Fiduciaries

Question 1

Who are fiduciaries? Bristol & West Building Soc v Mothew

Answer 1

Fiduciary is someone who:

1) undertakes to act on the behalf of another
2) in a relationship of trust and confidence

(basically anyone that is meant to act in the best interest of P

Question 2

Aberdeen Town Council v Aberdeen University

Answer 2

Trustee/Beneficiary = fiduciary relationship

Question 3

Boston Deep Sea Fishing v Ansell

Answer 3

Agent/Prinicpal = fiduciary relationship

Question 4

Regal Hasting v Gulliver

Answer 4

Director/Company = fiduciary relationship

Question 5

Aas v Benham

Answer 5

Partners = fiduciary relationship

Question 6

Hilton v Barker Booth

Answer 6

Solicitor/Client = fiduciary relationship

Question 7

Reading v AG

Answer 7

AD-HOC Fiduciary relationship (sergeant and the crown, he took bribes to escort smugglers through police checks)

No real test available - if C trusts D with property to be dealt with for C’s benefit

Question 8

Partners in a JV = adhoc fiduciary relationship

Answer 8

Murad v Al-Saraj

Question 9

AG v Blake

Answer 9

Lord Woolf - relationship of trust and confidence = F duty

Question 10

Grimaldi v Chameleon Mining NL

Answer 10

Undertaken to perform function at exclusion of his/her own interests

Question 11

JP Morgan v Springwell

Answer 11

Just because 1 party in commercial relationship trusts the other does not mean it is a fiduciary duty

Question 12

Scope of F duty

Answer 12

only as far as F is meant to act

Question 13

Basis of the F Duty: Bristol & West Building Soc v Mothew

Answer 13

Millet LJ - F has to be "loyal" to P by:
1) Good faith
2) No profit
3) No conflict
4) No self-benefit
(all linked to core duty of loyalty - NB. this is not exhaustive) 

If F works for 2 Ps, and P chose F for this reason = consent, and that on its own is not conflict

Question 14

Keech v Sandford

Answer 14

NO CONFLICT RULE = ENFORCED STRICTLY
- even if it is a potential conflict (not actual)

here T couldn’t have done it for B, landlord already said no

Question 15

Boardman v Phipps

Answer 15

NO CONFLICT RULE = enforced strictly

• even if it is a potential (not actual) conflict
• even if F = good faith
• even if actions left P better than if F did nothing

Here, F had to disgorge all profits made (only small allowance made for the work B&T did)

Question 16

No profit rule

Answer 16

Lord Neuberger said no profit rule is part of the wider no conflict rule (FHR European Ventures)

Question 17

Tito v Waddell (no.2)

Answer 17

2 rules:

1) SELF-DEALING - where T deals with trust property (e.g. sells to himself)
- CONFLICT
- transaction ALWAYS voidable even if fair value paid

2) FAIR-DEALING - where T purchase beneficial interest off any of the beneficiaries
- less danger of conflict
- B can set aside transaction IF it is unfair
- T has to show:
- T did not take advantage of his position
- T made full disclosure to B
- Fair and honest transaction

Question 18

Re Duke of Norfolk ST

Answer 18

F can be remunerated (but if paid, higher potential for conflict of interest)

• even if there is a contract, courts have INHERENT JURISDICTION TO AUTHORISE REMUNERATION
• what F did must be v. valuable (e.g. Boardman v Phipps)

Question 19

How might F be remunerated?

Answer 19

• courts may authorise it
• or by consent (if B had full disclosure)
• by Charging Clause in trust instrument
• Trustee Act 2000 s.28-32 (professional trustees can charge even if no charging clause)

Question 20

Rescission

Answer 20

if F procures P to enter into a contract with 3P (because F was bribed to do that)

If F acts for P and 3P but 3P knows and P doesn’t

Under self-dealing and fair-dealing rules

Question 21

Norton v Lord Ashburton

Answer 21

EQUITABLE COMPENSATION (compensate losses)

• need causation and remoteness
• courts slow to take this on because they don’t like duty model (prefer disability model)

Question 22

CAUSATION in EQUITABLE COMPENSATION

Answer 22

BUT FOR test - Swindle v Harrison

was contribution - Brikenden v London Lonon

Question 23

Remoteness test in EQUITABLE COMPENSATION

Answer 23

Direct Consequence test (Canson Enterprises v Boughton)

Question 24

Contributory fault in Equitable Compensation?

Answer 24

depends if good faith (probably consider contributory fault) or bad faith (don’t consider contributory fault - National Building Society v Balmer Radmore)

Question 25

What happens after an account of profits is made and profits are shown?

Answer 25

P can make:

1) a personal claim
2) OR A PROPRIETARY claim (CT) - only if there are traceable proceeds in identifiable form

P can choose one not both (double recovery) - AG for HK v Reed

Question 26

How is profits worked out? Ultra frame UK v Fielding

Answer 26

Lewison J:

1. Unauthorised Profits
2. No unjust enrichment
3. P must established exactly what was acquired by F before F can be made to disgorge gains
4. FACT dependent

“just allowances” might be made for F’s skill, labour, or assumption of business risks

Question 27

Grimaldi v Cameleon

Answer 27

“proportion accordingly” (more favourable for F compared to Ultraframe’s “just allowances”)

because status quo here is not all for P

Question 28

Profits must be linked in some way

Answer 28

SCOPE approach (murad v Al Saraj - profits made within scope of fiduciary duty)

CAUSATION approach - bear a reasonable relationship to breach of duty (1 cause - Ultrfrade)

Question 29

SECRET COMMISSION AND BRIBES

Answer 29

Originally no CT: Lister v Stubbs

then yes CT: AG of HK v Reid

then confirmed yes CT: FHR European Ventures