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General principle:

Unless the principle has informed consent, a fiduciary agent must account for any profit made as a result of his fiduciary position and the opportunity or knowledge it provides.


Boardman v Phipps [1967] 2 AC 46


Since they were serving as solicitors for the trustees of a will trust, the defendants, Boardman and another individual, were considered to be fiduciaries rather than trustees in this case. The trustees were minority owners in a private firm that was being run inefficiently, and the management was causing the company to lose money. To reorganise the firm for the benefit of the trust holding, Boardman and one of the beneficiaries under the trust both made the acquisition of a majority stake in the company using their own personal funds, which they did so in good faith. As a result of the reorganisation, the value of the personal assets as well as the trust holdings grew. As a consequence of this, one of the other beneficiaries demanded an accounting of the personal gains gained by the defendants.


Wilberforce J. decided in the High Court that the defendants were obliged to account for the profit, minus the money spent on realising that profit; but, while doing so, he made a generous allowance for the amount of labour that was put in to realise that profit. The defendants first filed appeals with the Court of Appeal, but those appeals were ultimately denied. The defendants then filed appeals with the House of Lords.


House of Lords determined that the appellants had violated their fiduciary obligation by acting in a certain manner and that they were required to transfer earnings to the trust. 3:2 split. The members of the majority believed there was a conflict. It was opined that since Boardman had purchased shares, he would be unable to provide impartial advice to trust if they asked for it. There were some further applicable cost-benefit analyses with a more solid foundation. Claims that the appellants had earned earned a profit from their position as fiduciaries and the information they obtained in that capacity. Boardman has also previously portrayed himself as operating in the capacity of a trust representative. In doing so, he committed a breach of trust by using the information and opportunity for his personal advantage. Upjohn had a different opinion; he said that there was no conflict of interest since the trust had no intention of purchasing the shares.

Boardman v Phipps


The general rule states that an agent may not use their position to make a profit, unless they have fully informed the principal and the principal agrees. The case of Boardman v Phipps involved trustees of an estate (the agent) obtaining information about share prices of company. They did not obtain the “informed consent” of the principal, but in acting honestly and without concealment bought shares with their own money, and made profit for themselves and the principal. Accordingly, it was held that it is no defence that the agent acted in good faith. In Regal (Hastings) Ltd v Gulliver [1942] , Lord Russell of Killowen said:

"The rule of equity which insists on those who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon questions or considerations as whether the property would or should otherwise have gone to the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff”.

Boardman v Phipps

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