¹ Sealy, L.S., “Fiduciary Obligations, Forty Years On” (1995) 5 Journal of Contract Law 37Google Scholar, note 8.

² Gower, L.C.B., The Principles of Modern Company Law (London 1954)Google Scholar.

³ Regal (Hastings) Ltd. v Gulliver [1967] 2 A.C. 134 (H.L.). It was reported, but in [1942] 1 All E.R. 378.

⁴ Boardman v Phipps [1967] 2 A.C. 46 (H.L.).

⁵ Similarly, the leading work of Commonwealth courts lay decades ahead: see especially Hospital Products Ltd. v United States Surgical Corporation [1984] HCA 64, (1984) 156 C.L.R. 41; Chan v Zacharia [1984] HCA 36, (1984) 154 C.L.R. 178; and LAC Minerals Ltd. v International Corona Resources Ltd. [1989] 2 SCR 574 (SCtCanada).

⁶ I declare my biases: I am a member of the Sealy fan club, an ex-student, and have been fascinated by fiduciaries since I encountered them as an undergraduate.

⁷ L.S. Sealy, “Fiduciary Relationships” [1962] C.L.J. 69; L.S. Sealy, “Some Principles of Fiduciary Obligation” [1963] C.L.J. 119; L.S. Sealy, “The Director as Trustee” [1967] C.L.J. 83.

⁸ Bristol and West Building Society v Mothew [1998] Ch. 1 (C.A.), 18.

⁹ Sealy also noted the unhelpful circularity of defining the expressions “fiduciary”, “trust” and “confidence” in terms of each other: Sealy, “Fiduciary Relationships”, note 14.

¹⁰ Al Nehayan v Kent [2018] EWHC 333 (Comm), [2018] 1 C.L.C. 216, at [159] (Q.B.). Also see Lehtimäki v Cooper [2020] UKSC 33, [2003] 3 W.L.R. 461, at [44]–[46] (Lady Arden), considered in more detail later. In the Australian context, see Hospital Products Ltd. v United States Surgical Corporation [1984] HCA 64, 96–97 (Mason J.).

¹¹ This usage is now too firmly embedded to change, although Sealy maintained a distinction between fiduciaries and trustees, seeing fiduciaries, defined precisely, as individuals who were not trustees, although their roles were similar in certain important respects: Sealy, “Fiduciary Relationships”, 72. We are unlikely to ignore differences in the two roles when considering property, but the usual prescriptive duties imposed on trustees will not necessarily be replicated in individual fiduciary relationships.

¹² English v Dedham Vale Properties Ltd. [1978] 1 W.L.R. 93, 110 (Slade J.).

¹³ His starting point was Nocton v Lord Ashburton [1914] A.C. 932 (H.L.). The next extended study was I.E. Davidson, “The Equitable Remedy of Compensation” (1982) 13 Melbourne University Law Review 349.

¹⁴ As are losses in contract and tort – i.e. the relevant question is what position would the claimant have been in if the contract had been performed or the tort not committed?

¹⁵ Sealy, “Fiduciary Relationships”, 69–70.

¹⁶ (1879) 11 Ch.D. 772, 778. Although this decision was disapproved of in Re Hallett's Estate (1880) 13 Ch.D. 696 (C.A.), the cited passage was expressly approved by Jessel M.R. at 713.

¹⁷ Sealy, “Fiduciary Relationships”, 73.

¹⁸ Ibid. To similar effect see the subsequent much-cited observations of P.D. Finn, Fiduciary Obligations (Sydney 1977), 2; now republished: Fiduciary Obligations: 40th Anniversary Republication with Additional Essays (Sydney 2016).

¹⁹ Sealy, “Fiduciary Relationships”, 74ff.

²⁰ Ibid., at note 23. Whether a thief has this power to control is worth further thought. We often assume a positive answer, but the thief cannot transfer legal or beneficial title to any transferee, only possession, and not the best right to possession. The position is typically different for status-based fiduciaries, given the estoppel-basis of our agency rules.

²¹ Ibid. Finn is of the same view, also without elaboration: P. Finn, “Fiduciary Reflections” (2014) 88 A.L.J. 127, 133, note 59. Also see Westdeutsche Landesbank Girozentrale v Islington LBC [1996] A.C. 669, 715–16 (H.L.) (Lord Browne-Wilkinson), although not spelling out the intended ramifications.

²² Now see Proceeds of Crime Act 2002. To the contrary, Foskett v McKeown [2001] 1 A.C. 102 (H.L.) holds that the tracing rules are inherent rules of property. For counter-arguments to the approach in Foskett, see S. Worthington, “Justifying Claims to Secondary Profits” in E.J.H. Schrage (ed.), Unjust Enrichment and the Law of Contract (The Hague 2001), 451.

²³ Reading v R [1949] K.B. 232, 236.

²⁴ E.g. we see the tightening of the legal analysis now applied in the context of employee/employer relationships. Employees are not now regarded as status-based fiduciaries, despite earlier use of “fiduciary” language in that context. Instead, although their relationship may be described as one of mutual “trust and confidence”, both employees and employers are seen as subject not to fiduciary selflessness, but rather to special obligations of good faith and fair dealing: see Johnson v Unisys Ltd. [2003] 1 A.C. 518, at [24] (Lord Steyn); and Eastwood v Magnox Electric plc. [2005] 1 A.C. 503, at [11] (Lord Nicholls); see too Ranson v Customer Systems [2012] EWCA Civ 841. This does not mean that employees cannot be fiduciaries if the facts support that conclusion: see the cogent analysis of Elias J. in University of Nottingham v Fishel [2001] RPC 22 (Q.B.), at [87]–[98], especially [92]–[93]. There appears to be no reason why this re-analysis would not cover Crown servants as employees. If so, the exclusion of such employees from the category of status-based fiduciaries may have pleased Sealy: see his critical comments in Sealy, “Fiduciary Obligations, Forty Years On”, 50, on the outcomes in a trio of Crown servant cases, including A-G for Hong Kong v Reid [1994] 1 A.C. 324 (P.C.). His complaint was that an “ordinary employee” surely would not have been visited with the same consequences as these employees.

²⁵ Sealy, “Fiduciary Relationships”, 76, note 7. See e.g. Rossetti Marketing Ltd. v Diamond Sofa Company Ltd. [2012] EWCA Civ 1021, [2013] Bus.L.R. 543, at [20]–[27] (C.A.).

²⁶ Now see FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, [2015] A.C. 250, at [5].

²⁷ Keech v Sandford (1726) 25 E.R. 223.

²⁸ See Sealy, “Fiduciary Obligations, Forty Years On”, 45. More generally, consider how often we label legal principles by a case name when the principles themselves are difficult to explain.

²⁹ Relations where undue influence is rebuttably presumed include parent and child, guardian and ward, religious, medical and other advisers and those who consult them, and solicitor and client. We might legitimately broaden this category to include those cases where the flaws in the principal's proper consent to a transaction are not induced by potential undue influence in the relationship, but by potential unfair use of information obtained in a confidential advisory relationship. These are the “fair-dealing” cases, which should be distinguished in both ambit and applicable legal rules from the fiduciary “self-dealing” rules. See Tito v Waddell (No 2) [1977] Ch. 106, 241 (Megarry V.C.). For a discussion of the fair-dealing and self-dealing rules, see S. Worthington, “Fiduciaries: Following Finn” in T. Bonyhady (ed.), Finn's Law: An Australian Justice (Sydney 2016), 51–53; but contrast M. Conaglen, “A Re-appraisal of the Fiduciary Self-dealing and Fair-dealing Rules” [2006] C.L.J. 366.

³⁰ Using the term as we would now define it: i.e. an unauthorised use of information that is confidential and has been received in circumstances importing an obligation of confidence. Duties of confidence are commonly found to be owed by bankers, doctors and solicitors, as well as by trustees, company directors, partners and agents.

³¹ To the contrary, see Finn, “Fiduciary Reflections”, amplified below in note 43.

³² Space prohibits discussion, but Sealy advised a clear focus on the purpose being served by disclosure, and decried the idea there might be a duty to disclose: Sealy, “Some Principles of Fiduciary Obligation”, 125–35; Sealy, “Fiduciary Obligations, Forty Years On”, 51–52. Similarly critical of a prescriptive approach, see P.D. Finn, “The Fiduciary Principle” in T.G. Youdan (ed.), Equity, Fiduciaries and Trusts (Toronto 1989), especially 10, 16–24; P. Birks, “The Content of Fiduciary Obligation” (2000) 34 Israel Law Review 3, note 48; R.C. Nolan and M. Conaglen, “Good Faith: What Does It Mean for Fiduciaries, and What Does It Tell Us about Them?” in M. Harding and E. Bant (eds.), Exploring Private Law (Cambridge 2010), 325–27; R. Derrington, “Commentary on Professor Lionel D Smith's Paper, ‘Prescriptive Fiduciary Duties’” (2018) 37 University of Queensland Law Journal 289; A. Black, “Fiduciary Duties in a Commercial Context: Comparing English and Australian Approaches” [2020] L.M.C.L.Q. 401; P.L. Davies, S. Worthington and C. Hare, Gower's Principles of Modern Company Law, 11th ed. (London 2021), paras. [10-033]–[10-034]. But contrast the very different analysis in L.D. Smith, “Prescriptive Fiduciary Duties” (2018) 37 University of Queensland Law Journal 261. Even in the much cited Item Software (UK) Ltd. v Fassihi [2004] EWCA Civ 1244, [2004] B.C.C. 994, Arden L.J. did not regard the duty to disclose as a self-standing prescriptive duty. See too her comments, now as Lady Arden, in a quite different but nevertheless informative context in Halliburton Co. v Chubb Bermuda Insurance Ltd. [2020] UKSC 48, [2020] 3 W.L.R. 1474, at [160]. Also see Etherton J. in Shepherds Investments Ltd. v Walters [2006] EWHC 836 (Ch), [2007] 2 B.C.L.C. 202, at [132].

³³ Re Coomber [1911] 1 Ch. 723, 728.

³⁴ Many modern cases support this. See e.g. Al Nehayan v Kent [2018] EWHC 333 (Comm), at [163]; Secretariat Consulting Pte Ltd. v A Company [2021] EWCA Civ 6, [2021] 4 W.L.R. 20, at [41] (C.A.).

³⁵ This explains why I suspect Sealy may have preferred the definition of a fiduciary given in Al Nehayan v Kent [2018] EWHC 333 (Comm) (see the text at note 10 above) to the definition so often cited from Mothew (see the text at note 8 above). However, as we shall see, Millett L.J. had more to say on fiduciaries in Mothew, and much of that sits very comfortably with Sealy's analysis.

³⁶ I use “imposition” deliberately. Sealy was clearly of the view that the courts imposed these rules on parties in the given relationships. See too Finn, “The Fiduciary Principle”, 54: “A fiduciary responsibility, ultimately, is an imposed not an accepted one. If one needs an analogy here, one is closer to tort law than to contract; one is concerned with an imposed standard of behaviour. The factors which lead to that imposition doubtless involve recognition of what the alleged fiduciary has agreed to do. But equally public policy considerations can ordain what he must do, whether this be agreed to or not” (emphasis added). The justifications for these rules and their associated remedies have been described in various ways: see e.g. Bray v Ford [1896] A.C. 44, 51 (Lord Herschell); Murad v Al-Saraj [2005] EWCA Civ 959, [2005] W.T.L.R. 1573, at [74] (Arden L.J.); L. Smith, “Fiduciary Relationships: Ensuring the Loyal Exercise of Judgment on Behalf of Another” (2014) 130 L.Q.R. 608, 613–15; I. Samet, Equity: Conscience Goes to Market (Oxford 2019), 148.

³⁷ As Sealy recognised, what we now call the self-dealing rule is wholly concerned with fiduciaries acting on both sides of a sale and purchase in relation to the assets held in a fiduciary capacity. Moreover, it is the practicalities of this conflict which are important, not the identity of the formal parties to the deal. Sometimes the fiduciary will indeed be on both sides (as with a trust with a sole trustee selling trust property to himself), but often the counterparty, technically, is a third-party principal (as with a fiduciary selling to his company). The fact that the principal is the counterparty does not convert the deal into a fair-dealing transaction, nor remove it from the remit of the self-dealing rule. In all its emanations, the self-dealing rule is directed at the moral hazard of a fiduciary being in a position to favour the fiduciary's personal interest (in obtaining the best deal for the fiduciary) over the fiduciary's duty to act selflessly in engagements made for the principal with the principal's property. Contrast the undue influence and fair dealing rules: see note 29 above, and Daly v Sydney Stock Exchange Ltd. (1986) 160 C.L.R. 371 (H.C.A.) (especially the judgment of Brennan J.); and Swindle v Harrison [1997] P.N.L.R. 641 (C.A.). In neither of these cases was the fiduciary acting for the principal, or doing a job for the principal; rather, the solicitor was advising, and, if the solicitor was then to be a counterparty, the relevant (and rather onerous) disclosure rules applied with full force.

³⁸ This work on Categories I and II is further amplified and explained in Sealy, “Some Principles of Fiduciary Obligation’.

³⁹ Although this was less clear when Sealy was first writing: Donoghue v Stevenson [1932] A.C. 562 (H.L.) had been decided, but not Hedley Byrne & Co. Ltd. v Heller & Partners Ltd. [1964] A.C. 465 (H.L.). Nevertheless, see the perceptive discussion of Nocton v Lord Ashburton, in Sealy, “Some Principles of Fiduciary Obligation”, 136–40.

⁴⁰ Notice, however, that some breaches of contract or acts of negligence may also be breaches of fiduciary duty when they deliver unauthorised benefits to the fiduciary himself. See e.g. Foskett v McKeown [2001] 1 A.C. 102 (H.L.) (a breach of contract with the investors as well as a fiduciary taking trust property for his own personal benefit); Daniels v Daniels [1978] Ch. 406 (a negligent sale of company property at a gross undervalue, as well as being a self-serving sale of that property to the fiduciary). There are then alternative claims, and alternative remedies.

⁴¹ See Henderson v Merrett Syndicates Ltd. [1995] 2 A.C. 145, 205–06 (Lord Browne-Wilkinson) on this issue in the context of the duty of care. More generally, see S. Worthington, “Four Questions on Fiduciaries” (2016) 2 Canadian Journal of Comparative and Contemporary Law 723, 743, republished in (2018) 32 Trusts Law International 22.

⁴² Al Nehayan v Kent [2018] EWHC 333 (Comm), at [157]. See too Secretariat Consulting Pte Ltd. v A Company [2021] EWCA Civ 6, at [40].

⁴³ Although contrast Finn's current preference for a return to using fiduciary language as an umbrella term, including not only all the categories considered by Sealy in his early studies, but adding to those all the rules constraining the exercise of powers, whether in public or private law contexts: see Finn, “Fiduciary Reflections”. See too Grimaldi v Chameleon Mining NL (No 2) [2012] F.C.A.F.C. 6, at [174]. However, this did not come with any relaxation or merging of the legal characteristics of each individual class, and Finn maintained his early commitments to the strictly prescriptive operation of the conflicts and profits rules in that branch of his extended fiduciary landscape: Finn, “Fiduciary Reflections”, 136. Contrast Finn, “The Fiduciary Principle”, where Finn advocated the word “fiduciary” be used only in the narrow sense. For an outline of this trajectory in Finn's thinking, see Worthington, “Fiduciaries: Following Finn”.

⁴⁴ Bristol and West Building Society v Mothew [1998] Ch. 1, 16, 18 (C.A.) (Millett L.J.). See too Chan v Zacharia (1984) 154 C.L.R. 178. The following commentators also adopt a restricted use of the term “fiduciary” (including Finn in earlier times): Finn, “The Fiduciary Principle”, 28; R.P. Austin, “Moulding the Content of Fiduciary Duties” in A.J. Oakley (ed.), Trends in Contemporary Trust Law (Oxford 1996), ch. 7, 156; S. Worthington, “Fiduciaries: When Is Self-denial Obligatory?” [1999] CL.J. 500; Birks, “The Content of Fiduciary Obligation”, 5, and all the cases cited in these commentaries.

⁴⁵ Lehtimäki v Cooper [2020] UKSC 33, at [44]–[46] (Lady Arden). These basic principles do not appear to have been in dispute in the Court, even though the majority and minority differed in their application of these principles to justify their conclusions.

⁴⁶ See too P.J. Millett, “Equity's Place in the Law of Commerce” (1998) 114 L.Q.R. 214, 222, and more generally see 219–21.

⁴⁷ It is possible to be far more precise if the legal labelling is of relevant facts and legal duties, rather than “people” and “relationships”: see Worthington, “Fiduciaries: Following Finn”, 48–49. Similarly, see De Sena v Notaro [2020] EWHC 1031 (Ch), at [191] (HHJ Matthews), suggesting we speak only of “fiduciary obligations”, not “fiduciaries”, to avoid just this slippage.

⁴⁸ Bristol and West Building Society v Mothew [1998] Ch. 1, 18 (C.A.). See too Attorney General v Blake [1998] Ch 439, 454 (C.A.) (Lord Woolf M.R.): “[The most important] category of fiduciary relationship … is the relationship of trust and confidence, which arises whenever one party undertakes to act in the interests of another or places himself in a position where he is obliged to act in the interests of another” (emphasis added).

⁴⁹ Al Nehayan v Kent [2018] EWHC 333 (Comm), at [159]. Again, Leggatt L.J. went on, especially at [165] cited earlier, to emphasise the narrower proscriptive demands.

⁵⁰ Then citing Smith, “Fiduciary Relationships”. However, it is suggested that these cases on advice, such as advice from solicitors, are better treated either as straightforward fiduciary self-interest cases or as cases of negligence, depending on the particular problem needing to be addressed. In the negligence cases, where the solicitor's negligent advice has caused loss to the client, it will be material in any assessment of damages to decide whether the role of the solicitor was merely to provide careful advice on the issue, with the client then deciding for herself which action to pursue, or whether the solicitor was to make the choice for the client: see the analysis in Sealy, “Some Principles of Fiduciary Obligation”, 136–40; see too Bristol and West Building Society v Mothew [1998] Ch. 1 (C.A.); and Swindle v Harrison [1997] P.N.L.R. 641 (C.A.). If the solicitor was to make the choice for the client, then not only would the solicitor need to be careful, but, as a fiduciary, the solicitor would be barred from making choices on behalf of the client that involved conflicted decisions leading to unauthorised gains in the solicitor's hands. These prohibitions do not emerge only when the solicitor has “a substantial degree of power over” the client: the relevant rule is simply the unadorned proscriptive fiduciary rule.

⁵¹ See the paragraphs from these cases cited earlier. See too the extended discussion of proscriptive and prescriptive readings of English and Australian authorities in Black, “Fiduciary Duties in a Commercial Context”.

⁵² Sealy, “Fiduciary Relationships”; Finn, Fiduciary Obligations; Finn, “The Fiduciary Principle”; Worthington, “Fiduciaries: When Is Self-denial Obligatory?”; M. Conaglen, “The Nature and Function of Fiduciary Loyalty” (2005) 121 L.Q.R. 452; M. Conaglen, Fiduciary Loyalty: Protecting the Due Performance of Non-fiduciary Duties (Oxford and Portland 2010), especially ch. 3; Nolan and Conaglen, “Good Faith”; Derrington, “Commentary on Professor Lionel D Smith's Paper”; Black, “Fiduciary Duties in a Commercial Context”; J.E. Penner, “Trustees and Agents Behaving Badly: When and How Is ‘Bad Faith’ Relevant?” in P.B. Miller and M. Harding (eds.), Fiduciaries and Trust: Ethics, Politics, Economics and Law (Cambridge 2020).

⁵³ P.B. Miller and M. Harding, “Introduction” in Miller and Harding (eds.), Fiduciaries and Trust, chs. 1, 2. The detail is in P.B. Miller, “The Fiduciary Relationship” in A.S. Gold and P.B. Miller (eds.), Philosophical Foundations of Fiduciary Law (Oxford 2014), ch. 3 (and more generally on loyalty, with differing approaches, see chs. 5–8 by I. Samet, L. Smith, J. Penner and A.S. Gold, respectively). See too L.D. Smith, “Can We Be Obliged to Be Selfless?” in Gold and Miller (eds.), Philosophical Foundations of Fiduciary Law, 145; Smith, “Fiduciary Relationships”; Smith, “Prescriptive Fiduciary Duties”; L.D. Smith, “Conflict, Profit, Bias, Misuse of Power: Dimensions of Governance” in Miller and Harding (eds.), Fiduciaries and Trust. Perhaps because Smith has put the arguments so persistently and clearly, his work has been subject to the most detailed analysis: see especially Derrington, “Commentary on Professor Lionel D Smith's Paper”; and Black, “Fiduciary Duties in a Commercial Context”.

⁵⁴ Target Holdings Ltd. v Redferns [1996] A.C. 421 (H.L.).

⁵⁵ AIB Group (UK) Plc. v Mark Redler & Co. Solicitors [2014] UKSC 58, [2015] A.C. 150.

⁵⁶ Sealy, “The Director as Trustee”; Finn, “The Fiduciary Principle”, 11–13.

⁵⁷ Braganza v BP Shipping Limited [2015] UKSC 17, [2015] 1 W.L.R. 1661.

⁵⁸ Allen v Gold Reefs of West Africa Ltd. [1900] 1 Ch. 656 (C.A.).

⁵⁹ Assenagon Asset Management SA v Irish Bank Resolution Corp Ltd. (formerly Anglo Irish Bank Corp Ltd.) [2012] EWHC 2090 (Ch), [2013] Bus.L.R. 266; Azevedo v Imcopa Importação, Exportação E Indústria De Olėos Ltda, IMCOPA International SA, IMCOPA International Cayman Ltd. [2013] EWCA Civ 364, [2015] Q.B. 1.

⁶⁰ Cuckmere Brick Co. v Mutual Finance [1971] Ch. 949.

⁶¹ See Vatcher v Paull [1915] A.C. 372, 378 (H.L.) (Lord Parker); and Allen v Gold Reefs of West Africa Ltd. [1900] 1 Ch. 656, 671 (C.A.) (Lord Lindley M.R.). This is becoming increasingly contested territory, especially since the Supreme Court decision in Braganza [2015] UKSC 17 (a case on contractual discretion) and its reliance on public law concepts. But this modern concern is not to expand the fiduciary domain; it is to define the source of the rules that constrain discretions generally: see S. Worthington, “Powers” in W. Day and S. Worthington (eds.), Challenging Private Law: Lord Sumption on the Supreme Court (Oxford and Portland 2020).

⁶² See e.g. Pitt v Holt [2013] UKSC 26, [2013] 2 A.C. 108; Futter v Futter [2013] UKSC 26, [2013] 2 A.C. 108. The issues in these two cases did not involve unauthorised profits, but all the other forms of constraints on the exercise of discretionary powers by fiduciaries. Similarly, see Eclairs Group Ltd. v JKX Oil & Gas plc. [2015] UKSC 71, [2015] Bus.L.R. 1395. The two sources of constraint are similarly distinguished in C. Mitchell, “Good Faith, Self-denial and Mandatory Trustee Duties” (2018) 32 Trust Law International 92. Although Finn would sweep all these exercises of power (i.e. whether subject to fiduciary and general constraints, or only subject to general constraints) under the umbrella of a broad “fiduciary principle”, he would not lose any of the learning that indicates their different contexts, different rules and different consequences: see Finn, “The Fiduciary Principle”; and Finn, “Fiduciary Reflections”.

⁶³ See the illuminating detail explored in the context of directors and shareholders in Sealy, “The Director as Trustee”. See too his later writing in L.S. Sealy, “Directors’ ‘Wider’ Responsibilities – Problems Conceptual, Practical and Procedural” (1987) 13 Monash U.L.Rev. 164; and L.S. Sealy, “‘Bona Fides’ and ‘Proper Purposes’ in Corporate Decisions” (1989) 15 Monash U.L.Rev. 265.

⁶⁴ Sealy, “Some Principles of Fiduciary Obligation”, 122, 124.

⁶⁵ Finn, “The Fiduciary Principle”, 28.

⁶⁶ Note that Smith too does not suggest a positive duty to act “in the interests of the principal”, merely that the fiduciary rules tell the fiduciary how he is to address that task – he is bound by a subjective duty of loyalty to act unselfishly as he thinks best for the principal: see Smith, “Fiduciary Relationships”; and Smith, “Prescriptive Fiduciary Duties”. But “unselfishly” and “selflessly” import different standards: the former merely requires good faith commitment to the purposes of the endeavour, and is a standard imposed on all those exercising discretions, whether classed as fiduciaries (in the narrow sense) or not: see below, Section IV.

⁶⁷ See the detailed analysis in Sealy, “The Director as Trustee”; further expanded in Sealy, “Directors’ ‘Wider’ Responsibilities”; and Sealy, “‘Bona Fides’ and ‘Proper Purposes’ in Corporate Decisions”.

⁶⁸ And is an expression with its own ambiguities: see Sealy, “‘Bona Fides’ and ‘Proper Purposes’ in Corporate Decisions”, 269.

⁶⁹ Howard Smith Ltd. v Ampol Petroleum Ltd. [1974] A.C. 821 (P.C.); Eclairs [2015] UKSC 71.

⁷⁰ Finn, Fiduciary Obligations, 16.

⁷¹ E.g. Cowan v Scargill [1985] Ch. 270 (the power of investment is not to be used for the purpose of advancing interests other than the beneficiaries’ financial interests); Howard Smith v Ampol [1974] A.C. 821 (P.C.) (the power to issue shares is not to be used for the purpose of altering voting majorities).

⁷² Unless we are going to adopt Finn's “fiduciary umbrella” approach, and that will not, at least for Finn, change the law in play, only the labelling of what is in issue.

⁷³ Finn, Fiduciary Obligations, 39.

⁷⁴ On whether the test for that should be the “but for” test (as advocated by Lord Sumption in Eclairs [2015] UKSC 71) or the “substantial purpose” test (as in Howard Smith v Ampol [1974] A.C. 821 (P.C.)), see Worthington, “Powers”.

⁷⁵ Cowan v Scargill [1985] Ch. 270.

⁷⁶ Sealy, “The Director as Trustee”.

⁷⁷ Ibid., at 90. Twenty years later he repeated the call for review: Sealy, “Directors’ ‘Wider’ Responsibilities”, 170. In short, nearly forty years before its enactment he set out a manifesto for what is now the Companies Act 2006, s. 172.

⁷⁸ Companies Act 2006, s. 172.

⁷⁹ The exception is the exercise of powers by directors or shareholders in pursuit of their own gain when the company is on the brink of insolvency and its assets ought to be preserved for the creditors: see the common law rule in West Mercia Safetyware v Dodd [1988] B.C.L.C. 250 (C.A.), adopting the reasoning in Walker v Wimborne (1976) 137 C.L.R. 1 (H.C.A.); and the statutory rule on wrongful trading in Insolvency Act 1986, s. 214.

⁸⁰ Allen v Gold Reefs [1900] 1 Ch. 656; Peters’ American Delicacy Co. v Heath [1939] HCA 2, (1939) 61 C.L.R. 457.

⁸¹ Howard Smith v Ampol [1974] A.C. 821 (P.C.); Eclairs [2015] UKSC 71.

⁸² If that is in issue, then some other breach of duty will have to be found to support the necessary claim. Negligence and breach of the contractual undertaking are obvious options.

⁸³ The typical examples are the “hand in the till” cases, such as Foskett v McKeown [2001] 1 A.C. 102 (H.L.); the self-dealing cases such as Aberdeen Rwy Co. v Blaikie Bros (1854) Macq 461, [1843-60] All E.R. 249 (H.L.); the “opportunity” cases such as Boardman v Phipps [1967] 2 A.C. 46 (H.L.) and Regal (Hastings) Ltd. v Gulliver [1967] 2 A.C. 134 (H.L.); and the bribe cases such as FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45.

⁸⁴ For illuminating accounts which put these duties along a spectrum of obligations requiring us to abstain from causing injury and damage to another (as with the majority of legal rules), then obligations requiring us to take positive action in the interests of another (with good faith and proper purposes falling here), and then obligations requiring not only positive action in the interest of another but also disinterestedness, or altruism, or self-denial (with the fiduciary constraints falling here), see Finn, “The Fiduciary Principle”; Birks “The Content of Fiduciary Obligation”; G. Leggatt, “Contractual Duties of Good Faith” (2016) Lecture to the Commercial Bar Association, available at https://www.judiciary.uk/wp-content/uploads/2016/10/mr-justice-leggatt-lecture-contractual-duties-of-faith.pdf (last accessed 9 May 2021), at [142]. See too Yam Seng Pte Ltd. v International Trade Corp. [2013] EWHC 111 (Q.B.), [2013] 1 All E.R. (Comm.) 1321, at [142]; and Al Nehayan v Kent [2018] EWHC 333 (Comm), at [167].

⁸⁵ Howard Smith v Ampol [1974] A.C. 821 (P.C.); Bamford v Bamford (1970) 1 Ch. 212 (C.A.); Pitt v Holt [2013] UKSC 26. See Worthington, “Powers”; Nolan and Conaglen, “Good Faith”.

⁸⁶ Target Holdings Ltd. v Redferns [1996] A.C. 421 (H.L.); AIB Group (UK) Plc. v Mark Redler & Co. Solicitors [2014] UKSC 58.

⁸⁷ Note carefully the two very different aspects of the fiduciary's duty of care: a fiduciary may be liable for breach of a duty of care either in the management of the property under the fiduciary's control (where the remedy is then designed to compensate for losses caused to the property being managed – i.e. equitable compensation) or alternatively in the provision of careful advice to the principal (where the remedy is designed to compensate for the harm suffered by the principal – i.e. common law damages): see, e.g, Bartlett v Barclays Bank Trust Co. Ltd. [1980] 1 Ch. 515 and Swindle v Harrison [1997] P.N.L.R. 641 (C.A.), respectively.

⁸⁸ Lister & Co. v Stubbs (1890) LR 45 Ch.D. 1 (C.A.).

⁸⁹ A-G for Hong Kong v Reid [1994] 1 A.C. 324 (P.C.).

⁹⁰ Sealy, “Fiduciary Obligations, Forty Years On”, 50.

⁹¹ FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45.

⁹² But see Tang Ying Loi v Tang Ying Ip [2017] HKCFA 3. I am not sure Sealy would have agreed with Lord Millett N.P.J.'s comments at [15]: “the present case is concerned with a fiduciary who made a profit by applying his principal's money for his own benefit. D1 did not take advantage of the fiduciary relationship or put himself in a position where his interest conflicted with his duty. He simply helped himself to money belonging to the estate and applied it for his own benefit. It is a straightforward case where a trustee or person in an analogous position has committed a breach of trust. As will appear, not only is the factual context different, so is the underlying policy which drives equity's response.” Lord Millett N.P.J. is undoubtedly right when he goes on to say that profiting from use of the principal's property involves no difficult issues of causation, but it remains important to distinguish between disgorgement claims against a fiduciary who has made unauthorised profits, and compensation claims against a fiduciary who has wrongfully disposed of the principal's property (whether to the fiduciary himself or to some third party). Where the disposition is to the fiduciary, and thus disgorgement and compensation claims are both open to the principal, the choice of which claim to pursue will depend on whether the fiduciary's self-interested use of the assets has generated a greater profit than would properly have been in the fund if managed appropriately, without unauthorised dispersals. Now also see, especially on causation, M. Conaglen, “Identifying the Profits for Which a Fiduciary Must Account” [2020] C.L.J. 38, 57–62.

⁹³ See especially Sealy, “The Director as Trustee”, 97; and Sealy, “Some Principles of Fiduciary Obligation”, 134–35.

⁹⁴ Cook v Deeks [1916] 1 A.C. 554 (P.C.).

⁹⁵ Boardman v Phipps [1967] 2 A.C. 46 (H.L.).

⁹⁶ Regal (Hastings) Ltd. v Gulliver [1967] 2 A.C. 134 (H.L.).

⁹⁷ A-G for Hong Kong v Reid [1994] 1 A.C. 324 (P.C.). See too W. Swadling, “The Fiction of the Constructive Trust” (2011) 64 Current Legal Problems 399.

⁹⁸ To the same ends, see S. Worthington, “Fiduciary Duties and Proprietary Remedies: Addressing the Failure of Equitable Formulae” [2013] C.L.J. 720, especially 730–36, 744–49.

⁹⁹ See note 24 above and associated text.

¹⁰⁰ Sealy, “Some Principles of Fiduciary Obligation”, especially 137–40, and also 120–21.

¹⁰¹ The next serious study was decades later in Davidson, “The Equitable Remedy of Compensation”.

¹⁰² Nocton v Lord Ashburton [1914] A.C. 932 (H.L.).

¹⁰³ Sealy noted that a Category I fiduciary would have to “account”, as trustees did, for what he had done with the property under his control, but he discussed the relevant remedy in terms of compensation. Given the way Sealy assessed the required compensation, there is nothing in this which is at odds with the views of Lord Millett N.P.J. in Libertarian Investments Ltd. v Hall (2013) 16 HKCFAR 681, at [166]–[172]. Indeed, all seems entirely consistent with Lord Millett's approach. On the other hand, it might be inferred that Sealy did not approach the issues by dwelling on “account” because that does not identify what assets should be in the trust pot. Similarly, see Worthington, “Four Questions on Fiduciaries”, 743–44, 750, 763.

¹⁰⁴ Although common law damages may be, whether for breach of contract or in tort.

¹⁰⁵ AIB Group (UK) Plc. v Mark Redler & Co. Solicitors [2014] UKSC 58.

¹⁰⁶ Target Holdings Ltd. v Redferns [1996] A.C. 421 (H.L.).

¹⁰⁷ For a discussion of the area, see Worthington, “Four Questions on Fiduciaries”, 754–64, with many of the commentators listed at note 108.

¹⁰⁸ See the analysis in Worthington, “Four Questions on Fiduciaries”; similarly see L. Ho and R.C. Nolan, “The Performance Interest in the Law of Trusts” (2020) 136 L.Q.R. 402.

¹⁰⁹ Even if the fiduciary has now paid the fund over to the principal or the principal's nominated third party, as in Target Holdings v Redferns [1996] A.C. 421 (H.L.) and AIB v Redler [2014] UKSC 58.

¹¹⁰ Main v Giambrone & Law [2017] EWCA Civ 1193, [2018] P.N.L.R. 2, at [59]–[60] (Jackson L.J., with Underhill and Moylan L.JJ. agreeing on this issue).

¹¹¹ Similarly, although in a simpler context, see Dawson (dec'd), Re (1966) 2 NSWR 211 (NSW SCt).

¹¹² Auden McKenzie (Pharma Division) Ltd. v Patel [2019] EWCA Civ 2291, [2020] B.C.C. 316; noted in Worthington, S., “More Disquiet with Equitable Compensation” [2020] C.L.J. 220CrossRefGoogle Scholar; and in Turner, P.G. and Ho, L., “Misapplication of Company Assets - A Moving Target” [2020] L.M.C.L.Q. 354Google Scholar.

¹¹³ See especially Mitchell, C., “Equitable Compensation for Breach of Fiduciary Duty” (2013) 66 Current Legal Problems 307CrossRefGoogle Scholar; and C. Mitchell, “Stewardship of Property and Liability to Account” (2014) 78 Conv. 215.

¹¹⁴ Mitchell, “Equitable Compensation for Breach of Fiduciary Duty”, 315–16.

¹¹⁵ This harks back to the “good man” theory of fiduciaries promoted by Lord Millett (see the references cited ibid at n 33), but see A. Mackley, “A Challenge to the Utility and Distinctiveness of the Good Man Theory of Equity” (2021) 27 Trusts & Trustees (forthcoming).

¹¹⁶ Sealy, “Fiduciary Obligations, Forty Years On”, 53.