What is a fiduciary in Singapore?
A fiduciary is a person who has a legal obligation to another person, also known as the beneficiary, due to a relationship built on trust and confidence. This relationship typically involves the following elements:
- The fiduciary has the authority or freedom to make decisions or take actions.
- The fiduciary can utilise this authority or freedom in a manner that impacts the legal or practical interests of the beneficiary.
- The beneficiary is in a position of vulnerability or dependence on the fiduciary.
Who is a fiduciary in Singapore?
These are the various types of fiduciaries and the individuals to whom they owe fiduciary obligations:
- Trustees have fiduciary duties to the beneficiaries.
- Directors owe fiduciary duties to the company.
- Agents have fiduciary duties to the principal.
- Lawyers have fiduciary duties to their clients.
- High-ranking employees owe fiduciary duties to their employers.
What duties does a fiduciary fulfil?
Fiduciaries are typically obligated to adhere to the following duties:
- Duty to avoid conflicts of interest: Fiduciaries, such as lawyers, cannot represent conflicting clients, and their interests should not conflict with those of the beneficiaries.
- Duty to avoid unauthorised profits: Fiduciaries, like directors of a company, may breach their duty if they benefit from opportunities that rightfully belong to the entity they represent.
What are the exceptions to a fiduciary’s duty in Singapore?
- Generally, the beneficiary to whom the fiduciary owes the duty can waive it. As such, the fiduciary may be released from the duty with the beneficiary’s consent.
- Additionally, in the case of a company-director relationship, the company may ratify certain actions of the director that would otherwise constitute a breach of fiduciary duty.
What happens if a fiduciary fails to fulfil their duty?
When a fiduciary duty is breached, the beneficiary can take legal action against them. To succeed in a lawsuit, the beneficiary must provide evidence that a fiduciary duty existed, was violated, and resulted in harm.
The beneficiary may seek monetary compensation for lost profits, income, or property losses.
In addition to damages, the Singapore Courts offer other remedies for breaching a fiduciary duty, including:
- Cancelling a contract that involved the breach of fiduciary duty.
- Requiring the fiduciary to provide fair compensation to the beneficiary.
- Requiring the fiduciary to account for any profits gained from the breach.
- Transferring ownership of property from the fiduciary to the beneficiary.
- Obtaining court orders to prevent the fiduciary from further breaches.
