Can mere incompetence constitute a breach of fiduciary duty?

Author:George Beaton
Position:Graduated English LLB Student at the University of Dundee. George would like to thank the editorial board and the anonymous peer reviewer for their kind comments.
Pages:1-4
Dundee Student Law Review, Vol. 5(1+2), No.1
Can mere incompetence constitute a breach of
fiduciary duty?
George Beaton
Introduction
Trustees, when given the responsibility of administering a trust, are subjected to a number of
duties. These general duties are commonly found within a trust instrument, should one exist.
Simultaneously, whilst in office, trustees are required to act with good faith and confidence
on behalf of the beneficiaries, giving rise to what is said to be a ‘fiduciary relationship’. This
relationship bestows upon the trustee another category of obligations, known as ‘fiduciary
duties’.
This essay will give a brief overview of what seems to be the most reliable definition of a
fiduciary and their function within a trust relationship. In addition, it shall identify the
fundamental obligations which derive from fiduciary relationships. It will then critically
discuss the courts’ disinclination to regard mere incompetence as a breach of fiduciary duty.
Rather, it will illustrate that the courts are likely to place incompetence under negligence in
tort or the breach of a general duty of care, as is evidenced by the common law.
What are fiduciary duties, and what are their functions?
An appropriate starting point is to explore what the obligations under a fiduciary relationship
may entail. The English legal system does not have a settled definition for the term
‘fiduciary’. That said, a number of relationships have been regarded as fiduciary per se.
These include: principal and agent; director and company, solicitor and client; and, in trusts
law, trustee and beneficiary.1 A frequently cited, and therefore reliable, definition is
delivered by Millet LJ in Bristol & West Building Society v Mothew,2 who describes a
fiduciary as someone who has elected to act for another ‘in circumstances which give rise to a
relationship of trust and confidence’.3 Such a definition leaves the situations in which
Graduated English LLB Student at the University of Dundee. George would like to thank the edito rial board
and the anonymous peer reviewer for their kind comments.
1 Sukhninder Panesar, ‘The nature of fiduciary liablity in English law’ (2007) 1 2 Cov. L. J. 1, 2.
2 Bristol & West Building Society v Mothew [1998] Ch 1.
3 ibid [18].

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