Trusts and fiduciary duty

The law in relation to trusts and fiduciary duties is enforced by a branch of the law known as Equity. Equity is ancient judge-made-law that overlays the common law and statute law. In the early days the Equity courts took it upon themselves to arbitrarily change the outcome of cases based on the Judge’s ideals of what was just. This did more harm than good, because it meant no one could be certain of what their rights were. So as time went by, Equity developed fixed principles that allowed the outcome of cases to be known beforehand and not dependant upon the whim of the judge.

The most important work of Equity is in upholding Trusts and duties of utmost good faith (fiduciary duties).

Trusts

A trust is an arrangement whereby the legal owner of property (including land, financial assets, goods and even businesses) hold that property not for their own benefit but for the benefit of another. The person entitled to the benefit of the property is known as the beneficial owner. The legal owner (trustee) is owner in name only, everything he does must be for the benefit of the beneficial owner (beneficiary of the trust). The trustee owes a fiduciary duty (a duty of utmost good faith) to the beneficiaries.

Bransgroves Lawyers are highly conversant with trust law. This includes both express trusts and resulting trusts. Much of property law and probate law involves trusts and our partners’ constant exposure through prolific litigation in these two areas and academic research keeps us at the forefront of knowledge when it comes to establishing and enforcing trusts.

Fiduciary duties

Fiduciary duties are the obligations of utmost good faith imposed by the law of Equity on a person in circumstances where the person owing the duty (fiduciary) is bound to act for the benefit of another (the principal). In a fiduciary relationship the principal, in a position of vulnerability, reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relationship good conscience requires the fiduciary to act at all times for the sole benefit and interests of the principal. Equity will not allow a person owing fiduciary duties to enter into any transaction where the fiduciary has, or could have, a conflict of interest with that of the person to whom the trust is owed. It will oblige the fiduciary to act with loyalty and punish (through equitable damages), apprehend (through injunctions), and reverse (through account of profits) breaches of fiduciary duty.

Bransgroves Lawyers are highly conversant with the law of fiduciary duties. On many occasions it is appropriate to plead breach of fiduciary duty alongside other relief.  In many situations we plead that breaches of a fiduciary duty result in a trust arising and we pursue existing pools of money held by third parties on that basis.