Boardman v Phipps [1967] 2 AC 46

Key Points

  • A fiduciary agent has to account to for any profits acquired by reason of the his fiduciary position and the opportunity or knowledge resulting from it, even if the principals could not have made the profits themselves with such opportunity or knowledge, unless the principal has given his informed consent
  • The profits will be held on constructive trust for the principal by the fiduciary agent, but the board may make allowance to the fiduciary agent for expenditure and work expended to acquire the profit


  • The defendants, Boardman and another, were acting as solicitors to the trustees of a will trust, and therefore were fiduciaries but not trustees
  • The trustees were minority shareholders in a private company which was being inefficiently managed
  • Boardman and one of the beneficiaries under the trust, in good faith, personally financed the purchase of a controlling interest in the company, in order to reorganise it to the benefit of the trust holding
  • Both the personal and trust holdings increased in value as a result of the reorganisation; one of the other beneficiaries therefore sought an account of the personal profits made by the defendants
  • Wilberforce J, in the High Court, held that the defendants were liable to account for the profit less the money spent on realising that profit; but at the same time made a liberal allowance for the work put in to realise that profit
  • The defendants appealed to the Court of Appeal, who dismissed their appeal; they subsequently appealed to the House of Lords

Held (House of Lords)

  • Appeal dismissed; the defendants were liable to account for the shares and profits to the trust beneficiaries, but the liberal allowance was maintained

Lord Hodson

A fiduciary shall not profit from his position

  • “The proposition of law involved in this case is that no person standing in a fiduciary position, when a demand is made upon him by the person to whom he stands in the fiduciary relationship to account for profits acquired by him by reason of his fiduciary position and by reason of the opportunity and the knowledge, or either, resulting from it, is entitled to defeat the claim upon any ground save that he made profits with the knowledge and assent of the other person.”: p.105B-C

Current case

  • ‘The appellants obtained knowledge by reason of their fiduciary position and they cannot escape liability by saying that they were acting for themselves and not as agents of the trustees. Whether or not the trust or the beneficiaries in their stead could have taken advantage of the information is immaterial”: p. 111A
  • “The question whether or not there was a fiduciary relationship at the relevant time must be a question of law and the question of conflict of interest directly emerges from the facts pleaded, otherwise no question of entitlement to a profit would fall to be considered. No positive wrongdoing is proved or alleged against the appellants but they cannot escape from the consequences of their acts involving liability to the respondent unless they can prove consent.”: p. 112A

Lord Guest

  •  “I have no hesitation in coming to the conclusion that the appellants hold the Lester & Harris shares as constructive trustees and are bound to account to the respondent…In the present case the knowledge and information obtained by Boardman was obtained in the course of the fiduciary position in which he had placed himself. The only defence available to a person in such a fiduciary position is that he made the profits with the knowledge and assent of the trustees. It is not contended that the trustees had such knowledge or gave such consent.” p. 117D – G

Lord Upjohn

  • “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.”: p. 123C
  • Whether there is a possibility of conflict depends on whether ‘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’: p. 124B


  • Note that in this case, not only did the principals, which are the trust beneficiaries, no lose anything, but they actually profited from the increase in value of shares held under the trust as a result of the actions of defendants – thus it can be surmised that regardless of whether any wrongdoing or harm was caused to the principal, the fiduciary is liable for all profits acquired as a result of his position
Constructive trust cases Fiduciary Duties
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