The company made a distribution of capital without reducing the values of the shares. The Trustee (T) refused to let them invest on behalf of the trust. National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. <> 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. They bought a majority stake. Boardman and Tom Phipps had breached their duties to avoid a conflict of interest. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide, This PDF is available to Subscribers Only. Coke v Fountaine (1676) Mike Macnair; 3. Viscount Dilhorne. &Thb;ynxP\ -|tLo9sRx[8-a5& 'vd `f@). 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. The trust assets include a 27% holding in a textile company called Lexter & Harris. They wanted to invest and improve the company. 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. View your signed in personal account and access account management features. In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. The Cambridge Law Journal publishes articles on all aspects of law. The trustees were prevented from purchasing any further shares as they were not authorised investments under the terms of . Boardman had concerns about the state of Lexter & Harris accounts and thought that, in order to protect the trust, a majority shareholding was required. For more information, visit http://journals.cambridge.org. 25% off till end of Feb! 1 0 obj Grey v Grey (1677) Jamie Glister; 4. Tom Boardman was a solicitor for a family trust. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trust's shares. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* 4 0 obj To purchase short-term access, please sign in to your personal account above. Boardman and another trustee, Fox, therefore . S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB <> Boardman v Phipps (1967) Michael Bryan; 21. Mr Tom Boardman was the solicitor of a family trust. stream F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB 39^40. Boardman was a solicitor to trustees of a will trust. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trusts shares. Therefore the agent must account to the trust for any profit made out of the position. Become Premium to read the whole document. They realised together that they could turn the company around. principal shareholder group, Boardman obtained information about the factories of Lester & Harris in Coventry and Nuneaton and its property in Australia. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. Study with Quizlet and memorize flashcards containing terms like Intro, Intro for fiduciaries, Boardman v Phipps (1967) and more. 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. 4 0 obj Boardman v Phipps. 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. . BOARDMAN and Another v. PHIPPS Viscount Dilhorne Lord Cohen Lord Hodson Lord Guest Lord Upjohn. Pettitt v Pettitt (1970) and Gissing v Gissing (1971) John Mee; 22. . xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ Each issue also contains an extensive section of book reviews. House of Lords. 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. 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. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* Case summary last updated at 24/02/2020 14:46 by the endobj 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. Boardman v Phipps [1967] 2 AC 46, [1966] 3 WL R 1009, [1966] 3 All ER 721. Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. Boardman appealed against a finding that he was a constructive trustee for, or agent did not necessarily render him accountable for profit from its use, yet in, the present case, as both the information which satisfied B and P, purchase of the shares would be a good investment and the opportunity to bid, came as a result of B acting on behalf of the trustees B and P, trustees of five eighteenths of the shares in the company for the respondent and, were liable to account to him for the profit thereon accordingly, Human Rights Law Directions (Howard Davis), Tort Law Directions (Vera Bermingham; Carol Brennan), Marketing Metrics (Phillip E. Pfeifer; David J. Reibstein; Paul W. Farris; Neil T. Bendle), Public law (Mark Elliot and Robert Thomas), Commercial Law (Eric Baskind; Greg Osborne; Lee Roach), Introductory Econometrics for Finance (Chris Brooks), Criminal Law (Robert Wilson; Peter Wolstenholme Young), Principles of Anatomy and Physiology (Gerard J. Tortora; Bryan H. Derrickson), Electric Machinery Fundamentals (Chapman Stephen J. <>>> This has fuelled a more general debate as to whether the no-conflict rule should be harsh or more flexible. CASE BRIEF TEMPLATE. Boardman and Phipps would have to account for their profits, despite the fact they had best intentions and made the Lexter & Harris a profit. 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. The trust property included a substantial shareholding in a private company. 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. 7 Boardman v. Phipps [1967] 2 A.C. 46, 124 per Lord Upjohn. trust. 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. The trust assets include a 27% holding in a textile company called Lexter & Harris. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. Boardman and Tom Phipps, one of the beneficiaries under the trust, were unhappy with the state of the . 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. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. Current issues of the journal are available at http://www.journals.cambridge.org/clj. 1 0 obj All rights reserved. <>>> The Trustee (T) refused to let them invest on behalf of the trust. It publishes over 2,500 books a year for distribution in more than 200 countries. This item is part of a JSTOR Collection. Facts: Boardman was solicitor of family trust, which included a 27% holding in a textile company. students are currently browsing our notes. Therefore, Boardman was speculating with trust property and should be liable. P0Y|',Em#tvx(7&B%@m*k Oxbridge Notes is operated by Kinsella Digital Services UG. A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions. Mr Boardman (the trust's solicitor) investigated the affairs of the company, initially on behalf of the trust, and gained useful information. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. 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 . <> John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. See below. With the knowledge of the trustees, Boardman and Phipps decided to purchase the shares themselves. However they were generously remunerated for their services to the trust. Phipps v Boardman: HL 3 Nov 1966 A trustee has a duty to exploit any available opportunity for the trust. T he respondent, JP, was a son of the testator and a beneficiary under the . 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. criticism, see L.S. 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 . Abstract. They wanted to invest and improve the company. But they did not obtain the fully informed consent of all the beneficiaries. "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. The institutional subscription may not cover the content that you are trying to access. 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. 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. 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? endobj <>/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>> 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. In April 1997, Mrs Newman and her husband granted a lease of 1 Vicarage . 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. Boardman v Phipps is a leading authority on the no-conflict rule. 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. Request Permissions, Editorial Committee of the Cambridge Law Journal. You do not currently have access to this article. If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward. Click the account icon in the top right to: Oxford Academic is home to a wide variety of products. Cambridge University Press is committed by its charter to disseminate knowledge as widely as possible across the globe. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase.
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