Leicester De Montfort Law School

LLB Equity & Trusts

EQUITY & TRUSTS

Seminar Eighteen – Fiduciaries

Session Outcomes

By the end of this Seminar you should be able to:

1. Understand what a fiduciary duty is;

2. Identify and apply fiduciary duties to a practical scenario; and
3. Explain the remedies for breach of fiduciary duty and apply them to a practical
scenario.

Materials and preparation required

In preparation for this Seminar you MUST:

1. Review the notes that you made during the Lectures on Fiduciaries;
2. Read the relevant chapter in an Equity & Trusts textbook;
3. Prepare answers to the following questions and come to the Seminar prepared to
discuss your answers.

Question

Familiarise yourself with the following facts and then answer the questions that
follow.

In 2018, Nancy and Finley were appointed as professional trustees of a trust fund
whose assets included, inter alia, a 40% shareholding in Wild Cat Ltd, a 55%
shareholding in Leisure Unlimited Ltd and the freehold of "Fourwinds". Peggy was the
only adult beneficiary and at the time the trust was created she personally owned 15%
of the shares of Wild Cat Ltd. whilst Finley owned 10% of the shares.

1
In January 2019, Peggy became a director of Wild Cat Ltd. and has received directors’
fees since then. Also in January 2019, it was decided that it would be in the best
interests of the trust, if Finley were to sell his shares to the trust. Accordingly, three
independent valuations of the shares were made and the trust purchased Finley’s
shares at the lowest of those valuations.

Nancy was appointed as a director of Leisure Unlimited Ltd in March 2019 and has
received directors’ fees ever since.

Finley has discovered recently that Nancy has been receiving payment for her duties as
a trustee at a rate of approximately £25,000 per annum.

Advise the other beneficiaries, who have discovered the above facts, of any
action that might be taken against Finley, Nancy and Peggy.

The questions below are designed to assist you in structuring an answer to a problem
based question on this topic, in addition to ensuring your answers deal with all of the
relevant issues raised, particularly detail on the law, case authority and application of the
facts of the scenario.

1. What is a fiduciary duty?

2. Who owes fiduciary duties in this scenario and why?

3. Has Peggy committed a breach of fiduciary duty in receiving directors’ fees? Is there any
case law in support of your answer?

4. Is Finley able to sell his shares to the trust? Is there any case law that can be applied or
distinguished here?

5. Does the independent valuation make a difference to your answer to Question 4? Case
authority for this?

6. Is Nancy able to receive directors’ fees? Is there any case law in support of your answer?
Is the trust’s 55% shareholding in this company relevant?

7. Is Nancy able to receive a payment to act as a trustee? Is there any statutory authority on
this point that can be applied?

8. If there has been a breach of trust what will be Finley, Nancy and Peggy’s liability? Any case
authority on this point?