Fiduciary Duty - Duty Of Loalty And Facets

Question 1

What does Meinhard v Salmon (NY) 1928 say?

Answer 1

A trustee is held to something stricter than
the morals of the market place. Not honesty
Alone… an honour the most sensitive, is then the standard of behaviour… the level of conduct for fiduciaries [has] been
kept at a level higher than that trodden by
the crowd.
○ Aren’t just ordinary business deals - they have to be prioritised, not dog eat dog like business

Question 2

Which case gives us most recent def for Fiduciary duty of loyalty and what does it say?

Answer 2

Canson Enterprises Ltd v 
Boughton & Co (1991)
	- Creates distincition from tort of negligence and contract
	-  The essence of a fiduciary 
	relationship, by contrast, is that one 
	party pledges herself to act in the 
	best interest of the other. The 
	fiduciary relationship has trust, not 
	self-interest, at its core[.]

Question 3

What does Bristol and West Building society v Mothew 1998 say?

Answer 3

 The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary.

Question 4

What famous quote does Bristol and west building society v Mothew 1998 say?

Answer 4

Breach of fiduciary obligation, therefore, connotes
disloyalty or infidelity.

Mere incompetence is not
enough.

Question 5

what happened in Girardet v Crease and co 1987?

Answer 5

• Case where solicitor botches the claim so they sue for breach of fiduciary duty
• Solicitors are a fiduciary because of trust and confidence in them
• but is it a breach?
• Judge says fiduciary is flung around too much - there was no breach of duty - actual issue was that solicitors were negligent

Question 6

Fiduciary noun and fiduciary adjective (Mothew 1998)

Answer 6

• Not every duty of fiduciary (the person/ noun) is a breach of fiduciary (adjective)
• We call someone a fiduciary because some of their duties are fiduciary but not all of them

Question 7

What is the no conflict rule?

Answer 7

• Conflict of interest - can be conflict between fiduciary’s principle and their own interest
• Or fiduciary might be dealing with 2 clients, or 2 principles, so there could be a conflict of interest between those 2

Question 8

No conflict cases

Wright v Morgan [1926]

Answer 8

Self-dealing, i.e. T sells trust property to T without involving B

Question 9

No conflict cases

Coles v Trecothick (1804)

Answer 9

 Fair-dealing, i.e. T buys trust property from B

Allowed with strict condition that there must be fully informed consent from beneficiary

Question 10

No conflict cases

Moody v Cox [1917]

Answer 10

 Fiduciary’s conflicting duties to two different principals

Question 11

What is the no profit rule?

Answer 11

• General rule that you’re not allowed to make profit from fiduciary office

Question 12

No profit

Cook v Deeks [1916]

Answer 12

Interception of corporate opportunity

Question 13

No profit

FHR v Cedar [2014]

Answer 13

Taking a bribe or secret commission

Question 14

What is good faith principle?

Answer 14

• Fiduciary must when taking decisions, act in good faith - this is a very slippery concept though
• Got to be some degree of intention to do something wrong to breach this, as previously said negligence isn’t enough

Question 15

OG def of good faith?

Answer 15

Re Second East Dulwich (1889)  a man who accepts such a trusteeship, and does
nothing, swallows wholesale what is said by his co-
trustee never asks for explanations, and accepts flimsy
explanations, is not honest.

Question 16

Dishonestly/ reckless good faith case?

Answer 16

Armitage v Nurse [1998]

either knowing that it is contrary to the interests
of the beneficiaries or being recklessly indifferent
whether it is contrary to their interests or not.’

Question 17

More recent good faith - rationality writer?

Answer 17

Mitchell 2018
 The idea that a party must act in a candid, rational, and
fair-minded way, and refrain from sharp practice and
behaviour that is secretive, capricious, perverse, or
misleading.

• Doesn’t seem to be the law but judge could be persuaded to accept it
• This type of law still up in the air for now

Question 18

What would happen if there isn’t established fiduciary/ loyalty?

Answer 18

• Cant start with equity without it

- if there isn’t a duty would have to try and sue for negligence or something