Fiduciary Duties Flashcards by lily masters

What are the 6 steps to approaching a FD problem question?

Is there a FD?
To who is it owed?
What is the scope?
Is there a prima facie breach?
Is there a defence?
What are the remedies?

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What goes against the fiduciary duty (examples)

.Buy/sell trust property to themselves
.take commission for the “trouble”
.take advantage of their office

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What are some cases for the need for control of discretion? (3)

.Keech v sandford
.ex p Lacey
.Emma silver mining co v grant

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Keech v sandford facts

A child given a trust. An adult said they would be trustee until adulthood. They take up the lease as their own. Judge said to give it back to the child

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Keech v sandford legal outcome

Putting the trustee’s interests before the beneficiary’s is not allowed. Can’t have a inflict of interest that will interfere with judgement

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Ex p Lacey facts

Trustee in bankruptcy has to sell all the property in the person’s house for as high a profit as possible, but they want to buy something for themselves, so will not want to pay an unreasonably high price for it

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Ex p Lacey legal outcome

Conflict of interest. Remedy is rescission. They have to put the money back into the trust and undo the wrongdoing

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Emma silver mining co v grant facts

Company promoter took 20% commission secretly from vendors of a mine, in turn taking 20% away from the profits

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Emma silver mining co v grant legal outcome

Breach of duty. Not in the best interests of the company

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A quote about loyalty of a fiduciary

“A trustee is held to something stricter than the morals of the market place”- judge Cardozo

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What case does the quote about loyalty of a fiduciary come from?

Meinhard v salmon

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A quote about acting in best interests

“The essence of a fiduciary relationship, by contrast, is that one party pledges herself to act in the best interest of the other”- Chief Justice of Canada

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What case does the quote about acting in best interest come from?

Carson enterprises ltd v boughton and co

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What is the general consequence of breaching a FD?

The trustee must undo the wrongdoing

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What are the two remedies to undo wrongdoing done by the breach of a FD?

.Disgorgement
.rescission

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What is disgorgement?

If the trustee made a large profit from the trust, i is taken away from them

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What is rescission?

The undoing of a transaction. If they buy the trust property, they transaction is taken back regardless of it there was no profit

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What is remedial consistency?

Where the remedies for breaching a FD are the same and the outcome is equal to what it was before the breach was done (?)

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What is a fiduciary relationship?

Where someone is put in a position of trust on behalf of a party and acts in their best interest

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What case tells us that somebody has to be disloyal to breach a FD, rather than merely incompetent?

Bristol and West Building Society v Mothew

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What does the case of Bristol and West Building Society v Mothew tell us?

somebody has to be disloyal to breach a FD, rather than merely incompetent?

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What is the no conflict rule?

A fiduciary must not put her own interests ahead of the duty to her principle

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Wright v Morgan facts

Self-dealing breaches the rule as the beneficiary is not involved in the transaction

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IGNORE
Coles v trecothick facts

Fair dealing- trustee buys property from the beneficiary

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Moody v cox facts

A fiduciary has conflicting interests by running two separate trusts. Doing the best for one could be not in the best interests of the other

What are the facets of the duty of loyalty?

.no-conflict rule .no-profit rule .good faith

What is the no-profit rule?

Where a fiduciary must not make unauthorised profit from her office

Cases for the no-profit rule? (3)

.keech v sandford .cook v deeks .FHR v cedar

Keech v sandford facts?

Lease wouldn’t renew to the beneficiary so the trustee renewed it to himself

Cook v deeks facts?

Interception of corporate opportunity

FHR v cedar facts?

Took a bribe/secret commission

Which case shows that a breach doesn’t have to be intentional?

Re Second East Dulwich

What is a category based fiduciary relationship?

One where a FD is owed by the nature of the relationship. Think of duty of care sort of thing? Eg. A director to a company, a trustee to a beneficiary, a solicitor to a client etc

What is the min change to categorising FD?

We’re moving away from lumping into categories and thinking about why a FD should be imposed on first principles

What is an ad hoc fiduciary relation?

one that arises out of the specific circumstances and dynamics of the particular relationship.

What did P D Finn say about fiduciary relations in his book “fiduciary obligations”?

The definitions is “‘one of the most ill-defined, if not altogether misleading terms in our law’

Who defined fiduciary relations as “‘one of the most ill-defined, if not altogether misleading terms in our law’

P D Finn in his book “fiduciary obligations”

What are the two approaches you would take when answering a problem question?

.self appointed agent .joint venture akin to partnership

Case for a self-appointed agent

Boardman v Phipps

Boardman v Phipps facts

Owned shares in a business that had to be restricted to be profitable. The beneficiary sued the solicitor of the trust which is not possible as the solicitor has FD to the client who is the trustee and not the fiduciary

Case for joint venture akin to partnership?

Global Container Lines Ltd v Bonyad Shipping Co

Global Container Lines Ltd v Bonyad Shipping Co facts

Two shipping companies merged. One was actually running another shipping company on the side which competed with the joint venture.

What are first principle fiduciaries?

a fiduciary that operates based on a set of guiding principles that prioritize the best interests of the beneficiary over other considerations

Who is the beneficiary?

The party that the fiduciary is acting on behalf of

Do employees owe a FD to their employer?

No, but special features are required in the employment relationship for there to be a full fiduciary duty

Who is a trustee?

The party who manages a trust on behalf of a beneficiary

What does prim facie mean?

Until more info is presented, the fact appear to be true, but could be proved otherwise after this extra information

What is the rule about the defence of consent?

Consent can be implied and this is only where it is necessary for the fiduciary’s business to work

What case shows the dense of consent?

Murad v Al-Saraj

Explain disgorgement

The wrongdoing is undone. The court places a proprietary constructive trust over the profit and if the company goes bust, you get proprietor over their creditors

Explain equitable compensation

The loss caused may be greater than the gain and equal compensation can be claimed

What case explains causation well?

Swindle v Harrison

Swindle v Harrison facts

Solicitor swindle advised Harrison to take out a loan that he would are a profit on. Her business lost a lot of money and she wanted to sue. Even if she knew he made profit from the loan, she would have still taken it as she was desperate

What rule does swindle v Harrison show?

But for

Explain election

Where you have to choose whether you want disgorgement (account of profits) or compensation as you can’t have both, and the loss is the price of the gain

Case for election

Tang Man Sit v Capacious Investments Ltd

Explain Measure, Apportionment and Allowance

Where the fiduciary can deduct the costs that it took them to make the profit from the end sum. It reflects their work

Case for Measure, Apportionment and Allowance

Guinness plc v Saunders

What does Guinness plc v Saunders say about Measure, Apportionment and Allowance

That the allowance for the work done must not undermine the deterrent for breaching fiduciary duties

Explain Forfeiture of Remuneration

They fiduciary is allowed to take an agreed percentage and if the FD is breached in bad faith then they must pay this back/forfeit it

Explain rescission

The transfer is unwound