His 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. The case for tracing forward not backward through an overdraft. If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward. 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. He also obtained detailed trading accounts of the English and Australian arms of the business. <> % Pettitt v Pettitt (1970) and Gissing v Gissing (1971) John Mee; 22. Special emphasis is placed on contemporary developments, but the journal's range includes jurisprudence and legal history. 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 . 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. WI[y*UBNJ5U,`5B1F :IK6dtdj::yj Boardman, the 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. Annetts v McCann (1990) 170 CLR 596. BOARDMAN v PHIPPS. This decision was followed and applied in Boardman v Phipps. National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. Applicant VEAL of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 437. View the institutional accounts that are providing access. Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. 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. &Thb;ynxP\ -|tLo9sRx[8-a5& 'vd `f@). 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. Unit 11. On this, Lord Denning MR said (at 1021). fiduciary he was accountable to the beneficiaries for any profit he had made. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB Boardman v Phipps [1967] 2 AC 46, [1966] 3 WL R 1009, [1966] 3 All ER 721. 25% off till end of Feb! <>>> endobj The majority agreed unanimously that liability to account for the profits made by virtue of a fiduciary relationship is strict and does not depend on fraud or absence of bona fides, and so Phipps and Boardman would have to account for their profits. 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. Boardman was speculating with trust property and should be liable. The trustees were informed of these intentions. His lordship, with respect . (Keech v Sandford 1726) - landlord would not grant new lease to beneficiary so trustee took in his own name. <>/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>> They wanted to invest and improve the company. Boardman and Tom Phipps had breached their duties to avoid a conflict of interest. Choose this option to get remote access when outside your institution. On the 1st March, 1962, the Respondent John Anthony Phipps com- menced an action against his younger brother, Thomas Edward Phipps and Mr. T. G. Boardman, a solicitor and partner in the firm of Messrs. Phipps & . 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 . Enter your library card number to sign in. Boardman felt that by asset-stripping the company he could increase the value of the shares. '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. my lords. On this Wikipedia the language links are at the top of the page across from the article title. The company made a distribution of capital without reducing the values of the shares. It publishes over 2,500 books a year for distribution in more than 200 countries. Paragon Finance plc v DB Thakerar & Co (a . He attended the annual general meeting of Lester & Harris Ltd, a company in which the trust had a substantial shareholding. His statement has . 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. stream In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. Boardman and Phipps did not obtain the fully informed consent of all the beneficiaries. Q6 - You now need to carry out research about the different universities/colleges you are interested in applying to by finding the answers to the areas you have outlined in your responses to questions 3 and 5 above. Rix LJ in Foster v Bryant4 was similarly equivocal to Arden LJ about the inflexibility of the test in Boardman v Phipps. 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.". Throughout this phase Proprietary relief in Boardman v Phipps 6 [1967] 2 AC 46 (HL) 73. Is it a conflict? law since Boardman v Phipps. <> 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. students are currently browsing our notes. If you see Sign in through society site in the sign in pane within a journal: If you do not have a society account or have forgotten your username or password, please contact your society. . Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. This species of action is an action for restitution such as Lord Wright described in the Fibrosa case. ), Rang & Dale's Pharmacology (Humphrey P. Rang; James M. Ritter; Rod J. Boardman v Phipps (1967) was an example of the application of strict liability. "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. His liability to account depends on the facts. The Cambridge Law Journal principal shareholder group, Boardman obtained information about the factories of Lester & Harris in Coventry and Nuneaton and its property in Australia. <> 7 Boardman v. Phipps [1967] 2 A.C. 46, 124 per Lord Upjohn. 2011 Editorial Committee of the Cambridge Law Journal 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. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ 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. 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. HL (majority 3-2) held that S and B would hold their acquired shares as constructive trustees for the beneficiaries. Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. 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. I think there should be a generous remuneration allowed to the agents. . 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. This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account. (eg- acting for multiple people) a. Boardman v Phipps is a leading authority on the no-conflict rule. Therefore, Boardman was speculating with trust property and should be liable. Material Facts Boardman was the solicitor for a family trust. If you cannot sign in, please contact your librarian. 2.I or your money backCheck out our premium contract notes! 39^40. 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. See below. 3 0 obj View your signed in personal account and access account management features. The trustees were prevented from purchasing any further shares as they were not authorised investments under the terms of . 4 0 obj Boardman had concerns about the state of Lexter & Harris accounts and thought that, in order to protect the trust, a majority shareholding was required. 3 0 obj In 1996 Mr Clarke settled 150,000 on trust to benefit various family members including his grandchildren, Brooke and Billy. Citation and Court [1967] 2 AC 46. 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. As the judge said: "it would be inequitable now for the beneficiaries to step in and take the profit without paying for the skill and labour which has produced it.". Boardman v Phipps (1967) Michael Bryan; 21. House of Lords. Whether or not the trust or the beneficiaries in their stead could have taken advantage of the information is immaterial: p. 111A, The question whether or not there was a fiduciary relationship at the relevant time must be a question of law and the question of conflict of interest directly emerges from the facts pleaded, otherwise no question of entitlement to a profit would fall to be considered. 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. Viscount Dilhorne. Phipps v Boardman: HL 3 Nov 1966 A trustee has a duty to exploit any available opportunity for the trust. This article is also available for rental through DeepDyve. It concludes that the conduct-based approach in Boardman v Phipps should be rejected, and that the unjust enrichment-based approach provided by Warman International Ltd v Dwyer should be 1 0 obj The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. When on the society site, please use the credentials provided by that society. The direct tyranny will come on by and by, after it shall have gratified the multitude with the spoil and ruin of the old institutions of the land.Samuel Taylor Coleridge (17721834), From scenes like these old Scotias grandeur springs,That makes her loved at home, revered abroad;Princes and lords are but the breath of kings,An honest mans the noblest work of God!Robert Burns (17591796), "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. Flower; Graeme Henderson). 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. Don't already have a personal account? However, the circumstances were quite different to those in Boardman v Phipps. endobj 399, 400 (PC). Do not use an Oxford Academic personal account. 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