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. <>>> 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. 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. Such persons will, however, be entitled to payment on a liberal scale for their work and skill. endobj Tom Boardman was a solicitor for a family trust. Rix LJ in Foster v Bryant4 was similarly equivocal to Arden LJ about the inflexibility of the test in Boardman v Phipps. Throughout this phase Proprietary relief in Boardman v Phipps 6 [1967] 2 AC 46 (HL) 73. The claim for repayment cannot, however, be allowed to extend further than the justice of the case demands. 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. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. His daughter, Mrs Newman, was one of the trustees. However the court exercised its inherent jurisdiction to make a monetary award to S for his services to improving the value of the trust. 2 0 obj They realised together that they could turn the company around. View your signed in personal account and access account management features. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. 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. 399, 400 (PC). It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide, This PDF is available to Subscribers Only. Boardman and Phipps would have to account for their profits, despite the fact they had best intentions and made the Lexter & Harris a profit. . law since Boardman v Phipps. 4 0 obj Boardman was a solicitor to trustees of a will trust. xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ Penn v Lord Baltimore (1750) Paul Mitchell . 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. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trust's shares. However, they would be able to retain a generous remuneration for the services he performed. The trustees were informed of these intentions. 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. 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. P0Y|',Em#tvx(7&B%@m*k 7 Boardman v. Phipps [1967] 2 A.C. 46, 124 per Lord Upjohn. 1 0 obj endobj The beneficiary principle in the 21st century, Subscription prices and ordering for this journal, Purchasing options for books and journals across Oxford Academic, Receive exclusive offers and updates from Oxford Academic. Citation and Court [1967] 2 AC 46. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB CASE BRIEF TEMPLATE. 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. The Cambridge Law Journal publishes articles on all aspects of law. Request Permissions, Editorial Committee of the Cambridge Law Journal. On this, Lord Denning MR said (at 1021). ", The phrase "possibly may conflict" requires consideration. The Trustee (T) refused to let them invest on behalf of the trust. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. Name of Case. 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. BOARDMAN and Another v. PHIPPS Viscount Dilhorne Lord Cohen Lord Hodson Lord Guest Lord Upjohn. 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. 39^40. 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. Case summary last updated at 24/02/2020 14:46 by the Current issues of the journal are available at http://www.journals.cambridge.org/clj. Material Facts Boardman was the solicitor for a family trust. Judgement for the case Boardman v Phipps 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. 1 0 obj 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. For full access to this pdf, sign in to an existing account, or purchase an annual subscription. 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. 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. 2010-2023 Oxbridge Notes. 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. BOARDMAN v PHIPPS. The trustees were prevented from purchasing any further shares as they were not authorised investments under the terms of . But then John Phipps, another beneficiary, sued for their profits, alleging a conflict of interest. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB Cambridge University Press is committed by its charter to disseminate knowledge as widely as possible across the globe. In April 1997, Mrs Newman and her husband granted a lease of 1 Vicarage . 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. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. 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.
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