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SQE – Equity and Trust – Is Breach of Trust the Same as Breach of Fiduciary Duty?
Short Answer
❌ No.
A breach of trust is not exactly the same as a breach of fiduciary duty, although the two concepts are closely related and often overlap.
Introduction
Both breach of trust and breach of fiduciary duty involve wrongdoing by a person who owes obligations to another. Both arise within equity and both may lead to equitable remedies such as:
Breach of Trust
Definition
A breach of trust occurs where:
a trustee fails to comply with the duties imposed by the trust.
The trustee violates obligations arising from:
Examples of Breach of Trust
A trustee commits breach of trust if they:
Example
Suppose Daniel is trustee of the Carter Family Trust.
Daniel improperly removes:
£200,000
from the trust to buy a car.
This is:
✅ breach of trust.
Breach of Fiduciary Duty
Definition
A breach of fiduciary duty occurs where:
a fiduciary acts disloyally or contrary to the interests of the person to whom duties are owed.
Fiduciary duties are duties of:
Fiduciaries Are Broader Than Trustees
Trustees are fiduciaries, but many other people are also fiduciaries, including:
✅ all trustees are fiduciaries,
but
❌ not all fiduciaries are trustees.
Examples of Breach of Fiduciary Duty
A fiduciary breaches duty if they:
Example
Suppose a company director secretly profits from a business opportunity belonging to the company.
This is:
✅ breach of fiduciary duty,
even though no trust exists.
Relationship Between the Two
Important Principle
Every trustee owes fiduciary duties.
Therefore:
✅ some breaches of trust are also breaches of fiduciary duty.
However:
❌ not every breach of trust is fiduciary in nature.
Key Distinction
Fiduciary duties focus mainly upon:
✅ loyalty and conflicts of interest.
Trust duties are broader and also include:
Example of Breach of Trust But Not Fiduciary Breach
Suppose Daniel, as trustee:
✅ breach of trust,
because he acted negligently.
But it may not be:
❌ breach of fiduciary duty,
because there was no disloyalty or conflict of interest.
Example of Both
Suppose Daniel uses trust money to buy property for himself.
This is:
✅ breach of trust,
and
✅ breach of fiduciary duty.
Why?
Because Daniel:
Fiduciary Duties Are Proscriptive
An important distinction is that fiduciary duties are usually:
proscriptive,
not prescriptive.
This means fiduciary law mainly tells fiduciaries what they:
❌ must not do,
such as:
Trust Duties Can Be Positive Duties
Trustees also owe:
✅ positive administrative duties,
including:
Remedies
The remedies often overlap.
Remedies for Breach of Trust
Remedies for Breach of Fiduciary Duty
Key Cases
Breach of Fiduciary Duty
Breach of Trust
Academic View
Modern equity scholars often emphasise that:
Simple Comparison
Breach of Trust
Concerned with:
✅ violation of trust obligations generally.
Includes:
Breach of Fiduciary Duty
Concerned with:
✅ disloyalty and conflicts of interest.
Includes:
Key SQE Principle
All trustees are fiduciaries.
Therefore:
✅ a trustee may commit both breaches simultaneously.
However:
❌ breach of trust is broader than breach of fiduciary duty.
Conclusion
Breach of trust and breach of fiduciary duty are closely connected but distinct concepts within equity. A breach of trust occurs whenever a trustee fails to comply with obligations imposed by trust law, while a breach of fiduciary duty specifically concerns disloyalty, conflicts of interest, and misuse of fiduciary position. Although many breaches of trust also involve fiduciary wrongdoing, some breaches of trust arise merely from negligence or poor administration rather than disloyal conduct. The distinction is important because fiduciary duties focus primarily on loyalty, whereas trust obligations extend more broadly to the proper administration and management of trust property.
Sources of Reference
Boardman v Phipps [1967] 2 AC 46 (HL).
Keech v Sandford (1726) Sel Cas Ch 61.
Target Holdings Ltd v Redferns [1996] AC 421 (HL).
Foskett v McKeown [2001] 1 AC 102 (HL).
Bristol and West Building Society v Mothew [1998] Ch 1 (CA).
Alastair Hudson, Equity and Trusts (11th edn, Routledge 2022).
James Penner, The Law of Trusts (12th edn, OUP 2020).
Graham Virgo, The Principles of Equity and Trusts (5th edn, OUP 2024).
John McGhee (ed), Snell’s Equity (35th edn, Sweet & Maxwell 2024).
Short Answer
❌ No.
A breach of trust is not exactly the same as a breach of fiduciary duty, although the two concepts are closely related and often overlap.
Introduction
Both breach of trust and breach of fiduciary duty involve wrongdoing by a person who owes obligations to another. Both arise within equity and both may lead to equitable remedies such as:
- equitable compensation;
- account of profits;
- constructive trusts;
- tracing;
- and injunctions.
Breach of Trust
Definition
A breach of trust occurs where:
a trustee fails to comply with the duties imposed by the trust.
The trustee violates obligations arising from:
- the trust deed;
- trust law;
- fiduciary obligations;
- or statutory duties.
Examples of Breach of Trust
A trustee commits breach of trust if they:
- misappropriate trust money;
- invest imprudently;
- distribute assets incorrectly;
- fail to safeguard trust property;
- act outside trustee powers;
- or fail to act impartially between beneficiaries.
Example
Suppose Daniel is trustee of the Carter Family Trust.
Daniel improperly removes:
£200,000
from the trust to buy a car.
This is:
✅ breach of trust.
Breach of Fiduciary Duty
Definition
A breach of fiduciary duty occurs where:
a fiduciary acts disloyally or contrary to the interests of the person to whom duties are owed.
Fiduciary duties are duties of:
- loyalty;
- good faith;
- honesty;
- and avoidance of conflicts of interest.
Fiduciaries Are Broader Than Trustees
Trustees are fiduciaries, but many other people are also fiduciaries, including:
- company directors;
- solicitors;
- agents;
- partners;
- executors;
- and financial advisers.
✅ all trustees are fiduciaries,
but
❌ not all fiduciaries are trustees.
Examples of Breach of Fiduciary Duty
A fiduciary breaches duty if they:
- make secret profits;
- place themselves in conflicts of interest;
- misuse confidential information;
- act disloyally;
- or prioritise personal interests over beneficiaries.
Example
Suppose a company director secretly profits from a business opportunity belonging to the company.
This is:
✅ breach of fiduciary duty,
even though no trust exists.
Relationship Between the Two
Important Principle
Every trustee owes fiduciary duties.
Therefore:
✅ some breaches of trust are also breaches of fiduciary duty.
However:
❌ not every breach of trust is fiduciary in nature.
Key Distinction
Fiduciary duties focus mainly upon:
✅ loyalty and conflicts of interest.
Trust duties are broader and also include:
- administrative duties;
- investment duties;
- accounting obligations;
- and management responsibilities.
Example of Breach of Trust But Not Fiduciary Breach
Suppose Daniel, as trustee:
- invests trust funds carelessly;
- but honestly and without self-interest.
✅ breach of trust,
because he acted negligently.
But it may not be:
❌ breach of fiduciary duty,
because there was no disloyalty or conflict of interest.
Example of Both
Suppose Daniel uses trust money to buy property for himself.
This is:
✅ breach of trust,
and
✅ breach of fiduciary duty.
Why?
Because Daniel:
- misused trust assets;
- acted disloyally;
- and placed personal interests above beneficiaries.
Fiduciary Duties Are Proscriptive
An important distinction is that fiduciary duties are usually:
proscriptive,
not prescriptive.
This means fiduciary law mainly tells fiduciaries what they:
❌ must not do,
such as:
- making secret profits;
- entering conflicts of interest;
- acting disloyally.
Trust Duties Can Be Positive Duties
Trustees also owe:
✅ positive administrative duties,
including:
- investing properly;
- keeping accounts;
- safeguarding trust property;
- and distributing assets correctly.
Remedies
The remedies often overlap.
Remedies for Breach of Trust
- equitable compensation;
- tracing;
- constructive trusts;
- equitable liens;
- account of profits.
Remedies for Breach of Fiduciary Duty
- account of profits;
- constructive trusts;
- rescission;
- equitable compensation;
- injunctions.
Key Cases
Breach of Fiduciary Duty
- Boardman v Phipps
- Keech v Sandford
Breach of Trust
- Target Holdings Ltd v Redferns
- Foskett v McKeown
Academic View
Modern equity scholars often emphasise that:
- breach of fiduciary duty concerns loyalty;
- while breach of trust concerns broader trustee obligations.
Simple Comparison
Breach of Trust
Concerned with:
✅ violation of trust obligations generally.
Includes:
- negligence;
- mismanagement;
- improper investments;
- wrongful distributions.
Breach of Fiduciary Duty
Concerned with:
✅ disloyalty and conflicts of interest.
Includes:
- secret profits;
- self-dealing;
- conflicts;
- misuse of position.
Key SQE Principle
All trustees are fiduciaries.
Therefore:
✅ a trustee may commit both breaches simultaneously.
However:
❌ breach of trust is broader than breach of fiduciary duty.
Conclusion
Breach of trust and breach of fiduciary duty are closely connected but distinct concepts within equity. A breach of trust occurs whenever a trustee fails to comply with obligations imposed by trust law, while a breach of fiduciary duty specifically concerns disloyalty, conflicts of interest, and misuse of fiduciary position. Although many breaches of trust also involve fiduciary wrongdoing, some breaches of trust arise merely from negligence or poor administration rather than disloyal conduct. The distinction is important because fiduciary duties focus primarily on loyalty, whereas trust obligations extend more broadly to the proper administration and management of trust property.
Sources of Reference
Boardman v Phipps [1967] 2 AC 46 (HL).
Keech v Sandford (1726) Sel Cas Ch 61.
Target Holdings Ltd v Redferns [1996] AC 421 (HL).
Foskett v McKeown [2001] 1 AC 102 (HL).
Bristol and West Building Society v Mothew [1998] Ch 1 (CA).
Alastair Hudson, Equity and Trusts (11th edn, Routledge 2022).
James Penner, The Law of Trusts (12th edn, OUP 2020).
Graham Virgo, The Principles of Equity and Trusts (5th edn, OUP 2024).
John McGhee (ed), Snell’s Equity (35th edn, Sweet & Maxwell 2024).
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