GENERAL PQ NOTES
- Argue from both sides and explain why one side is more correct
- Argue by analogy by drawing factual similarities to previous cases
- Structure is very important: use headings and subheadings
- Remember to have an introduction setting out the issues, and conclusion as to which
claim(s) are likely to succeed
- Always use the facts!
- “Ben tells his children, Charles and Daisy, that he will give them £500,000 cash and
shares worth £1 million to be split equally between them” → do not immediately
assume that Ben was trying to establish an express trust
o Think about whether he was just trying to make an outright gift of legal title
,Fiduciary Duties & Relationships
PQ Framework
1. Is there a fiduciary duty?
a. Does it fall into a settled category?
b. Otherwise, can we establish an ad-hoc fiduciary relationship?
2. What is the fiduciary duty?
a. What is the primary duty? (advice client)
b. What is the fiduciary duty? (avoid conflict of interest)
3. Is the fiduciary duty breached?
a. Note that not every breach by the fiduciary breaches the fiduciary duty
b. No conflict rule
c. No profit rule
4. Is there informed consent as a defence?
5. Remedies
Is there a fiduciary duty?
Settled Categories
Trustee to Beneficiary: Keech v Sandford
Agent to Principal: FHR European Ventures v Cedar Capital Partners (negotiation of
share purchase price)
Directors to Company: Regal (Hastings) v Gulliver
Solicitor to Client: Boardman v Phipps; Bristol & West Building Society v Mothew
Partners (to each other): Chan v Zacharia; Don King Productions v Warren
Company Promoter to Company: Lydney Iron Ore v Bird; Gluckstein v Barnes
Crown Servant to Crown: Attorney General (Hong Kong) v Reid
Executor/Administrator to Beneficiary of Deceased’s Estate: Re Diplock
Note: supposed fiduciaries may act in a self-interested manner where the trust terms permit
(Space Investments v Canadian Imperial Bank of Commerce Trust Co (Bahamas)).
Ad-Hoc Fiduciary Relationships
,The relationship between [F] and [P] does not fall within a settled category of fiduciary
relationships. A fiduciary is someone who has “undertaken to act for or on behalf of another
in a particular matter in circumstances which give rise to a relationship of trust and
confidence” (Bristol & West Building Society v Mothew). On the facts, [explain that there is
an undertaking – usually in a contract between F & P]. This creates a relationship of trust
and confidence between [fiduciary] and [principal].
If in doubt, consider:
Per Grimaldi v Chameleon Mining, a fiduciary relationship may arise when the intended
fiduciary has undertaken to act for the intended principal that it would be reasonable for
the intended principal to expect that the fiduciary will act exclusively in the principal’s best
interests. Although this definition was given by the Federal Court of Australia and was
criticised by Worthington for being circular, it is relevant as it has been approved by Lady
Arden in Children’s Investment Fund Foundation (UK) v Attorney-General as being
“consistent with the duty of single-minded loyalty”.
The mere fact that [fiduciary] has a legal power is insufficient to establish a fiduciary
relationship (Downsview Nominees v First City Corp). [mortgagee had a power of sale over
the mortgagor’s property, which the mortgagee holds on the mortgagor’s behalf and can
exercise in a self-interested way]
(commercial relationships) Courts are unlikely to find fiduciary duties in purely commercial
dealings since “a degree of self-seeking and ruthless behaviour is expected and accepted”
when commercial parties negotiate deals at arms-length (Vercoe v Rutland Fund
Management). The fact that one party trusts the other to “conduct itself in a commercially
appropriate manner” does not give rise to a fiduciary relationship (JP Morgan Chase Bank v
Springwell Navigation Corp).
Examples of ad-hoc fiduciary relationships
Nottingham University v Fishel
- Fiduciary duty owed by an employee to its employer
- Typically, the employer-employee relationship is not a fiduciary relationship unless
there are specific contractual provisions
, - However, under Fishel’s contract, he needed to obtain permission to conduct
outside work, which he did not
- The relationship of trust and confidence between employees and employers do not
necessarily mean a fiduciary relationship
Murad v Al-Saraj
- Joint venture
Ross River v Waveley Commercial
- Joint venture
- Fiduciary duty owed by Barnett (owner of Waveley) to Ross River
- Ross River had placed "a very high degree of trust” in Barnett and Harvey to “run
the JV for the benefit of all parties"
- Normally, the director of a company wouldn’t owe a duty to the third party with
whom his company is dealing
- Court of Appeal said the trust was not decisive, but the JV structure put Barnett in
control of the development and he was paid a management fee → fiduciary duty
was appropriate in these circumstances
Lonrho plc v Fayed (No 2)
- Constructive trustees may not always be fiduciaries
Reading v Attorney General
- Army sergeant owed a fiduciary duty to the Crown which he breached when he
took bribes to escort smugglers’ lorries through police checks with the aid of his
military uniform
Boardman v Phipps
- A solicitor took it on himself to negotiate on behalf of trustees and beneficiaries for
the purchase of company shares → owed them a fiduciary duty as a “self-
appointed agent” which he breached when he bought some of the shares for
himself
Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd
- Broker owed a fiduciary duty in adopting a role of intermediary and in representing
to the client that the terms offered by a third party were “competitive”
- Argue from both sides and explain why one side is more correct
- Argue by analogy by drawing factual similarities to previous cases
- Structure is very important: use headings and subheadings
- Remember to have an introduction setting out the issues, and conclusion as to which
claim(s) are likely to succeed
- Always use the facts!
- “Ben tells his children, Charles and Daisy, that he will give them £500,000 cash and
shares worth £1 million to be split equally between them” → do not immediately
assume that Ben was trying to establish an express trust
o Think about whether he was just trying to make an outright gift of legal title
,Fiduciary Duties & Relationships
PQ Framework
1. Is there a fiduciary duty?
a. Does it fall into a settled category?
b. Otherwise, can we establish an ad-hoc fiduciary relationship?
2. What is the fiduciary duty?
a. What is the primary duty? (advice client)
b. What is the fiduciary duty? (avoid conflict of interest)
3. Is the fiduciary duty breached?
a. Note that not every breach by the fiduciary breaches the fiduciary duty
b. No conflict rule
c. No profit rule
4. Is there informed consent as a defence?
5. Remedies
Is there a fiduciary duty?
Settled Categories
Trustee to Beneficiary: Keech v Sandford
Agent to Principal: FHR European Ventures v Cedar Capital Partners (negotiation of
share purchase price)
Directors to Company: Regal (Hastings) v Gulliver
Solicitor to Client: Boardman v Phipps; Bristol & West Building Society v Mothew
Partners (to each other): Chan v Zacharia; Don King Productions v Warren
Company Promoter to Company: Lydney Iron Ore v Bird; Gluckstein v Barnes
Crown Servant to Crown: Attorney General (Hong Kong) v Reid
Executor/Administrator to Beneficiary of Deceased’s Estate: Re Diplock
Note: supposed fiduciaries may act in a self-interested manner where the trust terms permit
(Space Investments v Canadian Imperial Bank of Commerce Trust Co (Bahamas)).
Ad-Hoc Fiduciary Relationships
,The relationship between [F] and [P] does not fall within a settled category of fiduciary
relationships. A fiduciary is someone who has “undertaken to act for or on behalf of another
in a particular matter in circumstances which give rise to a relationship of trust and
confidence” (Bristol & West Building Society v Mothew). On the facts, [explain that there is
an undertaking – usually in a contract between F & P]. This creates a relationship of trust
and confidence between [fiduciary] and [principal].
If in doubt, consider:
Per Grimaldi v Chameleon Mining, a fiduciary relationship may arise when the intended
fiduciary has undertaken to act for the intended principal that it would be reasonable for
the intended principal to expect that the fiduciary will act exclusively in the principal’s best
interests. Although this definition was given by the Federal Court of Australia and was
criticised by Worthington for being circular, it is relevant as it has been approved by Lady
Arden in Children’s Investment Fund Foundation (UK) v Attorney-General as being
“consistent with the duty of single-minded loyalty”.
The mere fact that [fiduciary] has a legal power is insufficient to establish a fiduciary
relationship (Downsview Nominees v First City Corp). [mortgagee had a power of sale over
the mortgagor’s property, which the mortgagee holds on the mortgagor’s behalf and can
exercise in a self-interested way]
(commercial relationships) Courts are unlikely to find fiduciary duties in purely commercial
dealings since “a degree of self-seeking and ruthless behaviour is expected and accepted”
when commercial parties negotiate deals at arms-length (Vercoe v Rutland Fund
Management). The fact that one party trusts the other to “conduct itself in a commercially
appropriate manner” does not give rise to a fiduciary relationship (JP Morgan Chase Bank v
Springwell Navigation Corp).
Examples of ad-hoc fiduciary relationships
Nottingham University v Fishel
- Fiduciary duty owed by an employee to its employer
- Typically, the employer-employee relationship is not a fiduciary relationship unless
there are specific contractual provisions
, - However, under Fishel’s contract, he needed to obtain permission to conduct
outside work, which he did not
- The relationship of trust and confidence between employees and employers do not
necessarily mean a fiduciary relationship
Murad v Al-Saraj
- Joint venture
Ross River v Waveley Commercial
- Joint venture
- Fiduciary duty owed by Barnett (owner of Waveley) to Ross River
- Ross River had placed "a very high degree of trust” in Barnett and Harvey to “run
the JV for the benefit of all parties"
- Normally, the director of a company wouldn’t owe a duty to the third party with
whom his company is dealing
- Court of Appeal said the trust was not decisive, but the JV structure put Barnett in
control of the development and he was paid a management fee → fiduciary duty
was appropriate in these circumstances
Lonrho plc v Fayed (No 2)
- Constructive trustees may not always be fiduciaries
Reading v Attorney General
- Army sergeant owed a fiduciary duty to the Crown which he breached when he
took bribes to escort smugglers’ lorries through police checks with the aid of his
military uniform
Boardman v Phipps
- A solicitor took it on himself to negotiate on behalf of trustees and beneficiaries for
the purchase of company shares → owed them a fiduciary duty as a “self-
appointed agent” which he breached when he bought some of the shares for
himself
Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd
- Broker owed a fiduciary duty in adopting a role of intermediary and in representing
to the client that the terms offered by a third party were “competitive”
