Boardman v Phipps [1967]

Two defendants were Boardman, the family trust
solicitor, and Phipps, one of the beneficiaries.
Family trust held shares in ailing company.
B & P tried to get elected to Board – failed.
Tried to split up company – failed.
B & P then, with their own money, purchased enough
shares in company to enable them, with support of other beneficiaries, to take
Then paid out large dividends and maintained high
share price.
Good for beneficiaries, but B & P also made
profits on the shares they had purchased.
One of other beneficiaries sued B & P to account
for these profits, said to be acquired in conflict of interest with the trust.
House of Lords found B & P liable to account
(although as they had acted bona fide throughout, entitled to liberal payment
for their work).
B’s liability straightforward – he obtained knowledge
through position as fiduciary and any profits made from using that information were
profits arising from fiduciary office, which must be accounted for unless
But P found liable on basis he should be treated
equally with B whatever the outcome, though P, as beneficiary, obviously did
not stand in same fiduciary capacity.
Lord Upjohn dissented on basis that there was no
conflict of duty and interest.