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. Boardman v Phipps (1967) was a classic illustration of the principles set out in Lord Russell's statement. However, they were generously remunerated for their services to the trust. He attended the annual general meeting of Lester &amp; Harris Ltd, a company in which the trust had a substantial shareholding. Choose this option to get remote access when outside your institution. <>>> But then John Phipps, another beneficiary, sued for their profits, alleging a conflict of interest. The trust property included a substantial shareholding in a private company. 2 0 obj 39^40. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. law since Boardman v Phipps. 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. 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. Grey v Grey (1677) Jamie Glister; 4. Applicant VEAL of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 437. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. 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. privacy policy. 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. Boardman v Phipps. If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward. For full access to this pdf, sign in to an existing account, or purchase an annual subscription. National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. % In 1996 Mr Clarke settled 150,000 on trust to benefit various family members including his grandchildren, Brooke and Billy. See below. students are currently browsing our notes. 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. 2011 Editorial Committee of the Cambridge Law Journal 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.". <>>> Don't already have a personal account? Boardman v Phipps (1967) was an example of the application of strict liability. Boardman, the The trust assets include a 27% holding in a textile company called Lexter & Harris. 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. View the institutional accounts that are providing access. stream 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 residuary estate included 8000 shares in J.ester & Harris Ltd., an underperforming private company with issued share capital of 3l),000 1 ordinary shares. Boardman v Phipps is a leading authority on the no-conflict rule. 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. endobj 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. 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. Enter your library card number to sign in. If the defendant has done valuable work in making the profit, then the court in its discretion may allow him a recompense. 1 0 obj With the knowledge of the trustees, Boardman and Phipps decided to purchase the shares themselves. It depends on the circumstances. Oxbridge Notes is operated by Kinsella Digital Services UG. Show all summaries ( 46 ) 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. 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. The company made a distribution of capital without reducing the values of the shares. By capitalizing some of the assets, the company made a distribution of capital without reducing the values of the shares. Maguire v Makaronis 1997 infers that anyone under a fiduciary obligation must foreshow righteousness of their transactions. 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. 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. ", The phrase "possibly may conflict" requires consideration. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. 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. Boardman and Tom Phipps, a beneficiary of the trust, attended a general meeting of the company. BOARDMAN v PHIPPS. He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. If your institution is not listed or you cannot sign in to your institutions website, please contact your librarian or administrator. The trust assets include a 27% holding in a textile company called Lexter & Harris. For librarians and administrators, your personal account also provides access to institutional account management. endobj %PDF-1.5 Some societies use Oxford Academic personal accounts to provide access to their members. Unit 11. 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 The Cambridge Law Journal way. 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. He (and a beneficiary) purchased shares in a company in which the trust already had a substantial holding. [1] The trust assets include a 27% holding in a company (a textile company with factories in Coventry, Nuneaton and in Australia through a subsidiary). CASE BRIEF TEMPLATE. It was irrelevant that S had acted in an open and honest (and profitable!) 399, 400 (PC). Many of these journals are the leading academic publications in their fields and together they form one of the most valuable and comprehensive bodies of research available today. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more. 25% off till end of Feb! <> You do not currently have access to this article. The strict liability of fiduciaries has been the subject of criticism on the grounds that Boardman v Phipps (1967) Michael Bryan; 21. 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 With the full knowledge of the trustees, Boardman and Phipps purchased a majority stake of the shares themselves. Boardman was speculating with trust property and should be liable. 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 . 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 concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. This decision was followed and applied in Boardman v Phipps. However they were generously remunerated for their services to the trust. P0Y|',Em#tvx(7&B%@m*k However the court exercised its inherent jurisdiction to make a monetary award to S for his services to improving the value of the trust. 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. 7 Boardman v. Phipps [1967] 2 A.C. 46, 124 per Lord Upjohn. Each issue also contains an extensive section of book reviews. Boardman was a solicitor to trustees of a will trust. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. 2010-2023 Oxbridge Notes. 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. 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.". 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. 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. P0Y|',Em#tvx(7&B%@m*k Penn v Lord Baltimore (1750) Paul Mitchell . endobj Current issues of the journal are available at http://www.journals.cambridge.org/clj. Rix LJ in Foster v Bryant4 was similarly equivocal to Arden LJ about the inflexibility of the test in Boardman v Phipps. The Cambridge Law Journal publishes articles on all aspects of law. 1 0 obj The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. 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.". The trustees were prevented from purchasing any further shares as they were not authorised investments under the terms of . The majority disagreed about the nature and relevance of information used by Boardman and Phipps. Special emphasis is placed on contemporary developments, but the journal's range includes jurisprudence and legal history. Boardman v Phipps answers this question: in the affirmative. 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. law since Boardman v Phipps. Boardman and another trustee, Fox, therefore .