Alford is a director for Company DEF, which puts him in a fiduciary position to the company.

The case of Reading vs AG1949 2 KB 232,236, a fiduciary relationship is held to arise whenever a plaintiff entrusts to the defendant property... and relies on the defendant to deal with such property for benefit of the plaintiff or purposes authorised by him and not otherwise, and whenever the plaintiff entrusts to the defendant a job to be performed...and relies on the defendant to procure for the plaintiff the best terms available. By the decision in Reading, it can safely be said that Alford stands in a fiduciary position with the company. As a fiduciary, he has a duty to act in the best interest of the principal, in this case, the company. He must not abuse his position of trust and confidence for his own advantage. As there are rooms for the abuse of this position by a trustee and potential breach of duties owed to the cest tui que, Equity impose a constructive trust to make him accountable for the breach of duty to the principal. The two main rule on the duty of a fiduciary are the no conflict rule and the unauthorised profits rule. The no conflict rule provides that a fiduciary must not place themselves in a position of conflict where a personal interest might conflict with their duty to act in the interest of the principal. The rationale behind this is that there is the possibility that a fiduciary may put his interest ahead of the interest of those he owe a duty to. The rule can be seen in Aberdeen Railway v Blaikie Bros1854 1 Macq 461 where a director of the company was also a partner in a business that supplied goods to the company. It was held that the director had a conflict of interest between his duty to act in the best interest of the company and his interest as a partner in the business. Lord Cranworth held, ...it is a universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can, have, personal interest conflicting, or which possibly may conflict, with the interest of those whom he is bound to protect. The facts of the case are similar to that of the given situation. Alford and Thomas have bought the reversion and granted a lease to the company. Here Alford has conflict between his duty to act for the benefit of the company as well his interest as the reversion holder. Even though the rent is at a lower value there is a possibility that they may increase it in the future. This is an example that Lord Cranworth means when he mentioned engagements which possibly may conflict between two interest. The no conflict rule is very clear on the point of a fiduciary entering into any agreements or engagements where there may arise a conflict between two interest. Going

back to the given facts, together with Thomas, Alford, have put himself in a position where his personal interest might conflict with the interest of the company. In holding this argument, there seems to be other possible ways which Alford could have settled the matter without putting himself in such a position. An example is giving the company a loan to allow the company to purchase the reversion themselves. By choosing to use his money to buy the reversion and then later granting a new lease to the company by imposing rent, he has put himself in a position where there is a possibility of a conflict arising, thus has breached the no conflict rule.

The other duty imposed on the fiduciary is not to make unauthorised or secret profits. If he is found guilty of this, he must account the profits to his principal. This was the rule laid down in Keech v Sandford1726 Sel. Cas Ch 61. In this case, the trustee had held the lease on trust for a minor. He later renewed the lease for himself when the renewal of the lease on behalf of the trust was refused. A constructive trust was created and the trustee was liable to account to the infant beneficiary for the profits he made. Lord Russell held in Regal (Hastings) v Gulliver Ltd1942 1 AllER that, The profiteer, however honest and well intentioned, cannot escape the risk of being called upon to account the profit. So if Alford made any unauthorised profit, he must account the profit to the company. In the case Boardman v Phipps1967 2 AC 46, a constructive trust was imposed on the ground that the profit by Boardman was made possible due to the information and opportunity came to him in his capacity as a fiduciary. This is because a fiduciary is not suppose to secure benefit for himself by taking advantage of the trust. In the given situation, Alford had been able to negotiate the patent while also receiving a commission was due to his capacity as a fiduciary. This is taking advantage of the trust for his personal gain. In the given situation, Alford as a fiduciary to DEF had agreed the deal with Thomas to negotiate to buy the patent with the condition that he receives $200 for his efforts. As the facts itself show that the deal was agreed between Alford and Thomas, not the company, it can be inferred that the company was not aware of the commission Alford will be receiving.

Therefore, the $200 is an unauthorised or secret profit which would mean the law from the cited cases applies and would amount to a breach of the unauthorised profit rule.