INTRODUCTION
Trusteeship
is a very imperative aspect of the Nigerian Legal system. This is because of
the relevance it commands with respect to private and property Law. In this
vain, the Powers and duties of a trustee operates side by side and are sometime
difficult to distinguish. In the words of Kekewich,
J., he stated thus:
“I
think that when persons are asked to become new trustees, they are bound to
inquire of what the property consists that is proposed to be handed over to
them and what the trusts are. They ought also to look into the trusts documents
and papers to ascertain what notices appear among them of incumbrances and
other matters affecting the trusts.”[1]
Similar
view was held in the case of Low v.
Bouvery.[2]
The trustee has many duties such as, duty of investment, duty of impartiality,
duty to distribute trust property, duty not to conflict profit and interest,
etc. However, for the purpose of this work, cognizance will be taken with
respect to the duty not to conflict profit and interest. For a trustee to give
a perfect job, interest must be secondary. But how do trustees threat this
aspect of their fiduciary duty? This will form the basis of our discourse. Thus,
the aim of this work is to take a look at the duty of the trustee not to
conflict profit and interest. In this light, a case study of the case of William v. Barton[3] will be considered. In other words,
the aim of this work is to report and give an arrant appraisal of the above
stated case.
FACTS OF THE CASE OF
WILLIAM v. BARTON [[1927] 2 Ch. D.
The
defendant was a trustee to a trustee estate, of which he is a co-trustee. He
was formerly a stockbroker but ceased to be a member of the stock exchange in
1919. In 1920, he entered the employment of a firm of stockbrokers, George
Burnand & Co. The terms of the employment was that he is obliged to provide
to the firm his services in connection with Bank of England transfer work and
for the information provided, he will be paid half the commission earned when
relied on. In 1924, Sir John Roper Parkington, the testator of the defendant
died. By this, it became necessary to have his securities valued. However,
through the pressure of the defendant, George Burnand & Co, had the
testators securities valued. After the valuation, the trustee’s share of half
the acquired commission was paid to him. Being dissatisfied, the plaintiff,
co-trustee, sued.
SYNOPSIS OF ISSUE:
That the defendant is not entitled to make profit from his trusteeship.
ARGUMENT
OF THE PLAINTIFF
The
counsels, Spens K.C. and R. M. pattisson argued as follows:
(1)
That the defendant’s salary depends upon the amount of business introduced by
him. By virtue of his position as trustee, the defendant has introduced to his
firm the business of the trust estate and has thereby increased his profit.
Where a person has the management of property as a trustee he is not entitled
to get any personal profit by availing himself of his position as affirmed in
the case of In re Duke of Cleverland’s Settled Estates[4].
(2)
The defendant cannot retain for his own benefit the half commission paid to him
by his firm for the introduction of his business, but is bound to treat it as a
part of the testator’s estate.[5]
For anything to the contrary would amount to a conflict of his duty and
interest.
ARGUMENT
OF THE DEFENDANT
Gavin
Simonds K.C. and F. McMullan, counsels for the defendant argues as follows:
Relying on the case of In re Dover Coalfield Extension,
Ld[6],
it was held that the sum paid to the defendant is remuneration earned by him as
a clerk and not as a trustee, and therefore he is not liable to account. In
that case, a certain trustee worked for Dover Company. He received remuneration
for work done as a director of Kent Company. It was held that he received the
same not as a profit so to say from the use of the Dover Company’s shares.
HELD:
RUSSEL J, whilst giving the leading judgment stated as follows:
1)
As a trustee, it is his duty to give the estate the benefit of his unfettered
advice in choosing the stockbrokers to act for the estate.
2)
That a person who has the management of property as a trustee is not permitted
to gain any profit by availing himself of his position, and will be a
contrastive trustee of any such profit for the benefit of the persons equitably
entitled to the property. On the same principle a trustee has no right to
charge for his time and trouble. The rule is stated in the case of Bray
v. Ford,[7]
where the court stated thus:
“It
is an inflexible rule of a court of Equity that a person in a fiduciary
position …. Is not, unless otherwise expressly provided, entitled to make a
profit; he is not allowed to put himself in a position where his interest and
duty conflict”.
Based
on the foregoing holding of the court, the court ruled that the plaintiff is
entitled to the declaration asked for. If necessary, an inquiry must be
directed, but if the amount can be agreed it may be inserted in the order and
order made for the payment of the agreed amount.
CONCLUSION
The
duties of a trustee cannot be over emphasized. A trustee is an agent of trust
and as such, guided by certain ethical principles which are more or less the
duties stated above. Any act to the contrary is same as putting palm oil in drinkable
water. Honesty is the watchword of a trustee, hence the rationale behind the
prohibition of duty and interest conflict.