Fiduciary Duties Flashcards
Bristol and West BS v Mothew
Millet LJ said that a fiduciary is an individual who has said they will act for/on behalf of someone else, in a relationship of trust and confidence. So 2 elements:
1) F undertakes to act on another’s behalf
2) Relationship of trust and confidence
Murad v Al Saraj
Fiduciary duties can arise in ad-hoc situations - does NOT have to be a formal situation.
Henderson v Merrett Syndicates
Close relationship between scope of F duty and contractual context in which it arises. So where there is a contract giving rise to a F relationship, it can modify the scope of that F relationship.
Bristol and West BS v Mothew - Duty of Undivided Loyalty
Millet LJ argued that the key feature of a fiduciary relationship is the F duty of undivided loyalty. He said that this duty has a number of non-exhaustive core elements:
- F must act in good faith
- F must not profit from the relationship through advising P to make profits themselves
- F must NOT put himself in a position where his duties and interest conflict
Lionel Smith argues that the F duty of undivided loyalty is a subjective one - provided F genuinely believes he is acting in the best interests of P, then he has not breached this duty.
Keech v Sandford
Fiduciary duty of ‘no conflicts’ between their personal interests and duties as a fiduciary. Court held that after the landlord refused to renew the lease in favour of P, then F should have let the lease expire, rather than purchasing it for himself because this would create a potential conflict between his interests and duties.
Potential conflict = sufficient.
Boardman v Phipps
F has a duty NOT to make any unauthorised profits as part of the wider duty to avoid conflicts rule. Trustees passed up on suggested opportunity to buy shares in textiles company, so solicitor and Tom Phipps came together and bought them, which made them profits.
HL held on 3-2 majority that the solicitor and Tom Phipps were liable to disgorge ALL profits because these were unauthorised profits in breach of F duty. This is because there was found to not be full disclosure by the solicitor about the plan to buy the shares to the Ts, so F was found to have acted disloyally and thus had to disgorge profits, even though Ts refused offer to buy shares.
FHR v Cedar Capital Partners
Lord Neuberger confirmed that the no unauthorised profits rule in Boardman v Phipps is part of the wider no conflict rule.
Tito v Waddell
Self-dealing rule arises where F deals with the trust in his personal capacity for the beneficiaries - so where F acts as both the buyer and seller of trust property. This is prohibited under the no self-dealing rule and therefore these transactions are always VOIDABLE by principals.
Re Thompson’s Settlement
For companies, if the trust holds a majority shareholding, a director who is also a fiduciary cannot act in the interests of the company = conflict of interests
Re Duke of Norfolk’s ST
Courts have jurisdiction to increase remuneration for Fs, only where the duty is particularly valuable to P.
Remedies for Breach of F Duty
1) Rescission
2) Equitable compensation
3) Account of profits
4) Constructive trust
Boardman v Phipps - Remedies
For the fair dealing/no unauthorised profits rule, P can rescind the contract if F did NOT make a full disclosure about the deal to them
McKenzie v McDonald
Court can order pecuniary rescission where F sells a property in breach of F duty to a bona fide purchaser. F must pay the current market value of the property that they sold in breach of F duty
Nocton v Lord Ashburton
Where F breaches their F duty and it causes loss to P, F has a duty to compensate that loss
Swindle v Harrison
For equitable compensation claims for breach of F duty, but for causation test is used generally. So where F did not act fraudulently but breached their F duty, the test for causation is but for.
