References: [1966] 3 All ER 721, [1967] 2 AC 46, [1966] UKHL 2
Links: Bailii
Coram: Lord Upjohn, Lord Hodson
Ratio: A trustee has a duty to exploit any available opportunity for the trust. ‘Rules of equity have to be applied to such a great diversity of circumstances that they can be stated only in the most general terms and applied with particular attention to the exact circumstances of each case. The relevant rule for the decision of this case is the fundamental rule of equity that a person in a fiduciary capacity must not make a profit out of his trust, which is part of the wider rule that a trustee must not place himself in a position where his duty and his interest may conflict.’ ‘The whole of the law is laid down in the fundamental principle exemplified in Lord Cranworth’s statement [in Aberdeen Railway Co v. Blaikie]. But it is applicable, like so many equitable principles which may affect a conscience, however innocent, to such a diversity of different cases that the observations of judges and even in your Lordships’ House in cases where this great principle is being applied must be regarded as applicable only to the particular facts of the particular case in question and not regarded as a new and slightly different formulation of the legal principle so well settled.’ and ‘The phrase ‘possibly may conflict’ requires consideration. In my view it means that the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you could imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in conflict.’
The court considered the circumstances under which information has been acquired so as to impose a duty of confidence: ‘The true test is to determine in what circumstances the information has been acquired. If it has been acquired in such circumstances that it would be a breach of confidence to disclose it to another then courts of equity will restrain the recipient from communicating it to another. In such cases such confidential information is often and for many years has been described as the property of the donor, the books of authority are full of such references: knowledge of secret processes, ‘know-how’, confidential information as to the prospects of a company or of someone’s intention or the expected results of some horse race based on stable or other confidential information. But in the end the real truth is that it is not property in any normal sense but equity will restrain its transmission to another if in breach of some confidential relationship.’
Lord Upjohn said: ‘In general, information is not property at all. It is normally open to all who have eyes to read and ears to hear. The true test is to determine in what circumstances the information has been acquired. If it has been acquired in such circumstances that it would be a breach of confidence to disclose it to another, then courts of equity will restrain the recipient from communicating it to another. In such cases such confidential information is often and for many years has been described as the property of the donor, the books of authority are full of such references; knowledge of secret processes, ‘know-how’, confidential information as to the prospects of a company or of someone’s intention or the expected results of some horse race based on stable or other confidential information. But in the end the real truth is that it is not property in any normal sense, but equity will restrain its transmission to another if in breach of some confidential relationship’.
Jurisdiction: England and Wales
This case cites:
- Cited – Bray v Ford HL ([1895-99] All ER Rep 1011, [1896] AC 44)
An appellate court’s power to order a new trial is conditional on ‘some substantial wrong or miscarriage’ being established.
Lord Hershell said: ‘It is an inflexible rule of the court of equity that a person in a fiduciary position, such as . . - Appeal from – Phipps v Boardman CA ([1965] Ch 992)
Affirmed . . - At first instance – Phipps v Boardman ChD ([1964] 1 WLR 993)
Agents of certain trustees had purchased shares, in circumstances where they only had that opportunity because they were agents.
Held: The shares were held beneficially for the trust. . .
(This list may be incomplete)
This case is cited by:
- Cited – Bhullar and others v Bhullar and Another CA (Bailii, [2003] EWCA Civ 424, [2003] 2 BCLC 241)
The claimants were 50% shareholders in a property investment company and sought relief alleging prejudicial conduct of the company’s affairs. After a falling out, two directors purchased property adjacent to a company property but in their own . . - Cited – New Zealand Netherlands Society ‘Oranje’ Inc v Laurentuis Cornelis Kuys PC ([1973] 1 WLR 1126)
(New Zealand) The scope of a fiduciary duty may be modified by a course of dealing by the person to whom the duty is owed. ‘The obligation not to profit from a position of trust, or, as it sometimes relevant to put it, not to allow a conflict to . . - Cited – Crown Dilmun, Dilmun Investments Limited v Nicholas Sutton, Fulham River Projects Limited ChD (Times 05-Feb-04, [2004] EWHC 52 (Ch), Bailii, [2004] 1 BCLC 468)
There was a contract for the sale of Craven Cottage football stadium, conditional upon the grant of non-onerous planning permissions. It was claimed that the contract had been obtained by the defendant employee in breach of his fiduciary duties to . . - Cited – Douglas and others v Hello! Ltd and others (No 3) CA (Bailii, [2005] EWCA Civ 595, Times 24-May-05, [2005] 4 All ER 128, [2005] 3 WLR 881, [2006] QB 125)
The principal claimants sold the rights to take photographs of their wedding to a co-claimant magazine (OK). Persons acting on behalf of the defendants took unauthorised photographs which the defendants published. The claimants had retained joint . . - Cited – Ultraframe (UK) Ltd v Fielding and others ChD (Bailii, [2005] EWHC 1638 (Ch))
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . . - Cited – Ratiu, Karmel, Regent House Properties Ltd v Conway CA (Bailii, [2005] EWCA Civ 1302, Times 29-Nov-05)
The claimant sought damages for defamation. The defendant through their company had accused him acting in such a way as to allow a conflict of interest to arise. They said that he had been invited to act on a proposed purchase but had used the . . - Cited – Imageview Management Ltd v Jack CA (Bailii, [2009] EWCA Civ 63, Times, [2009] WLR (D) 56, WLRD, [2009] 1 All ER (Comm) 921, [2009] 2 All ER 666, [2009] 1 BCLC 724, [2009] 1 Lloyd’s Rep 436, [2009] Bus LR 1034)
The appellant company acted for the respondent footballer in placing him with a football club. The respondent said that he had also taken a payment from the club, nominally for arranging a work permit. The respondent said this was improper. The . . - Cited – O’Donnell v Shanahan and Another CA (Bailii, [2009] EWCA Civ 751, Times)
The claimant appealed against dismissal of her petition for an order for the defendants to purchase her shares at a fair value, saying that they had acted unfairly toward her. Her co-directors had acquired, for another company of which they were . . - Cited – Gray v News Group Newspapers Ltd and Another; Coogan v Same ChD (Bailii, [2011] EWHC 349 (Ch), [2011] 2 All ER 725, [2011] 2 WLR 1401)
The claimants said that agents of the defendant had unlawfully accessed their mobile phone systems. The court was now asked whether the agent (M) could rely on the privilege against self incrimination, and otherwise as to the progress of the case. . . - Cited – Phillips v Mulcaire SC (Bailii, [2012] UKSC 28, SC Summary, SC, UKSC 2012/0038, Bailii Summary, [2012] 3 WLR 312, [2012] WLR(D) 193, [2012] 4 All ER 207, [2012] 5 Costs LO 609, [2013] 1 AC 1, [2012] EMLR 31)
The claimant worked as personal assistant to a well known public relations company. She alleged that the defendant had intercepted telephone message given by and left for her. The court was asked first as to whether the information amounted to . . - Cited – Halton International Inc (Holding) and Another v Guernroy Ltd ChD (Bailii, [2005] EWHC 1968 (Ch))
Parties had entered into a shareholders’ agreement as to voting arrengemets within a company. Thay disputed whether votes had been used in reach of that agreement, particularly as to the issue of new shares and their allotment, but the court now . .
(This list may be incomplete)
Leading Case
Last Update: 10 January 2017
Ref: 180410
