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Equity and Trusts Law - Fiduciary Duties.
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- Kings College London (KCL)
Comprehensive notes on Equity and Trusts Law in the UK - Fiduciary Duties.
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Equity and TrustsRevision Notes
BREACH OF FIDUCIARY DUTY (NATURE OF DUTY REMEDIES)
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a) INTRODUCTION
What will we be looking into?
® The nature of the fiduciary duties / nature of the liability of the breach : This is very much
reliant on loyalty and faithfulness.
® Remedies for breach: This will not only look into cases where fiduciaries have behaved
carelessly, in cases where they have drastically overlooked duties (a bad guy). (Next set of
notes)
Who is a fiduciary?
® Not limited to trustees: When we say fiduciaries, we are not only talking about trustees
though they are sort of fiduciary agents. We are broadening out of our focus; we are not
only looking at trusts but rather equitable relationships generally as well as other types of
fiduciary agents and principals.
® Examples:
FIDUCIARY AGENTS FIDUCIARY
PRINCIPALS
Trustee Beneficiary
Solicitor Client
Doctor Patient
Teacher Student
Mortgagee Mortgagor
Holders of an office Crown
of the Crown
Pawnbroker Pawnor
! These are examples of status-based relationships.
Different types of fiduciary relationships
! In English law, the fiduciary relationship has been described as ‘one of the most ill-defined, if
not altogether misleading terms in our law’.
® There are two types of fiduciary relationships:
1) Status based
2) Facts based
! In the exam, a status-based relationship will be given for PQ.
1) Status based
, Equity and Trusts
Revision Notes
LAC Minerals Ltd v International Corona Reserves Ltd (1989) 61 DLR (4th) 14
(Canada): The court, in this case, makes a distinction between fact based and status based
fiduciary relationships. The courts looked into how one would identify a fiduciary relationship;
usually we know of a fiduciary relationship because it is explicitly said. Hence, it listed some
status-based relationships, apart from the trustee - beneficiary relationship as seen below
(they are the English/Welsh version). The list provided is not exhaustive but is inclusive of
important ones.
‘It is … my view of the law that there are certain relationships which are almost per se
fiduciary, such as trustee and beneficiary, guardian and ward, principal and agent, and that
where such relationships subsist they give rise to fiduciary duties. On the other hand, there
are relationships which are not in essence fiduciary, such as the relationship brought into
being by the parties in the present case by virtue of their arm’s length negotiations towards a
joint venture agreement, but this does not preclude a fiduciary duty from arising out of
specific conduct engaged in them or either of them within the confines of the relationship.’
Solicitor/client: Nocton v Lord Ashburton [1914] AC 932
Employee/employer: AG v Blake [1998] Ch. 439
! In such cases, the employee will be the fiduciary agent and the employer will be the
principal.
Director/company: Furs (Ltd) v Tomkies (1936) 54 CLR 583
! Be careful here, it is not between the relationship between the director and the
shareholders. It is a relationship between a director and his/her company (as a legal person).
Hence, the company is the principal and the director is the agent.
Further, this is also one type of relationship in the commercial context and the rules change
for different relationships.
Members of a rock band: Badfinger Music v Evans [2002] EMLR. 2
! The members of a rock band are principal agents to one another.
2) Facts based
An important question to ask here is which facts the courts are particularly looking out
for.
Bristol and West Building Society v. Mothew [1998] Ch 1: LJ Millett is a very
influential person in this field. He gave the following description:
“fiduciary is someone who has undertaken to act for or on behalf of another in a particular
matter in circumstances that give rise to a relationship of trust and confidence. The
distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to
the single - minded loyalty of his fiduciary…”
EXPLANATION: It is a relationship of trust and confidence. For example, look at the solicitor
client relationship. The client is in an immensely vulnerable relationship. The solicitor, on the
other hand, has a lot more knowledge in the area, and his/her work cannot be checked by the
client. The client is susceptible to the information provided, putting them in a very vulnerable
position.
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