Profiting from a fiduciary position, while not expressly forbidden, is a feature that requires careful consideration by both trustees and beneficiaries, while in this matter, the billing of fees for legal services proved offensive and damaging for the party accused.
In 1895, the Governor of the Yorkshire College took issue with the vice-chairman after discovering that for a period of fourteen years, he had been providing legal function as a solicitor whilst holding a position based upon a voluntary footing.
Incensed at this opportunistic behaviour, the now appellant wrote a lengthy letter to the respondent, accusing him of a breach of fiduciary duty to the institution he served, while stressing that he had:
“[U]sed religious, educational and philanthropic schemes as a hypocritical cover for the purpose of serving his own ends.”
The respondent argued that the terms of the memorandum of association had provided him with rights to both charge and profit from his work, a contention that remained largely unproven at the point of litigation.
In the first hearing, the judge underemphasised the importance of the accusation levelled, instead focussing on the libellous tone used in the letter; which at the time, was circulated amongst three hundred other college governors.
Having convinced the jury that the respondent was justified in his collection of payment for legal services, the judge again placed greater weight upon the damaging effects of the written statements; after which, the jury returned a verdict in favour of the respondent with damages set at a lofty 600l.
Upon appeal, the appellant was left facing a similar outcome, after the Court agreed that the libel charges remained as effective as they would have should the respondent have been proved wrong, thus prompting a final plea before the House of Lords.
Here, the roots of the matter were revisited, along with Order XXXIX r.6 of the Rules of the Supreme Court 1883, which explained how:
“[A] new trial shall not be granted on the ground of misdirection or of the improper admission or rejection of evidence,…unless in the opinion of the Court to which the application is made some substantial wrong or miscarriage has been thereby occasioned in the trial…”Rules of Supreme Court 1883
It was thus uniformly agreed by the House that from the outset, the nature of the action had been grossly overlooked, and that the trial judge had clearly failed to acknowledge the gravity of a fiduciary breach; which if proven correct, went some way to justifying the claims made by the appellant at the outset.
Hence, the House held that there had been a clear miscarriage of justice, and that in failing to recognise this the Court of Appeal had conversely erred in judgment.
After which, the House reversed the Court of Appeal’s decision, directed a re-trial under the Supreme Court Rules, and ordered repayment of all courts costs and damages to the appellant, while reminding the parties that:
“[H]uman nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty, and thus prejudicing those whom he was bound to protect.”