Question: “A fiduciary owes a duty of exclusive loyalty to his principal. This duty of loyalty applies to prevent the fiduciary abusing his position. It operates to deter fiduciaries from acting in breach and to provide restitution for the principal if the breach is committed. Where the fiduciary is a trustee the potential for abuse of position arises because the trustee may use his powers of management over the trust property for his own benefit rather in the best interest of the beneficiaries.”
Millet LJ, Bristol and West Building Society v Mothew [1998] Ch 1
Discuss this statement with reference to relevant case law and secondary sources. How have the courts applied the exclusive loyalty rule to the position of trustees? Do you think it is too strict?
Answer: In Mothew the prominent factor in the relationship between the fiduciary and principal is “Loyalty,” Millet LJ stated that the Fiduciary must act in “good faith,” and “he must not make a profit” or “put himself in a position where his duty and interest may conflict.” The loyalty principle becomes two rules/ duties, the no Conflict rule/duty and the Non-profit rule/duty as in Bray v ford. Judges are keen to ensure that a fiduciary cannot profit from his responsibility and have applied the law strictly to send a clear warning to all fiduciaries. Judges recognise the obvious temptations of people who may see an opportunity for quick profit and be tempted to take advantage of their position. The law seeks to uphold the principle’s right to professional and honourab......(short extract)
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Details: - Mark: 67% | Course: Equity and Trust Law | Year: 2nd/3rd | Words: 1613 | References: No | Date written: January, 2014 | Date submitted: April 01, 2016 | Coursework ID: 958
