrong in Mr Cowan informing his fellow trustees of the decision of the board, a decision which might reduce the benefits of the scheme; and I see no merit in requiring the board instead to write to the committee, as Mr Scargill suggested. A trustee who informs his fellows of some impending disadvantage to the trust does not cease to act as a trustee by so doing: indeed, it would almost certainly be a breach of his duty to remain silent.

I shall not quote from the minutes of the meeting at any length. Mr Scargill and others of the NUM trustees made it perfectly clear that they would not agree to any further investment overseas or in energies competing with coal in any circumstances. Thus, when Mr Scargill was asked whether he would still say 'No' if a better financial result could be obtained by investing abroad, he said:

'The answer to that question has already been put fairly in this meeting previously. The National Union of Mineworkers unanimously at its Conference, in its individual branches, in its areas, and by representation of the trustees to this meeting, have declared unequivocally that they are opposed to any investment overseas.'

The NUM trustees were then asked, 'Do you regard yourself as within the trust law of this country to be mandated?', and Mr Scargill replied, 'We regard ourselves to be acting within the law and we have been so legally advised.' It was then put to him that under the law you could not be mandated by someone outside to do what you did not think right in terms of the financial returns, and Mr Scargill replied:

'I made it perfectly clear that the position of the N.U.M., determined by its Conference, its branches and its areas, was totally and unequivocally against overseas investment. That has also been reflected to this meeting by the trustees. There is no ambiguity about the statement that I made and we are so advised legally that we are acting within the law.'

A little later he added:

'People representing the National Union of Mineworkers as trustees have reflected their views quite clearly that they are against overseas investments in any circumstances.'

Subsequently he said:

'The National Union of Mineworkers' trustees are opposed in all circumstances to the investment of monies in the Mineworkers' Pension Scheme overseas.'

Mr Vincent, one of the NUM trustees, then said that this was not a mandate: 'it is N.U.M. policy'; and Mr Williams, another NUM trustee, said that the NEC decision was unanimous, and that the policy went through the annual conference 'without any opposition--unanimous'.

After further discussion, Mr Cowles said that trustees must not fetter their discretion to invest, whereat Mr Scargill asserted that 'the proposals on principles which we have advanced are, in our legal advisers' view, quite within the law'. Mr Cowles then said that he had asked Mr Scargill to show him a copy of his opinion, but he had not done so, to which Mr Scargill replied that 'if this action subsequently comes before another authority, at that stage no doubt you will be presented with our advice'. On being asked whether 'overseas' included EEC countries and the Third World, Mr Scargill said that it certainly did:

'I am speaking about investment in the United Kingdom--let there be no ambiguity about that. That is the policy of my Union and it is a principle decision.'

Towards the end of the meeting, Mr Scargill moved an amendment that the 1982 plan should not be implemented unless it incorporated a proposal, inter alia, 'to have no further increase in overseas investment over the 1980 Plan'. A page later he said that he had made his amendment 'very, very clear'; and he then stated it as being that the 1982 plan be adopted subject to three amendments, the first of which was 'that there be no increase in the percentage of overseas investment'. 'No further increase' and 'no further increase in the percentage' do not, of course, produce the same result. Where the amount of the fund is steadily increasing, as is the case here, the first prohibits any purchase, whereas the second permits it within limits. I do not think that the difference matters much, as the issue is not how much restriction there should be, but whether there should be any. In the end, the meeting was adjourned.

On 24 November 1983 the adjourned forty-seventh meeting was held. At an early stage, Mr Scargill said that--

'In order that the record be absolutely straight, at no time have the trustees of the N.U.M. had any other consideration than the benefit of the beneficiaries and it is towards that end that all our actions have been directed.'

Not surprisingly, Mr Cowan pointed to the conflict between principles which sought to diversify the fund so as to maximise the return for beneficiaries by investing at home and abroad if necessary, and principles which placed an embargo on decisions by the investment managers which they might consider to be in the best interests of the beneficiaries. Mr Scargill asserted that his proposal was a perfectly reasonable proposal that was in the interests of the beneficiaries; and he said that the line being taken by the NUM trustees was no different from the line taken when the 1982 plan was first presented. There were various references to the matter having to be resolved in the courts, and then, after Mr Scargill had said that they 'would not dream of coming to this meeting mandated or with a fixed policy', the meeting turned to other matters, some of which I shall have to refer to later. As I have mentioned, the originating summons was issued on 1 December 1983.

By the originating summons the plaintiffs seek directions under three heads. First, they seek--

'Directions whether the Defendants are in breach of their fiduciary duties as members of the Committee of Management of the Scheme and trustees of its money and investments in refusing to concur in the adoption of the Investment Strategy and Business Plan 1982 (initially presented to a meeting of the Committee on 9 June 1982) unless amended so that (1) there is to be no increase in the percentage of overseas investment; and (2) overseas investment already made is to be withdrawn at the most opportune time; and (3) the Committee adopts a proposal within the Business Plan of not investing in energies which are in direct competition with coal.'

Second, they seek--

'Directions whether the Investment Strategy and Business Plan 1982 should now be adopted by the Committee and implemented.'

Third, they seek--

'Directions for the completion of the accounts of the Scheme for the year to 30 September 1982.'

There is also a request for various consequential and other relief.

I can dispose of the third head quickly. At the outset of day 1 I asked Mr Scargill why it would not be possible for him and the other NUM trustees to sign the 1982 accounts with the addition of some words which showed that they did not question the accuracy of the accounts but dissociated themselves from certain matters disclosed in them. Mr Scargill then said that this had never been suggested by the plaintiffs, but that it was certainly a matter that could be considered. Towards the end of day 9 Mr Scargill referred to the point again, and said that if some such words could be inserted in the accounts, the defendants would have no objection to signing them. The matter was then left for discussion between the parties. Counsel for the plaintiffs did not think such words would produce any obstacles from his point of view, and so I shall say no more about question 3 unless I am asked to do so.

I turn to the law. The starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. This duty of the trustees towards their beneficiaries is paramount. They must, of course, obey the law; but subject to that, they must put the interests of their beneficiaries first. When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests. In the case of a power of investment, as in the present case, the power must be exercised so as to yield the best return for the beneficiaries, judged in relation to the risks of the investments in question; and the prospects of the yield of income and capital appreciation both have to be considered in judging the return from the investment.

The legal memorandum that the union obtained from their solicitors is generally in accord with these views. In considering the possibility of investment for 'socially beneficial reasons which may result in lower returns to the fund', the memorandum states that 'the trustees' only concern is to ensure that the return is the maximum possible consistent with security'; and then it refers to the need for diversification. However, it continues by saying that:

'Trustees cannot be criticised for failing to make a particular investment for social or political reasons, such as in South African stock for example, but may be held liable for investing in assets which yield a poor return or for disinvesting in stock at inappropriate times for non-financial criteria.'

This last sentence must be considered in the light of subsequent passages in the memorandum which indicate that the sale of South African securities by trustees might be justified on the ground of doubts about political stability in South Africa and the long-term financial soundness of its economy, whereas trustees could not properly support motions at a company meeting dealing with pay levels in South Africa, work accidents, pollution control, employment conditions for minorities, military contracting and consumer protection. The assertion that trustees could not be criticised for failing to make a particular investment for social or political reasons is one that I would not accept in its full width. If the investment in fact made is equally beneficial to the beneficiaries, then criticism would be difficult to sustain in practice, whatever the position in theory. But if the investment in fact made is less beneficial, then both in theory and in practice the trustees would normally be open to criticism.

This leads me to the second point, which is a corollary of the first. In considering what investments to make trustees must put on one side their own personal interests and views. Trustees may have strongly held social or political views. They may be firmly opposed to any investment in South Africa or other countries, or they may object to any form of investment in companies concerned with alcohol, tobacco, armaments or many other things. In the conduct of their own affairs, of course, they are free to abstain from making any such investments. Yet under a trust, if investments of this type would be more beneficial to the beneficiaries than other investments, the trustees must not refrain from making the investments by reasons of the views that they hold.

Trustees may even have to act dishonourably (though not illegally) if the interests of their beneficiaries require it. Thus where trustees for sale had struck a bargain for the sale of trust property but had not bound themselves by a legally enforceable contract, they were held to be under a duty to consider and explore a better offer that they received, and not to carry through the bargain to which they felt in honour bound: see Buttle v Saunders [1950] 2 All ER 193 . In other words, the duty of trustees to their beneficiaries may include a duty to 'gazump', however honourable the trustees. As Wynn-Parry J said (at 195), trustees 'have an overriding duty to obtain the best price which they can for their beneficiaries'. In applying this to an Official Receiver, Templeman J said in Re Wyvern Developments Ltd [1974] 2 All ER 535 at 544, [1974] 1 WLR 1097 at 1106 that he--

'must do his best by his creditors and contributories. He is in a fiduciary capacity and cannot make moral gestures, nor can the court authorise him to do so.'

In the words of Wigram V-C in Balls v Strutt (1841) 1 Hare 146 at 149, 66 ER 984 at 985:

'It is a principle in this Court that a trustee shall not be permitted to use the powers which the trust may confer upon him at law, except for the legitimate purposes of his trust.'

Powers must be exercised fairly and honestly for the purposes for which they are given and not so as to accomplish any ulterior purpose, whether for the benefit of the trustees or otherwise: see Duke of Portland v Topham (1864) 11 HL Cas 32, [1861-73] All ER Rep 980, a case on a power of appointment that must apply a fortiori to a power given to trustees as such.

Third, by way of caveat I should say that I am not asserting that the benefit of the beneficiaries which a trustee must make his paramount concern inevitably and solely means their financial benefit, even if the only object of the trust is to provide financial benefits. Thus if the only actual or potential beneficiaries of a trust are all adults with very strict views on moral and social matters, condemning all forms of alcohol, tobacco and popular entertainment, as well as armaments, I can well understand that it might not be for the 'benefit' of such beneficiaries to know that they are obtaining rather larger financial returns under the trust by reason of investments in those activities than they would have received if the trustees had invested the trust funds in other investments. The beneficiaries might well consider that it was far better to receive less than to receive more money from what they consider to be evil and tainted sources. 'Benefit' is a word with a very wide meaning, and there are circumstances in which arrangements which work to the financial disadvantage of a beneficiary may yet be for his benefit: see, for example, Re Towler's Settlement Trusts [1963] 3 All ER 759 , [1964] Ch 158; Re C L [1968] 1 All ER 1104 , [1969] 1 Ch 587. But I would emphasise that such cases are likely to be very rare, and in any case I think that under a trust for the provision of financial benefits the burden would rest, and rest heavy, on him who asserts that it is for the benefit of the beneficiaries as a whole to receive less by reason of the exclusion of some of the possibly more profitable forms of investment. Plainly the present case is not one of this rare type of case. Subject to such matters, under a trust for the provision of financial benefits, the paramount duty of the trustees is to provide the greatest financial benefits for the present and future beneficiaries.

Fourth, the standard required of a trustee in exercising his powers of investment is that he must--

'take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide.'

See Re Whiteley, Whiteley v Learoyd (1886) 33 Ch D 347 at 355 per Lindley LJ, and see also at 350, 358; Learoyd v Whiteley (1887) 12 App Cas 727. That duty includes the duty to seek advice on matters which the trustee does not understand, such as the making of investments, and on receiving that advice to act with the same degree of prudence. This requirement is not discharged merely by showing that the trustee has acted in good faith and with sincerity. Honesty and sincerity are not the same as prudence and reasonableness. Some of the most sincere people are the most unreasonable; and Mr Scargill told me that he had met quite a few of them. Accordingly, although a trustee who takes advice on investments is not bound to accept and act on that advice, he is not entitled to reject it merely because he sincerely disagrees with it, unless in addition to being sincere he is acting as an ordinary prudent man would act.

Fifth, trustees have a duty to consider the need for diversification of investments. By s 6(1) of the Trustee Investments Act 1961:

'In the exercise of his powers of investment a trustee shall have regard--( a ) to the need for diversification of investments of the trust, in so far as is appropriate to the circumstances of the trust; ( b ) to the suitability to the trust of investments of the description of investment proposed and of the investment proposed as an investment of that description.'

The reference to the 'circumstances of the trust' plainly includes matters such as the size of the trust funds: the degree of diversification that is practicable and desirable for a large fund may plainly be impracticable or undesirable (or both) in the case of a small fund.

In the case before me, it is not in issue that there ought to be diversification of the investments held by the fund. The contention of the defendants, put very shortly, is that there can be a sufficient degree of diversification without any investment overseas or in oil, and that in any case there is no need to increase the level of overseas investments beyond the existing level. Other pension funds got on well enough without overseas investments, it was said, and in particular the NUM's own scheme had, in 1982, produced better results than the scheme here in question. This was not so, said Mr Jenkins, if you compared like with like, and excluded investments in property, which figure substantially in the mineworkers' scheme but not at all in the NUM scheme: and in any case the latter scheme was much smaller, being of the order of £7m.

I shall not pursue this matter. Even if other funds in one particular year, or in many years, had done better than the scheme which is before me, that does not begin to show that it is beneficial to this scheme to be shorn of the ability to invest overseas. The main difference between the 1980 and the 1982 plans, I may say, is that although the target for overseas investments remains at 15%, the 1982 plan increases the percentage of the cash flow that can be invested in overseas realty from 7 1/2% to 10%, and relaxes the overall limit of 15% in this respect. It should be added that, in addition, something like 10% of the assets of British companies in which the fund has invested consist of overseas holdings, so that there is this additional foreign element. As for oil, the 1982 plan made no real difference: the existing holdings of just under 12% could have been maintained if that plan had been implemented.

Sixth, there is the question whether the principles that I have been stating apply, with or without modification, to trusts of pension funds. Counsel for the plaintiffs asserted that they applied without modification, and that it made no difference that some of the funds came from the members of the pension scheme, or that the funds were often of a very substantial size. Mr Scargill did not in terms assert the contrary. He merely said that this was one of the questions to be decided, and that pension funds may be subject to different rules. I was somewhat unsuccessful in my attempts to find out from him why this was so, and what the differences were. What it came down to, I think, was that the rules for trusts had been laid down for private and family trusts and wills a long time ago; that pension funds were very large and affected large numbers of people; that in the present case the well-being of all within the coal industry was affected; and that there was no authority on the point except Evans v London Co-op Society Ltd (1976) Times, 6 July and certain overseas cases.

I shall refer to the authorities in a moment, and consider the question of principle first. I can see no reason for holding that different principles apply to pension fund trusts from those which apply to other trusts. Of course, there are many provisions in pension schemes which are not to be found in private trusts, and to these the general law of trusts will be subordinated. But subject to that, I think that the trusts of pension funds are subject to the same rules as other trusts. The large size of pension funds emphasises the need for diversification, rather than lessening it, and the fact that much of the fund has been contributed by members of the scheme seems to me to make it even more important that the trustees should exercise their powers in the best interests of the beneficiaries. In a private trust, most, if not all, of the beneficiaries are the recipients of the bounty of the settlor, whereas under the trusts of a pension fund many (though not all) of the beneficiaries are those who, as members, contributed to the funds so that in due time they would receive pensions. It is thus all the more important that the interests of the beneficiaries should be paramount, so that they may receive the benefits which in part they have paid for. I can see no justification for holding that the benefits to them should run the risk of being lessened because the trustees were pursuing an investment policy intended to assist the industry that the pensioners have left, or their union.

I turn to the authorities. Evans v London Co-op Society Ltd (1976) Times, 6 July is a decision of Brightman J which has apparently achieved a considerable measure of renown among those concerned with pension funds as being the only English authority on the subject. I do not think that I need discuss the details of the case, because it seems to me to be perfectly clear that it is a decision on a particular rule of the pension fund there in question, r 7, and not on the general law. Rule 7 provided for the pensions committee to make loans on certain terms to the co-operative society in question, and the pension fund had been receiving from the society less than the market rate of interest on such loans. The substance of the decision was that the terms of r 7 permitted not only the self-investment of the pension funds but also the payment of less than the market rate of interest on such loans, even though the society was the trustee of the fund and so was profiting from its trust. I find it impossible to read pp 17-20 of the full transcript without reaching the conclusion that the judge was deciding the case on the extent to which r 7 took the case out of the ordinary law of trusts, and that but for r 7 the ordinary law of trusts would have been applied to the case. In my judgment, the case does nothing to support the contentions of the defendants. Instead, I think it provides some support for the plaintiffs.

Blankenship v Boyle (1971) 329 F Supp 1089 was a case heard in the US district court for the District of Columbia by Judge Gesell. The trustees of a pension fund had allowed large sums of money to remain in bank accounts bearing no interest at a bank controlled by the union. Over an 18-year period, varying sums between $14m and $75m, representing between 14% and 44% of the fund's total resources, had been left in this way. The fund was established for the benefit of employees of coal operators, their families and dependants, and over 95% of the members of the fund were also members of the union. It was contended that the trustees could properly consider not only the interests of the beneficiaries but also collateral matters such as increasing the tonnage of union-mined coal; but this was rejected. The court reaffirmed the duty of undivided loyalty to the beneficiaries that a trustee owes, and did not accept that regard should also be paid to the union or its members who generated some of the income of the fund, or to the industry as a whole. That seems to me to be plainly right.

Withers v Teachers' Retirement System of the City of New York (1978) 447 F Supp 1248 arose out of the impending insolvency of the City of New York in 1975. The Teachers' Retirement System (TRS) and four other New York pension funds agreed to purchase $2,530m unmarketable and highly speculative New York City bonds over the next 2 1/2 years in an attempt to stave off the imminent bankruptcy of the city; the share contributed by TRS was $860m. TRS was an unfunded scheme, and the evidence was that if the city ceased to make its massive contributions to the scheme, the reserves would be exhausted in some eight to ten years, even if the contributions by employees continued and there was a constant rate of retirement of teachers. In the US District Court for the Southern District of New York, Judge Conner considered and accepted Blankenship v Boyle and the traditional rules of equity, but held that the trustees had been justified in purchasing the bonds since they had done so in the best interests of the beneficiaries, and not out of concern for the general public welfare or the protection of the jobs of city teachers. The object of the trustees, who had imposed stringent conditions in an attempt to protect the TRS, had been to ensure the continuance of the city's major contributions to the scheme, and preserve the city's position as the ultimate guarantor of the payment of pension benefits; and this was in the best interests of the beneficiaries. This differed from the position in Blankenship v Boyle , where--

'the trustees pursued policies which may incidentally have aided the beneficiaries of the fund but which were intended, primarily, to enhance the position of the Union and the welfare of its members, presumably, through the creation and/or preservation of jobs in the coal industry.'

(See 447 F Supp 1248 at 1256.) Apart from the expression 'and/or', I would agree.

The American cases do not, of course, bind me; but they seem, if I may say so, to be soundly based on equitable principles which are common to England and most jurisdictions in the United States, and they accord with the conclusion that I would have reached in the absence of authority. Accordingly, on principle, on the Evans case, and on the two American cases, I reach the unhesitating conclusion that the trusts of pension funds are in general governed by the ordinary law of trusts, subject to any contrary provision in the rules or other provisions which govern the trust. In particular, the trustees of a pension fund are subject to the overriding duty to do the best that they can for the beneficiaries, the duty that in the United States is known as 'the duty of undivided loyalty to the beneficiaries' (see Blankenship v Boyle 329 F Supp 1089 at 1095).

In considering that duty, it must be remembered that very many of the beneficiaries will not in any way be directly affected by the prosperity of the mining industry or the union. Miners who have retired, and the widows and children of deceased miners, will continue to receive their benefits from the fund even if the mining industry shrinks: for the scheme is fully funded, and the fund does not depend on further contributions to it being made. If the board fell on hard times, it might be unable to continue its voluntary payments to meet cost-of-living increases, quite apart from the statement about this made by Mr Cowan at the forty-seventh committee meeting on 14 November 1983. The impact of that remote possibility falls far short of the imminent disaster facing the City of New York and TRS in the Withers case; and I cannot regard any policy designed to ensure the general prosperity of coal mining as being a policy which is directed to obtaining the best possible results for the beneficiaries, most of whom are no longer engaged in the industry, and some of whom never were. The connection is far too remote and insubstantial. Further, the assets of even so large a pension fund as this are nowhere near the size at which there could be expected to be any perceptible impact from the adoption of the policies for which Mr Scargill contends.

I turn to consider the grounds on which the prohibitions put forward by the defendants have been supported. First, there are the reasons put forward during the discussions by the trustees. I have already quoted a number of these. Put shortly, these were that the prohibitions were NUM policy: the union, as a matter of principle, was totally and unequivocally opposed to investment overseas. These views were put forward in various ways on various occasions, but the substance was unvarying. However, as I have mentioned, early in the meeting on 24 November 1983, nearly 18 months after the dispute had broken out, Mr Scargill asserted that at no time had the NUM trustees had 'any other consideration than the benefit of the beneficiaries and it is towards that end that all our actions have been directed'. At no stage did he explain how or why it was for the benefit of the beneficiaries to put union policy into force under the scheme by imposing the prohibitions. Nor did he attempt to reconcile his statement at the same meeting that he would not dream of coming to it 'mandated or with a fixed policy' with his consistent attitude of total opposition to overseas investment, as a matter of principle that was not negotiable. From time to time Mr Scargill made other assertions of this nature, again unexplained.

I can see no escape from the conclusion that the NUM trustees were attempting to impose the prohibitions in order to carry out union policy; and mere assertions that their sole consideration was the benefit of the beneficiaries do not alter that conclusion. If the NUM trustees were thinking only of the benefit of the beneficiaries, why all the references to union policy instead of proper explanations of how and why the prohibitions would bring benefits to the beneficiaries? No doubt some trustees with strong feelings find it irksome to be forced to submerge those feelings and genuinely put the interests of the beneficiaries first. Indeed, there are some who are temperamentally unsuited to being trustees, and are more fitted for campaigning for changes in the law. This, of course, they are free to do; but if they choose to become trustees they must accept it that the rules of equity will bind them in all that they do as trustees.

I must also refer once more to the legal advice which the union obtained from the solicitors. Mr Scargill repeatedly asserted that their legal advisers had taken the view that the proposals of the NUM trustees (namely the prohibitions) were within the law. He also rejected Mr Cowles's advice on the obligation to exercise the investment power solely for the benefit of the trust, and said that this was contrary to the legal advice that the union had received. Unlike Mr Cowles, Mr Scargill plainly had access to the whole of that legal advice. When at last he produced the memorandum containing that advice, after his previous refusals to do so, it could be seen that the advice in fact provided no support whatever for the prohibitions that the union trustees sought to impose, and that it accorded with Mr Cowles's advice, rather than contradicting it. The distinction that Mr Cowles made in his note of 25 June 1982 between opting for one particular investment as against a viable alternative, and, on the other hand, imposing an embargo on a wide range of investments, does not require a lawyer to understand it; yet Mr Scargill continued to claim that the advice obtained by the union supported his views. The solicitors' memorandum also discussed proposals for a Pension Scheme Act, referring to the 1980 report of the Committee to Review the Functioning of Financial Institutions (the Wilson Report (Cmnd 7937)) and comments on it, and saying that any such Act was some years away. The memorandum thus clearly distinguished the law as it was from the law that there may be.

I do not know what were the instructions that were given to the solicitors, or what questions they were asked; but judging from the memorandum, at least one question seems to have been how far pension fund trustees could give effect to their social views in making investments, and how far they would be at risk if they did so. For the most part, if I may say so, the advice seemed to me to be sound, practicable, and readily intelligible to a layman of ordinary intelligence; but it certainly does not provide any support for the prohibitions proposed by the defendants.

I therefore reject any contention that the defendants' attempts to impose the prohibitions were supported by the legal advice that they had obtained or that it supported their rejection of the advice given by Mr Cowles. Mr Scargill's assertions of such support are simply untrue, and obviously so. I also reject any assertion that prior to the commencement of these proceedings the benefit of the beneficiaries was the sole consideration that the union trustees had: that also is untrue. The union trustees were mainly, if not solely, actuated by a desire to pursue union policy, and they were not putting the interests of the beneficiaries first, as they ought to have done. They were doing so deliberately and in the teeth of proper legal advice from both sides of the table as to the duties of trustees, and there has been no suggestion that at any time they obtained further legal advice, as trustees who had genuinely intended to carry out their fiduciary duties would have done when the serious conflict of views had become plain. They were adamant in their determination to impose the restrictions, whether or not they harmed their beneficiaries. In this respect I can see no difference between Mr Scargill, who vehemently opposed investment overseas and in oil as soon as he became a trustee, and the other four union trustees, who for years before the advent of Mr Scargill had been operating under a policy of substantial investment overseas and in oil. As soon as Mr Scargill arrived, they promptly abandoned their previous attitude and fell in beside him.

This conclusion, however, does not end the matter. If trustees make a decision on wholly wrong grounds, and yet it subsequently appears, from matters which they did not express or refer to, that there are in fact good and sufficient reasons for supporting their decision, then I do not think that they would incur any liability for having decided the matter on erroneous grounds; for the decision itself was right. I must therefore turn to the 30 or 35 affidavits which, with their voluminous exhibits, made up the eight large volumes that were before me.

Some of the evidence filed by the defendants tended to show that the prohibitions would not be harmful to the beneficiaries, or jeopardise the aims of the fund, and that some pension funds get along well enough without any overseas investments. Such evidence misses the point. Trustees must do the best they can for the benefit of their beneficiaries, and not merely avoid harming them. I find it impossible to see how it will assist trustees to do the best they can for their beneficiaries by prohibiting a wide range of investments that are authorised by the terms of the trust. Whatever the position today, nobody can say that conditions tomorrow cannot possibly make it advantageous to invest in one of the prohibited investments. It is the duty of trustees, in the interests of their beneficiaries, to take advantage of the full range of investments authorised by the terms of the trust, instead of resolving to narrow that range.

There was other evidence filed by the defendants which was more to the point; and it was met by countervailing evidence of the plaintiffs. This evidence was directed to economics and investment strategy. At the outset I must say that I found the plaintiffs' evidence the more cogent and practical, and more directly related to what was in issue. The general thrust of the defendants' evidence in support of the restrictions that they seek to impose was along the following lines. Pensions funds in Britain have enormous assets. If all, or nearly all, of these assets were invested in Britain, and none, or few, were invested overseas, this would do much to revive this country's economy and so benefit all workers, especially if the investments were in the form not of purchasing established stocks and shares but of 'real' investment in physical assets and new ventures. For the mineworkers' scheme, the prosperity of the coal industry would aid the prosperity of the scheme, and so lead to benefits for the beneficiaries under the scheme. This point was put in various ways, and a short summary necessarily omits many facets; but in the end the approach seems to me to have been along these general lines.

I readily accept that a case, and perhaps a strong case, can be made for legislation or other provisions that in the general public interest would restrict the outflow of large funds from this country and put the money to work here. I have already mentioned the Wilson Report; and in July 1983 the TUC issued a report, some 35 pages long, called 'Pension Fund Investment and Trusteeship', which went into such matters in considerable detail, dealing with many other points as well. Apart from legislation, the report recommends the introduction of guidelines to restrict overseas investment by pension funds; and of course the investment clauses in schemes may include such restrictions, or may be altered to include them. It is only in the last five years that the abolition of exchange control has made it easy to invest abroad, and the full effect of this restored liberty has perhaps not yet been fully felt and evaluated in the investment world. It may well be, too, that a strong case could be made for the opposing view, precluding any restriction on overseas investment by pension funds. But I am not concerned with changes in the law or in the scheme for any pension fund, whether this fund or any other. I have to deal with this fund under the scheme as it now stands. I am concerned with a fund under which there are many beneficiaries who no longer have any financial interest in the welfare of the coal industry. They may well be 'interested' in it in the sense that they remember the years that they spent in it with affection or the reverse, and they may well find it 'interesting' to know what is going on in it, in the sense of gratifying a natural curiosity and concern about the industry and the people in it. But apart from such matters, they are not affected by the industry and its success.

In my view, therefore, the broad economic arguments of the defendants provide no justification for the restrictions that they wish to impose. Any possible benefits from imposing the restrictions that would accrue to the beneficiaries under the scheme (as distinct from the general public) are far too speculative and remote. Large though the fund is, I cannot see how the adoption of the restrictions can make any material impact on the national economy, or bring any appreciable benefit to the beneficiaries under the scheme. There is nothing whatever to suggest that the board will be in any difficulty in making its payments under the scheme unless the restrictions are adopted. There is not a shred of evidence to suggest that the board is in a state of imminent disaster like that which faced the City of New York in the Withers case, or that even if it were the imposition of the restrictions would save it; and in any case the scheme, unlike that in the Withers case, is fully funded. As for diversification, I can see that the risks inherent in an individual investment can be met by a modest degree of diversification; but where the risks are not merely for one particular investment but for a whole sector of the market, such as mining or tea, a wider degree of diversification will be needed. In any case, the question is one of excluding a very large sector of the market, and preventing diversification into investments in other countries which may do well at a time when the whole British market is depressed; and I can see no possible benefit in such an exclusion, especially in the case of a very large fund with highly skilled investment expertise.

Accordingly, on the case as a whole, in my judgment the plaintiffs are right and the defendants are wrong. The question, then, is what order should be made. The summons is cast in the form of asking the court to give directions; but I doubt whether this is the most appropriate remedy. I think that at this stage it would be more appropriate for me to make declarations, and leave it to the defendants to carry out their duties as trustees in accordance with those declarations. I am ready to assume that they will comply with the law once the court has declared what it is. My only hesitation arises from a letter dated 3 January 1984 from Mr Scargill in which he answered a request to sign a document by saying that he had 'no intention of signing anything in connection with this investment'; and he suggested getting the signature of Vinelott J 'who apparently appointed himself a Trustee for the purposes of this investment'. This refers to a motion before Vinelott J some two weeks earlier in which he had authorised making a particular overseas investment, the RAMPAC investment. Against this, however, must be set Mr Scargill's proper attitude in this court on the signing of the accounts; and so, despite his regrettable letter, I shall not assume that the defendants intend to demonstrate their unfitness to continue as trustees by refusing to comply with the law as declared by the court. Accordingly, subject to what may be said when I have concluded this judgment, I propose to make suitable declarations, and to give liberty to apply for directions or other appropriate relief if the declarations are not duly acted on. It is important to get this large trust back on the rails; and it may help to do this if at this stage the court refrains from giving directions or making any coercive orders, whether under the inherent jurisdiction or otherwise, and remains in the background while the normal operation of the scheme is being re-established. It is very much to be hoped that there will be no need to consider the exercise of the court's inherent power to remove trustees. I should add that it is clear that the court can make declarations even though they have not been claimed in the proceedings (see Harrison-Broadly v Smith [1964] 1 All ER 867 , [1964] 1 WLR 456).

Before I part with the case, there are certain other matters that I should mention. They do not affect what I have to decide, but they have plainly been bones of contention that have disturbed the smooth running of the scheme, and I do not think that I should pass over them in silence. First, there is the general question of deadlock. Mr Scargill placed much emphasis on the provisions of the scheme which established five trustees from each side and no casting vote: the concept of deadlock was built into the scheme, and ought not to be disturbed by the court. Initially he appeared to be arguing that the court had no jurisdiction to resolve any deadlock unless it was so complete that the affairs of the trust had been brought to a standstill; but by the end of the hearing he had accepted that the court had jurisdiction to resolve any deadlock. I therefore need not discuss Re Billes (1983) 148 DLR (3d) 512, which supports this view in relation to investment by trustees.

Despite Mr Scargill's emphatic submissions, I can see no particular significance in the so-called deadlock provisions. In an ordinary trust, the trustees can do nothing unless they are unanimous: a majority cannot prevail over a minority, and so the opportunities of a deadlock are even greater than under the scheme, where a majority suffices. Certainly I can see nothing in the so-called deadlock concept to affect the jurisdiction of the court. Nor, despite what Mr Scargill said, can I see anything significant in the fact that at the forty-fifth meeting of the committee, on 9 June 1982, when Mr Scargill first raised his objections to the 1982 plan, Mr Cowan adjourned the meeting without taking a vote, although there were only four NUM trustees at the meeting and so the 1982 plan could presumably have been approved by five votes to four. The adjournment seemed to me to be no more than the entirely proper conduct of a chairman at a meeting when an important point has arisen which has been strenuously debated and one side in the debate has not been fully represented. Although Mr Scargill stressed the adjournment, I could not discover any real relevance in it.

Second, there is the RAMPAC affair. This was the American investment which, as I have mentioned, was authorised by Vinelott J on 21 December 1983 on motion. The complaint is that the matter was put before the committee and the judge as a matter of urgency, whereas it has now emerged that in fact considerably more time was available. Nothing that I have to decide turns on this, and I shall not discuss it. But I think that I should say that I can well understand Mr Scargill having had feelings of suspicion in the matter, although in the end I think that his complaint really comes down to that of a failure by Mr Jenkins to discover more about the proposals than he in fact had found out at the time; and it has now been shown that there were difficulties in obtaining that information.

Third, there was a complaint that Mr Scargill and the other NUM trustees were being treated as second-class trustees, in that they were not given information about proposed investments when some of the NCB trustees were given it. Again, I can understand the complaint; but it is at least in part due to the structure under the scheme. One of the NCB trustees, Mr Cowan, is chairman of the committee. Another, Mr Harrison, is both a joint deputy chairman of the committee and the chairman of the JISC. It is therefore not at all surprising that Mr Jenkins should from time to time consult Mr Harrison or Mr Cowan, or both, on points that arise on investments. Yet Mr Scargill, who is also a joint deputy chairman of the committee, is not normally consulted in this way, and so he feels aggrieved at the difference in treatment between one joint deputy chairman and another. The explanation that Mr Harrison was consulted not qua joint deputy chairman of the committee but qua chairman of the JISC plainly did not satisfy Mr Scargill, who in cross-examining Mr Jenkins asked him whether he did not regard him, Mr Scargill, as a second-class trustee. As I have said, I can understand Mr Scargill's complaint; but it is nothing that arises under the originating summons that is before me. It is a matter for discussion when any changes in the constitution and operation of the scheme are under consideration. The same applies to what I think is Mr Scargill's more fundamental grievance, namely that the trustees, though responsible for general policy, have too little control over individual investments.

Fourth, I think that I should say something about certain other matters. Mr Scargill was critical of Mr Jenkins as being lacking in independence of the board, which paid his salary; as disregarding Mr Scargill's views and failing to give proper consideration to his suggestions for investment; and in failing to provide various items of information. I shall not go into the details; I merely say that it seemed to me that after these matters had been examined there was little, if anything, that supported the criticism. Counsel for the plaintiffs pointed out that Mr Scargill had said at the resumed forty-fifth meeting of the committee on 28 February 1983 that he was not suggesting that Mr Jenkins was doing anything other than carrying out the existing policy decisions of the trustees; it was the policy decisions and the principles that were wrong. On 10 May 1983, too, there was the 'deep appreciation' of Mr Jenkins and his staff for all the work that they had done and were continuing to do that Mr Scargill chose to express in his memorandum A. That, of course, was before the RAMPAC affair, and this and other matters have fed the suspicions that Mr Scargill has been harbouring. If it has done no more, I hope that the course of not preventing these matters from being explored during the hearing will have contributed towards allaying those suspicions.

I shall say nothing about various other matters that emerged during the hearing, such as the ill-fated Centre Video venture. I have read through my notes and I have referred to many passages in the transcripts; and at the end of the day I have reached the conclusion that there is no need to lengthen any further this already too lengthy judgment.

For the reasons that I have given, and subject to any submissions that there may be on the form of relief, I propose to make declarations along the lines that I have stated. I shall retain the matter.