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. Facts: Boardman was solicitor of family trust, which included a 27% holding in a textile company. Such persons will, however, be entitled to payment on a liberal scale for their work and skill. His liability to account depends on the facts. Boardman v Phipps (1967) Michael Bryan; 21. 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. Throughout this phase Proprietary relief in Boardman v Phipps 6 [1967] 2 AC 46 (HL) 73. He attended the annual general meeting of Lester & Harris Ltd, a company in which the trust had a substantial shareholding. . '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. 4 0 obj A breach of a fiduciary duty is of strict liability, regardless of their intention Boardman v Phipps 1967 1. . Boardman and Phipps did not obtain the fully informed consent of all the beneficiaries. P0Y|',Em#tvx(7&B%@m*k endobj 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 . 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. 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. By capitalizing some of the assets, the company made a distribution of capital without reducing the values of the shares. This article explores . With the knowledge of the trustees, Boardman and Phipps decided to purchase the shares themselves. 3 0 obj For terms and use, please refer to our Terms and Conditions 3 0 obj His statement has . 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. However, they were generously remunerated for their services to the trust. 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. <> 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. Phipps v Boardman: HL 3 Nov 1966 A trustee has a duty to exploit any available opportunity for the trust. Following successful sign in, you will be returned to Oxford Academic. 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. Name of Case. endobj In 1996 Mr Clarke settled 150,000 on trust to benefit various family members including his grandchildren, Brooke and Billy. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. If the defendant has done valuable work in making the profit, then the court in its discretion may allow him a recompense. If you cannot sign in, please contact your librarian. Mr Boardman (the trust's solicitor) investigated the affairs of the company, initially on behalf of the trust, and gained useful information. The Cambridge Law Journal ", The phrase "possibly may conflict" requires consideration. 2010-2023 Oxbridge Notes. Key Points. Oxbridge Notes uses cookies for login, tax evidence, digital piracy prevention, business intelligence, and advertising purposes, as explained in our in. However, the circumstances were quite different to those in Boardman v Phipps. If your institution is not listed or you cannot sign in to your institutions website, please contact your librarian or administrator. Administrative Law. *Lecturer in Law at University of East London, Email: Search for other works by this author on: The Author (2008). 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. They were therefore liable for the profits earned. law since Boardman v Phipps. Do not use an Oxford Academic personal account. endobj endobj 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.". way. our website you agree to our privacy policy and terms. The full text is available here: http://www.bailii.org/uk/cases/UKHL/1966/2.html, -- Download Boardman v Phipps [1967] 2 AC 46 as PDF --, Transvaal Lands Co v New Belgium (Transvaal) Lands & Development CO [1914] 2 Ch 488, http://www.bailii.org/uk/cases/UKHL/1966/2.html, Download Boardman v Phipps [1967] 2 AC 46 as PDF. Show all summaries ( 46 ) 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. 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 . If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more. 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. 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. 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. Boardman v Phipps is a leading authority on the no-conflict rule. The proceedings. 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. (Keech v Sandford 1726) - landlord would not grant new lease to beneficiary so trustee took in his own name. The Cambridge Law Journal publishes articles on all aspects of law. This has fuelled a more general debate as to whether the no-conflict rule should be harsh or more flexible. 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. Citation and Court [1967] 2 AC 46. endobj The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. Boardman v Phipps [1967] 2 AC 46, [1966] 3 WL R 1009, [1966] 3 All ER 721. able to bring it back to profit, and the trust fund benefited. 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. His daughter, Mrs Newman, was one of the trustees. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. Become Premium to read the whole document. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. However, they would be able to retain a generous remuneration for the services he performed. With the full knowledge of the trustees, Boardman and Phipps purchased a majority stake of the shares themselves. % 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. But then John Phipps, another beneficiary, sued for their profits, alleging a conflict of interest. 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. Each issue also contains an extensive section of book reviews. Flower; Graeme Henderson). Annetts v McCann (1990) 170 CLR 596. Therefore S and B invested themselves and the company did very well, improving the value of the shares held by themselves individually and by the trust. Some societies use Oxford Academic personal accounts to provide access to their members. Boardman and Phipps would have to account for their profits, despite the fact they had best intentions and made the Lexter & Harris a profit. Boardman had concerns about the state of Lexter & Harris accounts and thought that, in order to protect the trust, a majority shareholding was required. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. But they did not obtain the fully informed consent of all the beneficiaries. 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. 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. 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. T he appellant B was a solicitor who acted as an advisor to the trustees. Boardman and another trustee, Fox, therefore . Constructive trusts, unjust enrichment, tracing 2010 Cases, Written by Oxford & Cambridge prize-winning graduates, Includes copious academic commentary in summary form, Concise structure relating cases and statutes into an easy-to-remember whole. 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. See below. 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. 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.". They wanted to invest and improve the company. For more information, visit http://journals.cambridge.org. The trust assets include a 27% holding in a textile company called Lexter & Harris. A testator le ft 8000 shares (a minority share holding) of a private company in . Choose this option to get remote access when outside your institution. 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. Boardman v Phipps [1967] 2 AC 46. by Will Chen; 2.I or your money back Check out our premium contract notes! 31334. enough, and that am attempt to take control of the company should be initiated. 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. Cambridge Journals publishes over 250 peer-reviewed academic journals across a wide range of subject areas, in print and online. Mr Tom Boardman was the solicitor of a family trust. Ought Boardman and Tom Phipps to be allowed remuneration for their work and skill in these negotiations? principal shareholder group, Boardman obtained information about the factories of Lester & Harris in Coventry and Nuneaton and its property in Australia. 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 and Another v. PHIPPS Viscount Dilhorne Lord Cohen Lord Hodson Lord Guest Lord Upjohn. 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. If you are a member of an institution with an active account, you may be able to access content in one of the following ways: Typically, access is provided across an institutional network to a range of IP addresses. For librarians and administrators, your personal account also provides access to institutional account management. Applicant VEAL of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 437. However they were generously remunerated for their services to the trust. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. By his Will dated the 23rd December, 1943, Mr. C. W. Phipps left an annuity to his widow and subject thereto 5/18ths of his estate to each of his sons and 3 /18ths to his daughter, Mrs. Noble. When on the society site, please use the credentials provided by that society. The trust assets include a 27% holding in a textile company called Lexter & Harris. 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 & . Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. 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. Boardman and Tom Phipps, a beneficiary of the trust, attended a general meeting of the company. Pettitt v Pettitt (1970) and Gissing v Gissing (1971) John Mee; 22. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB View the institutional accounts that are providing access. 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. 1 0 obj The Appellant Phipps was Chairman of this company and Mr. Boardman was one of its directors. This species of action is an action for restitution such as Lord Wright described in the Fibrosa case. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB 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 . 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. Sealy, Commercial Law and Commercial Reality (London 1984), pp. Don't already have a personal account? 2 0 obj He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. The company made a distribution of capital without reducing the values of the shares. will. In this Equity Short, John Picton analyses Boardman v Phipps [1966] UKHL 2. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, co-appellant was another son of the testator, described as constructive trustees by virtue of a fiduciary relationship to the, B decided along with one of the trustees that the company was not doing well. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. Cambridge University Press is committed by its charter to disseminate knowledge as widely as possible across the globe.
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