The fiduciary relationship between a lawyer and their client is at the core of the English legal system. Regardless of its paramount importance to the proper functioning of the legal services industry, a degree of confusion remains around the particular duties owed by a fiduciary. For an explanation of the nature of fiduciary duties in England and the core duties encompassed under a fiduciary relationship please read the article below.

The Law Commission has characterised a fiduciary relationship, as one in which there is ‘discretion, power to act, and vulnerability’. Case law (Bristol v Mothew) identifies a fiduciary as ‘someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence’. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal.

The following points provide additional information with regards to the different facets of a fiduciary duty, as discussed above. It should be noted that while these are considered to be the “core duties” of a fiduciary, the list is non-exhaustive.

 (a) The “no conflict” rule: Boardman v Phipps [1966] UKHL 2 (Followed in Chan v Zacharia) – “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 a conflict.”

(b) The “no profit” rule: Regal (Hastings) Ltd v Gulliver [1942] UKHL 1, Lord Russell of Killowen – “The rule of equity which insists on those who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon questions or considerations as whether the property would or should otherwise have gone to the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having in the stated circumstances been made.”

(c) The duty of “undivided loyalty”: see Bristol & West Building Society v Mothew [1998] explained above.

(d) The duty of confidentiality: A duty of confidence will arise “wherever a person receives information he knows or ought to know is fairly and reasonably to be regarded as confidential” Campbell v. MGN Limited [2004] 2 AC 457. Douglas v. Hello [2006] QB 125 – “information will be confidential if it is available to one person (or a group of people) and not generally available to others, provided that the person (or group) who possesses the information does not intend that it should become available to others”. “Confidential” in the phrase “Confidential Information” could also be substituted with “Private”.

Should you require any further advice or information on fiduciary duties, Cleveland & Co, your external in-house counsel, are here to help.