As underlined in the Civil Code, Chapter 16 of the Laws of Malta, fiduciary obligations arise by virtue of law, contract, quasi-contract, unilateral declarations including wills, trusts, assumption of office or behaviour whenever a person (the “Fiduciary”):
- owes a duty to protect the interests of another person; or
- has registered in his name, holds, exercises control or powers of disposition over property for the benefit of other persons, including when he is vested with ownership of such property for such purpose; or
- receives information from another person subject to a duty of confidentiality and such person is aware or ought, in the circumstances, reasonably to have been aware, that the use of such information is intended to be restricted.
What are the obligations of the Fiduciary?
Amongst other obligations listed in Article 1124A of the Civil Code, the Fiduciary must:
- exercise the diligence of a bonus pater familiasin the performance of his fiduciary obligations;
- avoid any conflict of interest;
- act impartially when the fiduciary duties are owed to more than one person;
- not receive undisclosed or unauthorised profit;
- keep any property as may be acquired or held as a fiduciary segregated from his personal property and that of other persons towards whom he may have similar obligations;
- maintain suitable records in writing of the interest of the person to whom fiduciary obligations are owed;
- render account in relation to the property subject to fiduciary obligations; and
- return on demand any property held under fiduciary obligations to the person lawfully entitled thereto or as instructed by him or as otherwise required by applicable law.
Fiduciary obligations govern and are inherent in the very nature of the trustee’s obligations, who holds the trusted property “for the benefit” of the beneficiary. Therefore, the trustee/Fiduciary must carry out his obligations vis-à-vis the beneficiary with the utmost good faith and honesty. The fiduciary obligations listed in Article 1124A of the Civil Code impose on the trustee a duty of care, confidentiality, accountability, and trust in holding the trusted property to the benefit of the beneficiary.
The notion of fiduciary obligations was firstly enacted in the Civil Code through Article 1124A in 2004. However, the Court of Appeal (“CoA”) in ‘Anthony Caruana & Sons Ltd v Christopher Caruana, CoA, 28th February 2014’, ascertained that fiduciary obligations were already present as an underlying concept whenever a person acted in the interest of another.
For any queries relating to fiduciary obligations or service related thereto, please feel free to contact us on [email protected]