Boardman, the If you cannot sign in, please contact your librarian. Boardman and Phipps did not obtain the fully informed consent of all the beneficiaries. Register, Oxford University Press is a department of the University of Oxford. What Shall We Do With the Dishonest Fiduciary? the Unpredictability of When on the society site, please use the credentials provided by that society. Each issue also contains an extensive section of book reviews. If the defendant has done valuable work in making the profit, then the court in its discretion may allow him a recompense. Boardman v Phipps answers this question: in the affirmative. Following successful sign in, you will be returned to Oxford Academic. Tom Boardman was a solicitor for a family trust. Special emphasis is placed on contemporary developments, but the journal's range includes jurisprudence and legal history. 39^40. His liability to account depends on the facts. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB 31334. Don't already have a personal account? 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. in Aberdeen Railway v. Blaikie, 136 where he said: "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. This meant he had to account for all profits arising out the CoI, no matter how remote the probability was that this CoI would actually arise. He attended the annual general meeting of Lester &amp; Harris Ltd, a company in which the trust had a substantial shareholding. In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. 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.". In April 1997, Mrs Newman and her husband granted a lease of 1 Vicarage . Boardman V Phipps - Judgment - House of Lords | House Lords - LiquiSearch The Appellant Phipps was Chairman of this company and Mr. Boardman was one of its directors. The Trustee (T) refused to let them invest on behalf of the trust. They realised together that they could turn the company around. This article is also available for rental through DeepDyve. A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions. They bought a majority stake. able to bring it back to profit, and the trust fund benefited. trust. ", The phrase "possibly may conflict" requires consideration. Click the account icon in the top right to: Oxford Academic is home to a wide variety of products. This decision was followed and applied in Boardman v Phipps. Viscount Dilhorne. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* 3 0 obj 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. Administrative Law. Grey v Grey (1677) Jamie Glister; 4. Law Case Summaries <> Boardman had concerns about the state of Lexter & Harris accounts and thought that, in order to protect the trust, a majority shareholding was required. Boardman and Tom Phipps, a beneficiary of the trust, attended a general meeting of the company. In this Equity Short, John Picton analyses Boardman v Phipps [1966] UKHL 2. *Lecturer in Law at University of East London, Email: Search for other works by this author on: The Author (2008). Do not use an Oxford Academic personal account. 4 0 obj <> The majority disagreed about the nature and relevance of information used by Boardman and Phipps. 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. . Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. Boardman felt that by asset-stripping the company he could increase the value of the shares. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. Do not use an Oxford Academic personal account. students are currently browsing our notes. When on the institution site, please use the credentials provided by your institution. Therefore, Boardman was speculating with trust property and should be liable. He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. UK: Trustees And Conflicts Of Interest - Mondaq House of Lords. 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 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. Fiduciary duties - essay Flashcards | Quizlet % 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. Maguire v Makaronis 1997 infers that anyone under a fiduciary obligation must foreshow righteousness of their transactions. 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. 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. endobj 399, 400 (PC). 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. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. Boardman v Phipps [1967] 2 AC 46. by Will Chen; 2.I or your money back Check out our premium contract notes! Phipps v Boardman: HL 3 Nov 1966 A trustee has a duty to exploit any available opportunity for the trust. The Cambridge Law Journal Sealy, Commercial Law and Commercial Reality (London 1984), pp. Chase Manhattan Bank v Israel-British Bank Ltd, Industrial Development Consultants v Cooley, https://en.wikipedia.org/w/index.php?title=Boardman_v_Phipps&oldid=1123060721, Creative Commons Attribution-ShareAlike License 3.0, [1965] Ch 992, [1965] 2 WLR 839 and [1964] 1 WLR 993, Viscount Dilhorne, Lord Cohen, Lord Hodson, Lord Guest and Lord Upjohn, This page was last edited on 21 November 2022, at 15:30. Select your institution from the list provided, which will take you to your institution's website to sign in. Cambridge University Press is committed by its charter to disseminate knowledge as widely as possible across the globe. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. 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. Paragon Finance plc v DB Thakerar & Co (a . 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 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. 3 0 obj 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. Annetts v McCann (1990) 170 CLR 596. 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. 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. 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.". Breach of fiduciary duty Flashcards | Quizlet xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ The institutional subscription may not cover the content that you are trying to access. Boardman and Tom Phipps had breached their duties to avoid a conflict of interest. His S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB On this, Lord Denning MR said (at 1021). 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. It publishes over 2,500 books a year for distribution in more than 200 countries. 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. Boardman had concerns about the state of Lexter & Harris' accounts and thought that, in order to protect the trust, a majority shareholding was required. 2010-2023 Oxbridge Notes. This item is part of a JSTOR Collection. Boardman v Phipps. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trusts shares. Boardman v Phipps (1967) Michael Bryan; 21. <>/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>> Therefore the agent must account to the trust for any profit made out of the position. Published by Oxford University Press. stream ", The phrase "possibly may conflict" requires consideration. Landmark cases in equity in SearchWorks catalog - Stanford University You do not currently have access to this article. 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 . The strict liability of fiduciaries has been the subject of criticism on the grounds that Oxbridge Notes in-house law team. 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. 25% off till end of Feb! 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. Lord Denning MR, Russell LJ and Pearson LJ upheld Wilberforce J's decision and held that Boardman and Phipps had breached his duty of loyalty, which arose as they had become self-appointed agents representing the trust, by putting themselves in a conflict of interest. enough, and that am attempt to take control of the company should be initiated. His lordship, with respect . His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. Case summary last updated at 24/02/2020 14:46 by the 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.