16. Resulting and constructive trusts

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. A resulting trust refers to a trust under which, in certain circumstances, the beneficial interest jumps back to the settlor. Resulting trusts are created in accordance with the presumed intention of the settlor or donor and are enforced against the personal wishes of the constructive trustee. Under s 53(2) of the Law of Property Act 1925, the creation or operation of resulting, implied or constructive trusts is not subject to any written formality. This chapter deals with resulting and constructive trusts, and how they differ from each other. It examines how the law of resulting trusts applies to the many contexts in which they occur, the nature of constructive trusts, presumed resulting trusts on a voluntary transfer, constructive trusts in comparison with fiduciary liability to account, illegality and the presumption of a resulting trust, the presumption of advancement and the range of situations in which constructive trusts are to be found. The chapter also discusses presumed resulting trusts where express trusts do not exhaust the whole of the beneficial interest.

17. Company officers, secretary and auditor

This chapter focuses on company officers (secretaries, auditors and managers), with emphasis on their responsibilities and liabilities under the Companies Act 2006 (CA 2006) and the appropriate sanctions for breach of its requirements. It first considers who, in general terms, is an ‘officer’ or ‘manager’ of a company for the purposes of criminal or fiduciary liability. Then it deals with the appointment and qualifications of secretaries and the appointment and reappointment of auditors. There is discussion of auditors’ remuneration, integrity and independence, the required contents of an auditor’s report and an auditor’s investigative powers. There is analysis of an auditor’s liability in contract and tort for negligence in carrying out the audit and negligent misstatement in an auditor’s report. The chapter cites relevant legislation, including CA 2006 and UK Corporate Governance Code, and considers two particularly significant cases: Caparo Industries plc v Dickman [1990] 2 AC 605 and Stone and Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] AC 1391.

17. Company officers, secretary and auditor

This chapter focuses on company officers (secretaries, auditors and managers), with emphasis on their responsibilities and liabilities under the Companies Act 2006 (CA 2006) and the appropriate sanctions for breach of its requirements. It first considers who, in general terms, is an ‘officer’ or ‘manager’ of a company for the purposes of criminal or fiduciary liability. Then it deals with the appointment and qualifications of secretaries and the appointment and reappointment of auditors. There is discussion of auditors’ remuneration, integrity and independence, the required contents of an auditor’s report and an auditor’s investigative powers. There is analysis of an auditor’s liability in contract and tort for negligence in carrying out the audit and negligent misstatement in an auditor’s report. The chapter cites relevant legislation, including CA 2006 and UK Corporate Governance Code, and considers two particularly significant cases: Caparo Industries plc v Dickman [1990] 2 AC 605 and Stone and Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] AC 1391.

Legal Protection Against Bad Debtor Who is Bound by the Fiduciary Liability Insurance Against Auction Conducted by Creditor in Padang City

The execution of the fiduciary liability insurance, based on the fiduciary liability insurance certificate, has the executive power that is the same as the court decision that has obtained permanent legal force. The right to execute arises since a default occurs by a debtor whose creditor has the right to sell the object of the fiduciary liability insurance on his own power through auction. The purpose of this study was to find out how the execution process of the fiduciary liability insurance carried out by the company to the bad debtor and the form of legal protection against the bad debtor who is bound by the fiduciary liability insurance after the collateral object is auctioned by the creditor. After the auction is conducted, the author is interested in conducting a research discussing on the forms of legal protection against debtor who is bound by the fiduciary liability insurance after the collateral object is auctioned by the creditor. This research applies empirical juridical method by using primary and secondary data. The results of the study found that legal protection for bad debtor, who is bound by the fiduciary liability insurance after the collateral object is auctioned, is the elimination of fiduciary duties on objects guaranteed by fiduciary liability insurance and the return of the remaining credit obtained from the auction by the creditor to the debtor.

The Identification of Fiduciary Relationships

This chapter provides synthetic analysis of the law on fiduciary relationships, focusing on the identification of fiduciary relationships and fiduciary relationship formation and termination. The chapter analyzes the significance of fiduciary relationships to fiduciary liability. It discusses status- and fact-based methods of identifying fiduciary relationships, as well as analogical and definitional variants on these methods. The chapter concludes by highlighting the increasing convergence on powers-based definitions of the fiduciary relationship, and by explaining the merits of definitional reasoning in judicial identification of fiduciary relationships.

Fiduciary Principles in Banking

This chapter examines fiduciary principles in banking law, focusing on both commercial and investment banking. It considers when fiduciary duties exist and what they require, the range of remedies available for breach, and the various techniques banks use to exclude or modify fiduciary duties. One puzzling feature of the legal landscape is that clients bring actions less often than banks’ size and conduct might suggest, contributing to legal uncertainty. Fiduciary law nevertheless constrains banks’ activities: courts have cast banks as fiduciaries in all of the major commercial and investment banking functions, including making loans and accepting deposits, advising on merger and acquisition transactions, and underwriting securities offerings, although banks face greater risk in some areas than others. Banks have responded by disclaiming fiduciary duties and using information barriers/Chinese walls, and yet recent judicial decisions refuse to accept these measures as automatically effective for avoiding fiduciary liability. Courts insist that they, rather than the parties themselves, determine whether fiduciary duties exist and what they require. The law thus diverges from some theoretical accounts of fiduciary doctrine, posing challenges for banks and new questions for scholars.

16. Resulting and constructive trusts

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. A resulting trust refers to a trust under which, in certain circumstances, the beneficial interest jumps back to the settlor. Resulting trusts are created in accordance with the presumed intention of the settlor or donor and are enforced against the personal wishes of the constructive trustee. Under s 53(2) of the Law of Property Act 1925, the creation or operation of resulting, implied or constructive trusts is not subject to any written formality. This chapter deals with resulting and constructive trusts, and how they differ from each other. It examines how the law of resulting trusts applies to the many contexts in which they occur, the nature of constructive trusts, presumed resulting trusts on a voluntary transfer, constructive trusts in comparison with fiduciary liability to account, illegality and the presumption of a resulting trust, the presumption of advancement and the range of situations in which constructive trusts are to be found. The chapter also discusses presumed resulting trusts where express trusts do not exhaust the whole of the beneficial interest.

2018 WA Lee Equity Lecture:

May I commence by acknowledging the honour done to me by asking me to give this, the nineteenth WA Lee lecture. I studied Equity, in part, under Professor Lee and he was a prominent member of the teaching community at my University College. At that time, and later, I came to appreciate the extent to which his reputation was established, not just in Australia, but throughout the common law world. Perhaps the most telling of a number of indications, once publications such as the masterful Ford & Lee are put to one side, is the fact that when Donovan Waters QC, former Oxford don, STEP Honorary Member and one of the negotiators of the Hague Trust Convention,[1] visited Australia as a guest of STEP, the one Australian he specifically asked us to arrange for him to meet was Tony Lee. So to give this lecture before an audience including Tony Lee, fills me with not a little trepidation. He – and no doubt many others of you – will be immediately aware of any errors or imperfections. It is small consolation that, on this occasion at least, he will not be marking the paper. In choosing the topic for the paper, I had in mind a paper given by the Hon Dyson Heydon, AC QC, to the first STEP Australia Conference.[2] Mr Heydon QC observed that: This paper is an edited version of a paper presented at the 2018 WA Lee Equity Lecture delivered on 21 November 2018 at the Banco Court, Supreme Court of Queensland, Brisbane. * AM RFD QC; BA (UQ), LLB (UQ), LLM (UQ). [1] Adopted by Australia and implemented in the Trusts (Hague Convention) Act 1991 (Cth). [2] JD Heydon, ‘Modern Fiduciary Liability: the Sick Man of Equity’ (2014) 20 Trusts & Trustees 1006.

17. Company officers, secretary and auditor

This chapter focuses on company officers (secretaries, auditors and managers), with emphasis on their responsibilities and liabilities under the Companies Act 2006 (CA 2006) and the appropriate sanctions for breach of its requirements. It first considers who, in general terms, is an ‘officer’ or ‘manager’ of a company for the purposes of criminal or fiduciary liability. Then it deals with the appointment and qualifications of secretaries and the appointment and reappointment of auditors. There is discussion of auditors’ remuneration, integrity and independence, the required contents of an auditor’s report and an auditor’s investigative powers. There is analysis of an auditor’s liability in contract and tort for negligence in carrying out the audit and negligent misstatement in an auditor’s report. The chapter cites relevant legislation, including CA 2006 and UK Corporate Governance Code, and considers two particularly significant cases: Caparo Industries plc v Dickman [1990] 2 AC 605 and Stone and Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] AC 1391.

Corporate Fiduciary Duties and Prudential Regulation of Financial Institutions

While corporate fiduciary duties in many jurisdictions are generally understood to be owed to shareholders, recent Canadian Supreme Court cases have held that directors owe their duties to the corporation, period, not to shareholders or any other stakeholders. This development has introduced significant indeterminacy to the law since it is not clear what such a conception of the duty requires. The Supreme Court did, however, make one clear statement: it held that directors owe a fiduciary duty to ensure that their corporations obey statutory law. Such a duty encourages compliance with law, but may over-encourage compliance: individual directors do not necessarily gain personally from legal breaches, but may lose personally from them because of fiduciary liability, so they will have excessively strong incentives to avoid such breaches. The Article connects the fiduciary duty to obey law with recent developments in financial regulation that have increased the obligations on directors of financial institutions to oversee risk. By requiring directors to be engaged with risk at a governance level, regulators have enhanced the probability that directors will face liability under their fiduciary duties if their institutions do not comply with financial regulations. As the Article explains, the policy tradeoff between enhanced compliance benefits and over-compliance costs of fiduciary liability is different in the context of financial regulation from that in other settings. For example, significant corporate penalties, as opposed to penalties borne by individual directors, may be inconsistent with the prudential goals of regulation, perhaps because of toobig- to-fail concerns. The fiduciary duty to cause the corporation to obey financial regulation, and a stricter application of this duty than the highly deferential standard that exists in Delaware law, has advantages that do not exist in other legal and regulatory contexts.