Duties Flashcards
Re Harari’s Settlement Trust
Investment clauses are now given their plain meaning
Speight v Gaunt
Equitable duty of care- ‘a trustee ought to conduct the business of the trust in the same manner that an ordinary prudent man of business would conduct his own’
Re Whiteley
Such care as the prudent man would take would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide
Nestle v National Westminster Bank
‘Modern trustee’s acting within their investment powers are entitled to be judged by the standards of current portfolio theory, which emphasises the risk of the entire portfolio rather than the risk attaching to each investment taken in isolation’
Lord Hoffman and Staughten: weak authority that beneficiaries do not have to be treated equally
Re Lucking’s Will Trust
Special considerations apply when the trust is a controlling shareholder in a company
Barlette v Barclays Bank Trust
A higher standard for paid trustees- this case was prior to the act and was made orbiter
Cowan v Scargill
Moral objections-
Mine workers pension fund. Refused to accept investment plan on the basis of union policy.
Harries/ Bishop of Oxford v the Church commissioners for England
Trustees of a charitable trust are equally under a duty to get the maximum financial return consistent with commercial prudence but in limited circumstances they can refuse to make certain investments even though there may be risk of financial detriment-
In this case not possible unless it would cause no financial detriment
Re Chapman
S5(2)
No liability for mere errors of judgement
Nestle v NWB
T was a corporate trustee which made some bad mistakes- COA held: no breach of trust
Staughton LJ emphasises that the trustees performance must not be judged with hindsight
Tang Man Sit v Capacious Investments
Personal liability- election between remedies
Two separate causes but to compensate the same loss from slightly different perspectives- couldn’t enforce both of them, had to choose
Target Holdings v Redferns
Mortgage fraud
Redferns were not liable to pay the money as their breach had nothing to do with the ultimate loss
AIB Group v Redler
But for test applies to all breaches of trust
Swindle v Harrison
But for test I’m the context of fiduciary duty
Carson Enterprises v Boughton
Claimant in breach for failure to disclose an improper profit. Held:
La Forest: ‘the difference between damages and compensation is by no means clear, not many cases where compensation awarded for breach of fiduciary duty in context of intervening fault of a third party
Dimes v scott
The basic rule- no set off is possible
Fletcher v Green
Exception- where the profit and loss can be said to arise from the same transaction or breach of trust
Re Pauling’s
A beneficiary who participates in or consents to a breach of trust with knowledge will not be able to sue
Armitage v Nurse
Can exclude liability for all but dishonesty/wilful fraud
Bristol v Mothew
‘A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence’
Reading v AG
Staff sergeant stationed in Cairo sat in a lorry with smugglers . HOL held the crown could retain the money for many reasons, including that Mr R was in a fiduciary position and so was required to give up all unauthorised money to his principle
Bristol v Mothew
The basic duty- millet J: loyalty is the distinguishing obligation- loyalty has several facets
Boardman v Phipps (1)
A fiduciary who is acting outside the scope of his fiduciary duties cannot be liable for breach of duty.
No conflict rule
Keech v sandford
No conflict rule- it is very proper that the rule should be strictly pursued and not in the leased relaxed; for it is very obvious what would be the consequences of letting trustees have the lease, on refusal to renew the cestui que trust
Guinness plc v Saunders
Court won’t authorise remuneration for working if it would in any way encourage T to put himself in a position of conflict of duty
Boardman v Phipps
Awarded remuneration for his skill and labour- he had acted honestly and in the best interests of the trust at all times and had made a profit for the trust
Wright v Morgan
Self-dealing rule makes voidable any transaction in which a trustee purchases the trust property or more usually sells his property to the trust unless the transaction is specifically authorised, and explicit authorisation are strictly construed
Ex p Lacey
Self dealing rationale- trustee would be purchasing from himself which clearly allows for abuse of position
Holder v holder
Although he had special knowledge of the property it was not acquired through his position but through the fact that he was the tenant of the farm- in reality holder was not the seller and the buyer
Williams v Barton
Incidental profits-
A trustee had a contract with a brokerage firm under which he received a commission on work for clients that he had introduced to them; he was accountable to the trust for the commission he earned by directing trust business to them
Keech v Sandford
Purchase from a third party-
There can be no potential conflict of any kind
On the facts even though the landlord refused to renew the lease to the trust, this is a strict rule regardless of circumstances
Protheroe v Protheroe
Extended the rule to apply to a trustee who acquired freehold reversion
Re Macadam
Trustees who appoint themselves as directors of a company in which the trust has shares cannot keep any remuneration received
Re Dover Coalfield Extension
Remuneration as a director- exemption from remuneration is only applicable to trustees who use Trust shares to appoint themselves as directors
Re Gee
Hartman J: remunerative employment must account for the benefit obtains
Williams v Barton
Cannot keep commission from a third party if it comes from his fiduciary position
Lister v Stubbs
Bribe to order goods from a particular supplier
AG for Hong Kong v Reid
Acting director of public prosecutions accepted bribes to obstruct the prosecution of criminals- Reid was liable to account for bribes
Re Thomson
Competition- yacht broker: sensitive field
Aas v Benham
No liability where partner of ship brokers set up a ship building business
Regal (Hastings) Ltd v Gulliver
Opportunities arising from the fiduciary position-
Leases for two cinema’s- the directors had to account to the purchasers for the profits made. The fact that the directors acted as they did for the benefit of the company, in good faith, enabling the company to purchase the leases that it wanted, were all totally irrelevant
- consent from a general shareholders meeting
Boardman v Phipps
Very controversial, 3-2 majority-
B was solicitor to a family trust- 3 trustees one of who were senile, B and one of the testators son’s purchase shares in the company to gain control- had consent of 2 of the trustees- B acquired information from the company by purporting to act on behalf of the trust, opportunity to buy shares arose because of his position,
Making a profit was in breach- very strict approach- ‘possible may conflict’
Lord Upjohn: a real sensible possibility of conflict
Foster Bryant v Bryant
A director, while acting as such , has a fiduciary relationship with his company
Aas v Benham
Use of information would lead to no liability if it was used for purposes wholly outside the scope of the partnership business
Industrial development consultants v Cooley
It is an overriding principle of equity that a man must not be allowed to put himself in a position in which his fiduciary duty and his interests conflict
O’Sullivan v Management
An allowance may be awarded for work and skill-
Kept some of the profits
Murad v Al-Saraj
Supported lord Upjohn, suggested the UKSC take a look at the strict approach
Cradock v Piper
The only true exception to the rule disallowed unauthorised profits- a solicitor trustee is allowed his usual charges for litigation work done my himself for the trust so long as his being one of the parties has no added expense on the litigation
Re Duke of Norfolks settlement trust
The courts jurisdiction covered not only the power to allow remuneration for past services, and to allow remuneration for future services upon the appointment of trustees, but to increase the level of remuneration beyond that fixed in the trust instrument
Sinclair Investments v Versailles Trade Finance
Duty to account for profits
Lister v Stubbs
COA clearly regarded the non-trustee fiduciary’s liability to account for a bribe to be personal, not proprietary (old law)
FHR European Ventures LLP v Cedar Capital Partners
A proprietary remedy in the form of a constructive trust is available in all cases where a fiduciary makes an unauthorised profit from his position
