House of Lords. Boardman had concerns about the state of Lexter & Harris' accounts and thought that, in order to protect the trust, a majority shareholding was required. 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. students are currently browsing our notes. O(Grx+Q_[%Dm%|(Dy m%Cn(Dy(o%~(Jg(Q[tJD|(R(GIAK(xRph1%Z'-Y!bO-FDY b<9hHJO-F?!b<98HO-F!b-f b. 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. Following successful sign in, you will be returned to Oxford Academic. law since Boardman v Phipps. 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. Boardman was a solicitor to trustees of a will trust. The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. in Aberdeen Railway v. Blaikie, 136 where he said: "And it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect. P0Y|',Em#tvx(7&B%@m*k 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. S;70[`J)LQ,ecX_LK,*q3>~ B=eA* 4 0 obj endobj Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. 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 trusts shares. xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ 2011 Editorial Committee of the Cambridge Law Journal This is a Premium document. . The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. If your institution is not listed or you cannot sign in to your institutions website, please contact your librarian or administrator. Become Premium to read the whole document. They owed fiduciary duties (to avoid any possibility of a conflict of interest) because they were negotiating over use of the trust's shares. Therefore, Boardman was speculating with trust property and should be liable. <>/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>> law since Boardman v Phipps. 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. However, the circumstances were quite different to those in Boardman v Phipps. able to bring it back to profit, and the trust fund benefited. Maguire v Makaronis 1997 infers that anyone under a fiduciary obligation must foreshow righteousness of their transactions. I think there should be a generous remuneration allowed to the agents. Enter your library card number to sign in. Boardman v Phipps (1967) was a classic illustration of the principles set out in Lord Russell's statement. The company made a distribution of capital without reducing the values of the shares. % 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. The trust property included a substantial shareholding in a private company. Ought Boardman and Tom Phipps to be allowed remuneration for their work and skill in these negotiations? The Trustee (T) refused to let them invest on behalf of the trust. Priority of trustees indemnity inter se: pari passu or first in time priority? 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. Constructive trusts, unjust enrichment, tracing 2010 Cases, Written by Oxford & Cambridge prize-winning graduates, Includes copious academic commentary in summary form, Concise structure relating cases and statutes into an easy-to-remember whole. They bought a majority stake. CASE BRIEF TEMPLATE. T he appellant B was a solicitor who acted as an advisor to the trustees. Some societies use Oxford Academic personal accounts to provide access to their members. BOARDMAN and Another v. PHIPPS Viscount Dilhorne Lord Cohen Lord Hodson Lord Guest Lord Upjohn. Boardman v Phipps (1967) was an example of the application of strict liability. stream 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 Oxbridge Notes in-house law team. endobj However, they were generously remunerated for their services to the trust. Boardman v Phipps [1967] 2 AC 46, [1966] 3 WL R 1009, [1966] 3 All ER 721. endobj The trust assets include a 27% holding in a textile company called Lexter & Harris. They wanted to invest and improve the company. "And it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect. will. John Phipps and another beneficiary, sued for their profits, alleging a conflict of interest by Boardman and Phipps. But when, as in this case, the agents acted openly and above board, but mistakenly, then it would be only just that they should be allowed remuneration. For faster navigation, this Iframe is preloading the Wikiwand page for Boardman v Phipps . The gist of it is that the defendant has unjustly enriched himself, and it is against conscience that he should be allowed to keep the money. Flower; Graeme Henderson). 2010-2023 Oxbridge Notes. In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. criticism, see L.S. 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 trust assets include a 27% holding in a textile company called Lexter & Harris. Pettitt v Pettitt (1970) and Gissing v Gissing (1971) John Mee; 22. 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.". 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. [1] The trust assets include a 27% holding in a company (a textile company with factories in Coventry, Nuneaton and in Australia through a subsidiary). Boardman and Tom Phipps, one of the beneficiaries under the trust, were unhappy with the state of the . Viscount Dilhorne. The proceedings. In the present case, as the purchase of the shares was entirely out of the question, Regal Hastings was said to be inapplicable. 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. &Thb;ynxP\ -|tLo9sRx[8-a5& 'vd `f@). my lords. 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. 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. You do not currently have access to this article. Click the account icon in the top right to: Oxford Academic is home to a wide variety of products. Facts: Boardman was solicitor of family trust, which included a 27% holding in a textile company. Annetts v McCann (1990) 170 CLR 596. If you believe you should have access to that content, please contact your librarian. The institutional subscription may not cover the content that you are trying to access. privacy policy. %PDF-1.5 He attended the annual general meeting of Lester &amp; Harris Ltd, a company in which the trust had a substantial shareholding. Penn v Lord Baltimore (1750) Paul Mitchell . BOARDMAN v 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. Boardman was concerned about the accounts of the company, and thought that to protect the trust a majority shareholding is required. Cambridge University Press is committed by its charter to disseminate knowledge as widely as possible across the globe. The trustees were informed of these intentions. Name of Case. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB 3 0 obj Don't already have a personal account? This article explores . When on the society site, please use the credentials provided by that society. The Appellant Phipps was Chairman of this company and Mr. Boardman was one of its directors. Boardman, the He (and a beneficiary) purchased shares in a company in which the trust already had a substantial holding. 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. It publishes over 2,500 books a year for distribution in more than 200 countries. Unit 11. Request Permissions, Editorial Committee of the Cambridge Law Journal. 31334. 1 0 obj Case summary last updated at 24/02/2020 14:46 by the He also obtained detailed trading accounts of the English and Australian arms of the business. 399, 400 (PC). P0Y|',Em#tvx(7&B%@m*k endobj 'Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to the exact circumstances of each case. The strict liability of fiduciaries has been the subject of criticism on the grounds that principal shareholder group, Boardman obtained information about the factories of Lester & Harris in Coventry and Nuneaton and its property in Australia. Published by Oxford University Press. T he respondent, JP, was a son of the testator and a beneficiary under the . Boardman had concerns about the state of Lexter & Harris accounts and thought that, in order to protect the trust, a majority shareholding was required. Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. Coke v Fountaine (1676) Mike Macnair; 3. 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. "It is perhaps stated most highly against trustees or directors in the celebrated speech of Lord Cranworth L.C. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB 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 Material Facts Boardman was the solicitor for a family trust. 25% off till end of Feb! Sealy, Commercial Law and Commercial Reality (London 1984), pp. &Thb;ynxP\ -|tLo9sRx[8-a5& 'vd `f@). Current issues of the journal are available at http://www.journals.cambridge.org/clj. The trustees were prevented from purchasing any further shares as they were not authorised investments under the terms of . It depends on the circumstances. Shibboleth / Open Athens technology is used to provide single sign-on between your institutions website and Oxford Academic. (Keech v Sandford 1726) - landlord would not grant new lease to beneficiary so trustee took in his own name. This decision was followed and applied in Boardman v Phipps. Boardman v Phipps. 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. F5aE}*?fxl1oA+;{ S>"~qOf~AcW|g[ VFaxb'o Tns34}#rPDB The House of Lords maintained the strict rule that historically equity has imposed on a fiduciary. Is it a conflict? 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. National Provincial Bank Ltd v Ainsworth (1965) Alison Dunn; 20. <> Rix LJ in Foster v Bryant4 was similarly equivocal to Arden LJ about the inflexibility of the test in Boardman v 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. Boardman and Phipps would have to account for their profits, despite the fact they had best intentions and made the Lexter & Harris a profit. . <>>> 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. HL (majority 3-2) held that S and B would hold their acquired shares as constructive trustees for the beneficiaries. But they did not obtain the fully informed consent of all the beneficiaries. They realised together that they could turn the company around. Oxbridge Notes is operated by Kinsella Digital Services UG. His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. %PDF-1.5 His 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. <> 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. 2 0 obj Paragon Finance plc v DB Thakerar & Co (a . The articles and case notes are designed to have the widest appeal to those interested in the law - whether as practitioners, students, teachers, judges or administrators - and to provide an opportunity for them to keep abreast of new ideas and the progress of legal reform. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. S+QMS^ kUeH|8H4W,G*3R]wHgMY&,*Hu`IcFWB They were therefore liable for the profits earned. A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions. But then John Phipps, another beneficiary, sued for their profits, alleging a conflict of interest. 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 . All rights reserved. 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. For more information, visit http://journals.cambridge.org. 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. Boardman v Phipps is a leading authority on the no-conflict rule. This item is part of a JSTOR Collection. ", The phrase "possibly may conflict" requires consideration. 1 0 obj endobj In this Equity Short, John Picton analyses Boardman v Phipps [1966] UKHL 2. If the agent has been guilty of any dishonesty or bad faith, or surreptitious dealing, he might not be allowed any remuneration or reward. ), Rang & Dale's Pharmacology (Humphrey P. Rang; James M. Ritter; Rod J. Tom Boardman was a solicitor for a family trust. Part II describes the rationales for adopting each of the approaches to awarding allowances to dishonest fiduciaries. The Trustee (T) refused to let them invest on behalf of the trust. our website you agree to our privacy policy and terms. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide, This PDF is available to Subscribers Only. His daughter, Mrs Newman, was one of the trustees. xksgD2u$N+xH)%"dU &c~m_WMnny|t80^olIv"+E] mv}f"gv UY Fe_go_eu6[xGLBdUS-?b\4?s=}GO0upAQ![*`E"~ He and a beneficiary, Tom Phipps, went to a shareholders' general meeting of the company. The majority disagreed about the nature and relevance of information used by Boardman and Phipps. When on the institution site, please use the credentials provided by your institution. By his Will dated the 23rd December, 1943, Mr. C. W. Phipps left an annuity to his widow and subject thereto 5/18ths of his estate to each of his sons and 3 /18ths to his daughter, Mrs. Noble. This article is also available for rental through DeepDyve. 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. The Cambridge Law Journal Boardman v Phipps (1967) Michael Bryan; 21. 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. Lord Denning MR, Russell LJ and Pearson LJ upheld Wilberforce J's decision and held that Boardman and Phipps had breached his duty of loyalty, which arose as they had become self-appointed agents representing the trust, by putting themselves in a conflict of interest. <>>> Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, co-appellant was another son of the testator, described as constructive trustees by virtue of a fiduciary relationship to the, B decided along with one of the trustees that the company was not doing well. His lordship, with respect . With the knowledge of the trustees, Boardman and Phipps decided to purchase the shares themselves. A breach of a fiduciary duty is of strict liability, regardless of their intention Boardman v Phipps 1967 1. The trust benefited by this distribution 47,000, while Boardman and Phipps made 75,000. % 3 0 obj . 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. Phipps v Boardman: HL 3 Nov 1966 A trustee has a duty to exploit any available opportunity for the trust. 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. 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. Applicant VEAL of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 437. 2 0 obj They suggested to Mr Fox, a trustee, that it would be desirable to acquire a majority shareholding, but Fox disagreed. Another beneficiary (P) claimed conflict of interest and demanded her share of the profit, because of S fiduciary role. However, to do this he needed a majority shareholding in the company. 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. 2.I or your money backCheck out our premium contract notes! Boardman v Phipps [1967] 2 AC 46. Oxbridge Notes uses cookies for login, tax evidence, digital piracy prevention, business intelligence, and advertising purposes, as explained in our His Lordship distinguished Regal (Hastings) v Gulliver by restricting Regal Hastings to circumstances concerned with property of which the principals were contemplating a purchase. <> His liability to account depends on the facts. Boardman v Phipps is a leading authority on the no-conflict rule. 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. If you see Sign in through society site in the sign in pane within a journal: If you do not have a society account or have forgotten your username or password, please contact your society. By capitalizing some of the assets, the company made a distribution of capital without reducing the values of the shares. 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. It was irrelevant that S had acted in an open and honest (and profitable!) Register, Oxford University Press is a department of the University of Oxford. Special emphasis is placed on contemporary developments, but the journal's range includes jurisprudence and legal history. WI[y*UBNJ5U,`5B1F :IK6dtdj::yj stream 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 . 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. This has fuelled a more general debate as to whether the no-conflict rule should be harsh or more flexible. His statement has . 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. No positive wrongdoing is proved or alleged against the appellants but they cannot escape from the consequences of their acts involving liability to the respondent unless they can prove consent.: p. 112A, I have no hesitation in coming to the conclusion that the appellants hold the Lester & Harris shares as constructive trustees and are bound to account to the respondentIn the present case the knowledge and information obtained by Boardman was obtained in the course of the fiduciary position in which he had placed himself. Such persons will, however, be entitled to payment on a liberal scale for their work and skill. 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? This is a famous case in which John Phipps successfully claimed that, flowing fro. 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. what makes wiglaf a worthy successor to beowulf, concordia parish coroners office,