Fiduciary Duty

Question 1

A person in a fiduciary position has a duty not to put himself in a position where his personal interests and his duties conflict

Answer 1

Bray v Ford

Question 2

Fact-based fiduciary - a duty exists where:

• X has undertaken to act for Y; and
• Y reasonably believes that X will act exclusively in Y’s interest/joint interests

Answer 2

LAC Minerals

Question 3

Types of fiduciary breach

Answer 3

Trustee as purchaser;
Unauthorised remuneration of trustees; 
Incidental profits;
Competition with the trust;
Company Directors

Question 4

Trustee making a purchase from himself/co-trustees of the legal title

Answer 4

There is a conflict of interest under the ‘self-dealing’ rule
Strict liability, so fairness/context is irrelevant
Ex p Lacey

Question 5

Trustee making a purchase from a beneficiary of the equitable title

Answer 5

Presumption of undue influence - can be rebutted by fair-dealings rule

Question 6

Fair-dealing rule

Answer 6

• trustee must disclose all material facts;
• transactions needs to be fair and honest; and
• no undue influence

Question 7

Trustees cannot demand payment for their services unless authorised by:

Answer 7

• charging clause in trust instrument;
• beneficiaries’ consent
• court order
• or TA 2000

Question 8

s.28(1) TA 2000

Answer 8

Trustee can receive remuneration if there is a provision for remuneration in the trust instrument

Question 9

s.28(5) TA 2000

Answer 9

Trustee can receive remuneration if the trustee acts in a professional manner (ie management/administration of trust)

Question 10

s.29(1) TA 2000

Answer 10

A trust corporation can charge reasonable remuneration even though it is a sole trustee

Question 11

s.29(2) TA 2000

Answer 11

A trustee who is not a trust corporation can charge fees only if all the other trustees agree in writing

Question 12

s.29(3) TA 2000

Answer 12

Remuneration of trustees must be reasonable considering nature of services and attributes of trustee

Question 13

s.31(1)(a) TA 2000

Answer 13

Trustee can recover out-of-pocket expenses from the trust fund (ie travelling expenses)

Question 14

Remuneration from a third party by virtue of being a trustee is incidental profit

Answer 14

Williams v Barton

Question 15

Remuneration from a third party by virtue of being a football agent is incidental profit

Answer 15

Imageview

Question 16

Remuneration stemming from a position gained by virtue of trust property is incidental profit
Eg company shares held on trust used to become a director

Answer 16

Re Gee

Question 17

Assignment of business contracts upon dissolution of a company is incidental profit

Answer 17

Don King

Question 18

Renewal of a trust lease is incidental profit
Eg Trustee takes lease or buys on their own, not as trust property.
This is strict liability

Answer 18

Keech v Sandford

Question 19

Use of information and opportunities can be incidental profit

Answer 19

But can be awarded remuneration for honest behaviour that benefits trust under Boardman v Phipps

Question 20

Where the trust includes a business and trustee sets up his own business in competition, then the trustee is accountable for any profits and possibly an injunction

Answer 20

Re Thomas

Question 21

Companies Act 2006

Answer 21

Fiduciary duties of directors are codified in Companies Act 2006

Question 22

A director must avoid a situation in which he has, or may have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company

Answer 22

s.175 Companies Act 2006

Question 23

Directors cannot accept benefits from third parties unless authorised by shareholders

Answer 23

s.176 Companies Act 2006

Question 24

If directors negotiate contracts between themselves and the company, they should disclose interest to other directors

Answer 24

s.177 Companies Act 2006

Question 25

A trustee can obtain consent of all the beneficiaries if

Answer 25

• the beneficiaries are all sui juris;
• consent is fully informed; and
• there has been no undue influence

Question 26

Personal remedy to breach of fiduciary duty

Answer 26

Stripping fiduciaries of any gain they make from a conflict situation
‘disgorgement’

Question 27

Proprietary remedy to breach of fiduciary duty

Answer 27

A claim to the property derived from the profit

Williams v Barton

Question 28

A proprietary remedy is always available

Answer 28

FHR European Ventures