FD- new Flashcards
which 2 cases highlighted what a FD is
- Canson Enterprises: acting in the best interests of others
- Bristol and West Building society: relationship of trust and loyalty, you can only breach a FD if you are a F
3 remedies for breach of FD
- account of profits
- recission
- compensation
2 cases for breach of no-conflict rule
- Wright v Morgan; self-dealing
- Moody v Cox; conflicting duties owed to 2 principles
breach of no-profit rule case
Keech v Sandford
breach of no-conflict and no-profit rule case
FHR v Cedar
what case defined acting in bad faith and how
Re Second East Dulwich- as turning a blind eye to bad behaviour
what was highlighted in Armitage v Nurse
distinguished between dishonesty and recklessness
3 cases of category based fiduciaries
- Boardman v Phipps: T-B relationship
- Guinness Plc: Director-company
- Bristol and West Building Society: solicitor-Client
what was highlighted in Eze v Conway (3)
- that there was no category based F relationship even though he took a secret commission
- no claim
- This case shows that there was a shift in the law now and that courts will consider people who are not in a fiduciary-based category, as fiduciaries or not
outcome in Re Goldcorp (2)
- High expectations was not enough
- There was vulnerability but not high enough for there to be a FD
outcome in Hospital Products (3)
- Argued there was a FD so wanted an account of profits
- Courts said no- it was more like a breach of contract
- We need more than a little bit of vulnerability
which 2 cases show that this area of law is so strict that it can lead to harshness
- Re Goldcorp
- Hospital products
which case shows that the courts are reluctant to find fiduciary relations, there have to be very good reasons for imposing them
Murad v Al-Saraj
what was held in SEC v Chenery Corporation (Frankfurter J)
- When someone says they are a F it begins analysis- giving direction to further enquiry
- He argues that a fiduciary duty might not apply to everything
what was held in Re Coomber
-There are different types of F relations but it doesn’t mean that there will always be a breach of FD
what was held in Henderson v Merrett (per lord BW).
2
- The phrase ‘FD’ can give rise to a mistaken assumption that all fiduciaries owe the same duties
- This is not the case
what was held in Benham about partnerships (2)
- in partnerships, profiting from activates outside the scope of the partnership has been permitted
- You have to find the scope of the F duty
what was held in English v Dedham about F based relations
that the categories are not closed and that the court can infer a F relationship by compared it to similar cases
what did Finn argue about f relations (2)
- Argued that the concept of F relationship has always been hard to define
- And hard to work out an easy set to rules to determine who is a F
what 3 things will the court do when someone is not part of the categories of a F relationship
- Check if someone is an established categories
- What the scope of their F duties are
- And if they are not in a recognised category- they will decide if they are a F or not
what did Boardman v Phipps say about self-appointed agents
that they are Fs because their work is so close to that of an actual agent
what did United Dominos Corporation say about joint ventures
that is so close to a partnership that it will be held that a FD was owed
what was held in Global Container Lines
there was a F relationship
what type of approach will the courts go through when determining if someone is a F or not when they are not in the F based categories
multi-factorial approach considering 5 common factors
what are the 5 common facts courts consider when determine whether someone is a F or not
- An undertaking to act in the interests of another
- Delegation of power and discretion- fiduciary can bind them to legal contracts
- The need for self-denial- not to make profit on the side
- Vulnerability
- The danger of suborning the autonomy of the principal (power imbalance)- can the fiduciary bind you to things you don’t want to be bound to.
what was held in Fishel (3)
- that Employees are not Fs but they may have special features which may make them a F
- This case shows thar analogy is not the right method to determine whether someone owes a FD
- But the first principle route may be used instead
3 examples of cases where there was a a first principle F
- Ross River Ltd- Joint venture case
- Fishel- employee
- Sinclair investments- we look the individual in question, not the company to see if there was a breach of FD
when establishing first principle fiduciaries what do we need to look for
we need to look for whether there was a requirement of loyalty in these relationships or whether they were commercial relationships
what was held in Bray v Ford
you cannot make a secret profit
what was held in Boulting v ACTAT, in contrary to Bray v Ford
if a breach of FD can be authorised by their master for example, then this can be allowed.
what was held in Shipway v Broadwood
it is the secrecy involving the payment of the money, not the taking of the money.
what was held in Kuys regarding defences
-which case also confirmed this
- There must be full disclosure of the facts- a defence to breach of FD
- Principle must be informed about what is going on and understand everything
- Confirmed in Re Pauling’s ST
what was held in Gwembe Valley
-Highlighted that the principle must the full extent of what is going on- they need to know all the facts and numbers
what type of consent was found in Kelly v Cooper
implied consent- The defence of consent will be a defence when acting for multiple principles, but not a defence for taking secret commission.
what defence was rejected in Murad v Al-Saraj
causation defence rejected
what was held in FHR v Cedar about an account of profits as a remedy
-Need to make sure there is a profit in the first place that a constructive trust will arise over
what was held in CMS Dolfin about profits remedy
- Fiduciary may pay back the money for the breach of no-profit rule
- Rather than handing over trust property
when will equitable compensation be awarded
where there is not an involvement of profit
what was held in Swindle v Harrison
- what must D disprove
- losses caused by what
- what do you have to prove here
- lost case why
- what happens if you prove causation
- D must disprove breach caused loss
- Losses caused by breach of FD
- You have to prove causation here- did the breach of FD cause loss, or would she have lost money in any case?
- She lost case because she would have entered into this loan anyways as her business was desperate for capital
- If you can prove causation, principle can get compensation for breach of FD
what was held in Tang Man Sit (3)
- Highlighted that you cannot claim for an account of profits and compensation together you can only claim for one.
- Double recovery is not permitted
- The loss is the price of the gain
what was held in Boardman v Phipps about the strictness of the law when it comes to breaching FD
there was a breach of FD, but he did it with the best interests of the business.
And although he did not obtain consent, he was very honest and was allowed a liberal allowance for work and skill (remuneration)
what was held in Guinness in response to Boardman being allowed a liberal allowance
that the allowance must not undermine the deterrent/ prophylactic purpose of FDs
what can happen to remuneration
it can be forfeit
what was held in Keppel v Wheeler in response to remuneration
-Even authorised remuneration may be forfeit for breach of fiduciary duty in bad faith – deliberately going against the F engagement
what was held in Image View Management in response to remuneration (2)
- Any remuneration will be forfeit except where the breach was a case of ‘harmless collaterality’ to the engagement.
- If the breach was very innocent, you can keep you remuneration, but for everything else the remuneration will be forfeit
what was seen to be done by the courts with remuneration
It is seen that the courts attempted to lower the bar where remuneration can be forfeit
what was held in Galambos v Perez
need to show that there:
- vulnerability (agreed by Lord Millet)
- and a relationship of loyalty
what does FHR v Cedar say about profits and constructive trust
you need to make sure there is a profit in the first place that a constructive trust will arise over
what does CMS Dolphin say about remedies
that a F may pay back the money for the breach of the no-profit rule rather than handing over trust property
what was held in Bray v Ford
you cannot make a secret profit
what was held in ACTAT
that a breach of FD can be authorised by their master- then allowed
what was held in Shipway v Broadwood
that it is the secrecy involving payment of the money, not the taking of the money that matters
what was held in Kuys (3)
- there must be full disclosure of the facts-a defence to breach of FD
- principle must be informed about what is going on and understand everything
- confirmed in Re Pauling’s ST
what was held in Gwembe Valley
that the principle must understand the full extent of what is going on- they need to know all the facts and numbers
what type of defence was found in Kelly v Cooper
implied consent
when will consent be a defence
when acting for multiple principles, but not a defence for taking secret commission
what defence was rejected in Al-Saraj
causation defence rejected
where there is no involvement of profit what remedy can be awarded
equitable compensation
what did Kelly v Cooper say about dishonesty
dishonesty is sufficient
