¹ “Fiduciary Relationships” [1962] C.L.J. 69. We again, for convenience, use the word “fiduciary” as a noun, and “beneficiary” as its counterpart.

² The position of directors is complicated because they usually act as a board and not individually. The result is that only those who support a resolution affecting the company's property will be accountable as fiduciaries within this class; while inactive, absentee and dissentient directors will not—although their position may still be fiduciary in sense II.

³ Whether it is correct to describe these equitable rights as rights of ownership is a matter of controversy; see for further references Nathan's Equity through the Cases, 4th ed., Marshall, 50n. We are here, of course, concerned with their significance and not with giving them an accurate name.

⁴ This expression also is used in equity in a special sense: see Nathan (note 3, supra), pp. 40, 475–488.

⁵ Such circumstances will include (a) the intervention of a bona fide purchaser for value who takes the legal estate without notice of the beneficial owner's rights; (b) loss of the latter's rights by waiver, laches or the operation of the Limitation Act, 1939; (c) the property's becoming untraceable in equity; (d) perhaps in the event of conversion, disseisin or escheat.

⁶ e.g., as regards the safe custody of the property, that he had exercised proper care (in early equity, that he had kept it as his own); as regards matters within his discretion, that there had been a bona fide exercise of the discretion.

⁷ Wilson v. Moore (1833–1834) 1 My. & K. 126, 337; Lee v. Sankey (1873) L.R. 15 Eq. 204, 211.

⁸ The multiple meanings of this term cause some confusion. In its widest sense, it includes all trusts not intentionally created, in contrast with express trusts. Within this, there are several more limited meanings, one of which is mentioned above. Another is the fictitious trust declared by a court of equity aa a “remedial device”: see note 23, infra.

⁹ Nathan (note 3, supra), p. 470. So, a solicitor who advises a misapplication may be liable with the fiduciary who carries it out: Evans v. Coventry (1856) 25 L.J.Ch. 489, 501 (affirmed on appeal (1857) 8 De G.M. & G. 835).

¹⁰ Contrast the principle of executorship applied in Diplock's case (Ministry of Health v. Simpson [1951]Google Scholar A.C. 251), where the remedy against the executor must be exhausted first.

¹¹ Ex p. Biddulph (1849) 3 De G. & Sm. 587, 589; cf. John v. Dodwell & Co. Ltd. [1918]Google Scholar A.C. 563.

¹² Raby v. Bidehalgh (1855) 7 De G.M. & G. 104; Moxham v. Grant [1899] 1 Q.B. 480; [1900] 1 Q.B. 88 reaches the same result by reasoning which is not wholly satisfactory.

¹³ Charitable Corporation v. Sutton (1742) 2 Atk. 400.

¹⁴ Bahin v. Hughes (1886) 31 Ch.D. 390. Exceptionally, a solicitor-trustee who advises a breach of trust may be obliged to indemnify his co-trustees: Lockhart v. Reilly (1856) 25 L.J.Ch. 697.

¹⁵ Power v. Hoey (1871) 19 W.R. 916.

¹⁶ Where the situation is fiduciary in both sense I and sense II, the breach of one of the obligations which we are about to discuss may involve or amount to a wrongful dealing with the beneficiary's property and give rise to the proprietary remedies: cf. Nocton v. Lord Ashburton [1914]Google Scholar A.C. 932, discussed infra.

¹⁷ Lister & Co. v. Stubbs (1890) 45 Ch.D. 1, 15, per Lindley L.J.

¹⁸ e.g., Bridgman v. Green (1755) 2 Ves.Sen. 627. See generally Scott, “Constructive Trusts” (1955) 71 L.Q.R. 39, 42.

¹⁹ It is often difficult to decide whether the beneficial ownership has passed. The determining factor is the intention of the beneficial owner to transfer his rights, but it is immaterial that his consent to do so is induced by fraud or mistake. The same is true of a fiduciary (in sense I) who is acting within his authority; he effectively transfers the beneficial interest in the property under his control even when he is deceived or mistaken: Bridgman v. Green, supra. A fiduciary does not effectively alienate property in equity if he clandestinely transfers it to himself or causes it deviously to come into his own hands: Parker v. McKenna (1874) L.R. 10 Ch.App. 96; Gordon v. Holland (1913) 108 L.T. 385. On the other hand, the beneficial interest passes if he does so openly: Chalmer v. Bradley (1819) 1 Jac. & W. 51, discussed infra, or where the property comes back into his hands after a bona fide alienation: Re Thorpe [1891] 2 Ch. 360.Google Scholar

²⁰ Salmond, Jurisprudence, 11th ed., Williams, p. 288.

²¹ Beckford v. Wade (1805) 17 Ves. 87, 96; Marquis of Clanricarde v. Henning (1861) 13 Beav. 175; Metropolitan Bank v. Heiron (1880) 5 Ex.D. 319; Lister & Co. v. Stubbs (1890) 45 Ch.D. 1.

²² (1805) 17 Ves. 87, 96.

²³ See note 8, supra. It is this type of constructive trust which has been linked with quasi-contract and allied matters under the general head of “Restitution” in the United States; cf. Scott, op. cit., note 18, supra.

²⁴ [1962] C.L.J. 77.

²⁵ The conflict between one fiduciary obligation and another will usually be equally objectionable: see Ex p. Bennett (1805) 10 Ves. 381, 389, per Lord Eldon; Turner v. Trelawney (1841) 12 Sim. 49; Moody v. Cox & Hatt [1917] 2 Ch. 71.Google Scholar

²⁶ In Re Leeds & Hanley Theatres of Varieties, Ltd. [1902] 2 Ch. 809Google Scholar “a remedy in the shape of damages” was awarded against promoters for breach of their “fiduciary duty” to disclose their identity as vendors. It is submitted that this decision cannot be supported on any accepted equitable principles. The case illustrates the danger of an uncritical use of the word “duty” in equitable contexts.

²⁷ “Engagements” here means only contracts made on behalf of the beneficiary: there is ordinarily no rule preventing a fiduciary from competing with his trust. See Bell v. Lever Bros. Ltd. [1932]Google Scholar A.C. 161, 195, per Lord Blanesburgh; London & Mashonaland Exploration Co. v. New Mashonaland Exploration Co. [1891] W.N. 165. Re Thomson [1930] 1 Ch. 203Google Scholar, which is to the contrary, cannot stand with Bell v. Lever Bros. Ltd. and must be supported, if at all, on grounds not relied upon in the judgment: see note 54, infra. The relationships of master and servant and partner and partner are subject to special rules which can be explained on the basis of contract: see note 52, infra.

²⁸ (1854) 1 Macq. 461, 471.

²⁹ Gt. Luxembourg Ry. Co. v. Magnay (No. 2) (1858) 25 Beav. 586; Jacobus Marler Estates Ltd. v. Marler (1913) 85 L.J. P.C. 167n.Google Scholar

³⁰ Oliver v. Court (1820) 8 Price 127; Rothschild v. Brookman (1831) 5 Bli.(n.s.) 165; Armstrong v. Jackson [1917] 2 K.B. 822.Google Scholar

³¹ (1788) 2 Cox 320, affirmed (1791) 4 Bro.P.C. 258. See Lord Thurlow's explanation of this case as given by Lord Eldon in Ex p. Lacey (1802) 6 Ves. 625, 627.

³² See, e.g., Randall v. Errington (1805) 10 Ves. 423, 428; Rothschild v. Brook-man, supra, p. 202.

³³ Fox v. Mackreth, supra, p. 326; Cane v. Lord Allen (1814) 2 Dow 289, 294.

³⁴ Beaumont v. Boultbee (1802) 7 Ves. 599, 603.

³⁵ See, e.g., Dunne v. English (1874) L.R. 18 Eq. 524, 533, per Jessel M.R.; Davies V. London & Provincial Marine Insce. Co. (1878) 8 Ch.D. 469, 474.

³⁶ See [1962] C.L.J. 78.

³⁷ The cases referred to in Cheshire and Fifoot, Contract, 5th ed., p. 231 were all cases which contained an added element of undue influence or confidential advice, which complicated the purely fiduciary principle; cf. Chitty, Contracts, 22nd ed., § 284. Treitel, Contract, p. 231 makes the distinction clearly.

³⁸ It is submitted that disclosure in these cases is relevant only to show prior authorisation or the release of an equitable claim: see infra. A release is not valid unless it is proved that the beneficiary fully knew the position and knew of his rights: Ashbumer, Principles of Equity, 2nd ed., Browne, pp. 499, 500; Brunyate, Limitation of Actions in Equity, p. 241.

³⁹ e.g., in Dunne v. English (note 35, supra), Jessel M.R. wrongly accepted Imperial Mercantile Credit Assn. v. Coleman (1873) L.R. 6 H.L. 189 as an authority on the fiduciary principles. In 6 Halsbury 303, Murray's Executors' Case (1854) 5 De G.M. & G. 746 is referred to as an authority on the general law; cf. the citation (ibid., p. 302) of Bluck v. Mallalue (1859) 27 Beav. 398; Victors Ltd. v. Lingard [1927] 1 Ch. 323Google Scholar in Gower, Modern Company Law, 2nd ed., p. 479; Todd v. Robinson (1884) 14 Q.B.D. 739 in Gore-Browne, Joint-Stock Companies, 41st ed., p. 335.

⁴⁰ Re Sunlight Incandescent Gas Lamp Co. Ltd. (1900) 16 T.L.R. 535Google Scholar; cf. (in a different context) Re Darby [1911] 1 K.B. 95, 103.Google Scholar

⁴¹ It has been assumed in the discussion that the fiduciary's interest is as an opposite principal party, but this need not be so: see note 25, supra, and Transvaal Lands Co. v. New Belgium (Transvaal) Land & Development Co. [1914] 2 Ch. 488.Google Scholar It is not certain how precise the disclosure of such an interest must be, but it is submitted that, on principle, disclosure of the fact of the interest should in many cases be adequate.

⁴² Chalmer v. Bradley (1819) 1 Jac. & W. 51, especially at pp. 67, 68.

⁴³ [1896] A.C. 44.

⁴⁴ See the speech of Lord Herschell at p. 51. In Bray v. Ford the defendant was one of the governing board of a college; in Benson v. Heathorn (1842) 1 Y. & C.C.C. 326 the principle was applied to a director.

⁴⁵ Henderson v. Huntington Copper & Sulphur Co. (1877) 5 R. (Ct.Sess.) 1, 7, per Lord O'Hagan.

⁴⁶ Bath v. Standard Land Co. [1910] 2 Ch. 408, 416Google Scholar; on appeal [1911] 1 Ch. 618, 644.

⁴⁷ Benson v. Heathorn, note 44, supra. In two modern cases this strict rule has been disregarded: Be Dover Coalfield Extension Co. Ltd. [1908] 1 Ch. 65Google Scholar; Re Macadam [1946]Google Scholar Ch. 73.

⁴⁸ [1962] C.L.J. 77.

⁴⁹ Fox v. Mackreth, supra; De Bussche v. Alt (1878) 8 Ch.D. 286; cf. Parker v. McKenna (1874) L.R. 10 Ch.App. 96.

⁵⁰ De Bussche v. Alt, note 49, supra.

⁵¹ See note 27, supra, and the authorities there cited.

⁵² Or impliedly, as in the case of many contracts of employment: Hivac Ltd. v. Park Royal Scientific Instruments Ltd. [1946] 1 All E.R. 350Google Scholar; cf. Partnership Act, 1890, s. 30.

⁵³ Robinson v. Randfontein Estates Ltd. [1921]Google Scholar A.D. 168, 179, per Innes C.J.; Zwicker v. Stanbury [1952] 4 D.L.R. 344, 357–358Google Scholar (on appeal [1954] 1 D.L.R. 257).

⁵⁴ G. E. Smith Ltd. v. Smith [1952]Google Scholar N.Z.L.R. 470; Re Thomson, note 27, supra, may perhaps be explained on this ground.

⁵⁵ Cook v. Deeks [1916] 1 A.C. 554.Google Scholar

⁵⁶ Cook v. Deeks, supra. In the case of a promoter, it is sufficient that he holds himself out to third parties as representing the beneficiary as, e.g., by statements in a prospectus: Gluckstein v. Barnes [1900] A.C. 240.Google Scholar

⁵⁷ See the judgments of Cotton L.J. in Re Ambrose Lake Tin & Copper Mining Co. (1880) 14 Ch.D. 390, 398 and in Ladywell Mining Co. v. Brookes (1887) 35 Ch.D. 400, 413. The beneficiary's other remedy is, of course, rescission.

⁵⁸ The position of a director is less certain, since Burland v. Earle [1902]Google Scholar A.C. 83, when the Judicial Committee held that a director was not affected by the presumption; but it will apply if the director has been constituted agent for the particular transaction.

⁵⁹ Massey v. Davies (1794) 2 Ves.Jun. 317; Bentley v. Craven (1853) 18 Beav. 75.

⁶⁰ Based on Bentley v. Craven, supra.

⁶¹ Fox v. Mackreth, supra; Ex p. James (1803) 8 Ves. 337.

⁶² Semble, a director who buys his company's debentures on the market at a price below par may redeem them later at their face value; but he may be in the same position as other fiduciaries if he deals in a single specific charge, e.g., a mortgage debenture.

⁶³ (1726) Sel.Cas.t.King 61; see [1962] C.L.J. 77.

⁶⁴ Crawshay v. Collins (1808) 15 Ves. 218; Docker v. Somes (1834) 2 My. & K. 656.

⁶⁵ Ballow, Treatise on Equity (the author's original test is preserved by the editor of the 5th ed., 1820,186–187).

⁶⁶ An important decision is Newton v. Bennett (1784) 1 Bro.C.C. 359. Holds-worth, History of English Law, Vol. 12, p. 229 puts the change earlier, but does not account for the many authorities on which the defendant relied in this case.

⁶⁷ How v. Godfrey (1678) Rep.t.Finch 361; Palmer v. Jones (1682) 1 Vem. 144.

⁶⁸ Robinson v. Pett (1734) 3 P.Wms. 250; Ayliffe v. Murray (1740) 2 Atk. 58.

⁶⁹ Henderson v. Huntington Copper & Sulphur Co., note 45, supra; Hutton v. West Cork Ry. (1883) 23 Ch.D. 654, especially at p. 672, per Bowen L.J.

⁷⁰ (1862) 10 H.L.Cas. 26.

⁷¹ (1862) 10 H.L.Cas. 26, 59.

⁷² The earlier cases include Hunt's Case (1868) 37 L.J.Ch. 278; Madrid Bank v. Pelly (1869) L.R. 7 Eq. 442; Hay's Case (1875) L.R. 10 Ch.App. 593; the later cases are dealt with in the text.

⁷³ (1876) 4 R.(Ct.Sess.) 297n., 301n.; for the decision on appeal, see note 45, supra.

⁷⁴ Panama & S. Pacific Telegraph Co. v. India Rubber etc. Co. (1875) L.R. 10 Ch.App. 515, 526; Metropolitan Bank v. Heiron (1880) 5 Ex.D. 319, 325.

⁷⁵ Ibid.

⁷⁶ Boston Deep Sea Fishing & Ice Co. v. Ansell (1888) 39 Ch.D. 339.

⁷⁷ Ibid., pp. 367, 368, per Bowen L.J.

⁷⁸ [1892] 1 Ch. 322.

⁷⁹ Reading v. R. [1949] 2 K.B. 233, 236Google Scholar, per Asquith L.J. (affirmed on appeal [1951] A.C. 507).

⁸⁰ Mayor of Salford v. Lever [1891] 1 Q.B. 168.

⁸¹ Att.-Gen. v. Goddard (1929) 98 L.J.K.B. 743.Google Scholar

⁸² Reading v. Att.-Gen. [1951]Google Scholar A.C. 507.

⁸³ Re Cape Breton Co. (1885) 29 Ch.D. 795, obiter; Ladywell Mining Co. v. Brookes (1887) 35 Ch.D. 400; Burland v. Earle, note 58, supra; Jacobus Marler Estates Ltd. v. Marler, note 29, supra; Cook v. Deeks [1916] 1 A.C. 554.Google Scholar

⁸⁴ There may be an exception where the property has had a market price: see the Cape Breton case, note 83, supra, and Jacobus Marler case, note 29, supra.

⁸⁵ (1834) 2 My. & K. 655.

⁸⁶ Lord Hardwicke v. Vernon (1799) 4 Ves. 411, especially at pp. 416, 417; Beaumont v. Boultbee (1800) 5 Ves. 485.

⁸⁷ In equity, a trustee or fiduciary in sense I could not avail himself of any statute of limitation. Since 1888, however, special provision has been made by statute to provide a period of limitation for some breaches of trust (see Brunyate (note 38, supra), p. 50 et seq., p. 185 et seq.); but there is still no protection where there has been conversion or wrongful retention of the trust property by the fiduciary.

⁸⁸ North-West Transportation Co. Ltd. v. Beatty (1887) 12 App.Cas. 589; Burland v. Earle [1902]Google Scholar A.C. 83, 93; Baird v. J. Baird & Co. (Falkirk) Ltd., 1949Google Scholar S.L.T. 368.

⁸⁹ See, e.g., Cook v. Deeks [1916] 1 A.C. 554.Google Scholar

⁹⁰ See, e.g., Cheshire and Fifoot. Law of Contract, 5th ed., pp. 217, 231; Chitty, Contracts, 22nd ed., § 266.

⁹¹ See note 30, supra.

⁹² Pace Re Leeds & Hanley Theatres of Varieties, Ltd., note 26, supra.

⁹³ As in Cheshire and Fifoot, pp. 228–231; cf. Chitty, §§ 273–285.

⁹⁴ Salmond, Torts, 13th ed., p. 674; Winfield, Tort, 6th ed., pp. 461, 487.

⁹⁵ Salmond, p. 676.

⁹⁶ 24 M.L.R. 797, 799.

⁹⁷ [1914] A.C. 932.

⁹⁸ [1959] 1 Q.B. 55.

⁹⁹ Op. cit. (note 38, supra) pp. 82, 83, pp. 87–90, where the authorities are given.

¹ [1914] A.C. 932, 958, per Viscount Haldane L.C.

² Ibid. pp. 956–957.

³ Cf. the address of counsel at p. 943: “the plaintiff's case was put not on fraud but on property, i.e., on the ground that the money was held by the solicitor in trust for his principal”; and Hanbury, Modern Equity, 8th ed., p. 646.

⁴ [1914] A.C. 932, 958. Street, Torts, 2nd ed., p. 206, wrongly states that the fiduciary's remedy is in damages.

⁵ [1959] 1 Q.B. 55.

⁶ One transaction, the guarantee of an overdraft, was not strictly an investment; althongh even here it could perhaps be said that the bank had de facto control over the disposal of the plaintiff's property.

⁷ The remedy was an award of damages; it was said to be “in negligence” there was considerable discussion of the defendants' duty of care and its breach; master and servant were held liable aa if on the principle respondeat superior; and the finding of a fiduciary relationship is omitted in some reports of the decision.

⁸ Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164Google Scholar, especially at pp. 180, 181 (dissenting).