fiduciary relations - remedies for breach

Question 1

what happened in the account of profits of FHR european adventures v Cedar Capital?

Answer 1

A proprietary constructive trust is imposed over the profits
- Means even though M and his company didn’t want to owe trusts to FHR, a constructive trust was established over the 10 million with FHR as the beneficiaries and gives all the advantages of a trust
- If cedar or m (individual) went bust, the money would go back in priority to their general creditors
Powerful remedy but needs to be profit in the first placer for constrictive trust to arise

Question 2

which case stated that The fiduciary may pay money instead for breaches of the
no-profit rule?

Answer 2

CMS Dolphin Ltd v Simonet [2002]

Question 3

which no causation defence case can be used for account of profits remedy?

Answer 3

Murad v Al-Saraj [2005]

Question 4

what is equitable compensation?

Answer 4

• If money is lost, may try to get compensation instead
  There may be no gain to disgorge, or the
  loss caused may be greater than then gain.
  However, the principal may claim
  compensation for loss.

Question 5

what happened in the equitable compo case of Swindle v Harrison (1997)?

Answer 5

 Reverse burden of proof - I.e. F / defendant must disprove breach caused loss
 Cf damages for tort and contract at common law
- Swindle was solicitor, advised client Harrison to take out loan in which he had a personal interest - breach of fid duty
- He didn’t make any money from it but Harrison claimed a loss due to his breach of fiduciary duty
- You’ve still got to prove causation - did the breach of fid duty cause the loss
- But turned out Harrison business was in tight stop and probs would’ve entered into the capital even if she had known about swindles interest in it
- Harrison lost the case
- But if there I that causation, the principle can get compensation for breach of duty
Seems not to be for the principle to prove, but for the fiduciary to disprove - makes it an easier claim than at common law

Question 6

what can principle sue for in equitable compo?

Answer 6

principle can sue for profit, but not the gross income

Question 7

what is election remedy?

Answer 7

chose whether you want to go for profits or loss

Question 8

what did the elction case of Tang Man v Capacious Investments 1996 say about double recovery of profit and compo?

Answer 8

 Double recovery is not permitted. When the remedies
are inconsistent, one must elect for one over the other.
 The idea is that the loss is the price of the gain
- Basically said no you cant have both
Where you make a bit of profit and bit of loss, you can only claim for one if there is a breach of fid duty

Question 9

what did Boardman v Phipps [1967] say about allowances?

Answer 9

 A fiduciary doing very well for the trust will get a ‘liberal’ allowance
for work and skill (cf remuneration).
So long as it is honest and doesn’t undermine the purpose of the fid duty

Question 10

what did Guinness plc v Saunders [1990] say about allowances?

Answer 10

• Contrast with boardman
   Allowance must not undermine the the deterrent / prophylactic
  purpose of fiduciary duties.
  
  • Resulted in jail sentence for fraud
  • Alert court to risks of apply boardman - case where fid was less honest and straightforward
    So only in special circumstances where an allowance wont undermine purpose of fid duty

Question 11

what did Docker v Somes (1834) say about the apportionment of profit?

Answer 11

 Where some personal money and some trust money is used as

input, there might be an apportionment of the profit.

Question 12

what is forfeiture of remuneration?

Answer 12

• Fiduciaries and trustees are now often paid for their troubles - as long as authorised that certain amount of renumerations permitted to make it worth their while
  But what happens if there’s breach of duty somewhere - can this authorised renumeration be taken away? - yes!

Question 13

what happened in the forfeiture of remuneration case of Keppel v Wheeler [1927]?

Answer 13

 Even authorised remuneration may be forfeit for breach of
fiduciary duty in bad faith
- Deliberately going against the fiduciary agreement means their forfeit their renumeration
Really clear case - acting against on purpose

Question 14

what did Kelly v Cooper [1993] case say about forfeiture of renumeration?

Answer 14

 Dishonesty is sufficient to forfeit the renumeration

Still seems quite high threshhold - seems to require full on intentional wrongdoing, not reflective though

Question 15

what happened in Imageview Management Ltd v Jack (2009) forfeiture of remuneration case?

Answer 15

 Any remuneration will be forfeit except where the breach
was a case of ‘harmless collaterality’ to the engagement.
 Unfortunately it is not wholly clear what this means.
- Courts attempt to lower bar for where renumeration can be lost
- Could be better worded ‘ harmless collaterality’
- More in line with strictness or duty of loyalty
Seems to be if breach is innocent or doesn’t effect anything then its okay

Question 16

what is recission?

Answer 16

• Doesn’t just mean terminating the contract or trust, it means undoing it
  
  • So if trustee was buying and selling shares, getting recission would mean that share is undone
  • Undoing transaction and putting principle back to position they were in before transaction
    Idea being to take away the benefit of the impugn transaction from the fiduciary

Question 17

what can happen with recission?

Answer 17

 Property and money goes back from where it came
 Available for self-dealing as of right
 Available for fair-dealing if unauthorised
 Makes less sense for other breaches of fiduciary duty - like you cant really undo sold off assets and laid off people
 Can be barred by, e.g., the intervention of third party
rights