Fiduciary duties and breach of fiduciary duties

Abstract

Key points a fiduciary is someone who has agreed to act on behalf of another and owes particular duties; fiduciary duties include loyalty, good faith, not to profit from his position; a fiduciary relationship is automatically imposed in some relationships such as trustee–beneficiary, solicitor–client and director–board of directors; these relationships are fiduciary per se; some relationships are not automatically fiduciary but may become fiduciary in certain circumstances; examples of when a relationship may become fiduciary include where two people enter a joint venture or where an employee receives confidential information from his employer; fiduciary duties are applied strictly and it does not make any difference whether the fiduciary acted in good faith; the remedy for breach of fiduciary duties is restitution by the fiduciary which could take effect as a personal or proprietary remedy; under a personal remedy a trustee must account for any unauthorised profits to the trust; a fiduciary may hold unauthorised profits on constructive trust for his/her principal which would take effect as a proprietary remedy; and in limited circumstances a fiduciary may retain profits received through his/her position but generally only where permission has been granted by the principal or beneficiaries or from the court or the trust instrument. The nature of a fiduciary relationship The fiduciary relationship is notoriously difficult to define. Fiduciary duties arise in a number of relationships and include core duties of good faith, loyalty and trust and a duty on behalf of the fiduciary not to put himself into a position where his personal interests conflict with his duties to his principal. Fiduciary duties are applied strictly and the court does not consider whether the fiduciary was acting in good faith when considering whether there has been a breach.