Fiduciary Duty Flashcards
(28 cards)
A person in a fiduciary position has a duty not to put himself in a position where his personal interests and his duties conflict
Bray v Ford
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
LAC Minerals
Types of fiduciary breach
Trustee as purchaser; Unauthorised remuneration of trustees; Incidental profits; Competition with the trust; Company Directors
Trustee making a purchase from himself/co-trustees of the legal title
There is a conflict of interest under the ‘self-dealing’ rule
Strict liability, so fairness/context is irrelevant
Ex p Lacey
Trustee making a purchase from a beneficiary of the equitable title
Presumption of undue influence - can be rebutted by fair-dealings rule
Fair-dealing rule
- trustee must disclose all material facts;
- transactions needs to be fair and honest; and
- no undue influence
Trustees cannot demand payment for their services unless authorised by:
- charging clause in trust instrument;
- beneficiaries’ consent
- court order
- or TA 2000
s.28(1) TA 2000
Trustee can receive remuneration if there is a provision for remuneration in the trust instrument
s.28(5) TA 2000
Trustee can receive remuneration if the trustee acts in a professional manner (ie management/administration of trust)
s.29(1) TA 2000
A trust corporation can charge reasonable remuneration even though it is a sole trustee
s.29(2) TA 2000
A trustee who is not a trust corporation can charge fees only if all the other trustees agree in writing
s.29(3) TA 2000
Remuneration of trustees must be reasonable considering nature of services and attributes of trustee
s.31(1)(a) TA 2000
Trustee can recover out-of-pocket expenses from the trust fund (ie travelling expenses)
Remuneration from a third party by virtue of being a trustee is incidental profit
Williams v Barton
Remuneration from a third party by virtue of being a football agent is incidental profit
Imageview
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
Re Gee
Assignment of business contracts upon dissolution of a company is incidental profit
Don King
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
Keech v Sandford
Use of information and opportunities can be incidental profit
But can be awarded remuneration for honest behaviour that benefits trust under Boardman v Phipps
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
Re Thomas
Companies Act 2006
Fiduciary duties of directors are codified in Companies Act 2006
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
s.175 Companies Act 2006
Directors cannot accept benefits from third parties unless authorised by shareholders
s.176 Companies Act 2006
If directors negotiate contracts between themselves and the company, they should disclose interest to other directors
s.177 Companies Act 2006
