Fiduciary Duties Flashcards
(46 cards)
1
Q
What should a fiduciary do?
A
- Should obey the terms of the trust and not take make money
2
Q
Why is there a need for control of Discretion + case
A
- All because the T (or F) controls a great deal of wealth
- Keech v Sandford
3
Q
What happened in Emma Silver Mining Co v Grant
A
- Trustee put his interest ahead of his duty to the company
- breach of the no profit rule and fiduciary duty
4
Q
Regal (Hastings) Ltd v Gulliver [1967] AC 134, [1942] 1 All ER 378 (HL)
A
- Directors contributed own money in company acquisition of cinema
- Didn’t get the right authorisation and benefited off the trust
5
Q
what happened in Boardman v Phipps
A
- Trustees’ solicitors put in own money, improved outcome for trust and themselves
6
Q
What is the Fiduciary Duty of Loyalty and what cases (2) is it found in
A
- A trustee is held to something stricter than the morals of the market place (Meinhard v Salmon)
- The essence of a fiduciary relationship, 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 (Canson Enterprises Ltd v Boughton & Co)
7
Q
What is the Consequence of Breach of Fiduciary Duty
A
- Compensation is not enough
- The remedies need to be deterrent – remedies consistent with wrong
- Or prophylactic
8
Q
What are 2 ways to reverse the outcome when there has been a breach and what is this an example of
A
- Account of profits (or disgorgement)
- Rescission (undoing the transaction)
- This is an example of remedial consistency
9
Q
what does Bristol and West Building Society v Mothew (1998) state about breach of fiduciary obligation
A
- Breach of fiduciary obligation, therefore, connotes disloyalty or infidelity. Mere incompetence is not enough.
10
Q
does every person who is a fiduciary owes a fiduciary duty? what case backs this up?
A
- no
- Bristol and West Building Society v Mothew
11
Q
A fiduciary must not put her own interest ahead of her duty to her principal as a part of the No-Conflict Rule- what 3 cases demonstrate this and their circumstances
A
- Wright v Morgan - self-dealing (T sells trust property to T without involving Beneficiary)
- Coles v Trecothick - Fair-dealing (T buys trust property from B – allowed if there is fully informed consent )
- Moody v Cox - Fiduciary’s conflicting duties to two different principals (prioritising one duty over the other i is allowed as long as there is fully informed consent)
12
Q
A fiduciary must not make an unauthorised profit from her office as a part of the No-Conflict Rule - name 3 cases that support this?
A
- Keech v Sandford (1726)
- Cook v Deeks [1916]
- FHR v Cedar [2014]
13
Q
how would a fiduciary not act in good faith and case?
A
- Acting contrary to the interests of the principal
- something more than negligence, but less than intention.
- Re Second East Dulwich 745th Starr-Bowkett Building Society
14
Q
what does Armitage v Nurse say about dishonesty
A
- Dishonesty ‘connotes at the minimum an intention on the part of the trustee to pursue a particular course of action, 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.’
15
Q
how does a fiduciary act in good faith?
A
- 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.
16
Q
What is the Category-Based Fiduciary Relations in Boardman v Phipps
A
- Trustee-beneficiary
17
Q
What is the Category-Based Fiduciary Relations in Guinness plcf v Saunders
A
- Director-company
18
Q
What is the Category-Based Fiduciary Relations in Docker v Somes
A
- Executor-legatee – when someone has died
19
Q
What is the Category-Based Fiduciary Relations in Featherstonhaugh v Fenwick
A
- Partner-partnership
20
Q
What is the Category-Based Fiduciary Relations in Bristol and West Building Society v Mothew
A
- Solicitor-client, solicitor must put the clients interest above their own
21
Q
What is the Category-Based Fiduciary Relations in Kelly v Cooper
A
- Agent-principal
22
Q
What is the Category-Based Fiduciary Relations in Eze v Conway? and why was their a shift in the law?
A
- Non-fiduciary ‘agent’, the agent took a secret commission.
- The agent was just a facilitator to speed up the sale. There wasn’t a fiduciary duty in the first place.
- shift in the law because categories are less important that what people actuals jobs are
23
Q
why are the courts are sometimes less keen on finding fiduciary duties in these ordinary commercial arrangements + case?
A
- breach of fiduciary duty is so strict its sometimes harsh
- Murad v Al-Saraj
24
Q
what do the cases Aas v Benham and Dean v Macdowell confirm?
A
- You can be fiduciary in certain activities are not fiduciary, is the respect of others.
- In cases of partnerships, profiting from activities outside of the scope of the partnership has long been permitted
25
Bailees, Mortgagees, and Employees were originally fiduciary relations, has this changed and how?
- Bailees do not have management responsibilities
- Mortgagees are explicitly allowed to put their own interests first
- And it would be a bit rich for your employer to tell you not to work for someone else out of working hours (without good reason)
26
what did United Dominions Corporation Ltd v Brian Pty Ltd state about joint ventures and fiduciary duties?
- Given the close ended interdependence, they require the same mutual trust and confidence and the same good faith and fairness as an actual partnership would have required.
- There was a fiduciary relation.
27
what happened in Global Container Lines Ltd v Bonyad Shipping Co (1998)
- the terms of the joint venture excluded competition within that area.
- Fiduciary duty.
28
what will the courts find with a non-standard arrangement
- if the courts find a non-standard arrangement is close enough to one of the fiduciary categories that requires the same trust and loyalty they will hold them as fiduciary duties
29
- what does the Partnership Act 1890, s 1 state
- ‘Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.
30
what does Section 2 state in "In determining whether a partnership does or does not exist, regard shall be had to the following rules:"
- S 2(2): The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived.
31
what are First Principles Fiduciaries
- courts have developed additional ways to determine whether there are fiduciary duties when you can't find an analogy to an existing category:
32
what are the common factors for First Principles Fiduciaries (5)
1. An undertaking to act in the interests of another
2. Delegation of power and discretion
3. The need for self-denial
4. Vulnerability
5. The danger of suborning the autonomy of the principal (power imbalance)
- These question needs to be answered and weigh them up and the court will decide if there is or isn’t and it makes the law uncertain
33
employees are not fiduciaries but when might they have a duty + case
- sometimes employers are vulnerable to employees and can be fiduciaries but it requires special features
- University of Nottingham v Fishel - He was supposed to manage the team for the university’s benefit not his own
34
Ross River Ltd v Waveley Commercial Ltd
- Ross River reposed in Waverly commercial, a very high degree of trust in the business arrangements.
- Courts of Appeal thought that there was a fiduciary relation
- Joint venture, successful
34
Helmet Systems Ltd v Tunnard (2006) – employee case
- Mere preparatory work to competing with employer insufficient
35
what is the difference for Bray v Ford and Boulting v ACTAT
- Bray v Ford - he is not allowed to put himself in a position where his interest and duty conflict.
- Boulting v ACTAT - If the person entitled to the benefit of the rule is content with that position (where they serve two masters) and understands what are his rights in the matter, there is no reason why he should not relax the rule, and it may be very much to his advantage to do so.
36
what was the defence in Kuys
- Full and frank disclosure of all material facts
37
what cases show the consent as an effective defence
- Re Pauling’s ST - [T]he principal must ‘fully understand[] what he is concurring in’ – not just be informed.
- Gwembe Valley v Koshy - Not only the existence of the interest, but also its extent, must be disclosed
38
what did Ross River Ltd v Waveley Commercial Ltd say about The Extent of the Consent and what other cases can be used
- What is permitted is never wider than the terms of the agreement and is often narrower.
- Kelly v Cooper - Estate agent didn’t get fully informed consent but there was implied consent. (must be absolutely necessary)
- Murad v Al-Saraj - Causation defence rejected (fiduciary law acts a deterrent)
39
cases for Account of Profits (Disgorgement)
- FHR European Ventures LLP v Cedar Capital Partners - There needs to be a profit in the first place.
- CMS Dolphin Ltd v Simonet - The fiduciary may pay money instead for breaches of the no-profit rule
40
what is Equitable Compensation and why is it used?
- A loss was suffered
- There may be no gain to disgorge, or the loss caused may be greater than then gain. However, the beneficiary may claim compensation for loss.
41
case for equitable compensation
- Swindle v Harrison (1997) - Reverse burden of proof – It is for the fiduciary who is the defendant to disprove causation
42
Tang Man Sit v Capacious Investments Ltd
- Double recovery is not permitted. When the remedies are inconsistent, one must elect for one over the other.
43
Can you sue for the gross income of the fiduciary + case?
- no
| - CMS Dolphin Ltd v Simonet
44
what does Rescission do?
-Rescission unwinds the transfer
45
case for Forfeiture of Remuneration as remedy
- Keppel v Wheeler
