'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 his duty conflict.' (Lord Herschell in Bray v Ford (1896)). Critically discuss whether fiduciary duties are enforced too strictly in England and Wales.

Introduction: briefly define fiduciaries, considering the breadth of relationships that may be included. Introduce the core fiduciary obligation of loyalty to the principal (Bristol and West Building Society v Mothew) as founding the strict approach to fiduciary duties.

Explain the rationale of the rule: Lord Herschell continues in Bray v Ford to explain that the purpose of the rule is not based on morality but to guard against any possible conflict between fiduciaries' duties and their personal interests.

Discuss the strict approach taken by the case law: outline key decisions which demonstrate the strict approach taken to fiduciaries and unauthorized profits, eg Keech v Sanford. The honesty of the fiduciary is irrelevant if the profits are unauthorized.

Boardman v Phipps in depth: This is a key House of Lords' decision decided by a 3:2 majority in favour of a strict approach. Compare the majority reasoning with the dissenting judgment of Lord Upjohn, who felt that the reasonable man must perceive a 'real sensible possibility of conflict' between the fiduciary's interests and duties before liability is imposed. It is important to demonstrate an analysis of these positions – which is more convincing and why?

Consider how this position has been treated in the courts: consider the recent decision in Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (in administration) [2011]. Previously the courts had adopted a strict approach to ensuring a fiduciary could not benefit in any way from accepting bribes – research the creative reasoning used in Attorney-General for Hong Kong v Reid [1994] and Reading v Attorney-General [1951] AC 507. Whereas previous cases had suggested that the principal had a proprietary interest in bribes which allowed them to claim any additional profits made with bribe money, in Sinclair Investments the Court of Appeal declined to follow this approach and returned to the approach taken in Lister & Co v Stubbs (1890). This meant that while the fiduciary had a duty to account for bribe money received, he would not be required to disgorge any profits made using that money. Such a position undermined the strict approach traditionally taken towards fiduciary and potential conflicts of interest.

However, more recently in FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, the Supreme Court re-asserted the strict anti-corruption stance taken in Attorney-General for Hong Kong v Reid [1994]. This is a vital decision to read: not only is it clearly structured and written, it fully reviews the various arguments both for and against allowing a proprietary claim against bribe monies accepted by fiduciaries. It is an extremely useful case to read for an essay like this, as Lord Neuberger openly admits that there are a range of arguments which favour both positions. Faced with such a dilemma, the court decides that the most important factor to be considered is the policy of tackling corruption and bribery and not a strict adherence to the equitable principles which have informed the development of these remedies (and which would favour the more generous position taken in Lister v Stubbs (1890)).

Discuss alternative Commonwealth approaches: research and discuss the approach taken by the Australian courts, which have adopted Lord Upjohn's reasoning from Boardman v Phipps (e.g. Chan v Zacharia (1983) 154 CLR 178).

Consider justifications for strict approach: the strict approach encourages fiduciaries to act scrupulously in the discharge of their duties (FHR European Ventures LLP v Cedar Capital Partners LLC [2014] is extremely useful in this regard).

The liability for unauthorized profits is strict, but fiduciaries who make a full disclosure of their intentions may be protected (see, further, Queensland Mines v Hudson (1978) 18 ALR 1). Discuss the House of Lords award of a quantum meruit sum to Boardman in respect of his efforts in Boardman v Phipps.

Consider whether a softening of approach is possible: Conclusion: sum up your arguments and conclude whether the justifications for the strict approach in Bray v Ford are still convincing. These conclusions could address the following points: should fiduciaries be more able to pursue their own interests, especially when they act in good faith? What are the implications of the courts’ approach to fiduciaries who accept bribes? Is there a need for a more principled overall approach to this issue than currently exists?