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Fiduciary Relationship
1. Accepted/Non-accepted categories
2. Scope
3. Breach
a. Conflicts Rule
i. Duty-duty
ii. Duty-interest
b. Profits Rule
4. Defences
a. Informed Consent
5. Third Party Liability
6. Remedies
Personal Remedies
1. Specific Performance
2. Injunction and Specific Delivery
3. Damages in lieu of injunction/SP
4. Account of Profits
5. Equitable Compensation
6. Equitable Rescission
7. Declarations
8. CL Remedies
a. Exemplary Damages
b. Aggravated Damages
Equitable Proprietary Remedies
1. Remedies
a. Constructive trust
b. Equitable Lien
2. Preconditions
a. Misappropriation of opportunity by a fiduciary
b. Fiduciary Receipt of bribes and secret commissions
3. Bankruptcy Considerations
a. Secured Debts v Unsecured Debts
4. Tracing process of identifying a new asset in sub for an old asset (Foskett)
a. Right to CT, either
i. Pre-existing Proprietary Rights (arising from
BOFD/trust/misappropriation/bribe)
b. Able to identify the property in the hands of D
i. Property is Ascertainable (mixing does not prevent this)
ii. Property not dissipated
E.g. pay off unsecured debts/improves asset
But note: a personal remedy in respect of misappropriation
still exists
iii. If 3P, then must not be BFPfVWON
c. Scenarios
i. D substitutes asset: Solve by
F holds substitute asset subject to Claimants equitable rights
(Foskett)
Applies also to 3P recipient with notice (Barnes first limb) +
where 3P exchanges asset for some new asset
ii. D mix with own property: Situations
F/3P who owes duty as constructive trustee pursuant to
Barnes (P can elect a CT or lien) (Foskett); OR
a. Mixing by Improvement?
i. Intangible/tangible property?
1. Proportionate claim of equitable
ownership (i.e. prop CT) OR
2. An appropriate money remedy secured
by an equitable lien
b. Mixing by Acquisition?
i. Scott v Scott (Tangible)
1. Proportionate CT as an alternative
2. Equitable lien for the increase in value
for the house in the same proportion as
the trust has contributed
ii. Foskett (Intangible)
c. Mixing into a bundle of indistinguishables?
i. Brady v Stephenson
1. Assert ownership of a proportionate
collection of the things in the bundle
2. Apply Re Hallett can seek equitable
lien over indistinguishable mass to
secure an appropriate money remedy OR
3. Can also argue that investments were of
Claimants shares
Innocent 3P?
a. Ps equitable title defeats Vs title (Diplock)
b. E.g. AG v Reid
iii. D takes property from 2 innocent parties, mixes and purchases asset
iv. D transfers property to 3P; 3P mixes it with own/received mixed
D transfers property to 3P (no mix)
a. Can assert CT if:
i. If already got CT over the property when go to
3P AND
ii. Identifiable in someones hand then CT
applies
1. i.e. if Volunteer and no mixing: V holds
on trust for rightful owner
2. However note BFPVFWON
b. The 3P may also be liable under KR only personal
remedy in the form of equitable compensation is
available under BvA for the running down of the value
of the asset
What if they mix with their own property?
a. Innocent Volunteers (Diplock)
i. Tracing is available for 3P volunteers
ii. If mixed into bank accounts (see below use Re
French)
iii. Where $ mixed to buy new assets, beneficiary
entitled to a charge to secure repayment (i.e. in
proportion of any contributions)
iv. Upgrade/alteration/pay off debts no right to
trace as dissipated
5. Bank Accounts
a. First in, first out (Claytons Case) rejected in many cases
i. Unfair for:
Accounts of mixed $s of multiple beneficiaries; OR
Where moneys are from multiple trust funds
b. If insufficient funds, presumption trustee withdraws his own first (Re Hallett)
c. Pari Passu Rule (Re French Caledonia Travel)
i. Beneficiaries share proportionately where $s are from multiple funds
ii. Where mixing involves innocent 3P
Rationale: If the first transaction between the P and D was a cause of the second
transaction between the D and the third party, then the plaintiff should be entitled to
claim a share of the benefit received by the D from the second transaction, in
proportion with the contributions of the other causes
d. Lowest Intermediate Balance Rule
i. Applies if balance of account fluctuates over time
ii. NO APPLY if: SINGLE deposit + withdrawal
Use Re Hallett instead; or
Re French if mixing involves innocent 3P
Equitable Assignment
- See table