Fiduciary Duty - Basics

Question 1

What is the OG case for control of discretion?

Answer 1

Keech v Sandford (1726)

Question 2

What happens in Keech case?

Answer 2

 L wouldn’t renew lease to Beneficiary so T secured renewal to himself

• How should this be regulated
• Got to think about liability and remedy
• Fiduciary so strict judge held him liable for breach of duty, even though there was only a slight possibility of a conflict of interest
• No defence to say trust didn’t suffer a loss
• Quite a liability!
• Remedy is an account of profits - all profits held on constructive trust in favour of the child, way of taking away all benefits trustee would get from renewing the lease themselves, all transferred via this implied trust foe the child

Question 3

What happens in Ex P Lacey 1802?

Answer 3

 Trustee in bankruptcy bought bankrupt’s property for himself (trustee has to sell all of persons property to pay off debts, so should try to sell everything for highest price to help bankrupt person out)
○ Conflict of interest as duty of bankruptcy is to get highest possible price to pay off creditors, but their personal interest is to get the lowest possible price for themselves
So transactions can be set aside. Rescinded - property goes back to trust and anymore that changes hands goes back

Question 4

What happens in Emma Silver Mining Co v Grant 1879?

Answer 4

 Company promoter took 20% secret commission from vendors of a silver mine
Having fiduciary duty to company and then taking 20% is clearly a conflict of interest and a breach of the no profit rule

Question 5

What happens in Regal (Hastings) Ltd v Gulliver 1967 (HL)?

Answer 5

 Directors contributed own money in company acquisition of cinema
○ Controlled companies who couldn’t control assets as they didn’t have enough money, so they put their own money in - both company and trust makes massive profit, because they put own money in they share in the profits
○ Fiduciary law so strict it even prohibits these profits here as the made the profit by means of their fiduciary responsibilities, had to return the profit in remedy known as counter profit…

Question 6

What happens in Boardman v Phipps 1967 (HL)?

Answer 6

 Trustees’ solicitors put in own money, improved outcome for trust and themselves
○ Man here got some money for the good work he did for the trust, but this is seen more like a salary rather than profiting from the actual trust

Question 7

Which 2014 case where purchasing agent took 10 million secret commission?

Answer 7

FHR European Ventures v Cedar Capital Partners