1. Be prepared to discuss the advantages of bringing a personal claim for equitable
compensation and the advantages of bringing a proprietary claim to obtain a constructive
trust over specific property.
Personal liability-
There is the remedial process that starts with the duty to account. The beneficiaries can
always ask for an account, but ultimately the court has discretion whether to order an
account, i.e. compel the trustees to hand over the accounts to the beneficiaries or provide
full explanations as to their dealing with the trust fund. The consequences of the account
may be that a breach of trust is identified.
Falsification- Common account (no wrongdoing alleged) seeking equitable compensation for
wrongful payments out of the trust fund. Something has been taken out of the account that
is not approved of and compensation is seeked. Though highly debated, the beneficiaries
cannot seek compensation for losses that would have occurred had the trustee properly
carried out their duties AIB Group (UK) Plc v Mark Redler & Co Solicitors (2014).
Surcharge- common account (no wrongdoing alleged) – compensation for gainst the trustee
made but did not credit the trust. By paying equitable compensation the trustees can put the
trust fund to where it should be, had they performed their duties properly. Porving such
losses can be difficult on the facts – Daniel v Tee (2016) (Spearmans judgment) and more
generally Nestle v National Westminster Bank plc (1993).
Wilful default (Wrongdoing is proven) – compensation for losses caused by trustees not
obtaining property they should have, e..g through investing the trust fund.
Personal claim-
Account of profit for unorganised gains.
If successful, you can recover a large amount of money.
Useful if unauthorised gains are purely financial.
Holds individual to account – punished for breaching and will not benefit at all.
Proprietary claim-
more beneficial as it allows C to assert a claim with priority.
Allows for tracing- safer.
Allows you to capture uplifting.
2. Consider Boardman v Phipps [1967] 2 AC 46. What are the facts of the case? What is the
importance of ‘informed consent’? What was the actual outcome? (Surprisingly, the
judgment does not clearly explain the outcome: read Andrew Hicks, ‘Proprietary relief and
the order in Boardman v Phipps’ [2013] Conv 232-241).
A fiduciary agent has to account for any profits acquired by reason of 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 principle 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 of 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
compensation and the advantages of bringing a proprietary claim to obtain a constructive
trust over specific property.
Personal liability-
There is the remedial process that starts with the duty to account. The beneficiaries can
always ask for an account, but ultimately the court has discretion whether to order an
account, i.e. compel the trustees to hand over the accounts to the beneficiaries or provide
full explanations as to their dealing with the trust fund. The consequences of the account
may be that a breach of trust is identified.
Falsification- Common account (no wrongdoing alleged) seeking equitable compensation for
wrongful payments out of the trust fund. Something has been taken out of the account that
is not approved of and compensation is seeked. Though highly debated, the beneficiaries
cannot seek compensation for losses that would have occurred had the trustee properly
carried out their duties AIB Group (UK) Plc v Mark Redler & Co Solicitors (2014).
Surcharge- common account (no wrongdoing alleged) – compensation for gainst the trustee
made but did not credit the trust. By paying equitable compensation the trustees can put the
trust fund to where it should be, had they performed their duties properly. Porving such
losses can be difficult on the facts – Daniel v Tee (2016) (Spearmans judgment) and more
generally Nestle v National Westminster Bank plc (1993).
Wilful default (Wrongdoing is proven) – compensation for losses caused by trustees not
obtaining property they should have, e..g through investing the trust fund.
Personal claim-
Account of profit for unorganised gains.
If successful, you can recover a large amount of money.
Useful if unauthorised gains are purely financial.
Holds individual to account – punished for breaching and will not benefit at all.
Proprietary claim-
more beneficial as it allows C to assert a claim with priority.
Allows for tracing- safer.
Allows you to capture uplifting.
2. Consider Boardman v Phipps [1967] 2 AC 46. What are the facts of the case? What is the
importance of ‘informed consent’? What was the actual outcome? (Surprisingly, the
judgment does not clearly explain the outcome: read Andrew Hicks, ‘Proprietary relief and
the order in Boardman v Phipps’ [2013] Conv 232-241).
A fiduciary agent has to account for any profits acquired by reason of 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 principle 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 of 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
