Published by Oxford University Press. 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. Oxbridge Notes in-house law team. See below. Tom Boardman was a solicitor for a family trust. Flower; Graeme Henderson). Boardman and Phipps would have to account for their profits, despite the fact they had best intentions and made the Lexter & Harris a profit. 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. Do not use an Oxford Academic personal account. <>/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>> 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.". 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 . However they were generously remunerated for their services to the trust. For librarians and administrators, your personal account also provides access to institutional account management. 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 House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. 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 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. ", The phrase "possibly may conflict" requires consideration. Click the account icon in the top right to: Oxford Academic is home to a wide variety of products. Boardman felt that by asset-stripping the company he could increase the value of the shares. Boardman v Phipps is a leading authority on the no-conflict rule. The institutional subscription may not cover the content that you are trying to access. trust. law since Boardman v Phipps. Select your institution from the list provided, which will take you to your institution's website to sign in. The company made a distribution of capital without reducing the values of the shares. endobj fiduciary he was accountable to the beneficiaries for any profit he had made. This article explores . Oxbridge Notes is operated by Kinsella Digital Services UG. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. By capitalizing some of the assets, the company made a distribution of capital without reducing the values of the shares. 7 Boardman v. Phipps [1967] 2 A.C. 46, 124 per Lord Upjohn. "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. 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.". I think there should be a generous remuneration allowed to the agents. <>/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>> Boardman v Phipps [1967] 2 AC 46. But then John Phipps, another beneficiary, sued for their profits, alleging a conflict of interest. &Thb;ynxP\ -|tLo9sRx[8-a5& 'vd `f@). Boardman and Tom Phipps, one of the beneficiaries under the trust, were unhappy with the state of the . When on the institution site, please use the credentials provided by your institution. If you cannot sign in, please contact your librarian. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. . 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. . 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 had concerns about the state of Lexter & Harris' accounts and thought that, in order to protect the trust, a majority shareholding was required. my lords. 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. He (and a beneficiary) purchased shares in a company in which the trust already had a substantial holding. 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? T he appellant B was a solicitor who acted as an advisor to the trustees. Abstract. &Thb;ynxP\ -|tLo9sRx[8-a5& 'vd `f@). The Trustee (T) refused to let them invest on behalf of the trust. Name of Case. 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. 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. The trustees were informed of these intentions. In April 1997, Mrs Newman and her husband granted a lease of 1 Vicarage . <> Citation and Court [1967] 2 AC 46. Study with Quizlet and memorize flashcards containing terms like Intro, Intro for fiduciaries, Boardman v Phipps (1967) and more. If the defendant has done valuable work in making the profit, then the court in its discretion may allow him a recompense. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. 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. 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. in. 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. Rix LJ in Foster v Bryant4 was similarly equivocal to Arden LJ about the inflexibility of the test in Boardman v Phipps. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB Therefore, Boardman was speculating with trust property and should be liable. Boardman v Phipps. Grey v Grey (1677) Jamie Glister; 4. 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 v Phipps (1967) was an example of the application of strict liability. BOARDMAN v PHIPPS. His But they did not obtain the fully informed consent of all the beneficiaries. They realised together that they could turn the company around. All rights reserved. Boardman was a solicitor to trustees of a will trust. 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. principal shareholder group, Boardman obtained information about the factories of Lester & Harris in Coventry and Nuneaton and its property in Australia. House of Lords. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB 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. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trust's shares. Maguire v Makaronis 1997 infers that anyone under a fiduciary obligation must foreshow righteousness of their transactions. To purchase short-term access, please sign in to your personal account above. 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. For more information, visit http://journals.cambridge.org. The trust assets include a 27% holding in a textile company called Lexter & Harris. 39^40. When on the society site, please use the credentials provided by that society. His liability to account depends on the facts. Each issue also contains an extensive section of book reviews. 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. endobj Sealy, Commercial Law and Commercial Reality (London 1984), pp. The proposition of law involved in this case is that no person standing in a fiduciary position, when a demand is made upon him by the person to whom he stands in the fiduciary relationship to account for profits acquired by him by reason of his fiduciary position and by reason of the opportunity and the knowledge, or either, resulting from it, is entitled to defeat the claim upon any ground save that he made profits with the knowledge and assent of the other person.: The appellants obtained knowledge by reason of their fiduciary position and they cannot escape liability by saying that they were acting for themselves and not as agents of the trustees. Cambridge Journals publishes over 250 peer-reviewed academic journals across a wide range of subject areas, in print and online. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* 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. Annetts v McCann (1990) 170 CLR 596. 4 0 obj They realised together that they could turn the company around. On this, Lord Denning MR said (at 1021). T he respondent, JP, was a son of the testator and a beneficiary under the . <>>> 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. The trustees were prevented from purchasing any further shares as they were not authorised investments under the terms of . HL (majority 3-2) held that S and B would hold their acquired shares as constructive trustees for the beneficiaries. <> 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. 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. our website you agree to our privacy policy and terms. Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. endobj students are currently browsing our notes. 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. 2011 Editorial Committee of the Cambridge Law Journal It was irrelevant that S had acted in an open and honest (and profitable!) <> Unit 11. 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. 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. Show all summaries ( 46 ) 1 0 obj Lords Cohen, Guest and Hodson held that there was a possibility of a conflict of interest because the beneficiaries might have come to Boardman for advice as to the purchases of the shares. 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. This is a famous case in which John Phipps successfully claimed that, flowing fro. If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward. P0Y|',Em#tvx(7&B%@m*k 2.I or your money backCheck out our premium contract notes! Boardman and Phipps did not obtain the fully informed consent of all the beneficiaries. They bought a majority stake. Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. His daughter, Mrs Newman, was one of the trustees. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. By using They suggested to Mr Fox, a trustee, that it would be desirable to acquire a majority shareholding, but Fox disagreed. Throughout this phase Proprietary relief in Boardman v Phipps 6 [1967] 2 AC 46 (HL) 73. You do not currently have access to this article. Penn v Lord Baltimore (1750) Paul Mitchell . privacy policy. WI[y*UBNJ5U,`5B1F :IK6dtdj::yj Administrative Law. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. 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 . Do not use an Oxford Academic personal account. It publishes over 2,500 books a year for distribution in more than 200 countries. 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 depends on the circumstances. 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 was speculating with trust property and should be liable. overrule Boardman v Phipps.3 It should be noted that the majority in Boardman v Phipps were all-too-aware that they were imposing a constructive trust on a person who had acted in good faith. 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. The Cambridge Law Journal publishes articles on all aspects of law. Whether or not the trust or the beneficiaries in their stead could have taken advantage of the information is immaterial: p. 111A, The question whether or not there was a fiduciary relationship at the relevant time must be a question of law and the question of conflict of interest directly emerges from the facts pleaded, otherwise no question of entitlement to a profit would fall to be considered. Don't already have a personal account? View your signed in personal account and access account management features. 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. 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. 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 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. . In this Equity Short, John Picton analyses Boardman v Phipps [1966] UKHL 2. 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. 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. Applicant VEAL of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 437. 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 Tom Phipps had breached their duties to avoid a conflict of interest. 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. However, the circumstances were quite different to those in Boardman v Phipps. <> Material Facts Boardman was the solicitor for a family trust. Viscount Dilhorne. 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 & . Boardman had concerns about the state of Lexter & Harris accounts and thought that, in order to protect the trust, a majority shareholding was required. 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. Boardman and another trustee, Fox, therefore . will. For full access to this pdf, sign in to an existing account, or purchase an annual subscription. 25% off till end of Feb! 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. They were therefore liable for the profits earned. Such persons will, however, be entitled to payment on a liberal scale for their work and skill. Coke v Fountaine (1676) Mike Macnair; 3. They wanted to invest and improve the company. His statement has . The claim for repayment cannot, however, be allowed to extend further than the justice of the case demands. WI[y*UBNJ5U,`5B1F :IK6dtdj::yj Mr Tom Boardman was the solicitor of a family trust. Pettitt v Pettitt (1970) and Gissing v Gissing (1971) John Mee; 22. On this Wikipedia the language links are at the top of the page across from the article title. The proceedings. 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 believe you should have access to that content, please contact your librarian. The trust property included a substantial shareholding in a private company. With the knowledge of the trustees, Boardman and Phipps decided to purchase the shares themselves. However, they would be able to retain a generous remuneration for the services he performed. 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. Some societies use Oxford Academic personal accounts to provide access to their members. Phipps v Boardman: HL 3 Nov 1966 A trustee has a duty to exploit any available opportunity for the trust. Boardman v Phipps (1967) Michael Bryan; 21. %PDF-1.5 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. 1 0 obj criticism, see L.S. ", The phrase "possibly may conflict" requires consideration. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB 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.". stream A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions. Read more about this topic: Boardman V Phipps, Judgment, A severe though not unfriendly critic of our institutions said that the cure for admiring the House of Lords was to go and look at it.Walter Bagehot (18261877), The welcome house of him my dearest guest.Where ever, ever stay, and go not thence,Till natures sad decree shall call thee hence;Flesh of thy flesh, bone of thy bone,I here, thou there, yet both but one.Anne Bradstreet (c. 16121672), You see how this House of Commons has begun to verify all the ill prophecies that were made of itlow, vulgar, meddling with everything, assuming universal competency, and flattering every base passionand sneering at everything noble refined and truly national. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. 3 0 obj In 1996 Mr Clarke settled 150,000 on trust to benefit various family members including his grandchildren, Brooke and Billy. 399, 400 (PC). 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. View the institutional accounts that are providing access. Boardman v Phipps [1967] 2 AC 46. by Will Chen; 2.I or your money back Check out our premium contract notes! Become Premium to read the whole document. Mr Boardman (the trust's solicitor) investigated the affairs of the company, initially on behalf of the trust, and gained useful information. However, to do this he needed a majority shareholding in the company. able to bring it back to profit, and the trust fund benefited. They wanted to invest and improve the company. Current issues of the journal are available at http://www.journals.cambridge.org/clj. 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. He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. This decision was followed and applied in Boardman v Phipps. Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. Some societies use Oxford Academic personal accounts to provide access to their members. Boardman v Phipps is a leading authority on the no-conflict rule. xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ <>>> This species of action is an action for restitution such as Lord Wright described in the Fibrosa case. However, they were generously remunerated for their services to the trust. law since Boardman v Phipps. endobj Paragon Finance plc v DB Thakerar & Co (a . Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. BOARDMAN and Another v. PHIPPS Viscount Dilhorne Lord Cohen Lord Hodson Lord Guest Lord Upjohn. 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.