Keech v Sandford
A trustee who renews a lease held on trust for his own benefit holds the new lease on trust for the beneficiary, even if the landlord would not have renewed it for the beneficiary.
Facts
A trustee held a lease of the profits of Romford market on trust for a child. When the lease was about to expire, the trustee asked the landlord to renew it for the benefit of the child, but the landlord refused, because a lease to a child could not be enforced against him. The trustee then took a new lease for himself. The child sued, claiming that the trustee held the new lease on trust for him.
Legal principle
Lord King LC held that the trustee held the new lease on trust for the child. He said that, although it may seem hard that the trustee is the only person who could not have the lease, it is very proper that the rule should be strictly pursued and not in the least relaxed, because it is very obvious what would be the consequence of letting trustees have the lease on refusal to renew to the beneficiary. The case established the strict rule that a fiduciary must not profit from his position, even where the beneficiary could not have obtained the benefit.
Related cases on fiduciary duties
- Attorney General for Hong Kong v Reid [1994] 1 AC 324
- Boardman v Phipps [1967] 2 AC 46
- Bray v Ford [1896] AC 44
- Bristol and West Building Society v Mothew [1998] Ch 1
- Re Duke of Norfolk's Settlement Trusts [1982] Ch 61
- FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, [2015] AC 250
- Guinness plc v Saunders [1990] 2 AC 663
- Holder v Holder [1968] Ch 353
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