(Keech v Sandford 1726) - landlord would not grant new lease to beneficiary so trustee took in his own name. 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. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. This article explores how the dissenting judgment of Lord Upjohn in Boardman v Phipps has been preferred by the lower courts and why the courts have adopted such a position. 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 had obtained (some) consent from the beneficiaries? F5aE}*?fxl1oA+;{
S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account. Annetts v McCann (1990) 170 CLR 596. Boardman v Phipps [1967] 2 AC 46. By his Will dated the 23rd December, 1943, Mr. C. W. Phipps left an annuity to his widow and subject thereto 5/18ths of his estate to each of his sons and 3 /18ths to his daughter, Mrs. Noble. Lord Upjohn also agreed with Lord Cohen that information is not property at all, although equity will restrain its transmission if it has been acquired by a breach of confidence. 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. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more. House of Lords. To purchase short-term access, please sign in to your personal account above. Ought Boardman and Tom Phipps to be allowed remuneration for their work and skill in these negotiations? However, the circumstances were quite different to those in Boardman v Phipps. 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. The company made a distribution of capital without reducing the values of the shares. By using 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. Request Permissions, Editorial Committee of the Cambridge Law Journal. P0Y|',Em#tvx(7&B%@m*k By capitalizing some of the assets, the company made a distribution of capital without reducing the values of the shares. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. . Name of Case. A breach of a fiduciary duty is of strict liability, regardless of their intention Boardman v Phipps 1967 1. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. His liability to account depends on the facts. 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. endobj
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law since Boardman v Phipps. He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. Rix LJ in Foster v Bryant4 was similarly equivocal to Arden LJ about the inflexibility of the test in Boardman v Phipps. Society member access to a journal is achieved in one of the following ways: Many societies offer single sign-on between the society website and Oxford Academic. endobj
Boardman v Phipps seems like a more onerous application of rule against an unauthorised profit than that in Regal Hastings, all that is apparently required for a fiduciary to be liable is that ' a reasonable man looking at the relevant facts would think there was a real possibility of . Lords Cohen, Guest and Hodson held that there was a possibility of a conflict of interest because the beneficiaries might have come to Boardman for advice as to the purchases of the shares. Recent cases including Bhullar v Bhullar are discussed to illustrate the present approach of the courts to the recurring issues surrounding possible applications of the no-conflict rule. 3 0 obj
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However they were generously remunerated for their services to the trust. View your signed in personal account and access account management features. The majority unanimously agreed that liability to account for the profits due to a fiduciary relationship is strict; it does not depend on fraud or an absence of bona fides. Mr Boardman (the trust's solicitor) investigated the affairs of the company, initially on behalf of the trust, and gained useful information. However, they were generously remunerated for their services to the trust. 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. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. A fiduciary shall not profit from his position, Appeal dismissed; the defendants were liable to account for the shares and profits to the trust beneficiaries, but the liberal allowance was maintained, A fiduciary agent has to account to for any profits acquired by reason of the his fiduciary position and the opportunity or knowledge resulting from it, even if the principals could not have made the profits themselves with such opportunity or knowledge, unless the principal has given his informed consent, The profits will be held on constructive trust for the principal by the fiduciary agent, but the board may make allowance to the fiduciary agent for expenditure and work expended to acquire the profit, The defendants, Boardman and another, were acting as solicitors to the trustees of a will trust, and therefore were fiduciaries but not trustees, The trustees were minority shareholders in a private company which was being inefficiently managed, Boardman and one of the beneficiaries under the trust, in good faith, personally financed the purchase of a controlling interest in the company, in order to reorganise it to the benefit of the trust holding, Both the personal and trust holdings increased in value as a result of the reorganisation; one of the other beneficiaries therefore sought an account of the personal profits made by the defendants, Wilberforce J, in the High Court, held that the defendants were liable to account for the profit less the money spent on realising that profit; but at the same time made a liberal allowance for the work put in to realise that profit, The defendants appealed to the Court of Appeal, who dismissed their appeal; they subsequently appealed to the House of Lords. Tom Boardman was a solicitor for a family trust. Select your institution from the list provided, which will take you to your institution's website to sign in. The Trustee (T) refused to let them invest on behalf of the trust. Boardman and Phipps did not obtain the fully informed consent of all the beneficiaries. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. 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 realised together that they could turn the company around. CASE BRIEF TEMPLATE. Following successful sign in, you will be returned to Oxford Academic. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. way. BOARDMAN and Another v. PHIPPS Viscount Dilhorne Lord Cohen Lord Hodson Lord Guest Lord Upjohn. He also obtained detailed trading accounts of the English and Australian arms of the business. Key Points. 1 0 obj
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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. Judgement for the case Boardman v Phipps The solicitor to a family trust (S) and one Beneficiary (B)-there were several-went to the board meeting of a company in which the trust owned shares. I think there should be a generous remuneration allowed to the agents. Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. Sealy, Commercial Law and Commercial Reality (London 1984), pp. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB This article explores . Grey v Grey (1677) Jamie Glister; 4. *Lecturer in Law at University of East London, Email: Search for other works by this author on: The Author (2008). The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. endobj
Priority of trustees indemnity inter se: pari passu or first in time priority? If the defendant has done valuable work in making the profit, then the court in its discretion may allow him a recompense. For more information, visit http://journals.cambridge.org. The trustees were informed of these intentions. Cambridge Journals publishes over 250 peer-reviewed academic journals across a wide range of subject areas, in print and online. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trusts shares. For librarians and administrators, your personal account also provides access to institutional account management. The case for tracing forward not backward through an overdraft. "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. Proprietary relief in Boardman v Phipps 3 the trustees, although Ethel, who suffered from senile dementia, took no active role in the trust affairs at the material time. Maguire v Makaronis 1997 infers that anyone under a fiduciary obligation must foreshow righteousness of their transactions. He attended the annual general meeting of Lester & Harris Ltd, a company in which the trust had a substantial shareholding. This species of action is an action for restitution such as Lord Wright described in the Fibrosa case. Boardman V Phipps - Judgment - House of Lords House of Lords The majority of the House of Lords (Lords Cohen, Guest and Hodson) held that there was a possibility of a conflict of interest, because the solicitor and beneficiary might have come to Boardman for advice as to the purchases of the shares. Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. This is a Premium document. Become Premium to read the whole document. my lords. %
The Cambridge Law Journal publishes articles on all aspects of law. (eg- acting for multiple people) a. Show all summaries ( 46 ) <>/ExtGState<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 17 0 R 22 0 R 23 0 R 25 0 R 35 0 R 36 0 R 40 0 R 42 0 R] /MediaBox[ 0 0 594.96 842.04] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>>
The proposition of law involved in this case is that no person standing in a fiduciary position, when a demand is made upon him by the person to whom he stands in the fiduciary relationship to account for profits acquired by him by reason of his fiduciary position and by reason of the opportunity and the knowledge, or either, resulting from it, is entitled to defeat the claim upon any ground save that he made profits with the knowledge and assent of the other person.: The appellants obtained knowledge by reason of their fiduciary position and they cannot escape liability by saying that they were acting for themselves and not as agents of the trustees. But when, as in this case, the agents acted openly and above board, but mistakenly, then it would be only just that they should be allowed remuneration. The articles and case notes are designed to have the widest appeal to those interested in the law - whether as practitioners, students, teachers, judges or administrators - and to provide an opportunity for them to keep abreast of new ideas and the progress of legal reform. They wanted to invest and improve the company. 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. Do not use an Oxford Academic personal account. This is because there is no possibility the trustee would seek Boardman's advice to purchase the shares and at any rate Boardman could have declined to act if given such request. <>>>
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. WI[y*UBNJ5U,`5B1F
:IK6dtdj::yj Nicholas Collins, The no-conflict rule: the acceptance of traditional equitable values?, Trusts & Trustees, Volume 14, Issue 4, May 2008, Pages 213224, https://doi.org/10.1093/tandt/ttn009. The gist of it is that the defendant has unjustly enriched himself, and it is against conscience that he should be allowed to keep the money. Penn v Lord Baltimore (1750) Paul Mitchell . However, to do this he needed a majority shareholding in the company. in. 2 0 obj
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UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ 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. Oxbridge Notes is operated by Kinsella Digital Services UG. For terms and use, please refer to our Terms and Conditions 7 Boardman v. Phipps [1967] 2 A.C. 46, 124 per Lord Upjohn. The trustees were prevented from purchasing any further shares as they were not authorised investments under the terms of . But they did not obtain the fully informed consent of all the beneficiaries. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB 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.". P0Y|',Em#tvx(7&B%@m*k F5aE}*?fxl1oA+;{
S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB The only defence available to a person in such a fiduciary position is that he made the profits with the knowledge and assent of the trustees. ", The phrase "possibly may conflict" requires consideration. You do not currently have access to this article. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. In April 1997, Mrs Newman and her husband granted a lease of 1 Vicarage . Cambridge University Press (www.cambridge.org) is the publishing division of the University of Cambridge, one of the worlds leading research institutions and winner of 81 Nobel Prizes. Boardman v Phipps [1967] Where an individual is in the position of agent for trustees, any knowledge acquired in such a position is trust property. Boardman v Phipps answers this question: in the affirmative. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. The Appellant Phipps was Chairman of this company and Mr. Boardman was one of its directors. Boardman v Phipps is a leading authority on the no-conflict rule. Boardman v Phipps (1967) was a classic illustration of the principles set out in Lord Russell's statement. <>
When on the society site, please use the credentials provided by that society. "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. Facts: Boardman was solicitor of family trust, which included a 27% holding in a textile company. Therefore S and B invested themselves and the company did very well, improving the value of the shares held by themselves individually and by the trust. <>
Oxbridge Notes in-house law team. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. Study with Quizlet and memorize flashcards containing terms like Intro, Intro for fiduciaries, Boardman v Phipps (1967) and more. stream
If your institution is not listed or you cannot sign in to your institutions website, please contact your librarian or administrator. trust. ", The phrase "possibly may conflict" requires consideration. Boardman was speculating with trust property and should be liable. our website you agree to our privacy policy and terms. 3 0 obj
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. WI[y*UBNJ5U,`5B1F
:IK6dtdj::yj Boardman and Tom Phipps had breached their duties to avoid a conflict of interest.
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