At this time of year, you probably have other things on your mind than French law. I therefore will not analyse any French case but rather give you my impression about an English one. Boardman v Phipps1 has radically changed my perception of estate issues even in French law. I will not discuss the facts nor the reasoning as I would do with a French case. I just would like to draw your attention to theoretical aspects that you may not value as much as I do if you have been educated and practice in a common law country. These theoretical aspects make trusts unique.
In this case, a solicitor owing a fiduciary duty to beneficiaries has acted without their effective consent2 to buy shares of a company in order to take control of it and improve its situation. He used information that he had obtained when acting as a fiduciary to achieve this goal3. He had to complete complex transactions. The operation was a success and the solicitor was asked to give back the profit made as a result. He has breached his fiduciary duty since he has put himself in a situation of conflict of interest and has made profit out of it. He however has been allowed to keep the profit made as a liberality.
In French law such a solution is hard to conceive, especially in the context of professional fiduciaries. Lord Upjohn in a dissenting judgement indicates that he does not think that there has been a breach of fiduciary duty. According to his Lordship, a breach of duty in this case would be the result of a severe application of equitable principles4. It may seem that there is nothing specific to trusts. After all, English law looks at facts rather than at principles. Concluding that a duty has been breached and allowing the fiduciary to keep profit that he has made can therefore be seen as a way to apply equitable principles while recognising the fiduciary's skill at the same time. This perception is fine. It seems to me that trust law uses the common law reasoning driven by facts in a specific way: it focuses on the interest of the beneficiary.
Lord Goff distinguishes Guinness v Saunders from Boardman v Phipps stating that a fiduciary cannot claim a remuneration for a successful operation that he would not be able to get by contract5. It seems to me that trusts are not only an element that disrupts contract or property law. Trust law directly examines beneficiary's interest without further consideration into contract law principles. In Guineas v Saunders, it appeared that the fiduciary had not done anything exceptional in the interest of the beneficiary. He therefore did not deserve any exceptional reward.
When trust law recognises an exceptional situation, it in fact confirms equitable principles by specifying their scope. It will soon be seen that sometimes in French law, cases rely on uncodifided rules that may seem disruptive, especially in a succession context. However, there is no ground in French law to discuss the interest of the beneficiary directly. It has to be seen in the light of the validity of a contract, company governance rules, incapacity, for example. Fiduciary law on the contrary provides the lawyer with adequate tools to solve a dispute according to the beneficiary's interest. This makes trusts unique.
We will discover the importance of some uncodifided elements in French law in January. In the meantime, I wish you all a warm and cheerful Christmas as well as all the best in 2018.