Fiduciary duties

Question 1

English v Dedham Vale Properties

Answer 1

There is no definitive list of fiduciary relationships

Question 2

Reading v Attorney General

Answer 2

Ah army sergeant owed a fiduciary duty to the Crown - the duty can be relatively easy to establish, depending on equity

Question 3

Queensland Mines Ltd v Hudson

Answer 3

Shows that remedies are not consistent. Here, the MD of a mining company acquired licences to develop a mining operation but the company could not afford to do so. Therefore the MD resigned and did this in a personal capacity, with the knowledge of the firm. This was held to be outside of the fiduciary relationship and even if it was within, by taking no action the company were found to have consented. However this contrasts with other case law that suggests in fact the opposite is the case, and even in bona fide situations there can be a breach

Question 4

Boardman v Phipps

Answer 4

Courts retain an inherent jurisdiction to pay trustees even when they have breached their fiduciary duties. Here, a solicitor trustee bought shares in a company with knowledge from being a trustee, turned around its fortunes and made a large profit both for himself and for the trust. This was bona fide but he was still found to have been in breach (but was remunerated)

Question 5

Tito v Waddell

Answer 5

Trustees cannot purchase trust property - self dealing rule. Acting as both buyer and seller

Question 6

Wright v Morgan

Answer 6

The self dealing rule in Tito v Waddell about purchasing trust property exists even if independent valuations have been sought

Question 7

Holder v Holder

Answer 7

Dubious decision about purchasing of trust property, watering down the rules - property was purchased at auction (fair price) by exor. Exor had not acted in his role and purported to renounce (although had not done so). This has since been disapproved although not yet outright overturned

Question 8

Morse v Royal

Answer 8

Shows the fair dealing rule - that a trustee can purchase a beneficiary’s interest. Beneficiary pressed trustee to purchase his interest who agreed to do so but property then went up in price and the beneficiary regretted it. He tried to have it overturned but the court distinguished between this and self dealing. To be self dealing, the trustee must both sell and buy but to be fair dealing, it must be the beneficiary selling to the trustee. For it to be valid, the trustee has to show that the beneficiary has been independently advised, there has been full disclosure and that a fair price has been paid.

Question 9

Re Thompson’s settlement

Answer 9

Self dealing rule is simply an application of the wider principle that a fiduciary can’t put himself into a position of conflict. This means that (probably) a trustee also can’t sell his personal property into a trust although there is no specific case law on this point

Question 10

Keech v Sandford

Answer 10

Renewal of lease into the trustee’s personal name (as landlord refused to renew in benenificary’s name) would simply create a constructive trust

Question 11

Re Biss

Answer 11

Beneficiaries do not owe duties in reverse to trustees, so beneficiary could renew a lease in personal name despite existence of a trust

Question 12

Phillips v Phillips

Bevan v Webb

Answer 12

Trustee cannot purchase freehold reversion in a personal capacity

Question 13

Bray v Ford

Answer 13

Fiduciary cannot profit from his position

Question 14

Re Macadam

Answer 14

If a trust includes shares in a a company and a trustee becomes a director, he cannot keep director’s fees due to the Bray v Ford rule that he cannot profit

Question 15

Re Dover Coalfield

Answer 15

Despite general rule in Bray v Ford that trustee cannot profit, here they had been directors before they were trustees and due to that were allowed to retain director fees even after they became trustees (although in that case do they not still have a conflict of interest?)

Question 16

Re Gee

Answer 16

Concerning retaining director’s fees. Here, the trustees became directors, but did not rely on the votes of the trust to achieve this appointment and therefore were allowed to keep the fees

Question 17

Re Thompson

Answer 17

A trustee cannot compete with the trust - acting in a trust including a yacht-broker business, attempted to set up a rival company but was stopped by an injunction

Question 18

Williams v Barton

Answer 18

Commission openly earned by trustee but still had to pay it back as there was a conflict of interest

Question 19

Lister v Stubbs
Attorney General v Reid
Versailles Trade Finance Ltd

Answer 19

In all three cases, a trustee took a bribe which was then further invested and more profits created. The original position in Lister was that only the bribe needed to be returned and the profit could be kept. However, in Reid this was seen as problematic and it was ruled that both the bribe and the profit needed to be returned. But the original position was taken again in Versailles so it now appears that only the bribe itself needs to be returned

Question 20

IDC v Cooley

Answer 20

Mr Cooley joined IDC as MD to procure work in the gas trade. He was approached by the Eastern Gas Board who said that they would work with him personally but not with IDC. He therefore told IDC he was ill and resigned to work with the Eastern Gas Board. There was a breach of his fiduciary duty and he had to return the profits to the former employer. This was despite the court acknowledging that if he had not resigned, there would be no profit at all as the Eastern Gas Board would never have worked with IDC.