Lecture 7: Fiduciaries: Introduction to recovery
What is a fiduciary?
“someone… (acting) for another… in circumstances which give rise to a relationship of trust
and confidence… the distinguishing obligation of fiduciary is loyalty”- Bristol v Mothew 1996
It is a relationship based on trust and loyalty.
Bristol and West Building Society v Mothew 1996
Facts: the defendants were a firm of solicitors who were acting for both the lender and the
borrower in a mortgage transaction. They failed to disclose to the lender that borrower
already had a first mortgage over the relevant property and hence the lenders made a loan
believing they were the first mortgagees. On default of the mortgage payments by the
borrowers the lenders suffered heavy losses and brought an action for breach of fiduciary
duty in order to claim much better remedies above.
Held:
The court of Appeal held that the failure to disclose the existence of the first mortgagee was
not a breach of the duty of trust, loyalty and confidence- it was merely common law
negligence and hence the lenders had to rely only on common law damages.
Breitenfeld UK Ltd v Harrison and others 2015
Facts: The court considered orders to be made on allegation that a company chairman had
entered into contracts benefitting family members, as to the chairman and as to the family
members.
Saltri v MD Mezzanaine 2013
FHR European Ventures v Mankarious Supreme Court 2014:
Facts:
The court examined the principles of tracing and determined that where a fiduciary had
paid trust money into one account and its own money into another account held at the
same bank, the funds could not be said to have been mixed. In such circumstances, the
principles of tracing established in Hallett's Estate, Re (1880) 13 Ch. D. 696 rather than
those established in Oatway, Re [1903] 2 Ch. 356 applied.
What is a fiduciary?
“someone… (acting) for another… in circumstances which give rise to a relationship of trust
and confidence… the distinguishing obligation of fiduciary is loyalty”- Bristol v Mothew 1996
It is a relationship based on trust and loyalty.
Bristol and West Building Society v Mothew 1996
Facts: the defendants were a firm of solicitors who were acting for both the lender and the
borrower in a mortgage transaction. They failed to disclose to the lender that borrower
already had a first mortgage over the relevant property and hence the lenders made a loan
believing they were the first mortgagees. On default of the mortgage payments by the
borrowers the lenders suffered heavy losses and brought an action for breach of fiduciary
duty in order to claim much better remedies above.
Held:
The court of Appeal held that the failure to disclose the existence of the first mortgagee was
not a breach of the duty of trust, loyalty and confidence- it was merely common law
negligence and hence the lenders had to rely only on common law damages.
Breitenfeld UK Ltd v Harrison and others 2015
Facts: The court considered orders to be made on allegation that a company chairman had
entered into contracts benefitting family members, as to the chairman and as to the family
members.
Saltri v MD Mezzanaine 2013
FHR European Ventures v Mankarious Supreme Court 2014:
Facts:
The court examined the principles of tracing and determined that where a fiduciary had
paid trust money into one account and its own money into another account held at the
same bank, the funds could not be said to have been mixed. In such circumstances, the
principles of tracing established in Hallett's Estate, Re (1880) 13 Ch. D. 696 rather than
those established in Oatway, Re [1903] 2 Ch. 356 applied.
