(ii) The Nature and Ambit of Fiduciary Duties

A number of different principles can be identified relating to the nature and ambit of fiduciary duties.36

(1) In an important dictum from an American case Frankfurter J said:

To say that a man is a fiduciary only begins the analysis: it gives direction to further inquiry. To whom is he a fiduciary? What obligation does he owe as a fiduciary? In what respects has he failed to discharge these obligations? And what are the consequences of his deviation from duty?[1] [2] [3] [4] [5] [6] [7] [8] [9]

In other words, it is not enough to decide that the defendant is a fiduciary: this is simply the initial question. This has been recognized explicitly in English law. In Bristol and West Building Society v Mothew38 the Court of Appeal acknowledged that there is more than one category of fiduciary relationship and that different categories of relationship possess different characteristics and attract different kinds of fiduciary obligation.39 Crucially, it is dangerous to assume that all fiduciaries are subject to the same duties in all circumstances.40

  • (2) A particular relationship may fall within more than one category of fiduciary relationship. Also, the different categories of relationship may last for varying periods and the duties owed by the fiduciary will differ depending on the category of relationship which is being considered.
  • (3) In Bristol and West Building Society v Mothew41 Millett LJ recognized that not every breach of duty by a fiduciary is a breach of fiduciary duty. Rather, fiduciary duties are ‘those duties which are peculiar to fiduciaries and the breach of which attracts legal consequences differing from those consequent upon the breach of other duties’.42 So, for example, although all fiduciaries are under an obligation to use proper skill and care in the discharge of their duties, the breach of this obligation is not a breach of a fiduciary duty because it is not a duty which is peculiar to fiduciaries.43 Whether the duty that has been breached is fiduciary or non-fiduciary will sometimes have substantive consequences,44 both as regards the rules of causation and remoteness which apply, and also as regards the determination of the appropriate remedy, with full disgorgement of profits being the typical remedy for breaches of fiduciary duty and compensatory damages for breach of non-fiduciary duties.
  • (4) Fiduciary duties are considered to be proscriptive in effect. This means that the duties do not identify what fiduciaries must do, but identify what they should not do.
  • (5) For a fiduciary to be liable for breach of fiduciary duty he or she must have breached the duty by an intentional act; unconscious omission is not sufficient.[10] But, crucially, a fiduciary will be held liable even if he or she did not act fraudulently or in bad faith and even if the fiduciary honestly thought that he or she was acting in good faith.[11]
  • (6) A fiduciary obligation does not continue after the termination of the relationship which gave rise to the duty,[12] save where the fiduciary has resigned specifically to exploit an opportunity acquired as a fiduciary.[13] Whilst this exception might be analysed as continuation of the fiduciary obligation after resignation, and so an exception to the general rule that fiduciary duties terminate on resignation, it is better analysed as a breach of duty whilst still in a fiduciary relationship, by virtue of the disloyalty in resigning in order to exploit the opportunity.[14] Indeed, if the fiduciary resigns for legitimate reasons and then exploits the opportunity, this will not constitute a breach of fiduciary duty. There are other potential exceptions to the rule that fiduciary duties end on the termination ofthe relationship. The first is where information is imparted to the fiduciary in confidence whilst the fiduciary relationship subsists. The obligation to maintain confidence is unrelated to the fiduciary continuing to be employed and so the obligation continues even after the relationship has been terminated.[15] The second exception is where the principal remains dependent on the fiduciary despite the formal termination of the relationship, so that the former fiduciary continues to be able to exert influence over the principal.

  • [1] For detailed examination of the nature and ambit of fiduciary duties see Finn, Fiduciary Obligations.
  • [2] Securities and Exchange Commission v Chenery Corporation (1943) 318 US 80, 85-6.
  • [3] [1998] Ch 1. For more general analysis of the nature of fiduciary obligations see Millett, ‘Equity’s Place in
  • [4] the Law of Commerce’, 2 1 8 -23 . 39 See p 492, below.
  • [5] Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, 206 (Lord Browne-Wilkinson).
  • [6] [1998] Ch 1, 16. See also Hilton v Barker, Booth and Eastwood [2005] UKHL 8, [2005] 1 WLR 567, 575
  • [7] (Lord Walker). 42 Bristol and West Building Society v Mothew [1998] Ch 1, 16.
  • [8] Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, 180 (Lord Goff) and 205 (Lord Browne-Wilkinson); White v Jones [1995] 2 AC 207, 274 (Lord Browne-Wilkinson).
  • [9] Bristol and West Building Society v Mothew [1998] Ch 1, 16 (Millett LJ).
  • [10] Ibid, 19 (Millett LJ).
  • [11] Murad v Al-Saraj [2005] EWCACiv969, [2005] WTLR 1573, [67] (ArdenLJ).
  • [12] CMS Dolphin Ltd v Simonet [2001] EWHC 415 (Ch), [2001] 2 BCLC 704, [95] (Collins J); In Plus GroupLtdvPyke [2002] EWCA Civ 370, [2002] 2 BCLC 201, [71] (Brooke LJ).
  • [13] Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200, [2007] 2 BCLC 239.
  • [14] Ibid, [69] (Rix LJ).
  • [15] Attorney-General v Blake [1998] Ch 439 (CA); Attorney-General v Guardian Newspapers Ltd (No 3)
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