Fiduciaries Flashcards
What were the facts in Keech v Sandford?
Trustee held a lease for a child beneficiary.
Lessor refused to renew lease for the minor.
Trustee took the renewed lease for himself.
What legal principle was established in Keech v Sandford?
Trustee breached fiduciary duty by profiting from the trust opportunity.
Lease held on constructive trust for beneficiary.
Strict no-conflict rule: Trustee must avoid any possibility of personal benefit, even if acting honestly.
How did Mothew define a fiduciary?
“A fiduciary is someone who has undertaken to act for or on behalf of another in a matter giving rise to a relationship of trust and confidence.”
What key clarification on fiduciary duty was made in Mothew?
Mere incompetence ≠ breach of fiduciary duty.
A servant doing their best (though poorly) is not necessarily disloyal.
Fiduciary duty breach = disloyalty, conflict, or unauthorised benefit, not negligence alone.
What were the facts in Boardman v Phipps?
Boardman (solicitor) advised trust to buy more shares in a company it was already invested in.
Trustees refused, so he and a beneficiary bought the shares personally.
Made a profit from improved company performance.
What principle did the majority in Boardman v Phipps uphold?
Held: Boardman liable to account for all profits made.
No-conflict rule applies regardless of good faith or trust benefit.
Lord Cohen: Rule applies even if:
- There was no fraud
- Trust wasn’t harmed
- Trustee acted in good faith
What was the outcome for Boardman despite the breach?
He was awarded generous remuneration for his skill and effort under the court’s discretion.
What were the facts in FHR v Cedar Capital?
FHR bought a hotel business.
Cedar (their agent) received a secret commission from the seller.
FHR sued to recover that bribe.
What principle was established in FHR v Cedar Capital?
Bribes or secret commissions received by fiduciaries are held on constructive trust for the principal.
Fiduciary cannot retain unauthorized benefit.
UKSC confirmed: proprietary remedy is available for breach of fiduciary duty via secret profits.
