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Fiduciary Duties - Breach of Fiduciary Duty - The No-Conflict Rule

Q: Application of No Conflict Rule

self-dealing rule (governs situations where the trustee wishes to purchase the trust property) fair dealing rule (governs situations where the trustee wishes to purchase the beneficiaries beneficiary's interest)

6 important questions on Fiduciary Duties - Breach of Fiduciary Duty - The No-Conflict Rule

Aberdeen Railway Company v Blaikie Bros (1854), Lord Cranworth

No one having [fiduciary] duties to discharge, shall be allowed to enter into engagements in which he has a personal interest conflicting, or which may possibly conflict, with the interests of those whom he is bound to protect.

Situation: Where A Fiduciary Acts for Two or More Principals

A fiduciary should not put himself in a position where his duty to one principal conflicts with his duty to another principal, unless both principals give their fully informed consent to such a conflict. Breach of the no-conflict duty may thus arise even where there is no personal interest which conflicts because the fiduciary was in that position already.

Application of No Conflict Rule

self-dealing rule (governs situations where the trustee wishes to purchase the trust property)
fair dealing rule (governs situations where the trustee wishes to purchase the beneficiaries beneficiary's interest)

Tito v Waddell (No.2)

Megarry VC recognised both of the rules.

Thomson v Eatswood

So, if a trustee purchases a beneficiary's interest in the trust property, the transaction can be set aside by the beneficiary unless the trustee can establish the fairness of the transaction

Coles v Trecothick

Although a purchase from the beneficiary can be valid, it remains a hazardous transaction because the negotiations and the final agreement must be completely above board and reasonable, with no hint of fraud, concealment, or advantage of the principal taken by the fiduciary.

The question on the page originate from the summary of the following study material:

The Principles of Equity and Trusts | 9780199570041 | Graham Virgo

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Topics that are related to Fiduciary Duties - Breach of Fiduciary Duty - The No-Conflict Rule

Fiduciary Duties - Breach of Fiduciary Duty - The No-Conflict Rule

6 important questions on Fiduciary Duties - Breach of Fiduciary Duty - The No-Conflict Rule

Aberdeen Railway Company v Blaikie Bros (1854), Lord Cranworth