The strict liability of fiduciaries has been the subject of criticism on the grounds that Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. Request Permissions, Editorial Committee of the Cambridge Law Journal. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. <> Facts: Boardman was solicitor of family trust, which included a 27% holding in a textile company. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. Lord Cohen said the information is not truly property and it does not necessarily follow that, because an agent acquired information and opportunity while acting in a fiduciary capacity, he is accountable. No positive wrongdoing is proved or alleged against the appellants but they cannot escape from the consequences of their acts involving liability to the respondent unless they can prove consent.: p. 112A, I have no hesitation in coming to the conclusion that the appellants hold the Lester & Harris shares as constructive trustees and are bound to account to the respondentIn the present case the knowledge and information obtained by Boardman was obtained in the course of the fiduciary position in which he had placed himself. xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ 39^40. Lord Upjohn dissented, and held that Phipps and Boardman should not be liable because a reasonable man would not have thought there was any real sensible possibility of a conflict of interest. O(Grx+Q_[%Dm%|(Dy m%Cn(Dy(o%~(Jg(Q[tJD|(R(GIAK(xRph1%Z'-Y!bO-FDY b<9hHJO-F?!b<98HO-F!b-f b. The problem was that the trust instrument itself did not allow the investment of, Boardman purporting to act on behalf of the trust (relationship of agenc, discovered the likely cost of the shares and purchased the shares in his own, At all points, Boardman had acted honestly, After Boardman had purchased the controlling interest in the company. The other two members of the majority, Lord Hodson and Lord Guest, opined that information can constitute property in appropriate circumstances and in the current case, the confidential information acquired can be properly regarded as property of the trust. Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. *Lecturer in Law at University of East London, Email: Search for other works by this author on: The Author (2008). endobj fiduciary he was accountable to the beneficiaries for any profit he had made. Special emphasis is placed on contemporary developments, but the journal's range includes jurisprudence and legal history. This article explores . An important feature of the journal is the Case and Comment section, in which members of the Cambridge Law Faculty and other distinguished contributors analyse recent judicial decisions, new legislation and current law reform proposals. Maguire v Makaronis 1997 infers that anyone under a fiduciary obligation must foreshow righteousness of their transactions. Lord Cohen (on a point with which Hodson and Cohen agreed): S had placed himself in a position of potential CoI, for example if the trustees asked his advice on the merits of buying more shares in the company. The Appellant Phipps was Chairman of this company and Mr. Boardman was one of its directors. Land law - Introduction to land law with description of its history, Introduction to Sports Massage and Soft Tissue Practices, Legal and Professional Aspects of Optometry (BIOL30231), Access to Health Professionals (4000773X), Business Data Analysis (BSS002-6/Ltn/SEM1), Introductory Chemistry (0FHH0023-0901-2018), Introduction toLegal Theory andJurisprudence, Introduction to English Language (EN1023), Cell Membranes - Lecture notes, lectures 1 - 24. Grey v Grey (1677) Jamie Glister; 4. His Lord Upjohn dissented, and held that Phipps and Boardman should not be liable because a reasonable man would not have thought there was any real sensible possibility of a conflict of interest. Wilberforce J held that Boardman was liable to pay for his breach of the duty of loyalty by not accounting to the company for that amount of money, but that he could be paid for his services. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. A breach of a fiduciary duty is of strict liability, regardless of their intention Boardman v Phipps 1967 1. They suggested to a trustee (Mr Fox) that it would be desirable to acquire a majority shareholding, but Fox said it was completely out of the question for the trustees to do so. It is not contended that the trustees had such knowledge or gave such consent. p. 117D G, The relevant rule for the decision of this case is the fundamental rule of equity that a person in a fiduciary capacity must not make a profit out of his trust which is part of the wider rule that a trustee must not place himself in a position where his duty and his interest may conflict.: p. 123C, Whether there is a possibility of conflict depends on whether the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict: p. 124B, Note that in this case, not only did the principals, which are the trust beneficiaries, no lose anything, but they actually profited from the increase in value of shares held under the trust as a result of the actions of defendants thus it can be surmised that regardless of whether any wrongdoing or harm was caused to the principal, the fiduciary is liable for all profits acquired as a result of his position. Boardman and Tom Phipps had breached their duties to avoid a conflict of interest. <>>> If you cannot sign in, please contact your librarian. xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ Click the account icon in the top right to: Oxford Academic is home to a wide variety of products. Boardman appealed against a finding that he was a constructive trustee for, or agent did not necessarily render him accountable for profit from its use, yet in, the present case, as both the information which satisfied B and P, purchase of the shares would be a good investment and the opportunity to bid, came as a result of B acting on behalf of the trustees B and P, trustees of five eighteenths of the shares in the company for the respondent and, were liable to account to him for the profit thereon accordingly, Human Rights Law Directions (Howard Davis), Tort Law Directions (Vera Bermingham; Carol Brennan), Marketing Metrics (Phillip E. Pfeifer; David J. 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But then John Phipps, another beneficiary, sued for their profits, alleging a conflict of interest. % Show all summaries ( 46 ) <> Case summary last updated at 24/02/2020 14:46 by the This species of action is an action for restitution such as Lord Wright described in the Fibrosa case. The claim for repayment cannot, however, be allowed to extend further than the justice of the case demands. "And it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect. His Lordship regarded Boardman to be liable because he acquired the information in the course of the fiduciary relationship and because of the fiduciary relationship. Each issue also contains an extensive section of book reviews. 4 0 obj When on the society site, please use the credentials provided by that society. BOARDMAN v PHIPPS. 1 0 obj 'Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to the exact circumstances of each case. Boardman v Phipps (1967) Michael Bryan; 21. In this Equity Short, John Picton analyses Boardman v Phipps [1966] UKHL 2. His lordship, with respect . our website you agree to our privacy policy and terms. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. Constructive trusts, unjust enrichment, tracing 2010 Cases, Written by Oxford & Cambridge prize-winning graduates, Includes copious academic commentary in summary form, Concise structure relating cases and statutes into an easy-to-remember whole. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. If you are a member of an institution with an active account, you may be able to access content in one of the following ways: Typically, access is provided across an institutional network to a range of IP addresses. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* Lord Upjohn was in dissent in Boardman v. Phipps, but his dissent was "on the facts but not on the law": Queensland Mines Ltd. v. Hudson (1978) 52 A.L.J.R. His liability to account depends on the facts. He attended the annual general meeting of Lester &amp; Harris Ltd, a company in which the trust had a substantial shareholding. View the institutional accounts that are providing access. You do not currently have access to this article. &Thb;ynxP\ -|tLo9sRx[8-a5& 'vd `f@). Study with Quizlet and memorize flashcards containing terms like Intro, Intro for fiduciaries, Boardman v Phipps (1967) and more. I think there should be a generous remuneration allowed to the agents. Therefore, Boardman was speculating with trust property and should be liable. The plaintiff is ready to concede it, but in case the other beneficiaries are interested in the account, I think we should determine it on principle. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB His liability to account depends on the facts. 2.I or your money backCheck out our premium contract notes! For librarians and administrators, your personal account also provides access to institutional account management. HL (majority 3-2) held that S and B would hold their acquired shares as constructive trustees for the beneficiaries. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. Tom Boardman was a solicitor for a family trust. National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. Tom Boardman was a solicitor for a family trust. Administrative Law. Do not use an Oxford Academic personal account. He said unequivocally that knowledge learnt by a trustee in the course of his duties is not property of the trust and may be used for his own benefit unless it is confidential information which is given to him (i) in circumstances which, regardless of his position as a trustee, would make it a breach of confidence to communicate it to anyone or (ii) in a fiduciary capacity. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. For terms and use, please refer to our Terms and Conditions If you believe you should have access to that content, please contact your librarian. Penn v Lord Baltimore (1750) Paul Mitchell . law since Boardman v Phipps. Viscount Dilhorne. However, the circumstances were quite different to those in Boardman v Phipps. If your institution is not listed or you cannot sign in to your institutions website, please contact your librarian or administrator. By capitalizing some of the assets, the company made a distribution of capital without reducing the values of the shares. The beneficiary principle in the 21st century, Subscription prices and ordering for this journal, Purchasing options for books and journals across Oxford Academic, Receive exclusive offers and updates from Oxford Academic. 4 0 obj Coke v Fountaine (1676) Mike Macnair; 3. He (and a beneficiary) purchased shares in a company in which the trust already had a substantial holding. Boardman and Phipps did not obtain the fully informed consent of all the beneficiaries. Issues Did Boardman and Tom Phipps breach their duty to avoid a conflict of interest, despite the fact that the company made a profit and . They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trust's shares. Annetts v McCann (1990) 170 CLR 596. Following successful sign in, you will be returned to Oxford Academic. <> in. Fiduciary duty and the exploits of commercial enterprise often run counter to each other, while in this instance the opportunistic actions of a solicitor produces a profitable outcome for all involved, but not without a cost to the integrity of their working relationships. . Boardman was speculating with trust property and should be liable. criticism, see L.S. endobj P0Y|',Em#tvx(7&B%@m*k Choose this option to get remote access when outside your institution. Boardman v Phipps [1966] UKHL 2 is a landmark English trusts law case concerning the duty of loyalty and the duty to avoid conflicts of interest. This is a Premium document. In my view it means that the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you could imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict.". strict liability of fiduciaries has been the subject of criticism on the grounds that it is unfair to penalise honest trustees in the same way as guilty trustees and that the strict rule may discourage people from accepting the post. Lord Hodson and Lord Guest: Since S and B had used information made available to them by virtue of their relationship to the trust (as solicitor and beneficiary respectively), and since the information was trust property, they had made a profit out of trust property, rendering them liable.