State Bank of New South Wales v Swiss Bank Corporation Directions

The Court of Appeal of New South Wales heard an appeal concerning a dispute between the State Bank of New South Wales and Swiss Bank Corporation. The core of the disagreement related to the interpretation and effect of certain directions given by the State Bank in its capacity as a trustee.

The primary legal issue before the Court was whether the directions issued by the State Bank were valid and binding on Swiss Bank Corporation, and consequently, whether Swiss Bank Corporation was liable for any losses incurred as a result of complying with those directions. This involved an examination of the nature of the trustee's duties and the extent of their power to issue directions to a custodian or agent.

The Court considered the principles governing the relationship between a trustee and its agent or custodian, particularly in the context of investment and the delegation of duties. It analysed the terms of the relevant trust deed and the specific wording of the directions given by the State Bank. The Court determined that the directions, as issued, were not within the scope of the powers conferred upon the State Bank as trustee, nor did they comply with the procedural requirements stipulated in the trust instrument. Consequently, Swiss Bank Corporation was not bound to follow these directions and could not be held liable for acting in accordance with its own independent judgment or for refusing to comply with the invalid directions.