By capitalizing some of the assets, the company made a distribution of capital without reducing the values of the shares. 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. Oxbridge Notes uses cookies for login, tax evidence, digital piracy prevention, business intelligence, and advertising purposes, as explained in our This decision was followed and applied in Boardman v Phipps. His It was irrelevant that S had acted in an open and honest (and profitable!) WI[y*UBNJ5U,`5B1F
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Throughout this phase Proprietary relief in Boardman v Phipps 6 [1967] 2 AC 46 (HL) 73. It publishes over 2,500 books a year for distribution in more than 200 countries. Annetts v McCann (1990) 170 CLR 596. Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. 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. 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. (eg- acting for multiple people) a. Key Points. It depends on the circumstances. ", The phrase "possibly may conflict" requires consideration. National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. 2011 Editorial Committee of the Cambridge Law Journal Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. However, they were generously remunerated for their services to the trust. BOARDMAN v PHIPPS. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB HL (majority 3-2) held that S and B would hold their acquired shares as constructive trustees for the beneficiaries. trust. 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. Ought Boardman and Tom Phipps to be allowed remuneration for their work and skill in these negotiations? 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. Boardman v Phipps is a leading authority on the no-conflict rule. *Lecturer in Law at University of East London, Email: Search for other works by this author on: The Author (2008). 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. 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. [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). 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. Boardman and Phipps would have to account for their profits, despite the fact they had best intentions and made the Lexter & Harris a profit. Oxbridge Notes is operated by Kinsella Digital Services UG. BOARDMAN and Another v. PHIPPS Viscount Dilhorne Lord Cohen Lord Hodson Lord Guest Lord Upjohn. 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. 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. 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. 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 realised together that they could turn the company around. To purchase short-term access, please sign in to your personal account above. law since Boardman v Phipps. Name of Case. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. Tom Boardman was a solicitor for a family trust. You do not currently have access to this article. endobj
The proceedings. 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 They suggested to Mr Fox, a trustee, that it would be desirable to acquire a majority shareholding, but Fox disagreed. Such persons will, however, be entitled to payment on a liberal scale for their work and skill. The trust property included a substantial shareholding in a private company. 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. 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 . <>/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>>
Following successful sign in, you will be returned to Oxford Academic. 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. By using T he appellant B was a solicitor who acted as an advisor to the trustees. House of Lords. The Cambridge Law Journal The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. 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. P0Y|',Em#tvx(7&B%@m*k 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. '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. 2010-2023 Oxbridge Notes. Boardman and Tom Phipps, a beneficiary of the trust, attended a general meeting of the company. 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 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. WI[y*UBNJ5U,`5B1F
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In 1996 Mr Clarke settled 150,000 on trust to benefit various family members including his grandchildren, Brooke and Billy. . Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. On this Wikipedia the language links are at the top of the page across from the article title. Viscount Dilhorne and Lord Upjohn (DISSENTING): A COI only arises and renders a fiduciary liable to account for profits made where a reasonable man, looking at all the relevant circumstances, would conclude that there was a real, sensible possibility of conflict of interest, which was not the case here. 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. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. 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. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more. See below. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. %PDF-1.5
But then John Phipps, another beneficiary, sued for their profits, alleging a conflict of interest. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* <>>>
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. Therefore, Boardman was speculating with trust property and should be liable. Click the account icon in the top right to: Oxford Academic is home to a wide variety of products. Cambridge Journals publishes over 250 peer-reviewed academic journals across a wide range of subject areas, in print and online. ), Rang & Dale's Pharmacology (Humphrey P. Rang; James M. Ritter; Rod J. They were therefore liable for the profits earned. 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. Boardman felt that by asset-stripping the company he could increase the value of the shares. 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. 1 0 obj
principal shareholder group, Boardman obtained information about the factories of Lester & Harris in Coventry and Nuneaton and its property in Australia. Tom Boardman was a solicitor for a family trust. %
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. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trust's shares. Flower; Graeme Henderson). 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. Don't already have a personal account? Boardman and Tom Phipps, one of the beneficiaries under the trust, were unhappy with the state of the . Special emphasis is placed on contemporary developments, but the journal's range includes jurisprudence and legal history. xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv
UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ 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. Material Facts Boardman was the solicitor for a family trust. The Cambridge Law Journal publishes articles on all aspects of law. Lord Cohen (on a point with which Hodson and Cohen agreed): S had placed himself in a position of potential CoI, for example if the trustees asked his advice on the merits of buying more shares in the company. 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. Viscount Dilhorne. 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. With the full knowledge of the trustees, Boardman and Phipps purchased a majority stake of the shares themselves. stream
CASE BRIEF TEMPLATE. In April 1997, Mrs Newman and her husband granted a lease of 1 Vicarage . Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. Study with Quizlet and memorize flashcards containing terms like Intro, Intro for fiduciaries, Boardman v Phipps (1967) and more. Boardman was a solicitor to trustees of a will trust. Applicant VEAL of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 437. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trust's shares. Therefore the agent must account to the trust for any profit made out of the position. Coke v Fountaine (1676) Mike Macnair; 3. The solicitor to a family trust (S) and one Beneficiary (B)-there were several-went to the board meeting of a company in which the trust owned shares. Paragon Finance plc v DB Thakerar & Co (a . Priority of trustees indemnity inter se: pari passu or first in time priority? 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. Pettitt v Pettitt (1970) and Gissing v Gissing (1971) John Mee; 22. endobj
399, 400 (PC). 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 31334. 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. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trusts shares. Choose this option to get remote access when outside your institution. Become Premium to read the whole document. 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 .
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