Breach of fiduciary relationship

Question 1

What is the fiduciary duty of a trustee?

Answer 1

1) not to create conflict between their personal interests and their duties to the beneficiary
2) a duty not to make an unauthorised profit from their role as a trustee

Question 2

What is ‘self dealing’?

Answer 2

This is where the trustee purchases assets from the trust. The transaction is voidable

Question 3

What is ‘fair dealing’

Answer 3

This is where the trustee directly transacts with the beneficiary to buy their beneficial interest under the trust. If the trustee can demonstrate they made full disclosure to the beneficiary, acted honestly, fairly and did not take advantage of the beneficiary, then the transaction is fine. Otherwise it will eb voidable

Question 4

What is the Keech v Sandford rule?

Answer 4

A fiduciary is not entitled to keep a profit they made as a result of an opportunity that comes to them in the course of performing their fiduciary duties

Question 5

What are the claims for a breach of the no profit rule?

Answer 5

An account of profits (i.e profits paid back to them

A constructive trust- i.e the profit made is held on trust for the principal. This also allows the principal to trace into any subsequent profits made by the fiduciary.