Boardman v Phipps  UKHL 2
Boardman was the solicitor of a family trust which had a substantial shareholding in a company called Lester & Harris Ltd. At one-point Boardman and Tom Phipps, one of the beneficiaries of the trust, attended the general meeting of Lester & Harris and decided they could improve the performance of the company by acquiring majority shareholding. The two informed the other trustees of their plans and none raised any objection. Using personal funds, Boardman and Tom Phipps purchased the shares themselves and acquired a majority stake. The trust made $47,000 from this whilst Boardman and Tom Phipps made $75,000. John Phipps, another beneficiary of the trust, sued for the profits made by Boardman on grounds that Boardman breached his fiduciary duties to the trust.
The trial court and court of appeal held that Boardman breached the loyalty of the trust and should account for the profits. Boardman appealed to the House of Lords.
Whether Boardman and Tom Phipps must account for the profits made?
Boardman must account for the profits made.
Their Lordships upheld the principle that a person in a fiduciary position, as Boardman was, is not allowed to benefit from any transaction he enters with trust property. Boardman obtained knowledge about the performance of Lester & Harris Ltd by virtue of his fiduciary position. He then used this knowledge to inform his buying of shares in Lester & Harris Ltd, thereby profiting from his fiduciary position.