Conflict Of Interest Flashcards
Auctor in Rem Suam
No fiduciary may place himself in a position where his interest and his duty may possibly conflict. This is known as the rule precluding ^ (in his own cause)
The rule precluding auctor in R.E.M. Suam
Where a trustee breaches this, the following consequences occur:
a) the trustee will be in breach of trust
b) where the trustee makes any profit or derives any property from the breach of trust a constructive trust will be created
c) any transaction in which a trustee in ^ is capable of reduction is voidable at the instance of a number of parties
Aberdeen Railway company v Blakie brothers
Trustees must not transact in their personal capacity with trust estate
Held that contract between railway company and one of the directors who supplied the company with iron was a disclosed conflict of interest and could be set aside on the basis that he was also a trustee
Cherry’s trs v Patrick
Trustees must not transact in their personal capacity with the trust estate
A trustee in a testamentary trust continued to supply goods to the business of the truster after the death of the truster. It was held that the profit from this series of sale of goods required to be paid back to the trust by the trustee
Clark v Clark
Indirect transactions cause a conflict of interest
Executors concludes a contract to sell part of the heritable property of the deceased’s estate to a number of third parties
3rd parties then assigned their right to receive the property to one of their executors in their person capacity
The assignation was reduced on the basis that there was a conflict of interest between the executors duty and her personal interest
Burrel v burrel
Transactions with parties related to the trustee
It was held that the purchase of shipping shares belonging to a trust estate by the wife of one of the trustees was on her own accord and was valid
Adair’s factor v Connells trs
Transactions with pastries related to the trustee
It was held that the purchase of shares from a trust by a limited company was invalid because the trustee was a director and shareholder of the company
University of Aberdeen v Town council of Aberdeen
Obtaining a personal advantage
Town council acted as trustees for the lands of Torry for the professors
They sold the land to themselves and received rent from fisheries
Uni found out 70 years later and claimed a breach of trust and they received back the land and all the profits from the fisheries
Inglis v inglis
Obtaining a personal advantage
By putting a certain person as executor you will disable them from favouring themselves, the estate of the deceased included the tenants interest in agricultural lease. The executor was one of a class of people compromising the deceased’s heir on intestacy
Elliot v Mackie and sons
The charging of fees by a trustee
It was held that where the entitlement to be a director arose as a qualification of share ownership then the trustees could retain the directors fees and they were not held on a constructive trust for the beneficiaries
