Fiduciary duties: they are out there**

Fiduciary duties are generally seen as the most onerous of all legal duties and where they apply they require a person to act solely in another party's interests.

One case often referred to that highlights the extent of fiduciary duties is Loughnan v McConnell [2006] QSC 359.

Broadly the situation was as follows:

1. Loughnan was a lawyer and a co-executor and trustee of the estate of Mr McConnell (Ross).
2. Nadia McConnell (Ross’ wife) was the co-executor and trustee.
3. Ross’ accountant was also an executor.
4. Duckett Pty Ltd was the trustee of a family trust.
5. The sole shareholder of Duckett was Ross, who held two shares, and he and Nadia were its directors.
6. Under the will, the shares in Duckett were to be held by the trustees of the will on trust for Henry McConnell (the son of Ross and Nadia) if he was living on 1 August 2021.
7. After probate was granted, Nadia undertook a number of actions without reference to Loughnan, including relevantly -
1. in her role as sole director appointed herself as chairman of Duckett;
2. appointed her mother as an additional director of Duckett;
3. Duckett then resolved to vary the deed for the trust to (among other things) make Nadia the appointor of the trust and allow her to remain a beneficiary even if she remarried. The trust deed prior to the amendment excluded Nadia as a beneficiary if she remarried and gave the appointor powers to Nadia and Loughnan jointly.
4. Under the trust deed as amended, Nadia then by further deed removed Duckett as trustee and in its place appointed NEM Investments Pty Ltd of which she was sole director.

Loughnan made an application to court for directions concerning the trust and in particular unwinding the steps Nadia had unilaterally taken. The court confirmed that proceedings against Nadia should be commenced by Loughnan on the basis that she had breached her fiduciary duties as an executor and trustee of the estate.

The court also observed however that the primary concern was Nadia’s failure to disclose her intentions and that if consent of the co-executors had been obtained the actions would not have been reviewable.

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** For the trainspotters, the title of today's post is riffed from the Dinosaur Jnr song ‘Out there’.

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