An essential feature of a fiduciary relationship is the fiduciary’s duty to the beneficiary who is entitled to expect that the fiduciary will be concerned solely for the beneficiaries interests, and never for the fiduciary’s own.
It has been said that the hallmark of a fiduciary relationship is that the relative legal positions are such that one party is at the mercy of the others discretion.
Where there is a fiduciary obligation there is a relation in which the principles interest can be affected by, and are therefore dependent on the manner in which the fiduciary uses the discretion which has been delegated to him or her. The fiduciary obligation is the law’s blunt tool for the control of this discretion.
Typically, a breach of fiduciary duty captures circumstances in which there is a breach of the duty of loyalty owed by the fiduciary and include circumstances involving acting in the face of a conflict, preferring a personal interest, taking a secret profit, acting dishonestly or in bad faith, or a Friday of similar or related circumstances.
The term fiduciary, however, has been described as one of the most ill-defined, if not altogether misleading terms and are law.
Despite the fiduciary nature of the trustee beneficiary relationship, not every failure of a fiduciary is a breach of a fiduciary duty. Giradet v Crease & Co. (1987) 11 BCLR (2d) 361 at 362.
In Meng Estate v Liem 2019 BCCA 127 the court stated that not every potential breach of duty is a breach of fiduciary duty– a fiduciary may breach duties owed in contract or negligence without those breaches being transformed into breaches of fiduciary duty.
In Louie v Louie 2015 BC CA 247 at paragraph 23, the court stated” I start with the two most fundamental and long-standing obligations of fiduciary’s the “no conflict” rule and the “no profit” rule.
With respect to the no conflict rule, the the objective is to preclude the fiduciary from being swayed by considerations of personal interest.
The no profit rule requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of the fiduciary position or of opportunity or knowledge resulting from it. The objective is to preclude the fiduciary from actually misusing his or her position for his or her personal advantage.
Thus, not only as a trustee, not to profit from his or her position, equity has an inflexible rule that he is not allowed to put himself in a position where his interest in duty conflict. Bray v Ford (1896) AC 44 at 51